MARKETS, P9 BACK PAGE, P22 UP TO THE CHALLENGE SBI taking steps to counter impact of HDFC-HDFC Bank merger: Khara INTERNATIONAL, P8 DIGITAL LENDING SHIV SENA REBELS NOT BACKING DOWN CURBING RECESSION FEARS Fintechs expect RBI norms to aid BNPL penetration Uddhav Thackeray says will quit as Maharashtra CM, but say it to my face Powell: US Fed will decide on rate hikes 'meeting by meeting' NEW DELHI, THURSDAY, JUNE 23, 2022 FOLLOW US ON TWITTER & FACEBOOK. APP AVAILABLE ON APP STORE & PLAYSTORE WWW.FINANCIALEXPRESS.COM READ TO LEAD VOL XLVIII NO. 97, 22 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: 51,822.53 ▼ 709.54 NIFTY: 15,413.30 ▼ 225.50 NIKKEI 225: 26,149.55 ▼ 96.76 HANG SENG: 21,008.34 ▼ 551.25 `/$: 78.39 ▼ 0.30 `/€: 82.43 ▲ 0.08 BRENT: $108.43 ▼ $6.22 GOLD: `50,687 ▼ `50 IN A RELIEF to telecom operators, the department of telecommunications (DoT) has finally removed the 3% floor rate on spectrum usage charges (SUC), a move which would in the long run make such payments zero on their entire spectrum holding, reports Kiran Rathee in New Delhi. Telcos had pointed out that the non-removal would make the whole exercise of not charging SUC now onwards meaningless. NFRA finds huge lapses in 2017-18 auditing of IL&FS THE NATIONAL FINANCE Reporting Authority has found a number of gaping holes in the audit of IL&FS for 2017-18, reports fe Bureau in New Delhi. These include failure to comply with the basic requirements of audit and violation of norms on quality control and auditor independence. Special Features PRASANTA SAHU New Delhi, June 22 THE CENTRE HAS decided to add dividend payment and share buybacks to the performance matrix of central public sectorenterprises (CPSEs) starting the current financial year, a move aimed at improving investor interest in these firms. According to sources, the performance-related pay for the CPSE staff will be linked to‘total return to shareholders’ (TRS), which will include annual targets on dividends and buybacks, apart from market capitalisation,the only criterion being followed at present. The TRS will be part of the annual memorandum of understandings (MoUs), which the governmentowned firms sign with the administrative ministries concerned. An inter-ministerial committee, which includes finance ministry and the Niti Aayog, apart from various administrativeministries,hasendorsed the new norms,the sources added. Earlier, the department of investment and public asset management (Dipam) had argued for“a predictable and staggered dividend regime”which it felt would enable CPSEs to avoid back-loading of annual payments by TUSHAR GOENKA Bengaluru, June 22 THE BOARD OF directors of Zomato will meet on Friday to likely approve the acquisition of e-grocery startup Blinkit (formerly Grofers). While Zomato, in a regulatory filing on Wednesday, did not say whether the upcoming board meet was related to the Blinkit deal, it just said that it is to discuss a potential acquisition. “Pursuant to Regulation 29 of listing regulations, as amended, this is to informyou that a meeting of the board of directors of Zomato is scheduled to be held on Friday,June 24,2022,to discuss a potential acquisition transaction by the company, the consideration for which may be discharged through an Zomato Intra-day on BSE (`), June 22 67.55 69 68 65.5 67 66 Previous close: 66.15 64 63 Shan Kadavil, cofounder, FreshToHome ■ Companies, P4 Conversational AI solutions offer human touch Yellow.ai’s dynamic AI agents are enabling customers to enjoy personalised interaction ■ eFE, P7 (` crore) 51,852 46,499 5,338 35,543 822 39,608 3,936 59,101 394 Capex* by CPSEs (` trn) 2 2.15 2.19 FY21 FY22 *by firms with annual capex budget of `500crore and above freeing up resources payable during only the last quarter of a year. Continued on Page 2 Open Close issuance of equity shares of the companybywayof a preferential issue,”the stock exchange filing said. This means that the deal with Blinkit will not involve any cash outgo onthepartofZomatobutwillbeashare swap deal. It is likely that the swap will be in the ratio of 1:10 where Zomato would get 10 shares of Blinkit forevery one of its shares. In the initial level of talks between the two firms, the valuation of Blinkit was seen at $700-750 million but this is likely to come down now. Blinkit has been struggling to raise funds, which has led it to lay off employees and shut down its warehouses to conserve cash. ■ News reports suggest closure of long-pending deal to acquire quick commerce company Blinkit ■ Reports say deal to involve a stock swap of a definite number of shares in the ratio of 1:10 ■ Consortium had extended credit facilities to the tune of `42,871 crore between 2010 and 2018 Former DHFL CMD Kapil Wadhawan (left) and director Dheeraj Wadhawan tune of `42,871 crore between 2010 and 2018. The bank has alleged that Kapil HIGHLIGHTING THE GROWTH of India’s digital economy, Prime Minister Narendra Modi said on Wednesday that its value will reach $1 trillionby2025andthatthegovernmentissupporting innovation in every sector. He also said that the Indian economy is expected to grow by 7.5% this year, which will make it the fastest growing major economy. In a virtual address at the opening ceremony of the BRICS(Brazil-RussiaIndia-China-South Africa) Business Forum, Modi said there are investment opportunities to the tune of $1.5 trillion under the country’s National Infrastructure Pipeline. He said that the Narendra Modi, kind of digital transPrime Minister formation thatis taking place in India today has never been seen in the world before.“In order to deal with the economic problems arising out of the pandemic, in India we have adopted the mantra of reform,perform and transform.And the results of this approach are evident from the performance of the Indian economy,” he said.“This year, we are expecting a 7.5% growth, which makes us the fastest growing major economy. Transformativechangesaretakingplacein every sectorin the emerging‘NewIndia’,” Modi said. Continued on Page 2 Rupee at all-time low Continued on Page 2 ON THE PLATE a CBI team carried out coordinated searches on 12 premises in Mumbai belonging to the accused andDheerajWadhawanincriminal conspiracy with others misrepresented and concealed facts, com- mittedcriminalbreachoftrustand abused public funds to cheat the consortium to the tune of `34,614 crore by defaulting on loan repayments from May 2019 onwards. Following the registration of case on June 20, a team of over 50 officials from the agency on Wednesday carried out coordinated searches on 12 premises in Mumbai belonging to FIR-listed accused which also include Sudhakar Shetty of Amaryllis Realtors and eight other builders. Continued on Page 2 PRESS TRUST OF INDIA New Delhi, June 22 ... and keep investment momentum FY20 ■ On June 20, ■ Action came on a complaint from Union Bank of India, head of 17-lender consortium Indian digital economy will reach $1 trillion by 2025: PM 43,052 10,671 Blinkit buy on Zomato board menu tomorrow 65 ‘We will not participate in 10-minute delivery race’ 18,963 CASE FILE IN INDIA'S BIGGEST bank fraud case,the Central Bureau of Investigation (CBI) has registered a fresh case against DHFL, its erstwhile promoters Kapil Wadhawan and Dheeraj Wadhawan, who are already in judicial custody, for defrauding a consortium of 17 banks, led by Union Bank of India (UBI),to the tune of `34,615 crore. The action came on a complaint from UBI, which had extended credit facilities to the Buyback Dividends FY17 DoT removes 3% floor rate on SUC payments CPSEs boost the exchequer... Move to aid govt’s non-debt receipts FY18 A POWERFUL EARTHQUAKE struck a rugged, mountainous region of eastern Afghanistan early Wednesday, killing at least 1,000 people and injuring 1,500 more in the country's deadliest quake in two decades, reports AP. Officials warned that the already grim toll may still rise. FE BUREAU New Delhi, June 22 FY20 FY19 IN THE NEWS Earthquake kills at least 1,000 in Afghanistan CBI files fresh case against Wadhawans Dividends and buybacks to now govern PSU pay FY21 THE CBDT ON Wednesday issued a circular containing guidelines to remove difficulties with regard to 1% TDS on transfer of virtual digital asset by payer with effect from July 1, reports fe Bureau in New Delhi. “One good thing is that the tax department tried to restrict the TDS obligation at only one party level in a scenario where there could be four parties — a seller, an exchange, a buyer and a broker,” said EY India tax leader Sudhir Kapadia. Page 2 BIGGEST BANKING FRAUD OF `34,615 CRORE TO IMPROVE INVESTOR INTEREST FY22 One party can pay TDS on crypto transfer if multiple players involved `/$ 78.05 ■ In the past, Zomato had extended a short-term loan of $150 m for Blinkit’s short-term capital requirements Intra-day, June 22 (Inverted scale) 78.14 78.39 78.15 78.25 78.35 Previous close: 78.08 78.45 Open Close ● FULL REPORT, PAGE 9 TEMPLE RUN BEFORE DELHI VISIT Draupadi Murmu, the BJP-led NDA's presidential candidate, visited a Shiva temple in Mayurbhanj district, Odisha, on Wednesday, ahead of her journey to New Delhi Domestic air traffic flies close to pre-pandemic levels in May FE BUREAU Mumbai, June 22 Passengers flown May 2019 DOMESTIC AIR PASSENGER traffic made a strong rebound in May, as it recorded a fivefoldjumpinvolumesonayearon-year basis, with Indian airline companies carrying 12 million passengers on local routes, according to the data from Directorate General of Civil Aviation (DGCA). Last month’s domestic air traffic numbers are also close to the levels seen in May2019, when Indian carriers ferried 12.2 million passengers.With the secondwave of Covid-19 at its peak last year, the air passenger traffic on domestic routes was at a mere 2.1 million in May 2021. Despite the rising jet fuel prices and increasing fares, domestic air traffic was up a good 11% from the preceding month as well.This was a good pick-up from a mere 1.7% increase that was registered in April over March. IndiGo held on to its market-leading position and ferried around 7 million passengers with a near 58% market share; however,this was below (in m, May 2022) 0.98 12.2 May 2020 0.28 May 2021 2.1 Air traffic data (in m) Vistara Air Go IndiGo India First Market share (%, May 2022) IndiGo May 2022 57.9 Go First 12 10.8 SpiceJet Source: DGCA the 58.3% market share recorded bythe airline inApril. This was followed by MumbaibasedcarrierGoFirstwith1.28 millionpassengers,accounting for10.8%ofthetotaldomestic trafficof12millionpassengers recordedinMay2022.SpiceJet improved its market share to 9.5% in May,from 9.1% in the preceding month. AirIndiaandVistara,thetwo full-service carriers part of the Tata Group, carried 823,000 7 0.82 1.28 9.5 and 983,000 passengers, respectively,duringthe month. Budget airlineAirAsia India, also from the Tatas’stable,flew 686,000 passengers across the domestic routes, the aviation regulatorsaid. In terms of load factor, nofrill carrier SpiceJet delivered the highest load factor at 89.1%, followed by Go First at 86.5% in May. Continued on Page 2 ABOUT 51% OF COMPENSATION ‘AT RISK’ OR VARIABLE, NEARLY 25% LONG-TERM INCENTIVES At over `11 crore, CEO salary hits three-year high in FY22 SHUBHRATANDON Mumbai, June 22 THE AVERAGE COMPENSATION of Indian CEOs touched a three-year high in FY22 at `11.2 crore and median at `7.4 crore, according to a DeloitteIndia executive remuneration survey. The survey includes compensation for both promoter CEOs as well as professional CEOs and takes long-term incentives into account,and covers more than 470 companies across manufacturing,consumerproducts, IT, ITes services, life sciences and financial sectors. In FY21, the average salary of CEOs was `9.4 crore and median `6.4 crore, which was slightly subdued when compared to 2020,when the average salary with long-term incentives stood at `9.8 crore and median at `6.9 crore. In FY22,professional CEOs earned`10croreonanaverage while the median compensation along with long-term incentiveswas`7.4crore.Similarly,in FY21,the average was `9.1 crore while the median stood at `6.2 crore,which was again lowercompared to 2020 whentheaveragestoodat`9.7 croreandmedianat`7.1crore. About 51% of pay for CEOs is ‘at risk’ or variable. The ON THE RISE (` crore) CEO* 11.2 9.8 6.9 Professional CEOs 9.7 9.4 6.4 7.4 7.1 9.1 6.2 Average CXOs 10 7.4 3.5 2.4 3 2020 2021 2.4 2020 2021 2022 2020 2021 2022 Total cost to company with LTI; *Including promoter CEOs realised earnings from this component could drop to zero in case of poor share price and/orfundamental company Median performance. Nearly 25% of payforCEOswas in the form of long-term incentives. Also, the average compen- 2.4 3.2 2022 Source: Deloitte sation of CXOs in FY22 was `3.2 crorewith almost 40% of totalpaybeingatriskandlongterm incentives accounted for 20% of pay. The median pay was at `2.4 crore, which has remained stagnant atthis level for the last two years. In FY21, the average pay of CXOs was at `3 crore and, in 2020, it was `3.5 crore. CEO-to-CXO compensationratiosvarybetween2.4for COO to 4.9 for chief legal officer. Other than COOs, CFOs and business heads are the highest paid CXOs, the survey highlighted. For the CEO, 84% of shortterm incentives are dependent on companyperformance.The corresponding number is about 50% at the CXO level. Almost 80% companies prefer New Delhi a target-based approach for determining short-term incentives.While60% companies use long-term incentives, ESOPs continue to be the most prevalent type of long-term incentive instrument used. Across most roles, size of the company had a greater influence on the pay levels as compared to sector in which the company operates. The increase in paylevels is accompanied by a strong performance linkage.For companies with a long-term incentive plan,91% had avesting period of three or more years,it said. Continued on Page 2
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