ECONOMY, P2 ASHOK GULATI India needs to have a war room for Covid response INTERNATIONAL, P4 EDITORIAL STATE OF THE MATTER EXIT REFERENDUM US does well to support IPR waiver for Covid vaccines, other rich nations must come on board too Himanta Biswa Sarma to be next Assam CM; swearing-in likely today Johnson calls summit as Scotland renews call for independence MUMBAI, MONDAY, MAY 10, 2021 FOLLOW US ON TWITTER & FACEBOOK. APP AVAILABLE ON APP STORE & PLAYSTORE WWW.FINANCIALEXPRESS.COM READ TO LEAD VOL. LXI NO. 109, 12 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 0 (Recovery tracker index) 105 95 85 75 65 55 45 35 May 2020 Index Feb=100 This is the time for marketers to do their bit as citizens of a country in need, says Leo Burnett's Dheeraj Sinha ■ eFE, P8 Intelligent enterprises Innovation is much more than a competitive advantage, says SAP’s Sindhu Gangadharan ■ PERSONAL FINANCE, P9 Health cover for Covid treatment You need a comprehensive health insurance or a standard health insurance policy or a short-term Covid specific cover ■ INFRASTRUCTURE, P11 Sale of PSEs vital to NIP's success The govt needs to address structural issues if its ambitious divestment target of `1.75 trillion for FY22 is to be realised ■ SCIENCE & TECH, P12 Vaccine IPR waivers needed now US-backed effort to waive patent protection for vaccines, even if successful, is unlikely to narrow a yawning gap in access May 2021 Source: HSBC Work demanded 30 25 Employment provided 15 April 2019 April 2021 Source: HSBC 1,000 NATIONALASSET Reconstruction Company, the name coined for the bad bank announced in the Budget 2021-22, is expected to be operational in June, reports PTI. "Various preparatory work is going on and we hope that it should be operational next month. The biggest advantage would be aggregation of identified NPAs,” Indian Banks' Association CEO Sunil Mehta said. PAGE 2 FPIs withdraw `5,936 crore from equities so far in May FOREIGN INVESTORS have pulled out `5,936 crore from the Indian equities in the first week of May amid worries over the intense second wave of Covid and its fallout on the economy, reports PTI. Foreign investors had pulled out `9,659 crore in April after infusing money in the preceding six months. PAGE 2 Rural Feb 7, 2021 May 2, 2021 Source: CMIE, HSBC Domestic orders weak PMI Manufacturing 60 58 56 54 52 50 PMI Index New domestic March 2021 orders April 2021 New export orders Source: HSBC 7 0.9 Jan 2, 2020 May 6, 2021 Source: Bloomberg 419 9,859 5,111 514 Dec Mar 2019 1.4 1 IT firms take lead as India Inc turns in good numbers CORPORATE INDIA’S PROFITS have surged in the three months to March driven up by strong top line growth and some hefty cost-cutting. Producers of commodities, especiallymetalslikesteel,haveseen their sales boosted by rising prices and good demand; net sales atTata Steel jumped 39% year-on-year,nudging`50,000 crore.Abigjumpinexportsand an increase in local realisations oftwo-wheelercompanieshave helped increased theirsales. At Bajaj Auto, motorcycle volumes in the export market increased by 24% y-o-y and the mix too improved. Demand in the home market, too,was reasonably strong. Revenues at Maruti Suzuki increased by32%y-o-yled bya bigjumpinvolumesanda4.5% y-o-y increase in ASPs (average selling prices). Discounts on vehicles have come down significantly to `16,600 pervehicleinQ4FY21versus`19,051a year ago as demand has picked up. Standalone revenues at Ultratech Cement increased a smart35%y-o-ywithsalesvolumeup30%y-o-yandcapacity ■ Net sales (% chg y-o-y) 18 ■ Total expenditure ■ OPM 9.1 (% chg y-o-y) (bps, chg y-o-y) 0.5 -5 Q1 Q2 Q3 FY21 -9.6 -29.6 FE BUREAU New Delhi, May 9 -30 ■ PBT (% chg y-o-y) Q4 80 -4.4 -82.3 Q2 Q3 FY21 Q1 Q4 ■ Tax 126.1 (% chg y-o-y) 12.1 Q1 Q2 Q3 FY21 Q1 Q2 Q3 FY21 Q4 -34.6 Q1 Q2 Q3 FY21 Q4 Q4 ■ RM to Sales % (bps, chg y-o-y) 69.4 27.1 33.3 -42.8 650.7 402.6 398.7 -381 Q1 Q2 21 -522 Q3 FY21 Q4 Sample of 227 companies (excluding banks & financials Source: Capitaline utilisation hitting 93%y-o-y. The stars of the fourth quarter earnings season have been the IT services firms which have turned in stellar numbers. For a sample of 227 companies (excluding banks and financials) net sales were up a strong 18% y-o-y. FMCG firms fared well with supply chainslargelyrestoredpostthe lockdown and rural demand holding up: at Hindustan Unilever, underlying volumes jumped 16% y-o-y. Rural demand remains reasonably strong; at Maruti Suzuki, for example, rural volumes accounted for 41% of overall volumes in FY21 which is an increase of 200-250 bpsy-o-y. While sales have, no doubt, beenstrong,IndiaInc’sbottomline continues to be driven as muchbycostcutsasithasbeen in the past three quarters. Continued on Page 2 EXPRESS PHOTO: PREM NATH PANDEY 1.3 Jun Sept Dec Mar 2020 2021 Source: CMIE ● EXTRADITION ORDER 331 329 Nirav Modi's appeal awaits UK High Court judge decision ADITI KHANNA London, May 9 323 Overdue (` crore) Average due days Covidoverwhelmingthecountry, timely payments have become critical for us.We need theresourcestoensurecontinuous supply of electricity,” a seniorexecutiveatanindependent power generator told FE. Continued on Page 2 Hero extends shutdown of plants till May 16 The shutdown also includes the Global Parts Center (GPC) in Neemrana and R&D facility — the Centre of Innovation and Technology (CIT) in Jaipur — , Hero MotoCorp said in a statement. ■ Page 5 QuickPicks Bad bank to be operational next month, says IBA CEO Total 587 500 Discoms taking longer to clear their dues TWO-WHEELER MARKET LEADER Hero MotoCorp on Sunday said it is extending the shutdown of its plants across India byanotherweek tillMay16inviewoftheprevailingcoronavirussituation in the country,reports PTI. Urban 3.7 POWER STRUGGLE STATE-RUN POWER DISTRIBUTION companies (discoms) are holding back payments to electricitygeneratorsforaslong as one-and-a-half years, information available in the Union power ministry’s ‘Praapti’ portal shows. Power generators usually raise bills between 5 to 15 days after the end of every month and discoms are supposed to pay them within 30 daysoratbest60days.Butwhile discoms are clearing their bills —theyarewaitingforaslongas they can to do so. In March, for instance, they cleared bills worth `30,438 crore. Delaying payments to generatorshelpcash-strappeddiscoms manage their working capital cycles and avoid costly working capital loans. But it is taking a toll on power generators which need to pay for coal in advance and service their debt obligations “With the second wave of (%) 11 10 9 8 7 6 5 (Value of new investment, ` lakh cr) 1,519 1,500 1-7 May Source: Cowin.gov.in Investments remain subdued Raw material prices rising Steel; Hot-Rolled Coil ($/T) 2,000 6-12 Feb Unemployment rates rising 75 (Household; in million) 35 20 0 May 8, 2021 Demand for MGNREGA up Andhra Pradesh Stay away from tokenism 1 Jan 30, 2020 HSBC tracker down 25% 0 11,614,242 70,00,000 Source: Covid19india.org 10 26,55,932 Q4 EARNINGS -30.3 1,90,000 ANUPAM CHATTERJEE New Delhi, May 9 ■ BRANDWAGON, P10 14,000,000 Maharashtra FE SPECIALS Continued on Page 2 2,85,000 95,000 (Number of doses) 28,000,000 21,000,000 855 THE REMNANTS OF China's biggest rocket crashed into the Indian Ocean near the Maldives on Sunday with no reports of damage, but Beijing was criticised by NASA for its failure to "meet responsible standards" regarding its space debris, reports PTI. THE SECOND WAVE of the pandemic could jolt the economymuchharderthanisbeing anticipated. Sectors such as retail,hospitality,tourism and aviation, which have already taken a big hit during the first wave, will be even more badly bruised with more than twothirds of the country having imposed curfews or partial lockdowns. States like Karnataka have imposed a full lockdown for two weeks and others might follow. This time around many more well-to-do households — numbering in all roughly 250 million — have been impacted whichcouldhurtconsumption demand, albeit temporarily. Also, the second wave has affected rural areas and could result in demand staying suppressed for a few months.The economy right now is somewhat sluggish — growth in the services sector particularly is slowing—butdemandforboth goods and services should 4,03,808 3,80,000 Odisha NASA criticises China for handling of space debris FE BUREAU New Delhi, May 9 (Number of daily cases) 4,75,000 4,002 CONTINUING A POSITIVE growth, India's exports grew by 80% to $7.04 billion during the first week of this month, according to preliminary data of the commerce ministry, reports PTI. Exports during May 1-7 last year stood at $3.91 billion and $6.48 billion in the same week of May 2019. Sectors like retail, hospitality, tourism, aviation to get even more badly bruised bouncebackaroundSeptember as the festive season begins. Savings—atleastintheformof bank deposits — are growing, indicatingeithertheinabilityto spend orextreme caution. While the balance sheets of companiesintheorganisedsector would be affected very slightly, lakhs of small enterprises,intheinformalsector,will once again be in deep distress and many even go extinct.The dichotomyseen in the recovery following the first wave will get exacerbated;additionally,many more low-income households are likelyto get hit. Joblessness is already running high; the CMIE data showed unemployment has hit 8%andtenmillionsalariedpersons have lost their jobs.Moreover, researchers at the Azim Premji University have found that while a big chunk of workers did find work again, after having lost them in the first wave, the remuneration was much lower. The monthly per capita income for an average household of four members in October 2020 was a fifth lower than what it was in January 2020, at `4,979. Joblessness and reduced income have meant labour’s share of GDP dropped from 32.5% in Q2FY20 to 27% in Q2FY21. Pace of vaccinations falling... Corona cases rising… Karnataka Exports rise 80% to $7 billion during May 1-7 Second wave could jolt the economy much harder 16,209 EMIRATES SAID ON Sunday it will not charge NGOs anything for transporting their Covid relief material on its flights from Dubai to India, reports PTI. "Emirates will offer cargo capacity free of charge on an “as available" basis on all of its flights to nine cities in India, to help international NGOs rapidly deliver relief supplies, where it is needed," the airline said. PANDEMIC BLUES Tamil Nadu IN THE NEWS Emirates to fly medical aid to India for free -1,205 OPINION, P6 FUGITIVE DIAMOND MERCHANT Nirav Modi, whose extradition to India was ordered last month by UK Home Secretary Priti Patel in the estimated $2-billion Punjab National Bank (PNB) scam case, has filed an application for permission to appeal against the order in the High Court in London. The Crown Prosecution Service (CPS) confirmed an appeal has been lodged but a highcourtjudgewhowillmake a decision on the matter is yet to be assigned.“The matterhas not been sent to a judge for consideration on the papers,” theAdministrative Division of the Royal Courts of Justice in London said this week. In the first instance, a high court judge will make a decision“on the papers”submitted fortheappeal anddetermine if there are any grounds for an appeal against the home Secretary’s decision or the Westminster Magistrates Court February ruling in favour of Modi’s extradition to India to face charges of fraud and money laundering. Continued on Page 2 Free oxygen being provided at a gurudwara in Indirapuram, Ghaziabad, on Sunday COVID-19 Lockdown in Delhi till May 17 now; no Metro,weddings at public places PRESS TRUST OF INDIA New Delhi, May 9 THE ONGOING LOCKDOWN in Delhi due to surging Covid19 was on Sunday extended up to May 17 morning with suspension of Metro services and prohibition of wedding at public places. Delhi chief minister Arvind Kejriwal said although cases and positivity rate have comedowninthelastfewdays, any leniency would squander the gains achieved so far in the currentwave of the pandemic. Marriages will be held at home or in courts with not more than 20 people, according to an order issued by the Delhi Disaster Management Authority (DDMA). Continued on Page 2 Lockdown extended in UP till May 17 THE UTTAR PRADESH governmentonSundayextended the statewide lockdown ending on Monday by a week, a senior official said, reports PTI. The “corona curfew”, which was earlier scheduled to end at 7 amon May10,has been extended till May 17 morning.“The corona curfew is giving positive results,and it is helping in breaking the chain of infection...,” the UP government said. ■ Page 2 FM: GSTexemption on Covid vaccine to make them costlier FINANCE MINISTER NIRMALASitharamanonSundaysaidGSTexemptionto domestic supplies and commercial import of Covid drugs,vaccines and oxygen concentrators wouldmaketheseitemscostlierforconsumersasmanufacturers would not be abletooffsetthetaxespaid on inputs, reports PTI. Currently, domestic suppliesandcommercialimports of vaccines attract a 5%GST,whileitis12%on Covid drugs and oxygen concentrators. ■ Page 2 OFFLINE CARD TRANSACTION Fintechs pick up MDR tab, enjoy float till transaction settled SHRITAMA BOSE Mumbai, May 9 IN A PUSH to expand their merchant networks, fintech intermediaries have come up with an innovative settlement scheme by which they waive the merchant discount rate (MDR) on offline card transactions. This allows offline merchants to opt for a delayed settlement of a transaction bynot shelling out the MDR rather than settling it on a next-day basis.The payment intermedi- ary has access to the merchant’s float until the transaction is settled. To be sure, merchants would opt for a waiver of the MDR, typically 2-3% on the value of the purchase, only if they are severely strapped for cash. Else, it would not make sense forthem to give up the float. Industry sources said BharatPe and Paytm are amongthecompaniesoffering thisformofsettlement.Emails sent to the two companies did ■ Merchants opt for a delayed settlement of a transaction ■ Offline merchants do not shell out MDR rather than settle on a next-day basis ■ Intermediary has access to the merchant’s float until transaction is settled ■ Merchants opt for MDR waiver, typically 2-3% on purchase value, only if severely strapped for cash not elicit responses till the time of going to press. Mohit Gopal,seniorVP and strategy head,PayU India,said that the practice is not necessarily wrong. “On the offline side, this does happen.As long as it makes business sense between the fintech and the merchant,it’s fine.If it’s a merchant with strong cash flows, thenthisisanacceptablething to them,”he said. Anexecutivewith afintech, which offers this facility, explainedthatwhenthecardis swiped by the customer the merchants have two options: Opt fora regularsettlement or receive the money within 15 days,byusing the app.“Beyond 15 days,we havewaived offthe MDR charge. We pay the charge to the concerned bank forall transactions,”the executive said.His companybelieves MDR on card-based transactions is heading for a 2% level, except for Rupay, where MDR is already zero. Continued on Page 2
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