OPINION, P6 ECONOMY, P2 A GULATI, S JOSE & BB SINGH To avoid lockdown misery, get portability of services right BACK PAGE, P14 EDITORIAL ‘NO EVIDENCE’ MARKET MONOPOLY PM asking CMs to focus on conventional means to control Covid vital, but vaccine supply must be increased Nobel laureate trashes theory of limited govt intervention to uplift poor Record penalty for Ma’s Alibaba marks tumultuous stretch for its founder MUMBAI, MONDAY, APRIL 12, 2021 FOLLOW US ON TWITTER & FACEBOOK. APP AVAILABLE ON APP STORE & PLAYSTORE WWW.FINANCIALEXPRESS.COM READ TO LEAD VOL. LXI NO. 85, 14 PAGES, `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 Govt may hike FDI limit in pension sector to 74% THE GOVERNMENT MAY hike foreign direct investment (FDI) limit in the pension sector to 74% and a Bill in this regard is expected to come in the next Parliament session, according to sources, reports PTI. Last month, Parliament approved a Bill to increase FDI limit in the insurance sector from 49% to 74%. Franklin holders to get `2,962 cr in second tranche SBI FUNDS MANAGEMENT will distribute the next tranche of `2,962 crore to unitholders of Franklin Templeton's six shuttered schemes during the coming week, reports PTI. SBI MF has already distributed `9,122 crore to investors as directed by the SC earlier. Recovery slowing, under serious threat Covid cases surge Factory activity dull (Number of daily cases) 1,60,000 INDIA IS NOW firmly in the grip of a severe second Covid19 wave and while it may not have as deleterious as impact as the first one, the local restrictions will undoubtedly slow what was a promising recovery. Much of the damage has taken place in the services sector, and in the informal space, and therefore, doesn’t really show up in high frequency indicators. But even formal sector data isn’t encouraging and there are clear signs of a slowdown that could get exacerbated as the vaccination drive loses momentum and infections surge. Manufacturing remains weak, private sector investments show no sign of picking up meaningfully and loan growth is sluggish even though input costs have risen. The sectors that are the most vulnerable to disruption — hospitalityand transportation services — maycontribute less than 6% to GDP, but they account for a disproportionately high number of jobs. The revival in the services sectorcould nowbe postponed to the end of 2021. 1,52,565 -20 80,000 51.8 -60 0 1 -80 Jan 30, 2020 April 10, 2021 Source MoHFW Retail 2-wheeler sales down (% chg, y-o-y) 20 0 -20 -40 -60 -80 -88.8 -100 May 2020 March 2021 Source FADA Diesel consumption falls (million tonnes) 7.5 6.6 6.5 5.5 2.5 Feb 2021 Investments remain subdued 15 PMI* (RHS) 0 NIBRI drops 0.9 1.4 Dec Mar 2019 1 Jun Sep 2020 1.3 Dec Mar 2021 Source: CMIE Continued on Page 2 60 50 40 30 20 10 0 -10 -20 54.6 BSE-30 Index earnings growth (%) Revenues, profits seen growing to multi-quarter highs EVEN AS THE second Covid19 wave threatens to weaken demand and hurt sales,corporate earnings for the JanuaryMarch period will surge thanks largely to a helpful base. But the numbers are expected to be reasonably good even after adjustments to the base. Revenues should grow to multi-quarter highs in Q4FY21 on the back of better volumes and higherprices.But profits would also get a boost from cost savings and better operating leverage, much like theyhave in recent quarters.In other words, gross margins may be hit by input inflation (% chg, y-o-y) 7.5 6.44 6.5 March 13, 2020 March 12, 2021 Source: RBI Job listings weak (India jobs listing index) 110 Total listings Index New postings Index 70 50 30 Jan 2020 Source: Jefferies Mar 2021 SHUBHRA TANDON Mumbai, April 11 Dec Mar Jun Sep Dec Mar Jun Sep Dec Mar Jun Sep Dec Mar 2019 2017 2020 2021 2018 (E) Source: Kotak Institutional Equities estimates Nomura India Business Resumption Index 100 90 80 70 60 50 40 Oct 18, 2020 Apr 4, 2021 90 3.7 2 0 55.4 45 IIP* (LHS) 30 March 2020 March 2021 *Manufacturing Source: CSO, HIS Markit 3.5 (Value of new investment, ` lakh cr) 8 7 4 60 4.5 3.3 April 2020 6 -2 5.5 6.07 4.5 3.5 75 % chg, y-o-y -22.8 India Inc to end the More temps in year on a high note demand, fewer permanent jobs Loan growth anaemic -35.3 FE BUREAU New Delhi, April 11 but ebitda margins are likely to have expanded. Sequential comparisons of number could be less flattering. Nonetheless, corporate India will end FY21 on a high note thanks to global reflation, serious cost cuts and gains from the informal sector. While querying managements on demand trends in the March quarter, the Street will look for commentary on potential problems in the current quarter. For the Sensex set of companies net profits are estimated to soar 55% year-onyear on the back of an 11% y-o-y rise in revenues and a sharp 23% plus increase in operating profits.Forthe Nifty 50 companies, the jump in profits is a bigger 125% y-o-y on the back of a huge 17%y-oy increase in net sales and a 70% y-o-y improvement in operating profits. Continued on Page 2 WITHTHE PANDEMIC having impacted businesses badly and little visibility on the course of the recovery, companies are playing it safe by adding more temporary staff ratherthan taking on too many permanent employees. Although this relates primarily to entry-level positions, they’re using this approach to recruit for some senior roles too. According to Alok Kumar, senior director, Manpower, such senior professionals are taken on as consultants for specific projects for a specific period. “It applies to roles where the deliverables are well defined and results are quantified.These professionals earn a remuneration in the form of a commission,” Kumar said. TeamLease Services believes temporary hiring could double in 2021 over 2020 levels going back to precovidlevels,accordingtoDeval Singh,businesshead,(mobiliasation) who says this is the resultof managementstweaking their business models. “Companies are still facing uncertainty and are trying to minimise costs. With tempo- Temporary hiring Monthly Salary (`) Relationship officers `15,000-`18,000 Customer care executives `15,000-`17,000 Wireman & Installation engineer `16,000-`18,000 Sales executives/officers `15,000-`20,000 Store executives `10,000-`12,000 Desktop Support engineer `14,000-`16,000 Source: TeamLease Services raryhires,theyget apoolof talent that can be tested and later absorbed in permanent positions if it’s needed,”Singh said. Kumar observed that in the current scenario, companies are looking flexible staffing model and can be scaled up or down depending upon conditions in the market and the economy. Continued on Page 2 ● BOARD MEETING `39,097 cr RoDTEP is WTO-compliant. It’s a scheme to only refund certain levies on exported products. Other countries, too, do this. Such questions (like the ones by the US) are usually posed at the WTO and can be easily addressed. MEIS outlay approved by govt for FY20 `15,555 cr MEIS incentives for first 3 quarters ofFY21 <`20,000 cr Approximate release ofbenefits, mainly for FY20, according to trade sources — GK PILLAI, HEAD OF RoDTEP PANELAND FORMER COMMERCE SECY replaced the MEIS from January 1, 2021, are yet to be notified. Since exporters typically factor in tax remission under keyprogrammeswhilefirming up contracts, lack of clarity about RoDTEP rates is adding to theirwoes,they said. Continued on Page 2 Large CPSEs post record capex in FY21 WHILE REVENUE CONSTRAINTS led to a sharp decline in capital expenditure bystate governments in FY21, the Centre and public sector enterprises (CPSEs) owned by it largely held the fort, retaining the share of public expenditure in the gross domestic product (GDP). The combined capital expenditures by 37 large CPSEs and departmental undertakings — all with Jan ‘21 -40 40,000 ● BIG SPENDS PRASANTA SAHU New Delhi, April 11 0 1,20,000 Over `35,000-cr export aid held up amid trade recovery THE GOVERNMENTISholding back export benefits worth at least `35,000 crore under the MerchandiseExportfromIndia Scheme (MEIS),including sizeable funds traceable to FY20, according to trade sources. Inordinate delay in release of these funds could accentuate a Covid-induced liquidity crunch, limiting exporters’ capacity to ramp up supplies even as demand from keymarkets has improved,theyadded. Similarly, refund rates underthe Remission of Duties and Taxes on Exported Products (RoDTEP) scheme, which 20 HIRING METER 2.0 FE BUREAU New Delhi, April 11 CASH CRUNCH BANIKINKAR PATTANAYAK New Delhi, April 11 Q4FY21 -12.1 THE DEPARTMENT OF telecommunications (DoT) is likely to issue guidelines on implementation of production-linked incentive (PLI) schemes for manufacturers in the sector and start inviting applications for the same in about a week, according to government officials, reports PTI. SECOND WAVE 90.7 IN THE NEWS DoT likely to issue telecom PLI norms in a week ON THE RISE CPSE capex^ 3.81 4.41 4.36 4.41 FY17 FY18 FY19 (` lakh cr) FY20 4.6 FY21 ^Data of CPSEs and departmental arms with minimum annual capex of `500 cr Top investors FY21 ` crore NHAI Railways IOC ONGC NTPC HPCL Achievement as % of target 1,25,000 1,24,000 30,000 25,000 23,000 18,000 110 78 115 77 110 156 annual capex budgets above `500 crore — were `4.6 lakh crore in FY21.Thiswas 92% of the `5-lakh-crore target for the year and 4.3% higher than the capital spending by these entities in the previous year. Among these government entities, NHAI was the largest investor with capex roll-out of `1.25 lakh crore in FY21,overtaking Indian Railways for the firsttime.NHAI’sachievement was 110% of its annual target and up 20% on year. Continued on Page 2 Infosys to consider share buyback on April 14 FE BUREAU New Delhi, April 11 SOFTWARE SERVICES GIANT Infosys said on Sundayitwould consider a proposal to buy back of its shares at its forthcoming board meeting scheduled for April 14.The board will meet to approve and take on record the audited consolidated financial results of the company and its subsidiaries for the quarter and yearendedMarch.Infosyscompleted its first buyback of `13,000 crore in December 2017, comprising 11.3 crore equity shares at a price of `1,150 per share. It also announced a buy-back in early 2019 for an amount of `8,260 crore and bought back 11.05 croreshareatanaveragepriceof `747.38perequityshare. Bloomberg estimates peg the revenues for Q4FY21 at `26,398croreandnetprofitsat `5,168 crore even as the Street expects top tier IT players to reportsequentialrevenueincreases of 2.5-3.5% in constant currency terms.This would be among the best Q4 performancesinseveralyearsthoughmargins might not be as flattering due to wage hikes and higher overheads.The Infosys stock on Friday ended flat at `1,440.75 apiece, having gained 140% overthe past oneyear. THE NEW NORMAL Big PSBs speed up digitisation post merger SHRITAMA BOSE Mumbai, April 11 PUBLIC SECTOR BANKS (PSBs) havehistoricallylaggedtheirprivatepeers intermsoftheiradoption of technology and digital systems.Thatmightbechanging as a pandemic that refuses to die is forcing every financier to take a hard look at the way they have been doing business. For PSBs, the need to change has become even more relevant as the mergers have expanded Banking on In March, SBI floated an RFPfor redesigning its operating model, implementing new strategieswith the use ofdigital tools in MSME segment PNB is looking to develop an end-toend system for ATM reconciliation and redressal of customer complaints UBI wants to smoothen out the entire recovery function with a software-based solution BoB among the first PSBs to envisage a wholly revamped and digitally-driven operational model last year their scale and competition from tech-oriented players has only intensified. Several large PSBs have in recent months set in motion the process of digitising various functions.Most of these projects are focused on redeploying staff from the more mundane, workflow-driven processes to sales and other productive divisions. In March, State Bank of India (SBI) floated a request-for-proposal (RFP) for redesigning its operating model and implementing newstrategieswith the use of digital tools in its micro, small and medium enterprises (MSME) segment. Continued on Page 2 Mumbai
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