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APP AVAILABLE ON APP STORE & PLAYSTORE WWW.FINANCIALEXPRESS.COM READ TO LEAD VOL XLVIII NO. 105, 20 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: 52,907.93 ▼ 111.01 NIFTY: 15,752.05 ▼ 29.95 NIKKEI 225: 25,935.62 ▼ 457.42 HANG SENG: 21,859.79 ▼ 137.10 `/$: 79.04 ▼ 0.07 `/€: 82.67 ▼ 0.31 BRENT: $110.04 ▲ $1.01 GOLD: `51,840 ▲ `1,323 GOVT IMPOSES NEW OIL TAXES TO BOOST REVENUE, CURBS GOLD IMPORTS TO ALLAY CURRENT ACCOUNT DEFICIT CONCERNS Move to tame twin deficit At 78.94 vs dollar, rupee rebounds from all-time low `/$ (Inverted scale) Intra-day, July 1 78.95 79.00 79.00 79.04 79.05 79.10 79.15 Previous close: 78.97 Open Close SNAPPING ITS FIVE-SESSION losing streak, the rupee rebounded from its lifetime low to close 12 paise higher at 78.94 against the dollar on Friday amideffortsbythegovernment to curb gold imports and check CAD. ■ Details on Page 9 IN THE NEWS GST collections in June cross `1.4-trn mark again GST COLLECTIONS CROSSED THE `1.4-trillion mark for the fourth time in a row, in June, reports fe Bureau in New Delhi. The gross GST revenue collected in June rose 56% to about `1.45 trillion from `0.93 trillion a year ago, highlighting the effect of plugging of tax evasion. Factory activity eases to 9-month low in June MANUFACTURING SECTOR ACTIVITY eased to a ninemonth low in June as growth of total sales and production moderated amid intense price pressures, reports PTI. The seasonally adjusted S&P Global India Manufacturing PMI fell to 53.9 in June from 54.6 in May, the weakest pace of growth since last September. India, EU conclude first round of FTA negotiations INDIAAND THE European Union on Friday concluded the first round of talks for a comprehensive free trade agreement, a move aimed at further strengthening economic ties between the two sides, an official said, reports PTI. FE SPECIAL Scorpio-N: Floats like a butterfly, stings nobody Mahindra Scorpio-N possibly has the best suspension in its class of SUVs. Firm seats don’t pinch your lower back after day-long drives ■ MotoBahn, P8 Tax imposed on fuel exports, levy on crude doubled MEASURES IMPACT ■ Export cess on petrol, near term by a third from the current levels, Nayara Energy to see similar impact ■ Additional duty of `23,250 ■ Effective tax on crude to rise to 65% from 31%; `65,000-cr a tonne on domestic crude, to translate into $40 per barrel at current prices RIL, ONGC, Cairn Oil & Gas to take hit VIKAS SRIVASTAVA & SURYA SARATHI RAY Mumbai/New Delhi, July 1 According to analysts, the tax on export of fuels could have “$6-8/bbl blended impact”onRelianceIndustries SEEKINGTO STEM the rupee’s (RIL) if exports from its free fall and lay its hands on a refineries housed in special chunk of the “windfall profits” economic zones (SEZs) are not reapedbysomeofthedomestic exempted.However,the comfirms on the back of elevated pany, which exports about global oil prices, the govern- 58% of its refined products, ment on Friday imposed taxes will get a marginal relief since on exports of petrol, diesel the caps on exports — 30% for and aviation turbine fuel (ATF), petrol and 50% for diesel — andmorethandouwon’t apply to bled the levy on exports from the ALSO SEE domesticcrudeand JamnagarSEZunit, Oil firms' capped exports where 90% of the from non-SEZ refithroughput is earnings neries this fiscal. shipped abroad. to be hit Themoveisalso While margins PAGE 3 aimed at addwould reduce in ressing the crunch the short-term for in the domestic standaloneexportDuty hikes fuel market, as prioriented refining a practical vate refiners units, state-run oil move neglected supplies marketing compato retail outlets in nies, which also PAGE 6 the country, while have a robust retail tapping the highly network,mightsee remunerative export markets. a marginal improvement in The revenue impact of the margins, as they could source moves could be substantial if products at cheaperrates from the imposts last longer. The the former. special additional excise duty To be sure, upstream oil of `23,250/tonne on crude producers — state-run ONGC, itself could fetch the govern- OilIndiaandVedanta’sCairn& ment over `65,000 crore Gas — have benefited from the annually.Ifthecurrenttaxes— surge in global oil prices since oil development cess and roy- theyfollowimport-paritypricalties — on India crude is ing. ONGC, for instance, roughly31% or$35 a barrel at reported a 31.5% increase in current prices to refiners, the the net profit for Q4FY22 to newimpostwill roughlytrans- `8,860 crore,the highest-ever late into another $40 a barrel, quarterly number. raising the effective tax to a hefty 65%. Continued on Page 12 annual revenue gain for govt; FY23 earnings of ONGC, OIL to be down by a third and fourth respectively; Cairn Oil & Gas to feel the pinch ■ Exports from refineries in ■ Domestic fuel supplies to rise; move the domestic tariffarea capped in FY23; 30% of output for petrol and diesel balances cabinet decision to give marketing freedom to oil producers; pricing power to state-run OMCs ■ Gold imports, which remained ■ Customs duty on gold elevated through FY22 and surged 789% in May, to slow, helping reduce trade and current account deficits raised to 15% from 10.75%, effective tax on gold, including GST, now 18% In May, imports ofyellow metal surged 789% to $6 bn Overall taxes on gold (including GST of3%) after hike Basic import duty on gold hiked to 15% SHASHANK DIDMISHE Mumbai, July 1 Gold rates surged nearly 3% to `52,302 per 10 gram on MCX, though prices were lower in the global markets. The price hike, however, is unlikely to reduce demand, bankers said. They expect the borrowers to be eligible for higher loan amount due to the increase in the prices. Additionally, the demand for gold will continue as it is considered as a hedge against inflation,bankers said. State Bank of India chairman Dinesh Khara said, “Invariably, we have seen thatduringinflationaryconditions, gold is one of the preferred asset class and that means there is a traction for gold loans too.” THE GOVERNMENT ON Friday said that it has increased the basic import duty(BCD) on gold to 15%, from 10.75%, to check the current account deficit and the rising import of the yellow metal. The move is a reversal from lastyear’s tax cut to 10.75% in the Budget. India is the second-biggest importer of the precious metal in the world. “There has been a sudden surge in imports of gold. In May, a total of 107 tonne of gold was imported and in June, too, the imports have been significant. The surge is putting pressure on the current account deficit,” the finance ministry said on Friday. Continued on Page 9 RIL falls over 7%, ONGC tanks more than 13% YOOSEF KP Mumbai, July 1 SHARES OF THE country’s biggest fuel exporter Reliance Industries and state-owned oil explorer ONGC tumbled on Friday after the government slapped levies on exports of auto fuels and jet fuel,and also imposed a windfall tax on domesticcrude oilproduction. TheRILstocklostover7%to end at `2,408.95, after falling 8.82% in the intraday trade, recording an erosion of `1.25 trillioninitsmarketvalue.With this,RIL’syear-to-dategainsare RIL 2,550 2,408.95 246.8 235 2,450 135 2,350 Previous 125 Previous 205 213.95 220 2,250 close: 2,594.05 Open Close down to 1.7%, having outperformed the Sensex in six months to June. While the ONGC stock 115 close: 151.45 Open Extraordinary times do require such steps. — NIRMALA SITHARAMAN FINANCE MINISTER FE BUREAU New Delhi, July 1 190 Close crashed 13.4% to end at `131.15, Vedanta lost 4% to close at `213.95.The profits of boththecompanieswillbehurt Previous close: 251.90 Open Close ■ The govt was forced to replace BBB with a new entity after the Delhi High Court ruled last year that it was not a competent body ■ Three appointed members of new entity are Animesh Chauhan, former CMD of Oriental Bank of Commerce; Shailendra Bhandari, former MD & CEO of ING Vysya Bank and Deepak Singhal, former RBI ED life insurers had to vacate their positions. Continued on Page 12 BBB offered mixed results, task cut out for Financial Services Institution Bureau, Page 2 GM’s plant deal with Great Wall collapses GENERAL MOTORS' PLAN to sellitsTalegaonplantinPuneto China’s SUV maker Great Wall Motorhas fallen through in the absence of a clearance by the Union government.While GM willhavetolookfornewbuyers, the Chinese automaker’s plans toenterthegrowingIndianSUV market stand stalled by tighter government regulations. The agreement,whichwasextended twice,expired on June 30. With Indo-China border skirmishes rising in 2020, the government had tightened regulationswith regard to Chinese investments. Foreign direct investment (FDI) pro- Continued on Page 12 250 Intra-day on BSE (`), July 1 131.15 ENDING UNCERTAINTIES OVER crucial appointments to state-run banks, general insurers and other financial institutions, the government has decided to set up the Financial Services Institution Bureau (FSIB) with a wider mandate to replace the Banks Board Bureau (BBB). The BBB, which was entrusted with the task of selecting candidates for appointments to the senior management-level posts, has remained practicallydysfunctional after the term of its chairman Bhanu Pratap Sharma and members ended on April 10. The government was forced to replace the BBB with a new entity after the Delhi High Court had last year ruled that the BBB couldn’t select the general managers and directors of state-run general insurers, as it was not a competent body. Subsequently, at least half-a-dozen newlyappointed directors of non- FE BUREAU New Delhi, July 1 Continued on Page 12 155 149.05 145 Defending oil taxes, FM says weak rupee making imports expensive bytheadditionaltaxof`23,250 a tonneon crude production. Oil India Intra-day on BSE (`), July 1 2,580 18% FINANCE MINISTER NIRMALA Sitharaman said on Friday that thegovernmentandtheRBIare keeping “a good eye” on rupee depreciation, which makes imports expensive. A hike in gold import dutywas aimed at discouraging these non-essential imports as these were affecting the current account balance, she said.According to the RBI data,India’s CAD fell to $13.4billionor1.5%ofGDPin Q4FY22, from $22.2 billion (2.6%) in the previous quarter. But the deficit is seen to have widened in the June quarter to around $17 billion. ONGC Intra-day on BSE (`), July 1 2,650 BANIKINKAR PATTANAYAK New Delhi, July 1 ■ Reliance's gross refining margins to shrink in the diesel and ATFat `6, `13 and `6/litre, respectively New entity with wider mandate to replace BBB ROADBLOCK posalscomingfromChinanow need prior government approval, which also led to India banning more than 300 Chinese apps. The stance towards Chinese investments gothardenedfurtherwithNew Delhi coming out with an orderthatvendors from countries sharing land border with India could only bid for public projects after prior approval from the government. In January 2020, GM had inked a deal with Great Wall to sell its Talegaon plant as a part of its exit plan from India after failing to make a mark in the market in an over two decades of its presence. Continued on Page 12 ■ Chinese sports utility vehicle maker was expected to pay up to $300 million as part of a broader plan ■ It planned GM struck a deal in 2020 to sell Pune plant to Great Wall to invest $1 billion to establish a presence in India’s car market ■ The agreement, which was extended twice, expired on June 30 LARGER-THAN-LIFE ACTION THRILLERS FROM SOUTH ATTRACT MASSES Picture bleak for single-screen theatres despite recent hits ALOKANANDA CHAKRABORTY New Delhi, July 1 THE THREE BIG blockbusters — Pushpa,RRR and KGFChapter 2 — from the south film industry have got audiences back into single-screen theatres in good numbers.So will the larger-than-life, raw action thrillers finally change the script for India’s singlescreens, most of whom were counting their days before the end came? The consensus is except forthe southern part of India and some non-metros, single-screen theatres may have at best got some breathing space; nothing more. “Action genre movies tend to do well in single-screens, specially the south action movies which are technically superior. The single-screen audience is predominantly At `992 crore, Kannada blockbuster K.G.F: Chapter 2 is the third highest grosser of all time Telugu action drama film RRR was released in five Indian languages and did a whopping `300crore business young male (as against families in the case of multiplexes), says Shailesh Kapoor,founder & CEO, Ormax Media. But beyond that, the picture is bleak.Consider the figures: From around 8,500- BOX OFFICE SHARE BY LANGUAGE Hindi Telugu Hollywood* 100 80 60 40 20 0 3 10 9 6 10 23 Tamil Others 6 5 18 18 5 5 7 5 4 15 19 12 Kannada 7 2 9 18 33 Malayalam 4 4 69 3 13 27 40 43 39 28 38 2017 2018 2019 2020-21 2022 (Cum) Figures in %, Jan -Apr 2022, *Hollywood includes all language versions Source: “India is back...” GroupM&ormax Media Report Telugu movie Pushpa: The Rise was the highest grossing film of 2021 with a box office collection of `323 crore 9,000 single-screen cinemas across the country in 201819, around 6,200 are still operating, with a majority located inAndhra Pradesh.“At least 15-20% single-screen theatres have either shut down since theycan’t manage operations anymore, or are exploring redevelopment,” says Bappaditya Basu, CBO, Anarock Commercial. The cost of operating even a small theatre can run into `4-5 lakh per month, estimate analysts,and with ticket prices at `100-110 (in markets of the south it's as low as `70) it can be debilitating for an operator who doesn’t have the deep pockets of a PVR. The options are limited. Some of the theatre owners have gone in for redevelopment as a commercial property with a mall, multiplex and/or an entertainment zone. Take Delhi’s iconic Odeon, the erstwhile singlescreen theatre, which was among the early ones to convert to a multiplex with two screens and state-of-the-art facilities in 2009 amid stiff competition from multiscreen theatres. “Traditionally, the singlescreen theatres have a seating capacity of 400-500 plus seats while the average occupancy is anywhere between 30-50%. As such, there is a significant spare capacity available and potential to optimise the space as well as enhance the movie programming mix,” says Ajay Shah, partner, investment banking New Delhi advisory, EY. “Over the past few years, we have seen an increasing trend to convert the singlescreen theatres into a 2- or 3screen multiplex depending on the size and space available. The key thing will be investment required for such a remodelling (and the breakeven period thereof) and we expect to see many models evolving to facilitate such a transition.” But that’s not easy. A case in point is Alka Talkies, one of the oldest single-screen cinema halls in Pune. It is part of the city’s heritage. “Can you convert it into a mall orwarehouse overnight? Unlikely,as there will be resistance from local people and even local authorities,” says a trade analyst. Continued on Page 9
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