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APP AVAILABLE ON APP STORE & PLAYSTORE WWW.FINANCIALEXPRESS.COM READ TO LEAD VOL XLVIII NO. 227, 30 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: 61,418.96 ▲ 274.12 NIFTY: 18,244.20 ▲ 84.25 NIKKEI 225: 28,115.74 ▲ 170.95 HANG SENG: 17,424.41 ▼ 231.50 `/$: 81.67 ▲ 0.17 `/€: 83.88 ▲ 0.17 BRENT: $89 ▲ $1.55 GOLD: `52,331 ▲ `113 Arvind Agarwal steps down as Nykaa CFO NYKAA’S PARENT FSN E-Commerce Ventures’ chief financial officer Arvind Agarwal has resigned from the company, the beauty products retailer said in a regulatory filing on Tuesday, reports fe Bureau. ■ PAGE 4 Sebi extends deadline for settlement scheme by two months MARKETS REGULATOR SEBI on Tuesday extended the deadline for its settlement scheme, by two months to January 21, 2023, reports fe Bureau. ■ PAGE 9 EXPLAINER VOSTRO ACCOUNTS & RUSSIATRADE PAGE 24 FE S P E C I A L ‘Manufacturing locally is just a matter of time’ Audi India head Balbir Singh Dhillon says that carmaker is working on a three-pronged plan ■ BrandWagon, P7 Q1FY23 (% chg, y-o-y) 60 45 30 Q2FY23 20.14 WITH MOST COMPANIES reporting disappointing numbers for the September quarter, earnings estimates for the current year are seeing downgrades. Brokerage Jefferies has cut the FY23 earnings estimates for 49% of the 147 companies that it tracks. The brokerage said the FY23 earnings pershare (EPS) forthe Niftyset of companies has been cut by 3.7 percentage points though they have been left largely unchanged for FY24. Strategists at Kotak Institutional Equities (KIE) expect net profits of the Nifty-50 to grow11% in FY23 and 16% in FY24. “The moderate growth in FY23 reflects the sharp decline in profits of the commoditysectors and large loss of BPCL, which will partly offset strong growth in profits of the automobiles and banking sectors,” theywrote. “Our net profit estimates for FY23 and FY24 saw modest cuts in the Q2 season andwe see downside DISAPPOINTING SHOW 15 0 ■ Downside earnings risks to auto and construction material sectors -25.95 A GROUP OF ministers on casinos, race courses and online gaming on Tuesday decided to stick to its earlier proposal for a uniform 28% GST on the full value of the consideration on all three, reports Prasanta Sahu. ■ PAGE 3 FE BUREAU New Delhi, November 22 13.74 Online gaming likely to attract 28% GST on full value Earnings downgrade picks up the pace Q-commerce in slow lane Companies slap additional charges for speedy orders TUSHAR GOENKA Bengaluru, November 22 THE PROMISE OFten-minutedeliveries at low charges to consumers is fastfadingasquickcommercecompanies find they are not really making a quick buck. Instead, they are upping the charges forspeedydeliverieshopingtheserviceswillbecome more remunerative even if it means the numberof orders falls. Reliance Retail-backed Dunzo andZeptohavebeguncharging`3-7 perorder,dependingonthelocation, as handling charges in addition to deliveryfees.Theyhavealsoincreased the threshold for free orders from `149 to around `249 now. As Naveen Malpani, partner, Grant Thornton Bharat, pointed out that with a limited basket size, multiple players competing in a limited catchment area and high costs of operations, profits are some time away. “The business models need to be tweaked to include a reset of delivery time expectation. Therefore, we expect the players to settle for slightly higher delivery time in the future for most orders, around 40-60 SPEED BUMP ■ They have also increased the threshold for free orders from `149 earlier to around ■ Dunzo and Zepto are charging `3-7 `249 now ■ Arecent report per order as handling charges in addition to delivery fees noted that Dunzo Dailywas losing `230 per order ■ Swiggy,which operates Instamart, believes quick commerce will continue — ZEPTO’S CEO AND CO-FOUNDER AADIT PALICHA The management at another quickcommercebusinesssaidgiven customers are now accustomed to orderingonsuchplatforms,companieswill tryand ensure the transactions are profitable. “These could either be through loyalty programmes or by charging `15-20 on deliveries.Most of us do not have enough room in our margin structures to waive off delivery fees anymore,”the CEO said. In fact, companies say a good proportion of customers — around 40% — are now opting for slower deliveries since they pay less. Market players seek single tax on Paytm plunges over sale of employee stock options 11% to record low HC rejects Future’s plea to terminate arbitration proceedings ASHLEY COUTINHO & PRASANTA SAHU Mumbai/Delhi, November 22 MARKET PLAYERS REACHED out tofinanceministerNirmalaSitharamanwithalitanyofdemandsahead of the Union Budget for FY24 at a closed door meeting that lasted for an hour onTuesday. Among the main demands is the tax incidence on employee stock options (Esops) onlyon selling.Currently, tax is levied at two points. One,atthetimeofvestingandthen, RUN-UP TO THE BUDGET there is a capital gains tax when the shares are sold. Industry players said that since the investor doesn’t have the money (since the shares haven’t been sold at the time of vesting), the taxation should bewhen the shares are sold. The other demands include increased STT rates on options -15 -30 Net sales Operating profit ■ Export-oriented sectors like IT services to be hit Net profit ■ Consumption demand to slow down meaningfully Sample of 2,441 companies (excluding banks & financials); Source: Capitaline risks to earnings of domestic cyclical sectors such as auto and construction materials from volume and or profitability disappointments,”theywrote. The brokerage also sees downside risks to the earnings of exportoriented sectors such as ITservices. TALKING POINTS ■ Market players bat for rise in STT rates on options trading in the equity derivatives segment ■ Insurers ask they be allowed to register/function as composite insurance firms ■ MFindustry wants tax treatment for retirement plans at par with NPS plans ■ NBFCs want parity with banks in terms of exemption ofTDS and EMIs ■ Banks seek greater credit enhancement framework and lowering of the risk weightage trading in the equity derivatives segment since it was being used as a vehicle for speculation, which needed to be curbed, they said. Other analysts have pointed out consumption demand could slow down meaningfully due to inflation and the interest rate hikes which could add up to as much as 250 bps or more. Continued on Page 2 INSIDE FARMER GROUPS SEEK HALT IN AGRI PRODUCE EXPORTS ■ PAGE 2 PM TO MEET CHIEF SECRETARIES OF STATES IN JAN ■ PAGE 2 Incentivising investment over speculation is the need of the hour, said sources. Capital markets regulator Securities and Exchange Board of India (Sebi) is deliberating onways to dissuade retail investors from recklessly punting in the equity derivatives segment. In June, Sebi had reached out to the country's top brokers, asking them to furnish details of F&O clients, including age, income range, city and the profits made from trading in the segment in the yearbefore and afterthe pandemic. Continued on Page 2 Australian Parliament approves India FTA INDIAAND AUSTRALIA would now implementthefreetradeagreement (FTA)onamutuallyagreeddateasthe Australian Parliament on Tuesday approved the pact between the two countries,reports PTI. These approvals, commerce and industryministerPiyushGoyalsaid, is“very much doable”quickly.Goyal added that after then there will be INSIDE NEXT ROUND OF FTA TALKS WITH UK IN DEC, SAYS GOYAL ■ PAGE 2 harmonisationofcodesandcustoms regime so that “we can enter into force at an earlydate”.The deal is fair andgood forIndia,he said. The India-Australia Economic Cooperation and Trade Agreement (AI-ECTA) needed ratification bythe Australian parliament before its implementation.InIndia,suchpacts are approved by the Union Cabinet. The agreement was signed between the two countries inApril thisyear. ■ Full report on Page 2 Macquarie cites risks from RIL’s fintech foray FE BUREAU New Delhi, November 22 THE PAYTM STOCK on Tuesday plunged more than 11% to a record lowof`474.30afteranalystsatMacquarie highlighted risks to its business from the entry of Reliance Industries(RIL)intothefinancialservices space. RILrecentlysaiditisplanstobuild afinancialservicesunitcalledJioFinancial Services (JFS) and leverage its fast-growingretailbusiness.Theentitywilleventuallylistonthebourses. While RIL’s foray into financial services should not impact banks who enjoyregulatoryarbitrageandwould be able to protect their bastions, at least in the medium term, Macquarie’s Suresh Ganapathy believes that within the NBFC and fintech space,players like BajajAuto Finance and Paytm could be“most atrisk”. The scale of RIL’s retail operations and its deep pockets could mean stiff competition for Paytm, which is struggling to become profitable.Thestockisdownnearly78% fromitsIPOpriceof`2,150andhas lost 27% in the last two weeks. Ganapathywrote JFSwould have an edge overotherfintechs in that it would have access to huge amounts ofdata,gatheredfromnon-financial relationships.This data, he believes, canbeprocessedandanalysedinreal time,enabling the company to offer ENTRY SHOCKS ■ Macquarie believes in NBFC and fintech space, players like Bajaj Auto Finance and Paytm could be 'most at risk' from Jio Financial Services' entry ■ Scale of RIL’s retail operations & its deep pockets could mean stiff competition for Paytm ■ Paytm is down nearly 78% from its IPO price of `2,150, has lost 27% in last 2 weeks One 97 Communications Intra-day on BSE (`), Nov 22 550 530 535 510 476.80 490 470 450 Previous close: 536.20 Open Close JIO ENTRYTO SPUR COMPETITION ■ PAGE 9 financial services, similar to those from Alibaba,Amazon,Apple, Facebook and Google. Ganapathy pointed out that unlike otherfintechs,JFSwill have a large balance sheet, not be assetlight and eventually manufacture most product offerings, giving it a significant competitive advantage. Continued on Page 2 Google joins its Big Tech peers to lay off 10,000 employees USTECH GIANTGoogleisplanning to cut 10,000 jobs as severe downturn in the tech sector continues, according to the Information. The report comes days after Christopher Hohn, a UK billionaire activist investor, wrote a letter to Alphabet, the parent company of Google,assertingthatitsemployees are paid too much compared to other tech giants and its bloated workforce needs to be cut down. This shows that even Google isn’t immune to the meltdown in the sector. More than 135,000 white-collar professionals in the tech and startup space have been fired year to date, and so far down Flipkart Quick and Ola Dash has shut shop We have seen that the Arpu increases as the delivery time reduces and we want to continue to benefit from that. PRESSURE FROM INVESTORS, ADVERSE MARKET CONDITIONS AGENCIES November 22 ■ Flipkart is scaling minutes,” Malpani said. A founder at a large quick commerce company conceded the 10minute deliverywas something of a gimmick and the speed would slow downandalsobecomemoreexpensive.“There is a lot more sobriety in quickcommercenowandfromnow on, no specific delivery time will be mentioned.Companieswill instead promise quick delivery,” he said. “About 40% of our customers are now opting for slower deliveries since they get an additional discount on that.” A recent report from Entracker, a news website, noted that Dunzo Dailywas losing `230 per order. -8.07 THE ADANI ENTERPRISES’ board will meet on Friday to consider and approve the proposal of raising of funds by way of further public offering or preferential allotment, according to a filing, reports fe Bureau. Reports say the share issue could be worth at least $1.8 billion and launched in 2023. NIFTY FIRMS’ PROFITS TO GROW JUST 11% IN FY23 46.06 28.12 IN THE NEWS Adani Enterprises may consider raising $1.8 bn on Friday FIRING SPREE 135,000 white-collar professionals in the tech and startup space have been downsized year to date the US search engine giant avoided this trend. “However, due to adverse market conditions and a need to cut 187,000 Layoffs: Upcoming: Meta: 11,000 Intel: Amazon: Approx 10,000 of employees Twitter: Over 8,000 Salesforce: About 2,500 20% Google's workforce as of now Cisco: Over 4,000 Seagate: 3,000 costs, Google plans to ease out 10,000 employees through a type of stack ranking and performance improvement plan. If employees ■ 10,000 people or 6% of employees to be ranked as low performers compared to traditional 2% are rated as poorperformers,they’ll be shown the door.Additionally,the newperformance system could use the ratings to avoid paying bonuses and stock grants,” according to the Information. Google managers have been asked to rank 6% of employees — representing 10,000 people — as low performers, compared to the traditional 2%, according to the report.Alphabet has a workforce of nearly 187,000. And according to Hohn, the company’s headcount is “excessive” compared to prior hiring trends and doesn’t match the needs of the current climate at the company. Similarto Elon Musk’svision for Twitter, the activist hedge fund manager claims that the search engine can be efficiently run with considerablyfewerhighlycompensated professionals. With this downsizing, Google would join its tech peers in one of the biggest layoffs.Meta has sacked most at more than 11,000 employees, around 13% of the total workforce. Amazon is reportedly laying off 10,000 employees as part of its mass firing process.Twitterhas laid off almost half its workforce. According to reports, Intel may layoff around 20% of itsworkforce in the fourth quarter. Cisco is also layingoffmorethan4,000employees, which accounts to 5% of its workforce. Hard drive maker Seagate Technology announced last month that it plans to cut 8% of its global workforce, or about 3,000 employees. US-based enterprise software company Salesforce also announced around 2,500 job cuts earlier this month. New Delhi Continued on Page 2 FE BUREAU New Delhi, November 22 THE DELHI HIGH Court onTuesday dismissedFutureGroup’spleaseeking termination of the arbitration proceedings initiated by Amazon before the Singapore International Arbitration Court (SIAC). Justice C Hari Shankar said that hehasnotexpressedanyopinionon the merits of the arguments raised by the parties and that the arbitration before the SIAC will continue. Amazon, on November 17, had moved the Supreme Court for allowing arbitration proceedings to restart at the SIAC.At that hearing, representing Amazon NV Investment Holding LLC, senior counsel Gopal Subramaniam had pointed out howFuture Groupwas trying to stall the proceedings. “You (Future group and others) cannot keep stultifying the proceeding before the arbitral tribunal and this is just a ploy to delay the proceeding. These are all ploys by well-heeled parties to delay the arbitration proceeding. Your client is trying to be too clever by half,” a bench comprising Chief Justice DY Chandrachud and Justices Hima Kohli and J B Pardiwala said. JusticeChandrachudsaidhewas “concerned” as the CJI due to the claim made that there was “rule of law”prevailing in the country.“You can in any case challenge the final award to be passed in the arbitral proceedings,” the bench said, making clear“wewill make sure that the arbitral proceedings go on”. The Delhi High Court had recently reserved its verdict on a batch of pleas on the ongoing legal tussle between Amazon and the Future Group over Future Retail's (FRL’s) `24,731-crore merger deal with Reliance Retail. The legal battle between Future Group and Amazon started in October2020 afterthe formerdecided to sell its retail,logistics andwarehousing businesses to Reliance Retail, a subsidiaryofRelianceIndustries.The move by Amazon comes because in August 2019, the US e-commerce majoracquireda49%stakeinFuture Coupons, the promoter entity of FutureRetail,forabout`1,500crore. After the Future-Reliance deal, Amazon approached the SIAC in October 2020 and an emergency arbitrationinterimorderwaspassed, upholding the position of Amazon. The orderdirected the Future Group entitiesnottoproceedwiththetransactionswith Reliance Retail.
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