OPINION, P6 MARKETS, P11 S VARMA & A NANDI RBI adopts Fed policy mantra,normalisation likely from Q4 2021 INTERNATIONAL, P8 EDITORIAL CLOSED SCHEMES $268-MILLION PENALTY Amid inflation worries, RBI prioritised growth; govt should now pull its weight on supporting growth Sebi bars Franklin India from offering debt funds for two years Google overhauls global ad model after French antitrust fine NEW DELHI, TUESDAY, JUNE 8, 2021 FOLLOW US ON TWITTER & FACEBOOK. APP AVAILABLE ON APP STORE & PLAYSTORE WWW.FINANCIALEXPRESS.COM READ TO LEAD VOL. XLVII NO. 84, 18 PAGES, `8.00 (PATNA `8.00, RAIPUR `8.00) P U B L I S H E D F R O M : A H M E D A B A D , B E N G A L U R U , C H A N D I G A R H , C H E N N A I , H Y D E R A B A D , K O C H I , K O L K ATA , L U C K N O W, M U M B A I , N E W D E L H I , P U N E SENSEX: 52,328.51 ▲ 228.46 NIFTY: 15,751.65 ▲ 81.40 NIKKEI 225: 29,019.24 ▲ 77.72 HANG SENG: 28,787.28 ▼ 130.82 `/$: 72.81 ▲ 0.19 `/€: 88.55 ▼ 0.10 BRENT: $71.91 ▲ $0.02 GOLD: `48,624 ▲ `221 SHAPING UP IN THE NEWS Crisil cuts FY22 growth forecast to 9.5% from 11% Tata Digital pumps $75 m into CureFit CRISIL ON Monday cut its FY22 growth estimate for India to 9.5% from the earlier 11% due to the hit to private consumption and investments following the second wave of Covid-19, reports PTI. The rating agency joins other watchers who have cut their FY22 growth projections, with some pegging it as low as 7.9%. Co-founder & CEO Mukesh Bansal to continue to lead fitness start-up FE BUREAU New Delhi, June 7 RBI imposes `6-crore penalty on BoI, PNB STRENGTHENING ITS FOOTPRINT in the e-commerce space to compete with the bigger players, Tata Digital on Monday said it has entered into an agreement to invest up to $75 million in fitness startup CureFit Healthcare. Tata Digital recently completed its acquisition of e-grocer BigBasket, and is understood to be close to acquiring a significant stake in online pharmacy 1mg. Mukesh Bansal, the RBI ON Monday imposed a penalty aggregating to `6 crore on Bank of India and Punjab National Bank for contravention of norms, including one related to "Frauds – Classification and Reporting", reports PTI. A fine of `4 crore has been slapped on BoI and `2 crore on PNB. Fitch: Govt’s PSB privatisation plans could be delayed Curefit founder & CEO Mukesh Bansal to join Tata Digital as president FITCH SAID on Monday India’s plan to privatise two PSBs in FY22 could be delayed, as the “bold move” faces risk from political opposition and structural challenges, including heightened balance-sheet stress, reports fe Bureau in New Delhi. Diversiﬁed funds Curefit to help Tata Digital expand into pro-active health management space Tata Digital has been sealing a slew of acquisitions to expand its e-commerce play $12 billion by 2025 Investing in sectoral funds? Proceed with caution Sectoral/ Thematic funds Continued on Page 2 ■ Indian fitness and wellness market is expected to reach Special Features ` founder & CEO of CureFit will join Tata Digital as president while continuing his leadership role at CureFit,Tata Digital said in a statement. Tata Digital and CureFit did not disclose the specifics of the deal. AnalystssaidtheTataGroup, which already has an established presence in the traditional services sector,is looking toaddnew-agehealthandwellness services to its bouquet of offerings.The partnership with CureFit will help build on that strategy.“TheTatashaveanyway announcedtheirambitiontobe a super app. The investment adds to that capability,” said Arpit Mathur, partner at Kearney.Access to talent is another areathattheTatasarelookingat with this investment. Performance of sectoral or thematic funds is cyclical in nature, and is more volatile than diversified funds. Limit exposure to such funds to 5-10% of your portfolio ■ Personal Finance, P7 Strong FCF has sped up cut in debt for Motherson Sumi Q4 operating earnings in line with estimates; EPS for FY22/23e revised by -0.7/5.1%; target price up to `310 from `253; stock is valued attractively; ‘Buy’ rating maintained ■ Investor, P7 QuickPicks After rising in May, diesel sales drop 20% in early June INDIA’S DIESEL sales fell nearly 20% year-on-year to 762,000 tonnes in the first six days of June, industry data showed, reports fe Bureau in New Delhi. Sales in May had inched up 1.4% y-o-y to 4.9 million tonnes (MT), but this was smaller than the 6.9 MT of diesel was sold in May 2019. Petrol sold by OMCs in May was 1.8 MT, up nearly 13% y-o-y. However, they remained much lower than 2.5 MT sold in May, 2019 when there was no lockdown to reduce the spread of the coronavirus. PAGE 3 Twitter seeks more time from govt to complywith new IT rules SOCIAL MEDIA platform Twitter is learnt to have approached the government seeking more time to comply with the new IT rules, reports PTI. According to sources, the microblogging site has said that it intends to comply with the rules but needs more time due to the pandemic situation. "Twitter has written to MeitY seeking more time to comply with the IT rules. It has expressed its intent to comply with the rules but has been unable to do so because of the pandemic," a source said. PAGE 4 IPPs seek larger loan facility for discoms amid rising dues, disputes WITH STATE-RUN electricity distribution companies’ over-dues to private power companies rising 8% on year to `36,018 crore at April end despite the `1.25-lakh-crore PFC-REC loan facility at the discoms' disposal, even the latest package to bail out the power sector is threatening to come a cropper, reports Anupam Chatterjee in New Delhi. Independent power producers (IPPs) have demanded an expansion of the loan facility, even as a large segment of receivables are disputed by discoms. PAGE 2 VAX POPULI Free vaccines for all, Centre to foot bill EXTENDING SUCCOUR FE BUREAU New Delhi, June 7 PRIME MINISTER Narendra Modi on Monday declared that the Centre will provide free Covid-19 vaccines to states for the age group of 18-44 years from June 21, spelling out clearly that all the countrymen will nowhave access to free jabs atgovernment hospitals. Those who want to pay for the doses can get vaccinated at private hospitals, which can continuetoprocure25%ofthe jabs, said the Prime Minister. However, these hospitals can charge a maximum service fee of `150 for a single dose over and above the fixed price of the vaccine.Stategovernmentswill be taskedwith monitoring it. Sourcessaidwiththechange inpolicy,theCentre’sbudgetary expenditure on Covid vaccinationwouldbearound`42,00045,000croreagainstthebudget estimate of `35,000crore. The Centre will buy 75% of FIRST PHASE `89k-cr loans to be moved to NARCL ANKUR MISHRA Mumbai, June 7 LENDERS HAVE IDENTIFIED 22 stressed accounts, worth around `89,000 crore, to be transferred to the proposed National Asset Reconstruction Company (NARCL) in the first phase.A much larger exposure — ofanestimated `2 lakhcrore — is expected to be transferred overtime. The chairman of Indian Banks’Association (IBA),Rajkiran Rai G,said banks have identified accounts which can go to the ARC in the first phase and have arrived at this number. “However, once the ARC is formed, the management will look at these assets and only if they find that it is worthwhile, theywillmakeanoffer,”Raisaid. Rai, who is also MD and CEO of Union Bank of India, saidofthetotalamount,Union Bank had identified `7,800crore bad loans will be sent to NARCL. The lender will also pick up a 9% stake in the asset Lenders identify 22 accounts worth `89,000 cr for NARCL ■ Union Bank of India identifies `7,800-cr NPAs for NARCL ■ PNB identifies `8,000-cr NPAs for NARCL ■ Union Bank ■ PSU banks 9% 51% likely to pick to pick stake in NARCL stake in NARCL reconstruction company.Similarly, Punjab National Bank (PNB) MD and CEO SS Mallikarjun Rao on Saturday had said the lenderhad identified `8,000-crore NPAs to be sent to NARCL. Continued on Page 2 Jaypee Infra: Suraksha ‘improves’ bid SURAKSHA GROUP ON Monday submitted an “improved revised” bid to acquire debt-laden Jaypee Infratech(JIL),offeringmore funds to banks while reducing timeline to complete Free grains for 80 crore poor till Diwali: PM PM says will provide free vaccines to states for 18-44 years’ age group from June 21 some stalled projects for the benefit of homebuyers, reportsPTI.Itrequestedthat JIL’s committee of creditors (CoC) should consider its bid during the meeting. ■ Report on Page 4 Those who want to pay can get vaccinated at pvt hospitals, which will continue to get 25% jabs Centre to take over But these hospitals can charge only a maximum of `150/ dose over the fixedvaccine price 25% vaccine responsibilities currently handled by states Validity ofthe scheme to distribute free grains to 80 cr people extended until Diwali jabs from vaccine manufacturers,including 25% of the state quota,and give it for free to the stategovernments,Modisaidin an address to the nation. Continued on Page 2 PRE-IPO PLANS Flipkart eyes $3 bn from global funds Flipkart is in talks with Singapore’s GIC Pte, Canada Pension Plan Investment Board and Abu Dhabi Investment Authority SoftBank, which had previously backed Flipkart, could invest FE BUREAU New Delhi, June 7 THE GOVERNMENT WILL extend the validity of a programme to distribute free grains to 80 crore people until Diwali(November4)fromJune, Prime Minister Narendra Modi saidonMonday.Thiswillsoften the Covid blow to mainly the poorandthe vulnerable,including migrantworkers. The beneficiaries will continuetogetanadditional5kgof rice orwheat and 1 kg of pulses, everymonthunderthePradhan Mantri Garib Kalyan Anna Yojana (PMGKAY).This distribution isoverand above the supply of subsidised grains under the NationalFood SecurityAct. So, if all the free grains are lifted,itmaycosttheexchequer around `1.2 lakh crore this fiscal,roughlythe same as last. Freerationwasfirstprovided to the poorfor8 months through November 2020 under PMGKAYintheaftermathofCovidinduced lockdown in 2020. $300-500 million through Vision Fund II SARITHA RAI June 7 WALMART-OWNED FLIPKARTis in talks to raise at least $3 billion from investors including SoftBank Group and several sovereign wealth funds, according to people familiarwith the matter. The start-up is targeting a valuation of about $40 billion and is in discussions with Singapore’s GIC Pte, Canada Pension Plan Investment Board and the Abu Dhabi Investment Authority, said the people, asking not to be named because the discussions are private. Japan’s SoftBank, which had previouslybacked Flipkart before selling its stake to Walmart, could invest $300 million to $500 million of the Work flow FE BUREAU Rural joblessness rises, urban areas better After a steady and sharp rise over five consecutive weeks, urban joblessness fell by nearly 3.5 pps to 14.4% in the week ended June 6, indicating gradual resumption of economic and commercial activities. Rural unemployment rate, however, rose by 3.7 pps. Unemployment rate (%) All-India Urban Rural 14.4 16 12 7.72 8 6.18 4 0 13.27 13.62 Source: CMIE Jun 06, 2021 ILLUSTRATION: SHYAM KUMAR PRASAD GST COMPENSATION States set to drive a hard bargain PRASANTA SAHU New Delhi, June 7 OPPOSITION-RULED STATE governmentsaredeterminedto drive a hard bargain in the special Goods and Services Tax (GST) Council meet to be convened soon to decide whether andhowacompensationmechanism for their‘revenue shortfall’ be extended beyond June 2022, when a five-year initial windowends. At least six states — West Bengal, Kerala, Chhattisgarh, Punjab,Tamil Nadu and Odisha — are seeking extension of the compensation period and the relevant cesses on various ‘demerit’goods. Given that the comprehen- "Considering the pandemic's long-term effects, it would be appropriate to take a decision to extend the compensation arrangement beyond July 1, 2022.” —PTR PALANIVEL THIAGARAJAN, FINANCE MINISTER, TAMIL NADU The potential funding could help Flipkart invest in its supply chain, technology and possible acquisitions totalthroughitsVisionFundII, one of the people said. Flipkart plans to raise the additional capital ahead of an initial public offering, now planned fornextyear,the people said.The company had targeted an IPO as soon as the fourth quarter of this year,but those plans have been delayed by the coronavirus resurgence in India. The fundraising discussions are not yet finalised and could still change,the people said. SoftBank and GIC declined to comment,while Flipkart did not immediately respond to requests for comment. The e-commerce market has boomed over the past 18 months,one of the clear beneficiaries of the pandemic. Continued on Page 15 ● RESOLUTION NCLT okays Piramal’s bid for DHFL with some conditions FE BUREAU Mumbai, June 7 6.65 Mar 28, 2021 The fundraising discussions come ahead ofthe e-commerce giant's plans for an IPO now scheduled for next year “It is not practical to extend the compensation period. Except in FY18, revenue collection was not enough to achieve annual growth of 14% in any other year. Average revenue growth of most states was 8-9% in pre-GST period.” —SUSHIL KUMAR MODI, FORMER DEPUTY CHIEF MINISTER, BIHAR sive indirect tax in its current designhasproducedahugerevenue shortfall forstates against the protected level under the GST (Compensation to States) Act, 2017, and both the Centre and states have suffered as a result in varying degrees, any extension of the aidwill have to accompanied by a structural overhaul of the tax aimed at boosting revenues. Continued on Page 2 ■ Cut GSTon Covid drugs, retain 5% for vax: GoM, P2 THE MUMBAI BENCH of the National Company Law Tribunal (NCLT) on Monday approved Piramal Capital and Housing Finance’s (PCHFL) `37,250-crore resolutionplan for Dewan Housing Finance (DHFL) with a few conditions. It asked the company’s committeeofcreditors(CoC)to considergivingmoremoneyto small fixed deposit holders underthe approved resolution plan.“We are not remanding the plan back to CoC; we respect their commercial wisdom,” the NCLTsaid.It is likely that the CoC may consider reallocation of funds under approved resolution plan for FD holders. Thetribunalalsorejectedthe plea of former DHFL promoter KapilWadhawantogetaccessto a copyof the resolutionplan. The bench chaired by HP Chaturvedi and Ravikumar Duraisamy, however, said the approval is subject to the final outcome of the matter before the National Company Law Appellate Tribunal (NCLAT) and the Supreme Court. Continued on Page 2 NEW NORMS Threat of criminal action pushing social media firms to move court RISHI RAJ New Delhi, June 7 IT’S THE provision of initiating criminalliabilityfornon-complianceofanypartofthenewInformation Technology (IT) rules, whichcameintoforcefromMay 26, which has led some social mediafirmstomovecourt,challenging eithercertain mandates or disputing that some of their services can be categorised as socialmediaintermediary. The penal provision in the earlier IT rules with regard to imprisonment was limited, in the sense that if social media firms failed to remove/ block/ monitor/intercept content if directed by the government underSection 69Aof the ITAct, they could lose legal immunity under Section 79, and under Section69couldfaceimprisonment for a term which could extend to sevenyears and there could also be a fine. However, the new rules are all encompassing, have introduced newmandates,and nonobservance of any of the rules Why the social media firms are fearing the new laws: Penal provision in the earlier IT rules with regard to imprisonment was limited ■ New rules require appointing Ifsocial media firms failed to remove/block/ monitor/intercept content as directed by govt under Section 69Aofthe ITAct, they could lose legal immunity under Section 79 Under Section 69 they could then face imprisonment for a termwhich could extend to seven years and there could also be a fine ■ Under Rule 7,violation can lead to compliance officer, grievance loss ofintermediary status, criminal officer, nodal contact person, etc action,which may include life term canleadtoinitiationofcriminal action leading to imprisonment,which can be a life term also. A new Rule 7 has been inserted dealing with the nonobservance of the rules,which states,“Where an intermediary fails to observe these rules, the provisions of sub-section (1) of section79oftheActshallnotbe applicabletosuchintermediary and the intermediary shall be liableforpunishmentunderany law for the time being in force including the provisions of the Act and the Indian Penal Code”. New Delhi “Whatactioncouldbetaken against an intermediary if it failed to comply with the rules was earlier a grey area. Now, it hasbeenmadecrystalclearthat criminalactioncanbeinitiated,” says Pavan Duggal, cyberlaw expert and an SC advocate. “Social media firms should be proactiveincomplyingwiththe new rules as the provision for criminalliability,whichisanew feature,canhaveseriousconsequencesforthem,” he added. Continued on Page 15
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