OPINION, P8 ECONOMY, P2 MOHAMED A EL-ERIAN Faltering policy response to Covid-19 should worry markets COMPANIES, P4 EDITORIAL PREPACK INSOLVENCY COVID CRISIS Best to restrict interest waiver to small borrowers; waiver for all will bankrupt banks Rollout soon, Sahoo panel to submit report in 7-8 days Future Group lost `7k-cr revenue in first 3-4 months: Biyani AHMEDABAD, THURSDAY, OCTOBER 15, 2020 FOLLOW US ON TWITTER & FACEBOOK. APP AVAILABLE ON APP STORE & PLAYSTORE WWW.FINANCIALEXPRESS.COM READ TO LEAD VOLUME XV-117, 16 PAGES, `6.00 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 SENSEX: 40,794.74 ▲ 169.23 NIFTY: 11,971.05 ▲ 36.55 NIKKEI 225: 23,626.73 ▲ 24.95 HANG SENG: 24,667.09 ▲ 17.41 `/$: 73.30 ▲ 0.05 `/€: 86.08 ▲ 0.37 BRENT: $42.55 ▲ $0.10 GOLD: `50,467 ▼ `447 Continued on Page 6 THECABINETCommitteeon Economic Affairs (CCEA) on Wednesday gave ‘in-principle’approvaltothedemerger ofNagarnarSteelPlant(NSP) from National Minerals Development Corporation (NMDC),in order to pave the way for strategic disinvestmentofNSP’s`23,140-crore ● GST COMPENSATION new plant in Chhattisgarh by mid-2021, reports fe Bureau in NewDelhi. Separately,itapprovedthe WorldBank-assisted`5,718crore school education project underthe neweducation policyforsix states. ■ Report on Page 2 ● SAFETY CONCERNS Bangladesh set to beat India’s income antibody trial halted FE BUREAU New Delhi, October 14 RILEY GRIFFIN October 14 THE ADDITIONAL UNCONDITIONAL borrowing freedom of 0.5% of the gross state domestic product (G-SDP) given to 21 states and two Union Territories is in fulfilment of the promise made by the Centre that such incentive will be given to all states choosing its ‘Option 1’ to bridge the goods and services tax (GST) revenue shortfall in FY21. While these will be open market borrowings (OMBs), the special RBI-facilitated window for states to raise the funds required PAIN RELIEF ■ In all, 23 states get nod to raise extra `78,542 cr unconditionally via open market borrowings ■ Over and above this, these states can use special RBI window to borrow for GST compensation for part GST compensation will be available to them separately, the Centre clarified on Wednesday. Continued on Page 2 QuickPicks HZL,Guj ink pact for zinc smelter plant HINDUSTAN ZINC (HZL), the largest zinc producer in the country and among the top five globally, on Wednesday said it has signed a pact with the Gujarat government to set up a greenfield zinc smelter in the state, reports fe bureau in Ahmedabad. The proposed 300-KTPA (kilo tonne per annum) facility would be spread over 415 acres and entail an investment of `10,000 crore in phases, HZL said in a statement. ELI LILLY& CO said enrolment of participants in a clinical trial of its antibody treatment for Covid-19 has been paused due to a potential safety concern, pushing down the company’s shares. Anindependentdatasafety monitoring board recommended pausing enrolment in theUSgovernment-sponsored trial,acompanyspokeswoman said in a statement. Lilly didn’t provide information about what caused the panel to recommend the pause. Indianapolis-based Lilly is one of several companies developing so-called monoclonal antibody therapies, whichcanpotentiallyaidthose withearlyCovid-19symptoms from developing severe cases, and is also being studied as a prophylaxis. It’s seen bypharmaceutical executives and government health officials as a viable bridge to a vaccine. INDIA’S GROSS domestic product (GDP) in terms of purchasing power parity was 11 times more than that of Bangladesh in 2019, government sources said on Wednesday as they played down IMF projections of India slipping below the neighbouring nation on per capita GDP this year, reports PTI. Continued on Page 6 THE SUBSCRIBER ADDITION trends for June and July show that while incumbent Bharti Airtel is catching up well with Reliance Jio on the 4G front, Vodafone Idea is losingout.For incumbents like Bharti Airtel and Vi, the real challenge is to be able to migrate their 2G subscribers to 4G. Jio, which started out in September2016 as a fully 4G network, has an advantage on this front. Reliance Jio Bharti Airtel Vodafone-Idea 8.5 8 6 4 2 0 4.4 2.5 3.6 0.4 -1.2 -2 -4 -6 -8 July 2019 July 2020 Source: Edelweiss Revenues Operating profit Net profit 3.8 4,845 14.4 16.1 Operating margin (%) 22.7 25.3 260 bps on digital transformation, vendor consolidation and cloud were driving growth for Infosys,the top management said on a call. Detailed report on Page 4 FT REPORT Tatas may buy a stake in BigBasket FE BUREAU New Delhi, October 14 TATA GROUP IS in talks to tie upwithIndianonlinegroceries unicorn Big Basket,as the conglomerateattempts to catch up with rivals, includingAmazonand Mukesh Ambani’s rapidlyexpandingretail empire, the Financial Times reported onWednesday. Tata and Big Basket would make a decision on the deal by the end of October, FT reported, citing a person close to discussions.The newspaper wrote that another person with knowledge of the potential deal described it as a “strategic” relationship, with the conglomerate potentially acquiring a 20% stake and two board seats. The Bengaluruheaquartered Big Basket has a pan-India presence. It is believed to be negotiating a fresh round of funding with new investors, of $400 million and the backing of the Tatas woud be timely. Continued on Page 2 FE BUREAU Start-ups in recovery mode Total funding raised by start-ups in 2020 ($ bn) Stage-wise distribution of total funding (in $ bn, by calendar quarters) >2X Record rain and flooding in Hyderabad on Wednesday brought life to a crippling halt. Floodwaters pushed a car on top of another in the New Bowenpally area of the city ANI The latest trend in the 4G customeradditionfrontclearly establishesthestrongpointsof Jio and Bharti.While Jio has an edge in terms of coverage, Bharti has an advantage when it comes to attracting highdata usage customers in urban areasbecauseithasbeenableto createcapacity.However,Vodafone Idea needs to invest in its network to create more capacity or else it would continue to face subscriber churn. Continued on Page 2 1.93 2.84 CAR-NAGE Bharti Airtel plays catch-up with Jio 10 Q2FY21 Start-ups seem to have recovered, with the pace of funding nearing the pre-Covid levels in the July-September quarter, led by seed and late-stage investments. These firms managed to raise about $2.79 billion from investors in Q3, more than double the $1.33 billion they secured in Q2. Continued on Page 2 Wireless broadband subscriber additions (million) Q1FY21 Chg (%) Turnaround 4G ADDITIONS KIRAN RATHEE New Delhi, October 14 Continued on Page 2 ● PER CAPITA States can borrow up to Eli Lilly’s 4% of GDP sans reform Covid-19 State debt cap raised to 3.5% of GDP earlier, extra 0.5% allowed to alleviate GST pain posed by the Centre in an affidavit is estimated to cost the Centre only `6,500 crore. However, the government had stated in an affidavit that extending the interest relief to all“all types of loans forall categories of borrowers” would cause a huge burden of `6 lakh crore on banks, likely wiping out a major part of their net worth and even rendering most of them unviable. (` cr) « Cabinet clears demerger of NMDC unit the court had said the scheme was “not satisfactory”, and asked the government and the central bank to place on record the actions taken on the KV Kamathcommittee’sreporton debt restructuring. It even urgedgovernment-RBItoconsider the issues raised by the real estate associations and powerproducers overtheirrising debt burden. As reported by FE earlier, thewaiverof compound interest under the scheme pro- Salil Parekh, CEO and MD, Infosys 4,233 other countries. Tighter scrutiny will curb the possible diversion of Chinese investments through Hong Kong. CHANCES OF A courtimposed additional debilitating burden on banks and the exchequer in the form of a wider debt relief to borrowers appearedtoebbonWednesday. Hearing a batch of petitions seeking a waiver of interest on deferred EMIs during a sixmonth repayment moratorium that ended onAugust 31, the Supreme Court said, “We welcome the decision of the government to give a helping hand to the small borrowers”, but emphasised that the decisionshouldbeimplementedat the earliest. The court asked the Centre why it was “taking so much time” to implement the promised compound interest waiver scheme on loans up to `2 crore. It asked the government to come up with the notification/orders byNovember2,the next date of hearing. During a previous hearing, ■ SOLICITOR GENERAL TUSHAR MEHTA This is a bit harsh on the government. We do not stand to gain anything by delaying implementation...November 15 is the outer limit for implementation but the government will try to do it earlier. AFTER A STELLAR performance in the Septemberquarter, in which it signed deals worth $3.5 billion, Infosys Technologies believes itwill do betterthisyearthan it had earlier expected. The IT major expects revenuesthisyear,inconstantcurrency,willgoupby2-3%rather than the estimated 0-2%. Net profits in Q2FY21 were up a sharp14.4% sequentially at`4,845crorewhileoperating income rose 16.1% to `6,228 crore. Rupee revenues grew 3.8% q-o-q while margins jumped 2.7% q-o-q to 25.3%. CEO and MD Salil Parekh said, “Our digital and cloud capabilities combined with intense client relevance are helping us achieve differentiated results in the market as is visible in 2.2% y- o-y revenue growth and 25.4% growth from digital offerings, which noware at 47.3% of revenues.” Infosys said it would increase compensation across the board from January 2021 and would pay out 100% of variable pay this year, which could have some impact on margins going forward. Even though discretionary spends remained patchy, companies that were focused 6,228 Total Chinese investments (FDI included) in India up to Dec 2019 $8 bn FE BUREAU New Delhi, October 14 ■ JUSTICE MR SHAH We welcome the decision of the government to give a helping hand to the small borrowers, but the decision should be implemented at the earliest. During a previous hearing, the court had said the scheme was ‘not satisfactory’, and asked the government and the central bank to place on record the actions taken on KV Kamath committee’s report on debt restructuring It even urged the government-RBI to consider the issues raised by the real estate associations and power producers Waiver of compound interest under the scheme proposed by the Centre is seen to cost it `6,500 crore Extending the interest relief to ‘all types of loans for all categories of borrowers’ would have caused a huge burden of `6 lakh cr on banks 5,365 FDI from Hong Kong between April 2000 and June 2020, almost 1% of total inflows $2.41 bn FDI from China in April 2000June 2020, 0.5% of total inflows $4.51 bn On the govt's offer to waive compound interest on loans up to `2 crore: « THE CENTRAL government has mandated all ministries, public departments and public sector units (PSUs) to use telecom services of state-run Bharat Sanchar Nigam (BSNL) and Mahanagar Telephone Nigam (MTNL), reports PTI. CHIEF ECONOMIC ADVISER (CEA) Krishnamurthy V Subramanian on Wednesday favoured greater scrutiny of both direct and indirect Chinese investments, indicating that the government will likely step up monitoring of fund flow from Hong Kong, a close proxy for Beijing. Conceding that such curbs may impact funding for start-ups in the short term, Subramanian, however, exuded confidence that the vacuum will be filled up by investors, especially private equity funds, from — KV SUBRAMANIAN, CEA Apex court welcomes govt’s offer to waive interest on interest for loans up to `2 cr, seeks faster implementation FE BUREAU Mumbai, October 14 « Use of BSNL, MTNL services must for ministries, PSUs FE BUREAU New Delhi, October 14 Investments from the country with which we have tensions now, need to be scrutinised, and those include not just direct investments but also the indirect ones. Good results, even better guidance « THE CBDT has issued refunds worth `1,23,474 crore to more than 38.11 lakh taxpayers between April 1 and October 13, the government said in a tweet, reports fe Bureau in New Delhi. This includes income-tax refunds of `33,442 crore in 36,21,317 cases and corporate tax refunds of `90,032 crore have in 1,89,916 cases. CEA says funding vacuum created would be filled up by investors from other countries SC not likely to push for wider debt relief INFOSYS « I-T refunds worth `1.23L cr issued in FY21 so far Stricter scrutiny for FDI from Hong Kong MORATORIUM 24,570 INDIA'S PUBLIC debt ratio, which remarkably remained stable at around 70% of the GDP since 1991, is projected to jump by 17 percentage points to nearly 90% because of an increase in public spending due to Covid-19, the International Monetary Fund (IMF) said on Wednesday, reports PTI. EYE ON CHINA 23,665 IN THE NEWS India's public debt ratio to touch 90% due to Covid: IMF 2.79 Q1 Q2 2020 2.28 0.87 1.33 Source: Zinnov Research Late stage (Series C & beyond) Early stage (Series A & B) Seed stage (angel/seed) 0.79 Q3 Q1 0.11 0.38 0.07 0.41 0.10 Q2 2020 Q3 IN DRIVING SEAT After 20-yearwait,Hyundai Motor heir takes over HYUNJOO JIN & JOYCE LEE Seoul, October 14 HYUNDAI MOTOR GROUP appointed Euisun Chung as group chairman on Wednesday,cementing his succession from his octogenarian father in a move likely to give impetus to the world’s fifth-largest automaker’s push into electricvehicles and flying cars. In the first generational handover at the South Korean automobile giant in 20 years, Chung, 49, said he hoped to lead change at South Korea’s second-biggest conglomerate as it battles to stayahead of the pack in a time of rapid technological innovation in the global auto industry. “Carrying on theirbold and innovative legacies,I feel privileged,yet also a sense of great responsibility for opening a new chapter of Hyundai Motor Group,” Chung said in his inauguration speech to employees. Euisun Chung, chairman, Hyundai Motor Company Chung identified autonomous driving,electrification, hydrogen fuel cell, robotics and Urban Air Mobility (UAM) — industry jargon for flying cars — as his initiatives for the future. Hyundai Motor shares were trading up 0.3% afterrising as much as 2.5% after the appointment,while the wider market was down 0.6%. Kia Motors and Hyundai Mobis fell 1.6% and 1.1%, respectively. Continued on Page 2 Ahmedabad
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