OPINION, P6 COMPANIES, P4 A NANDY & A ANAND MSMEs may be back in the grind, but aren't out of the woods INTERNATIONAL, P8 EDITORIAL AFTER ADANI’S FORAY TOUGH TIMES Looking beyond listing woes, LIC should be able to up its game if the govt stays away Cement sector: A new wave of consolidation is in the offing Sri Lanka set to default on debt, no money for fuel NEW DELHI, THURSDAY, MAY 19, 2022 FOLLOW US ON TWITTER & FACEBOOK. APP AVAILABLE ON APP STORE & PLAYSTORE WWW.FINANCIALEXPRESS.COM READ TO LEAD VOL XLVIII NO. 67, 32 PAGES, `10.00 (PATNA & 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 SENSEX: 54,208.53 ▼ 109.94 NIFTY: 16,240.30 ▼ 19 NIKKEI 225: 26,911.20 ▲ 251.45 HANG SENG: 20,644.28 ▲ 41.76 `/$: 77.58 ▼ 0.02 `/€: 81.63 ▼ 0.38 BRENT: $114.13 ▲ $2.20 GOLD: `50,248 ▲ `212 IN THE NEWS S&P lowers India GDP growth to 7.3% in FY23 WITH RISING inflation and the longer-thanexpected RussiaUkraine conflict, S&P Global Ratings on Wednesday lowered India’s growth projection for the current fiscal year to 7.3% from 7.8% estimated earlier, reports fe Bureau in New Delhi. MPC minutes explain RBI’s surprise rate hike SEVERAL STORMS hitting together prompted the Monetary Policy Committee (MPC), to raise the key repo rate by 40 basis points in early May, according to the minutes of the rate-setting panel released on Wednesday, reports Shashank Didmishe in Mumbai. ITC Q4 net profit rises 11.8% to `4,190.96 crore BEATING STREET estimates, diversified conglomerate ITC on Wednesday reported an 11.81% year-on-year rise in its standalone net profit to `4,190.96 crore for the fourth quarter last fiscal, aided by a 15.71% y-o-y growth in its gross revenue from sale, reports fe Bureau in Kolkata. GoM for raising GST rate to 28% on online gaming A GROUP of ministers (GoM) has recommended raising the goods and services tax (GST) on online gaming from 18% to 28%, to bring the skill game tax rate on a par with chance games involving gambling and betting, sources said, reports Prasanta Sahu in New Delhi. Airtel CEO says 35% cut in 5G price inadequate BHARTI AIRTEL India and South Asia MD and CEO Gopal Vittal on Wednesday said that the 35% cut in the reserve price of 5G spectrum is not adequate, reports Kiran Rathee in New Delhi. Special Features Farmers reap benefits from use of digital tech Adilabad’s farmers have seen a four-fold rise in their income since they adopted technology ■ eFE, P7 Xiaomi 12 Pro 5G: Taking on the flagships The Xiaomi 12 Pro is the company’s latest and perhaps most refined attempt at a flagship ■ Gadgets, P7 INDIA P/E MULTIPLES DOWN BUT STILL MORE THAN PEERS 7% OFWORKFORCE LAID OFF Unacademy Equity valuations remain Vedantu fires pricey despite correction 424 staff in second round Trend to continue if downgrades in earnings estimates are significant Nifty one-year forward PE (x) RUCHIT PUROHIT & YOOSEF KP Mumbai, May 18 18 DESPITEASTEEPcorrectionin equity markets, India remains expensive compared to its peers.Themarketcouldremain expensive if the downgrades in profit estimates,post the earnings season,are significant. From the peak of 18,477.05 on October 18, 2021, the Nifty closed at 16,240.30onWednesday,afall of 12.1%. At its peak, the 50stock gauge was trading at a priceearningsmultiple(P/E)of 22.74 estimated one -yearforward earnings, according to data sourced from Bloomberg. That P/E multiple has now 14 24 One-year forward PE (x) 12 17.93 Nifty50 16.44 Jakarta Composite Taiwan Taiex 16 17.93 15.37 11.56 Bovespa (Brazil) MOEX Russia May 18, 2022 9.76 6.63 3.18 Source: Bloomberg come down to 17.93 times, closer to the ten-year average multiple of 16.79 times. However, the multiple is higher compared with 16.4 times for the Jakarta Composite, 11.6 times for the Taiwan TAIEX and 10.1 times for the KOSPI. Other markets such as ShanghaiComposite,Brazilare even less expensive. Gautam Duggad, Head, Research, Institutional Equities, Motilal Oswal, believes valuations are now in the fair valuezone and earningswould decide how they move.“Rising rates andmonetarytightening will be headwinds and anycorrection in commodity costs and inflation would be a tailwind,"Duggad said. Shiv Sehgal, President & Head, Institutional Equities, Edelweiss Securities,observed that with valuations now closerto the long term average of 17 times,the froth has been removed. “Given the much stronger corporate balance sheets and cost structure, some premium is justified so valuations are no longera concern for equities,"Sehgal said. Continued on Page 2 INCOME INEQUALITY RISING, SAYS REPORT KLM’s Elbers EAC-PM backs urban job guarantee scheme, UBI FE BUREAU New Delhi, May 18 AREPORTCOMMISSIONEDby theEconomicAdvisoryCouncil tothePrimeMinister(EAC-PM) on Wednesday suggested that the government roll out a universal basic income (UBI) scheme to reduce stark income gaps and launch a guaranteed employment programme for the urban unemployed. Stating that the heavily skewed nature of income distribution in the countryis only turningworse,the council also recommended steps to raise minimum income and a higher share of government spendingonthesocialsectorto make the vulnerable sections of population immune to sudden shocks and “stop their descent into poverty”. The report titled“The State of Inequality in India”, prepared by the Gurgaon-based Institute for Competitiveness, was released by EAC chairman Bibek Debroy. Citing the results of the three rounds of Periodic LabourForceSurvey(PLFS),the council noted that in the three years to 2019-20, the top 1% of the population held 6-7% thetotalincomesearned,while the top 10% held a third.To be precise,theshareofthetop1% of the population in the country's total income increased over the three years to 201920 -- from 6.14% to 6.82%. Of course, the pandemic thenledtoadeclineinnational `25,000/month Top 1% 2017-18 earns ~6-7% 2018-19 of total 2019-20 income decline in the income share of the top 10% to 32.52% in 2019-20 from 35.18% in 2017-18, this hasn't resulted inincreased salaries ofthe bottom-most population. LOW-COST CARRIER IndiGo has appointed aviation industryveteran Pieter Elbers as its chief executive officer, succeeding Ronojoy Dutta, who retires on September 30. Elbers will join the airline on or before October 1. Since 2014,Elbers has been the president and chief executive officer of KLM Royal Dutch Airlines. He is also a member of the executive committee of theAir France–KLM Group. His appointment is subject to regulatory approvals, IndiGo said in a regulatory update. Elbers had started his careerwith KLM in 1992 at its Schiphol hub, and later held severalmanagerialpositionsin TheNetherlands,Japan,Greece and Italy. After he returned to The Netherlands,hewasappointed as seniorvice president of network and alliances, before he was promoted in 2011 as the chief operating officer. “What IndiGo’s employees and leadership have jointly built, since its start 16 years ago, is, by any standard, truly impressive. I am very honoured and look forward to build upon this, working together with the entire IndiGo team,”Elbers said. Continued on Page 10 Continued on Page 2 Top 10% 2017-18 35.18% earns ~30-35% 2018-19 32.77% of total 2019-20 32.52% income 6.14% 6.84% 6.82% Incomes pick up, but at a slow pace Gross monthly earnings Casual labour 2018-19 2019-20 400 Salaried regular 20,000 Self-employed 16,000 300 15,000 12,000 200 10,000 8000 100 5000 4000 0 Rural Source: PLFS Urban 0 Rural Urban 0 Rural Urban KEY PRESCRIPTIONS ■ Establish airtight slabs that make class-based distinctions clear to trace movement within or out of a class ■ Introduce universal basic income and ensure better distribution of earnings ■ Launch MGNREGS-type scheme for urban India ■ Allocate higher share of expenditure for the social sector income in 2020-21. Given increased pace of formalisationoftheeconomyduringthe last two years, many analysts reckon the income gap may have widened since 2019-20. According to the report, though there was a marginal to succeed Ronojoy as IndiGo CEO FE BUREAU Mumbai, May 18 income among top 10% of total wages earned Move comes as offline models in edtech picks up into offline tuition centres withaplannedinvestmentofup to$200million.Priortoit,ithad launched80offline centres as part of a pilot programme with plans to open at least 500 new centres across 200 cities during the currentyear. “Currently, the external environment is tough. War in Europe, impending recession fears, and Fed interest rate hikes have led to inflationary pressureswithmassive correction in stocks globally and in India as well. Given this environment,capital will be scarce for upcoming quarters,” Krishna wrote in his mail. EDTECH UNICORN UNACADEMY,onWednesday,announced its foray into offline learning with its upcoming‘Unacademy Centres’,whichwillofferclasses to NEET-UG, IIT JEE and Foundation (9-12) aspirants. The start-up said that its offline learning centres will facilitate both learners and educators across these course categories. The first UnacademyCentre will be operational in Kota by nextmonth,followedbysimilar touchpoints in Jaipur, Bengaluru, Chandigarh, Ahmedabad,Patna,PuneandDelhi.The start-up also plans to conduct a nationalscholarshipadmission testforbatchenrollmentswhere rankerswouldbeprovidedwith scholarships. The edtech start-up said in a statement that offline batches will enroll learners with access to top educators,pedagogy and study material curated inhouse.Inaddition,offlinelearning centres will also provide inperson mentorship and doubt solving,andregularparent-educator sessions supported by high-techinfrastructure.Across Unacademy centres, the brand aims to enroll up to 15,000 learners in thefirst batch. “Our experiential touchpoints - Unacademy World has seen tremendous response from learners, many of whom havealsoexpressedtheneedfor in-person learning from the besteducators,”GauravMunjal, co-founder and CEO, Unacademy Group,saidinastatement. Continued on Page 10 Continued on Page 10 ■ In the past few months, Unacademy has laid off around 1,000 employees TUSHAR GOENKA Bengaluru, May 18 10.13 KOSPI (Korea) Shanghai Composite May 18, 2020 SALMAN SH Bengaluru, May 18 Peer comparison 22 20 logs on to offline mode ■ Earlier this WITH SCHOOLS, COLLEGES andcoaching centres returning to offline classes, the edtech sector start-ups seem to be feeling the heat.On Wednesday, online learning platform, Vedantu, laid off employees for the second time duringthemonth,firing424of its 5,900 employees -- around 7%ofitsworkforce.Earlierthis month, Vedantu had laid off 200 employees. The latest round of firing cametolight through aninternal email of CEO Vamsi Krishna,whonotedthatoffline models are picking up. Vedantu isnotaloneinthis exercise. In the past few months, Unacademy hadlaid off around 1,000 employees. Earlierthismonth, Byju's laid off around 800 employees of one of its unit,White Hat Jr. In February,another similar platform, Lido Learning had let go of around 150 of its employees before shutting shop. Most of these edtech start-ups have now started looking at offline classes in search of fresh revenues. For instance, Byju’s had in February announced its foray month, Byju's laidoff around 800 employees of one of its unit, White Hat Jr ■ Lido shut shop after firing 150 of its employees ■ Most edtech startups are now looking at offline classes for fresh revenues FOR MORE FUNCTIONAL AUTONOMY PSU boards to get powers to sell subsidiaries, exit JVs SOME CPSES AND THEIR KEY SUBSIDIARIES/JVS Move to unlock capital, facilitate their more productive use FE BUREAU New Delhi, May 18 THE UNION CABINET on Wednesday empowered the boards of the central public sector enterprises (CPSEs) to privatise, disinvest or close their subsidiaries and sell stakes in joint ventures. The move will give a fillip to the government's efforts to unlock capital, which are either stuck or sub-optimally employed in state assets, and put these into more productive use. Many large profit-making CPSEs like Coal India, ONGC and NTPC have valuable subsidiaries or JV partnerships (see chart). ■ ONGC ONGC Videsh, HPCL, Mangalore Refinery and Mangalore Refinery & Petrochemicals ■ IOC Chennai Petroleum Corporation, IndianOil Adani Gas, Petronet LNG (JV) ■ BPCL Petronet LNG and Indraprastha Gas (both JVs)sdfsdfsd fsdfsdfsdf ■ COAL INDIA: Eastern Coalfields, Western Coalfields, South Eastern Coalfields, Northern Coalfields and Mahanadi Coalfields and Central Coalfields The decision will enable them to monetise parts of these assets without having to secure the approval of the Cabinet or go through the process involving the administrative ministries and/or the department of investment and public asset management (Dipam). The move is also expected to reduce the burden on Dipam,which could nowfocus on privatisation of holding companies or parent CPSEs. Continued on Page 2 Govt amends biofuels policy ● ALSO SEE, PAGE 2 TAKING NEW ROAD Santro’s sunset may see rise of EV variants of Hyundai RISHI RAJ, VIKRAM CHAUDHARY & DEVINAJOSHI New Delhi/Mumbai, May 18 WAY BACK IN late 90s,several foreign car manufacturers enteredtheIndianmarket.Most continue to struggle till today and are finally calling it quits. However, South Korean car manufacturer, Hyundai, became a roaring success.The reason was its first product,the entry-level,1-litreenginehatchback,Santro. Hyundai's original choice was not to launch Santro as its firstcarbutthemid-sizedsedan, Accent. However, there was a strategic rethink and the company chose to first build vol- umes and then move up the product chain.Rest,as they say is history. Today, the product which defined the company's success in the Indian market, is being phased for the second time becauseofverylowmonthlyvolumes – around1,500 units. BVR Subbu, former president of Hyundai Motor India, who was the strategist behind firstlaunchingSantroinsteadof Accent, has an interesting take on the phasing out of the car at thispointoftime."Iwouldimagine that this decision to phase out the Santro is a clear indicationthatHyundaiisgettingserious about an EV play in India. TheSantroisclearlynotmaking ■ Santro today has low monthly volumes of around 1,500 units ■ The car was launched in 1998 and had sold a total of 1.3 million units before it was phased out in 2014 ■ A new Santro was launched by Hyundai in August 2018 File photo of the new Hyundai Santro launched in 2018 by Hyundai India MD & CEO YK Koo and brand ambassador Shah Rukh Khan much money at its present volumes.Therefore,thebeststrategicoptionwouldbetoretoolthe Santro production line to make ■ Initially Hyundai had thought of first launching midsize sedan Accent as its first product EVs. See the other moves on applying for PLI for lithium ion cells and the recharging network agreement with Tata Motors...andthenjointhedots," Subbu said. “I expect Hyundai would retool the Santro production line and produce eitherIoniq 5 or maybe the Kia Soul EV — badge and price them appropriately and launch in India next year. With a relatively meagre capital investment they could bring in significant cost efficiency too. And they willhavepureEVsinplay—not someclunkyshoehornedproduct,”he added. Subbu's assessment seems right. Hyundai's strategy of phasing out a product when its time is over by a product whose time has come,mayyield it rich dividends just like Maruti did with its first car 800 by replacing itwithAlto. Maruti 800, which was launched in mid-80s and rede- New Delhi finedmotorisationinIndia,was phasedoutcompletelyin2014. At that time it had sold 2.8 million units. Alto, a similar but more contemporary and stylisedcarwhichwaslaunched in2000,hadclockedin4million units by 2020.“Alto can appropriatelybetermedaworthysuccessor of the successful Maruti 800”, says RC Bhargava, chairman,MarutiSuzuki India. Santrowaslaunchedin1998 andhadsoldatotalof1.3million unitsbeforeitwasphasedoutin 2014. A new Santro was launched by Hyundai in August 2018butfailedtoclickinitssecondcoming. Continued on Page 10