OPINION, P6 COMPANIES, P4 A GULATI & R JUNEJA Food inflation fears must not dull India's cereal exports COMPANIES, P4 EDITORIAL EV MANUFACTURING PROMOTING GREEN TECH The insolvency framework is fast losing credibility because of delays, needs a booster dose Make Tesla cars in India, Poonawalla advises Musk Toyota to invest `4,800 crore more in Karnataka NEW DELHI, MONDAY, MAY 9, 2022 FOLLOW US ON TWITTER & FACEBOOK. APP AVAILABLE ON APP STORE & PLAYSTORE WWW.FINANCIALEXPRESS.COM READ TO LEAD VOL XLVIII NO. 58, 16 PAGES, `10.00 (PATNA `10.00, RAIPUR `10.00) 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 IN THE NEWS Centre to step up scrutiny of states’ borrowings THE CENTRE WILL scrutinise each state’s off-Budget liabilities before approving its borrowing limit for FY23, reports Prasanta Sahu in New Delhi. The regulation is in view of the rising yields on the state development loans (SDLs) and the rate hike cycle started by the Reserve Bank of India, which could raise the cost of generalgovernment borrowings. Jet gets security clearance from home ministry THE UNION HOME ministry has granted security clearance to Jet Airways that is planning to relaunch commercial flight operations in the next few months, according to an official document, reports PTI. The Jalan-Kalrock Consortium is currently the promoter of Jet Airways. HUL adopts new strategy to tackle inflation FMCG MAJOR HUL expects the operating environment to remain challenging in the near term as inflation is likely to continue for the next few quarters, reports PTI. In order to overcome the challenge, the company is adopting a 'bridge pack strategy', under which it will introduce products packs priced between the existing highest and the lowest prices. Pushp Kumar Joshi takes over as CMD of HPCL PUSHP KUMAR JOSHI on Sunday took over as the new chairman and managing director of India's third largest oil refining and fuel marketing company HPCL, reports PTI. Macrotech to invest `3.8k cr in projects this fiscal MACROTECH DEVELOPERS WILL invest `3,800 crore this fiscal year on construction of its various ongoing and new projects, MD and CEO Abhishek Lodha has said, reports PTI. FE SPECIALS Investors lose big time as new-age tech firms underperform FE BUREAU New Delhi, May 8 THE CRASH IN the stocks of several start-ups or new-age technologycompanieshascost investors dearly.Fora clutch of six such players,the erosion in market capitalisation since July last year has been close to `1.8 trillion. Some of the sell-off may be related to the choppy state of the markets and the weakness intheNasdaq,whichlastThursday ended at its lowest level since November 2020. However, the disappointing financialperformanceofsomeofthe companies, and the realisation that these businesses may be hugely over-valued, has also added to the disenchantment. CarTradeTech,forinstance reported a poorset of numbers for FY22, posting an Ebitda (earnings before interest tax, depreciation and amortisation) loss as it normalised expenses on employees and marketing. The cost of ESOPs rose sharply but even excluding these expenses, the standalone Ebitda margins forFY22 and Q4FY22 came in at 4.5% and 5.5% respectively,significantly lower than in the previous year, thanks to higher employee and advertising expenses. Compared with the IPO price of `1,618 per share, the CarTrade stock now trades One 97 Comm Share price on BSE (`) 175 150 125 100 75 50 25 600 500 400 300 200 100 Share price on BSE (`) 60.5 76 Jul 22, ‘21 Fino Payments Bank 2,500 2,000 1,500 1,000 500 0 Zomato May 6, ‘22 Share price on BSE (`) 2,150 568.15 Nov 17, ‘21 May 6, ‘22 PB Fintech FSN E-Commerce 1,600 1,400 1,200 1,000 800 600 400 3,000 2,500 2,000 1,500 1,000 Share price on BSE (`) 980 Nov 12, ‘21 May 6, ‘22 at `646.45,down 60%. Thebiggestloserinthepack is One97 Communications, which operates the Paytm 1,125 May 6, ‘22 Share price on BSE (`) 1,556.5 Nov 9, ‘21 Nov 11, ‘21 285.45 CarTrade Tech Share price on BSE (`) 618.1 577 May 6, ‘22 brand.It has given up `64,500 crore in value since listing in November 2021, a 64% fall. Compared to the issue price of BIG CHANGES UNLIKELY IN BUDGET MATH 1,750 1,500 1,250 1,000 750 500 250 1,618 646.45 Aug 19, ‘21 May 6, ‘22 `2, 150 per share, the stock closedat`568.15onFriday,an erosion of 73%. In early April, MorganStanleyhadputaprice A display of recovery OOH advertising is recovering on the back of new digital capabilities ■ PERSONAL FINANCE, P7 It’s time to think of pre-payments Regular pre-payments on home loans can help reduce your interest payouts ■ eFE, P10 Commerce taking a chatty turn Fast-growing Gupshup aims to make B2C communication as easy as texting a friend billion to fund investments in quick grocery commerce, the path to profitability‘appeared to get longer’. Although it listed a handsome premium to its issue price of `980, the PB Fintech stock has since corrected sharply and closed at `617 on Friday. The company posted a consolidatedlossof`298crore for Q3FY22 compared with a lossof`19.58croreintheyearago period although revenues from operations were up 73% y-o-y.The business is expected to continue to post losses in FY22 and FY23 according to analysts’estimates. Continued on Page 2 NO NEW GLOBAL CAPACITY TILL 2026 Receipts may offset extra Price cap for KG-D6 gas to subsidy outgo: Somanathan rise in October: Reliance Finance secretary sees higher fertiliser and food subsidies spend of `1.8 trillion over the BE in FY23 PRASANTA SAHU New Delhi, May 8 THE CENTRE MAY require to spend an extra `1.8 trillion in aggregate over the Budget Estimate on fertiliserand food subsidies in FY23, finance secretary T V Somanathan said, but added that the additional outgo could be offset by a steep jump in net tax receipts and higher disinvestment revenues.In the end,the Budget balance sheet won't be much different from what is projected, the official said. Somanathan noted that extra outgo on fertiliser subsidycouldbearound`1trillion andthatonfoodsubsidy,about `80,000 crore. Another official said that the government has no plans Budget balance VIKAS SRIVASTAVA/ AGENCIES Mumbai, May 8 Extra inflows* Extra outflows* ~`1.7 trillion ~`1 trillion As net tax revenue On fertiliser subsidy due to the steep rise in costs of imported fertilisers and inputs ~`21,000 cr From LIC IPO `30,000 cr `80,000 cr Savings on food subsidies due to lower wheat purchases For the free grains scheme for H1FY23 Total: `2.2 trillion Total: `1.8 trillion * Over Budget Estimates; it is assumed that other Budget variables will be unchanged; If the free ration scheme is extended to H2, Budget deficits could still be higher than projected at the moment to cut expenditures on other items from the respective BE levels, adding that a review of spending would be undertaken only at the time when the Revised Estimates (REs) are made. The review of BEs usually occurs after November-December in any financial year. The fiscal deficit forFY23 is projected at 6.4% of GDP, of which revenue deficit is seen at 3.8% of GDP. In FY22, the Centre's fiscal deficit was 6.9% and in the year before it was 9.2%, both much above the tolerable level under the Fiscal Responsibilityand Budget Management (FRBM) framework. AccordingtothenewFRBM roadmap, the Centre's fiscal deficitwill be reduced to 4.5% by FY26 by sticking to a glide path. ThoughSomanathansaidit was too earlymake anyprecise estimate of the tax receipts in the current financialyear,analysts and official sources indicated that the Centre's tax receipts,net of transfers to the state could be a steep `1.7 trillion higher than the BE of `19.35 trillion. Continued on Page 2 RELIANCE INDUSTRIES (RIL) expects natural gas from its KG-D6 basin to be competitive in the coming months even as global gas prices stayfirmwith Europe sourcing gas from countries other than Russia. SanjayRoy,seniorvicepresident (explorationandproduction) said on an analyst call that the company expects the price cap for its KG-D6 gas sales to rise over the current $9.92 per million British thermal units to double digits in the next pricerevision in October this year. "Going forward, we expect ceiling prices to increase to $9.92 in the first half of current fiscal- that has been notified.We expect increases from there onwards in the second half of the year,"Roy said. Higher gas prices have boosted RIL’s Ebitda (pre-tax profit) from oil and gas exploration and production business to a seven-year high. Revenue from the segment rose 3.5 times to `7,492 crore in 2021-22 while Ebitda Stuck ICB power units to restart soon: Centre DEEPA JAINANI Lucknow, May 8 THREE IMPORTED COALBASED (ICB) power plants, with a combined capacity of 3,650 mega watt (MW), will startoperations in threeweeks and another three in two months with lenders agreeing to support these plants with new credit lines, Union power secretary Alok Kumar told FE. Also,NTPC will soon start running one insolvent ICB unit, which is now before the National Company Law Tribunal, and another one without much delay, the official said, elaborating on the steps ■ State ■ Three power plants, with a combined capacity of 3,650 MW, will start operations in three weeks; another three in two months ■ NTPC will soon start running one insolvent ICB unit, which is now before the NCLT taken bytheCentre totideover the power crisis. Kumar said state govern- governments have been asked to revise tariffs built into the existing PPAs with ICBs, given the sharply increased cost of imported coal ments have been asked to revise tariffs built into the existingpowerpurchaseagree- ments (PPAs) with ICBs given the sharply increased cost of imported coal. He, however, addedthatthe`12/unitcapfor power sold on the exchanges is 'reasonable', even inviewof the higher cost of imported coal. “The ministry is trying to get the state discoms to payon time. We are also asking the lenders to help the ICB units withworking capital to get the units up and running at the earliest,” he said, adding that this was the only practical way to tackle the crisis at hand. The ICB units that will resume operations soon at optimal PLFs are Essar Power’s 1200 MW unit at Salaya in Gujarat, Rattan India’s 1,250 MW plant in Nasik and IL&FS’ 1200 MW Cuddalore plant. Kumar said lenders have agreed to support theseplants. Time-lines forrestarting operations have alsobeen mutually agreed upon between the lenders and the managements of these units. In the case of an ICB unit in Maharashtra,the lenders have asked for some clearances from the state government, after which the banks would likely go ahead and release the working capital, the official said,without naming the unit. Continued on Page 2 WHEELS OF CHANGE ■ BRANDWAGON, P9 target of `935 for the stock. Earlier in mid-March, Macquarie slashed the 12-month price target to `450 from the earlier level of `700 as it assigned a lower price-to-sales growth multiple of 0.2 times following the correction in global fintechs. Zomatohasseennearlytwothirds of investor wealth being wiped out from its peak in November last year. Compared to the issue price of `76, the stock closed at `60.50 on Friday. Post the Q3FY22 results, Kotak Institutional Equities (KIE) had lowered the fairvalue forthestockto`135from`170 earlier. The brokerage noted thatalthoughZomatohad$1.7 EV OEMs may unveil 20-25 models by 2027 VIKRAM CHAUDHARY New Delhi, May 8 FOUR-WHEELER ELECTRIC VEHICLES (EVs) accounted for a mere 0.65% of the passenger vehicle (PV) market last year. Nonetheless, the growth was fast-paced at257% duringthe year and at 17,802 units,their market share trebled from 0.21% to 0.65%. This surpassed an IHS Markit estimate which put the marketat12,000unitsin2021 and 18,000 units in 2022 prompting experts like Som Kapoor (partner, Automotive Sector,EYIndia)toforecastthat post 2025, passenger EV sales shouldgrowinhighdouble-digits,followingaCAGRof10-15% Hyundai India will have six EVs by 2028, as also Kia India Mahindra will have at least four electric SUVs by 2027 Maruti Suzuki will launch an EV in 2025 Tata Motors will have at least 10 EVs by 2026 until2025.By2025-27,Indiais expected to have 20-25 EV models up from just fournow. While Maruti Suzuki will makeitsEVdebutin2025,Tata Motors will showcase at least 10 models by 2026. Hyundai India is expected to roll out six EVs by 2028, as also Kia India. Mahindra & Mahindra should be readywith at least fourelectric SUVs by2027. Luxury carmakers MercedesBenz, BMW, Porsche, Audi, Jaguar and Volvo already have a portfolio of EVs Gaurav Vangaal, associate director, S&P Global Mobility, says the entry of players like MarutiandHyundai,withtheir strongsalesnetworks,willdrive up sales. To be sure the cus- tomer will decide the pace of growth. “Given how some Japanese carmakers are focussing on hybrid cars, the customerwill soon have choice beyondEVs,”Vangaalexplained. He added that hybrid cars are being promoted as self-chargingEVsandthatcouldseeasection of customers moving towardshybrids,providedthese are priced attractively. Tata Motors aims to have 20-25% of its PVsales coming from EVs within five years and more than 30% by 2030. It recently launched its bornelectric pure EV architecture and the first car will be rolled out in 2025. Continued on Page 2 ■ Higher gas prices have boosted RIL’s Ebitda (pre-tax profit) from oil and gas exploration and production business to a seven-year high ■ Revenue from the segment rose 3.5 times to `7,492 cr in 2021-22 while Ebitda surged 21 fold to `5,457 cr Demand for natural gas is expected to remain strong and higher production based on KG-D6 field as well as prices will drive value for the business surged 21 fold to `5,457 crore. Roy observed prices would remain firm given no additional capacity is expected to come on stream until 2026. Europe consumes about 85 million tonne per annum, which amounts to 1% of global supplies. "We expect prices to remain elevated.KGD6 gas, which attracts a price ceiling will be quite attractive because of the lower prices compared to the rest of the market,"he said. Demand for natural gas is expected to remain strong, and higher production based on KG-D6 field as well as prices will drive value for the business. Continued on Page 11 POLICYTWEAK IN THE WORKS Green energy purchases likely to be mandatory SHRITAMA BOSE Mumbai, May 8 THE UNION GOVERNMENTis planning to amend the Electricity Act and the National Tariff Policyto make it mandatoryforelectricitydistribution companies(discoms)andother bulk buyers to meet their renewable purchase obligations (RPOs), a move that will give a fillip to investments in solar, wind and hydro energy sectors. The move comes at a time when companies engaged in the renewable power segment have lined massive expansion plans and are looking to raise funds from different sources including domestic banks and financial institutions, overseas banks, capital markets and multilateral institutions. The plan is also in syncwith NewDelhi's newcommitment to meet half of its energy requirement from renewable sources by 2030. The RPOs were introduced in 2010 under the Section 86(1) (e) of theAct.Via this section, the Centre urges bulk buyers of power,including discoms to meet a certain percentage of electricity requirements through renewable sources. But compliance with this New Delhi Govt may make it mandatory to meet renewable purchase obligations for discoms ■ The plan is in ■ Some of India’s largest companies are ramping up renewable capacity in the hydro andwind ■ Oflate, thermal power power has been segments losing favour with banks syncwith India's commitment to meet halfof its energy needs from green sources by 2030 norm has been lax, as most state governments haven't showed a firm resolve to enforce it. While RPO rates among states vary roughly in the 9-17% range, some states including Uttar Pradesh have even waived the penalty for non-compliance. Continued on Page 11