OPINION, P6 ECONOMY, P2 RENU KOHLI High forex reserves can’t guarantee monetary policy independence INTERNATIONAL, P8 EDITORIAL PM-SPEAK NEW STRATEGY Govt must tread lightly with co-operation ministry, focus on regulatory changes in structure Agri needs post-harvest revolution, govt impetus on scientific ecosystem ECB’s Lagarde foresees July policy shift, 2022 ‘transition’ NEW DELHI, TUESDAY, JULY 13, 2021 FOLLOW US ON TWITTER & FACEBOOK. APP AVAILABLE ON APP STORE & PLAYSTORE WWW.FINANCIALEXPRESS.COM READ TO LEAD VOL. XLVII NO. 114, 22 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: 52,372.69 ▼ 13.50 NIFTY: 15,692.60 ▲ 2.80 NIKKEI 225: 28,569.02 ▲ 628.60 HANG SENG: 27,515.24 ▲ 170.70 `/$: 74.58 ▲ 0.06 `/€: 88.40 ▲ 0.08 BRENT: $74.77 ▼ $0.78 GOLD: `47,740 ▼ `183 2 0 5.15 May 2020 Source: MoSPI June 2021 nesstoremainaccommodative. Whilethemonetarypolicycommittee is expected to retain key ratesinitsnextmeetinginAugust, some analysts expect the beginning of a policy normalisationintheDecemberquarter. Continued on Page 2 ATATIME when big corporates likeRelianceIndustriesandTata Groupareexpandingtheirfootprint by foraying into online play,e-commercemajorFlipkart has raised a huge $3.6 billion in a fresh round of funding from a clutch of investors led by GIC, Canada Pension Plan Investment Board, SoftBank Vision Fund 2 and Walmart to take on the emerging competition. The new round of funding was also backed by sovereign are betting aggressively on the segment ■ Flipkart to use the funds to continue investing in new categories, bolster infrastructure & supply chain ■ Indian e-commerce projected to reach $112 bn in GMV by FY25 led by fashion & grocery funds DisruptAD, Qatar Investment Authority, Khazanah Nasional Berhad and marquee investors Tencent, Willoughby Capital, Antara Capital, Franklin Templeton andTigerGlobal,the company saidinastatementonMonday. ■ The pandemic-led shift in consumer behaviour has boosted demand for online commerce; massive adoption by tier-2 cities & beyond Post this fund-raise, Flipkart has been valued at $37.6 billion. It was valued at $24.9 billion when it had secured $1.2billionininternalfunding led byWalmart in Julylastyear. Continued on Page 2 THE INDEX OF industrial production grew 29.3% y-oy in May, driven mainly by a favourable base, reports fe Bureau in New Delhi. However, IIP in May was 13.9% lower than the pre-Covid level a year ago. It also wit- OLA ELECTRIC ON Monday said that it has raised $100 million in long-term debt from BankofBarodafor“fundingandfinancialclosure” of the first phase of its electric twowheeler factory in Tamil Nadu, reports fe Bureau in New Delhi.The factory,which is coming up on a 500-acre site in the southernstate,iseyeingtoproduce10millionvehi- nessed a sequential moderation due to localised lockdowns,suggesting a sustained industrial recovery is still away. Government officials and analysts cautioned againstreadingtoomuchintothe rates of expansion. ■ Page 2 cles annually at full capacity. The company claims that it will be the world’s largest twowheeler factory. In December last year, Ola had announced that it will be investing `2,400 crore for setting up the first phase of thefactory.Theprojectisnearingcompletion following which production trials of the Ola scooterwill commence. ■ Page 4 INDIA'S FULLROLLOUT of the Sputnik V Covid-19 vaccine willhavetobeputonholduntil the Russian producerprovides equal quantities of its two differing doses,Dr Reddy’s Laboratories said on Monday. Dr Reddy’s had received about 3 million first doses by June 1 and about 360,000 dosesofthesecondbyearlythis month, the company and the Indian government have said. “As a matter of responsibility, we would not like to announce a full-fledged commercial launch until we have an equivalent quantity (of the second dose),” Dr Reddy’s said in an e-mail to Reuters. DrReddy’s,whichoriginally planned a full rollout in midJune,iscurrentlyrunningapilot programme underwhich more than 195,000 doses have been administered at hospitals across the country. “It is our commitment to ensure supply of component 2 in equal quantity and on time to all partner hospitalstowhomwehavesupplieddose1,”thecompanysaid, declining to share more details ahead of its financial results. Continued on Page 2 EXPENSE CURVE Unemployment rate rises as labour participation improves THE UNEMPLOYMENT rate for the week ended July 11 rose 34 basis points (bps) from the previous week to 7.64%, as improved labour participation raised the need for jobs, reports fe Bureau in New Delhi. With the easing of localised lockdowns and further headway in the Covid vaccination drive, more workers were back in the employment market. According to the data compiled by the Centre for Monitoring Indian Economy, the unemployment rate in urban area went up by 33 bps to 8.9% for the week ended July 11. Similarly, joblessness inched up by 35 bps to 7.06%. PAGE 2 Hero MotoCorp remains bullish on domestic, overseas growth HERO MOTOCORP remains bullish on growth prospects in both domestic and international markets going ahead as it looks to enhance its presence in the premium two-wheeler segment and develop competencies in the electric vehicle space going ahead, as per its Annual Report for 2020-21, reports PTI. The country’s largest two-wheeler maker is now set for the next phase of its expansion and growth. For the near and medium terms, the company is focussed on delivering products that are relevant and in line with the overall sustainability of the company, said Pawan Munjal, chairman and CEO. PAGE 4 (April-May, growth %, y-o-y) 150 FY21 FY22 100 75 AIDEDBYANincipientrecovery in tax revenues, state governments seem to have stepped up capital expenditure,reversing a declining trend witnessed in FY20duetothepandemic,which dented revenues and necessitatedelevatedrevenuespending. Data gathered by FE of 15 major states shows that these statesreportedcombinedcapex of`26,115croreinApril-Mayof the current financial year, up 129% on year. Of course, the surge is aided bya lowbase. InApril-Maylastyear,whena nationwide lock-down brought economic activities to a standstill,the growth in states’capex declined by67%.Of course,the aggregatecapexgrowthofthese stateswerestill25%lowerthan in April-May period of the prepandemic year, FY20. What helped the 15 states to improve their capex performance from the much lower levels seen in States’ finances 50 0 -50 -100 -40 QuickPicks PRASANTA SAHU New Delhi, July 12 45 Investors should identify an undervalued growth stock and then gain when earnings rise. So, buy stocks when P/E ratio is lower than rate at which earnings per share can grow in the future ■ Personal Finance, P7 States revive capex on tax revenue boost Borrowings INTRINSIC VALUE FE BUREAU New Delhi, July 12 ■ Reliance andTata Group KRISHNA DAS New Delhi, July 12 15 VALUE CPI -47 GROWTH GARP 6.27 11 P/E Ratio 4 6.26 growing competition in the e-commerce space Ola Electric raises $100 million in long-term debt from BoB GARP: Mix of growth and value investing strategies PEG Ratio 6 first external financing round since Walmart’s acquisition of a majority stake in the internet firm ■ Funding to help company fight rivals amid Base effect drives up IIP to 29.3% in May Special Feature EPS 8 ■ This is Flipkart’s Shortage of Sputnik second dose to delay India rollout: DRL -8 BHARTI AIRTEL RECORDED a speed of over 1 Gigabit per second during a 5G field trial in Mumbai using Finnish firm Nokia’s network gear, according to sources, reports PTI. The telecom company is running a live 5G trial in Mumbai’s Phoenix Mall in Lower Parel. RETAIL INFLATION UNEXPECTEDLY dropped a tad in June to 6.26% from a sixmonth high of 6.30% in May but still stayed above the Reserve Bank of India’s (RBI’s) tolerance level for a second straight month, as price pressure remains elevated across food and fuel segments. With global prices of commodities,especiallyofoil,onthe rise and the US Federal Reserve signalling its intent to raise interestrateslaterthisyear,theRBI faces tough choices in its bid to supplement growth if inflation stays sticky, despite its willing- 10 9.2 Total expenditure Tax revenues 5G trial with Nokia: Airtel records over 1,000 Mbps speed FE BUREAU New Delhi, July 12 (% change, y-o-y) 12 CPI food Raises $3.6 billion to take on new rivals; funding round sees return of SoftBank as an investor 129 AS MANY AS 24,781 responses have been received on the e-proceedings functionality and about 40,000 ITRs are being filed daily on the new I-T portal, the Central Board of Direct Taxes said as it addresses on war footing the technical glitches facing the new site, reports PTI. Drops a tad in June to 6.26% from a six-month high of 6.30% in May Flipkart valuation jumps to $37.6 bn -0.4 CBDT: 40,000 ITRs filed daily on new portal CPI inflation stays above comfort zone COVID-19 FUNDING BOOST Revenue expenditure THE CABINET HAS cleared disinvestment of LIC and a panel headed by the finance minister will now decide on the quantum of stake dilution, reports PTI. Dipam had in January appointed actuarial firm Milliman Adviors to assess the embedded value of LIC ahead of the IPO. PRICE PRESSURE Capex -67 IN THE NEWS Cabinet clears LIC stake sale; decision soon on quantum *15 major states reviewed by FE April-May of the previous fiscal was a steep 75% jump in tax receipts,again from a low base. Correspondingly, the need to borrow has also reduced. Borrowingsbythesestatesdeclined 40% to `63,638 crore in AprilMay 2021, compared to 45% risewitnessed ayearago. Continued on Page 2 SC refuses to interfere with HC order dismissing contempt plea against Lodha THE SUPREME COURT on Monday refused to interfere with the Calcutta HC order that dismissed contempt petitions filed against Harsh Vardhan Lodha for continuingasadirectorandchairman intheMPBirlaGroupcompanies, reports fe Bureau in New Delhi.The order allows Lodha to continue as chairmanofalltheMPBirlaGroup companies till the HC finally decides the issue. ■ Page 5 STEEP RENTS Food joints down shutters as Covid bites ASMITA DEY New Delhi, July 12 LOCKDOWN RESTRICTIONS MAY have eased but you may still be in for a disappointment if you planned to visit yourfavouritejointfor a quick bite or a high street coffee bar for some hot cappuccino. Reason: Covid has compelled many restaurateurs to shut shop.While companies had been trying to get their businesses back in shape post the lockdown lastyear,a devas- ILLUSTRATION: ROHNIT PHORE tating second wave and the ensuing restrictions this year made it difficult for them to sustain operations. ArushMalik,founder&CEO, The Immigrant Cafe, recently shutdownhisoutlet in New Delhi’s plush Khan Market. It was becoming nearly impossibletoshelloutasignificant`8 lakh in rental payments per month amid dwindling sales. In pre-Covid times, each outlet garnered some `35-40 lakh in sales on an average per month.That came down to about `20 lakh in February when thesituationwasbetter.“Having a cost of `8 lakh and incurring staff salary expenses were too much to be taken on,so we had to let go to ensure economies of scale.We tried on deliveries but it did not work out. During the second lockdown, not many orders were coming as almost everyone had an ill patient to caterto,” Malik told FE. Continued on Page 2 New Delhi ■ Rollout on hold till Russian producer provides equal quantities ofits two differing doses ■ Dr Reddy's had received about 3 million first Sputnik doses byJune 1 ■ It received about 360,000 doses ofthe second dose by early this month ■ DRLhad originally planned a full rollout ofSputnik in mid-June ■ It is currently running a pilot underwhich over 195,000 doses have been administered Dip in average daily vaccination since June 21 A DECLINE IN average daily vaccination against the coronavirus hasbeenseensinceJune 21,whenthe newphaseof universalisation of vaccination commenced,reports PTI. According to data available onCoWINplatform,anaverage of 61.14 lakh doses of vaccine were administered daily in the week from June 21-27 which dropped to 41.92 lakh doses daily in the subsequent week from June 28-July4. ■ Page 3
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