OPINION, P6 ECONOMY, P2 MOHANDAS PAI & NISHA HOLLA India needs a world-class chipmaking ecosystem INTERNATIONAL, P8 EDITORIAL REVENUE SHORTFALL GROWTH PANGS Zomato's stratospheric valuation despite zero profit shows the conservatism of the past has been shed Special GST Council meet likely in August after Monsoon session Fed's Powell: Economy ‘a ways off' from bond taper, inflation to ease NEW DELHI, THURSDAY, JULY 15, 2021 FOLLOW US ON TWITTER & FACEBOOK. APP AVAILABLE ON APP STORE & PLAYSTORE WWW.FINANCIALEXPRESS.COM READ TO LEAD VOL. XLVII NO. 116, 16 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: 52,904.05 ▲ 134.32 NIFTY: 15,853.95 ▲ 41.60 NIKKEI 225: 28,608.49 ▼ 109.75 HANG SENG: 27,787.46 ▼ 175.95 `/$: 74.59 ▼ 0.09 `/€: 87.97 ▲ 0.25 BRENT: $76.38 ▼ $0.11 GOLD: `47,965 ▲ `207 NON-COMPLIANCE Mastercard can’t add customers: RBI ■ Mastercard found in violation ofpayment JUL system data norms 2021 ■ RBI bars Mastercard from onboarding new customers fromJuly 22 todoso.Thecentralbank,however, clarified in a statement, the orderwillnot impact existing Mastercard customers. Continued on Page 2 Franklin Templeton: SC upholds Sebi rules THE EU UNVEILED sweeping new legislation Wednesday to help meet its pledge to cut emissions of the gases that cause global warming by 55% over this decade, including a plan to tax foreign firms for the pollution they cause, reports AP. Special Features ‘Planning for disruption is now the norm’ ■ eFE, P7 HP Smart Tank 515: The right printer for your home THE UNION Cabinet on Wednesday hiked dearness allowances (DA) and dearness relief (DR) for government employees and pensioners by 11 percentage points to 28% of basic pay/pension, which will cost the exchequer an additional about `25,800 crore for July-March period of FY22, reports fe Bureau in New Delhi. The combined impact on the exchequer on account of both DA and DR would be `34,400 crore per annum, said I&B minister Anurag Thakur. PAGE 2 IL&FS expects to recover `58,000 cr by March 2022 DEBT-LADEN IL&FS on Wednesday said it expects to address `58,000 crore or 95% of its estimated debt recovery target by March 2022, reports PTI. In April this year, the group had revised its estimates for aggregate debt recovery to `61,000 crore beyond September 2021. The group's overall debt stood at `99,000 crore, as of October 2018. As of May 31, 2021, `43,600 crore or 44% of estimated recovery have been addressed, the group said. PAGE 9 Key export tax refund scheme extended, shipping aid cleared THE GOVERNMENT on Wednesday extended the validity of a key tax refund scheme for garments and made-up exporters and rolled out a `1,624crore subsidy scheme for the shipping industry over five years, to further assist sectors hit hard by the pandemic, reports fe Bureau in New Delhi. The CCEA also approved the merger of all the animal husbandry sector schemes under three broad categories and envisaged a spending of `9,800 crore over five years (starting from FY22). PAGE 2 Q1FY22 Revenue from operation Ebit PAT 6 2.5 Ebit margin 24.5 23.7 (%) 2.3 80.6 bps Earningsbeforeinterestandtax (Ebit) increased 2.5% sequentiallyat`6,603crore,whichwas above estimates but margin declined 80 bps to 23.7% due to higheremployee cost. Continued on Page 2 Indian IT spending in 2021 to grow 8% ITSPENDINGINthecountry is expected to grow at 8% to $92.7 billion in 2021, a report by Gartner said on Wednesday,reports PTI. The IT spending growth at 8% is a shade less than the world average of 8.6%, the consultancy firm said, ON GOVT GUARANTEE TO 'BAD BANK' ON INFLATION TRAJECTORY Whenever there is a systemic clean-up of bad assets, the sovereign plays an important role. There are global precedents for this, including the programme launched by the US, following the global financial crisis. What is important is that the ARC (bad bank) framework that is being put into place should be driven by market principles. There are cost-push factors, emanating from the supply-side issues. The (rising) prices of diesel and petrol are putting pressure on the input prices. We expect more measures from the Centre and states to soften the current pace of inflation. As per MPC's assessment, inflation would moderate by Q3. Shaktikanta Das, RBI governor towards higher bond yields — at the last auction held on Friday, it set the cut-off yield for 10-year government securities (G-secs) at 6.1% after keeping it at below 6% for several months —, he said, “We’ve never had any fixation that the yield should be 6%, but some of our actions might have conveyed that impression.We are only interested in orderly evolution of the yield curve and market expectations seem to be converging with this approach.” Continued on Page 2 Retail investors bid for 2.7 times the number of shares reserved for them PRESS TRUST OF INDIA New Delhi, July 14 FOOD DELIVERY PLATFORM Zomato’sinitialpublicoffering (IPO) was oversubscribed on theopeningdayonWednesday with retail investors bidding for 2.7 times the number of shares reserved for them. The offer received bids for 75.60 crore equity shares against an IPO size of 71.92 crore, stock exchange data showed. Retail investors sought 2.69 times the portion reserved for them. Against 12.95 croresharesreservedfor retail individual investors, 34.88 crore shares were bid by 1700 hours.Non-institutional investors put in bids for 13% against their reserved portion while 38.88 crore shares reserved for qualified institutional buyers (QIBs) were almost fully subscribed. Of the 38.09 crore shares sought by QIBs, over 36.84 crore was by foreign institutional investors (FIIs).The portion set aside for employees has been subscribed 18%. Bids for 75.60 crore equity shares received against IPO size of 71.92 crore Against 12.95 crore shares reserved for retail investors, 34.88 crore shares were bid Non-institutional investors put in bids for 13% against their reserved portion While 38.88 crore shares reserved for qualified institutional buyers almost fully subscribed The IPO, the biggest in India this year,is open for subscription till Friday in a price band of `72-76 per share. Zomato has already mobilised`4,196.51crorefrom 186anchorinvestorsonJuly13, a daybefore the issueopened. Continued on Page 2 Centre takes total control of district mineral funds from states adding that global spends on information technology are estimated to come at $4.2 trillion. In India, the overall IT spending growth slowed down to 1.5% to $85.865 billion in 2020, probably hit bythe pandemic. ■ Page 4 THE CENTRE HAS taken complete control of the district mineral foundation (DMF) funds,negating states’ right to sanction or approve any expenditure out of the funds accrued from mandatory contribution from mining lease holders. Sinceitsinceptionin201516, over `49,400 crore have flown into the DMF funds. The move is seen by many states asyet anotherbid bythe Narendra Modi government to usurp the states’fiscal powers and undermine their constitutionally defined role in governance, so might spark a political storm. In a notification issued on July 12, the ministry of mines saidthemovewasnecessitated as“there are instances where a part of the funds of the DMF are being transferred to the treasury/consolidated fund of thestateorstatelevelfunds(by whatevername called) orChief Minister’s Relief Fund orother funds or schemes,” thereby “defeatingtheverypurpose”of the creation of the DMF. A FIELD DAY Farmers plant paddy saplings in a field in Nagaon district, Assam, on Wednesday Bumpy ride FE BUREAU Auto sales revive but concerns remain Though auto sales have started looking up with easing of lockdown restrictions, industry remains concerned about fears of a third wave of Covid-19, rising input prices and a shortage of semiconductors June 2020 Auto wholesales in June 2021 June 2021 1,05,617 Passenger vehicles % change June 2019 119 2,09,522 10,55,777 4 16,49,475 Source: Siam 9 2,31,633 10,14,827 Twowheelers Three- 10,300 wheelers 9,397 51,885 Continued on Page 2 ● COVID-19 ENTRY WOUNDS ‘Buy now, pay later’ sector stocks hit by Apple plan BYRON KAYE & NIKHIL NAINAN Sydney/Bengaluru, July 14 AREPORTTHATApple isworking on a service to let users pay for purchases in instalments draggeddownsharesinthe‘buy now,paylater’sector,which has thrivedduringthepandemicas online shoppers look for easier repaymentoptions.TheUStech giantwilluseGoldmanSachs,its partnersince2019fortheApple Cardcreditcard,asthelenderfor the loans, Bloomberg News Day 1: Zomato IPO oversubscribed SURYA SARATHI RAY New Delhi, July 14 « DA enhanced to 28%, extra cost seen at `25,800 cr in FY22 THE COUNTRY'S SECOND largest software services exporter, Infosys’ April-June quarter earnings was a mixed bag with the company missing streetestimatesonthenetprofit frontbutraisingitsfull-yearrevenue guidance. Net profit at `5,195crorewasup2.3%from theprecedingquarterbutlower thanBloombergconsensusestimate of `5,378.01crore. Infosys, however, increased itsfull-yearrevenueguidancein constant currencyterms to 1416%from12-14%earlier.This was slightly higher than the Street expectations.The company retained its full-year Ebit margin guidance at 22-24%. The company’s consolidatedrevenueduringthequarter was ahead of estimates at `27,896 crore,up 6% quarteron-quarter. Constant currency revenue was up 4.8% q-o-q. (` cr) Q4FY21 Q-o-Q (%) « QuickPicks FE BUREAU Bengaluru, July 14 We've never had any fixation that the (benchmark bond) yield should be 6%. We are only interested in the orderly evolution of the yield curve. Market market expectations seem to be converging with this approach. STELLAR DEBUT ● ALLEGED DIVERSION Infy raises revenue guidance to 14-16% « The HP Smart Tank 515, priced at `14,499, combines wireless printing, scanning and copying capabilities you can count on for all your working and learning from home tasks ■ Gadgets, P7 Q1 REPORT CARD « The everything-as-a-service model, intelligent edge computing and cloud-based automation can improve business agility in BFSI, says Nutanix’s Balakrishnan Anantharaman tions, reports fe Bureau in NewDelhi. The apex court held that Section 11B of the Sebi Act allows the market regulator to intervene in case of any violations and wrong decisions by trustees to wind up anyscheme. ■ Page 9 DIRECT FINANCING OF the central government’s fiscal deficit by the central bank or creation of new money is fraught with several downsides, Reserve Bank of India (RBI) governor Shaktikanta Das said on Wednesday. The RBI’s role as the general government’s debt manager has only helped quicken the transmission of monetary policy during the pandemic period as lower funding rates co-existed with plenty of liquidity,Das said in an exclusive interview with FE. The governor strongly rebutted the notion that a sharperandsustainedfocuson theyield curve might be eating awayatthecentralbank’sprincipal mandate, which is, inflation-targeting. Asked if the RBI had lately become a little more tolerant ON YIELD CURVE ILLUSTRATION: ROHNIT PHORE UPHOLDINGTHEVALIDITY of Sebi’s regulations, the Supreme Court said consent of majority unit holders will be required before closing debt schemes and the market regulator will have the power to intervene if the trustees violate the regula- KG NARENDRANATH & SHOBHANA SUBRAMANIAN New Delhi, July 14 5,195 EU unveils tough climate rules, eyes tax on foreign cos APR 2021 5,076 INDIAWAS THE single-largest source of government requests for account information received by Twitter, accounting for 25% of the global volume, during July-December 2020, the microblogging platform said on Wednesday, reports PTI. India also ranked second in terms of volume of legal demands for content removal, after Japan. Express and Diners Club inviolation ofnorms ■ RBI barsAmerican Express and Diners Club from issuing new cards 6,603 THE RESERVE BANK of India (RBI) on Wednesday barred MastercardIncfromacquiring new customers starting July 22.The payments operatorhas been barred from adding domestic customers cross three categories of cards – debit,credit as well as prepaid. The action has been promptedbyMastercard’sfailure to be in compliance with RBI’s directions on data storage. RBI observed Mastercard had failed to comply with the rules despite the company having been given considerable time and several chances ■ RBI findsAmerican RBI has no rate fixation, orderly evolution of yield curve a public good, says governor « FE BUREAU Mumbai, July 14 India single-largest source of a/c info requests: Twitter APR RBI directs operators to 2018 store payment system data only in India 6,440 Fails to comply with the central bank’s directions on data storage Creating new money has downsides: Das 27,896 THE WHOLESALE PRICEBASED inflation eased a tad to 12.07% in June as crude oil and food items witnessed some softening in prices, reports PTI. However, WPI inflation remained in double digit for the third consecutive month in June. PLAIN SPEAK 26,311 IN THE NEWS WPI inflation eases a tad in June; food, crude prices soften reported,citing people familiar with the matter. The prospect of going up againstagiantlikeApple,aswell asotherentrantsincludingPayPal,was likely to test Australian pure-playBNPLfirms that have so far gone unchallenged in a fertileUSmarket.SharesofAustralia-listed Afterpay,the country’s biggest BNPL provider which derives a big chunk of its revenue from the US, dived nearly10%onWednesday. Continued on Page 2 US ready to ship vaccines but India yet to clear legal hurdles LALIT K JHA Washington, July 14 THE US ON Tuesday said that it is ready to ship its Covid-19 vaccines expeditiouslywhen it has the green light from the Indian governmentwhich has told Washington that it needs further time to review legal provisions related to accepting vaccine donations. “We are ready to ship those vaccines (under COVAX) expeditiouslywhenwe have a green light from the government of New Delhi Vaccine scene Indian tells US it needs further time to review legal provisions related to accepting vaccine donations US announced to share 80 million doses from its stockpilewith countries around the world, including India India,” US state department spokesperson Ned Price told reporters at his daily news conference. Continued on Page 2
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