BACK PAGE, P22 COMPANIES, P4 MARKETS, P9 DISTINGUISHED SCHOLAR REGISTRATIONS SURGE INTERVIEW Noted economist and former Union minister YK Alagh passes away Demand for gig workforce rises as layoffs create gaps Irdai rule on tie-ups to benefit small firms: Bajaj Allianz Life CEO NEW DELHI, WEDNESDAY, DECEMBER 7, 2022 FOLLOW US ON TWITTER & FACEBOOK. APP AVAILABLE ON APP STORE & PLAYSTORE WWW.FINANCIALEXPRESS.COM READ TO LEAD VOL XLVIII NO. 239, 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: 62,626.36 ▼ 208.24 NIFTY: 18,642.75 ▼ 58.30 NIKKEI 225: 27,885.87 ▼ 65.47 HANG SENG: 19,441.18 ▼ 77.11 `/$: 82.61 ▼ 0.81 `/€: 86.71 ▲ 0.34 BRENT: $81.53 ▼ $1.15 GOLD: `53,407 ▼ `255 LUXURIOUS DUBAI A RED initiative appears in today’s edition of Financial Express. 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IN THE NEWS World Bank raises FY23 India growth forecast to 6.9% THE WORLD Bank on Tuesday raised its FY23 growth forecast for India by 40 basis points to 6.9%, citing the economy's relative resilience to external headwinds and the ‘strong’ growth outturn in September quarter, reports Banikinkar Pattanayak in New Delhi. ■ PAGE 2 Rupee sheds 1% as forward premiums sink to historic lows THE RUPEE saw its worst trading session in over two months on Tuesday, falling 1.01%, to extend its decline against the currency amid chatter of corporate dollar outflows, while premiums plunged further. ■ PAGE 9 Vehicle recalls in 2022 third-highest in five years MARUTI SUZUKI'S announcement that it is recalling five models has pushed the total number of recalls in the industry this year to the third-highest in five years, reports Swaraj Baggonkar in Mumbai. ■ PAGE 4 EXPLAINER DECODING AIIMS RANSOMWARE ATTACK ■ PAGE 22 FE S P E C I A L S ‘New verticals account for 30% of our business’ Ajay Gupte, CEO, South Asia for Wavemaker says work for ad agencies has expanded ■ BRANDWAGON, P7 RCap lenders vote In blow to telcos, against liquidation LEVY TO CONTINUE AT 8% OF AGR govt decides not to cut licence fee Industry was expecting NO RELIEF ■ A cut in a reduction of at least licence fee from two percentage points the current 8% JATIN GROVER New Delhi, December 6 TELECOM SERVICE PROVIDERS such as BhartiAirtel,RelianceJioandVodafoneIdea are in for big disappointment as the Department ofTelecommunications (DoT) has decided to continue with the current licence fee structure. The operators, who currently pay 8% of their adjusted gross revenue (AGR) as licence fee to the government,havelongbeendemandinga cutofat least two percentage points in the rate. While this did not form part of the telecomreformspackageannouncedbythegovernmentinSeptember2021,theexpectation was that the same would be part of the second round of reforms, which would come later. However, sources in the government toldFEthatthiswouldnotfigureintheDoT’s recommendationstothefinanceministryas part of the nextyear’s Budget proposals. A cut in the licence fee by two percentage points from the current 8% to 6% would have provided a relief of around `3,000 crore annually to the telcos. The government has been toying with the idea ofa cut in licence fee forsometime, mainly by reducing the universal service obligation component.The licence fee has two components — general exchequer which gets 3% and universal service obligation fund where 5% goes. Back in 2015, the Telecom Regulatory to 6% would have meant relief of around `3,000 cr yearly for telcos Of the total licence fee, 3% goes to general exchequer and 5% to the universal service obligation fund ■ ■ Trai had in 2015 recommended that the USO levy be reduced to 3% from 5% ■ Of total `1.3 trillion so far collected for USO fund, nearly 49% remains unutilised AuthorityofIndia(Trai) hadrecommended that the USO levy be reduced to 3% from 5% so that the overall licence fee comes down to 6%.The rationale behind this suggestion was that revenues which accrue to the general exchequerwould remain unaffected. The USO levy goes to the Consolidated Fund of India,but its usage is onlyfor rural telephony projects.As and when such projects are approved, funds through the USO are allocated for them. CoC to meet on Friday to finalise auction process BID BY BID ■ ACosmea- Piramal JV submitted a binding bid of RAJESH KURUP Mumbai, December 6 THE COMMITTEE OFCREDITORS (CoC) of Reliance Capital (RCap) has favoured the auction mode to complete the insolvency process of the debt-laden firm, voting against the liquidation process. The CoC,which met on Tuesday,was of the opinion that the liquidation process would further deplete the firm’s value.The CoCwill meet againon Fridayto discussthe auction process forthe formerAnilAmbani group company,sources close to the development said. The CoC has initiated discussions with bidders who had submitted their final bids in November. “The meeting on Fridayis to take a final call on completion of the bankruptcy process,even though the decision is to support auction mode. Liquidation will erode the company’s value further, while the insolvencyprocess aims to maximisevalue to the financial creditors,”a source said. The nearing of the deadline,which ends on January 31, also requires closing of the procedures at the earliest,he added. RCap’s lenders and adviserswere at loggerheads on the actions to be taken to complete the firm’s insolvency process, ahead of the CoC meeting. This followed a lukewarm response to the company’s insolvencyprocess,withitgettingonlyfivebinding bids. The deadline to submit the binding bids ended on November 28. The process adviser to the RCap’s bankruptcy was in support of the liquidation `5,231 cr, ■ An independent valuator of RCap has pegged the liquidation value at `13,000 cr ■ Oaktree Capital submitted a bid of `4,200 cr highest for RCap as a core investment firm ■ Hinduja Group bid is worth `5,060 cr, whileTorrent Group’s bid is at `4,500 cr process under section 6(A) of the InsolvencyandBankruptcyCode (IBC),while the adviser to the CoC wants to close the insolvency process by awarding the bid to the highest bidder. KPMG is the adviser to the CoC, while Nageswara Rao Y of Deloitte is the process adviser to RCap’s administrator. Last week, a joint venture by CosmeaPiramal had submitted a binding bid of `5,231 crore,the highest forRCap as a core investment company,followed by Hinduja Group at `5,060 crore.Torrent Group’s bid was at `4,500 crore and that by Oaktree Capital was at `4,200 crore. According to Duff & Phelps, an independent valuator of RCap has pegged the liquidation value of the firm at `13,000 crore, more than double the value of the binding bids it received,while that byRBSA stood at `13,200 crore. Continued on Page 12 Abrdn to offload entire stake in HDFC AMC FE BUREAU Mumbai, December 6 ABRDN INVESTMENT MANAGEMENT (formerlyStandardLifeInvestments),oneof the sponsors of HDFC Asset Management, planstooffloaditsentire10.2%stakeinthe mutual fund house. The other sponsor is HDFC,which holds a 52.59% stake. The investment manager intends to place up to 21.11 million shares, totalling 9.9% holding,with a single buyer and the rest separately, accordingtoanexchangefilingon Tuesday.Thestakesaleissubjectto applicable regulatoryprovisions. Consequent to the proposed stake sale, Abrdn Investment Management will cease to be a co-sponsor of HDFC Mutual Fund under Sebi (Mutual Funds) Regulations,1996. At current prices, the stake sale could fetchAbrdnInvestmentManagementabout `4,700 crore. Shares of the AMC have slid 11.2% in theyearto date to `2,190 apiece. In August,Abrdn Investment Manage- ment had divested 5.58% in HDFCAMC for a little over `2,300 crore through an open markettransaction,accordingtoreports.The shareswere divested at `1,935.63 apiece. Abrdn Investment Management held 16.21% in the AMC as of June 2022. In September2021,the investment manager had divested 5% in the AMC through the open market. InAugust,the Securities and Exchange Board of India (Sebi) had granted inprinciple approval forchange in control of HDFCAMCalongwith change in one of the co-sponsors of HDFC Mutual Fund from HDFC Ltd to HDFC Bank. The change in control would happen post the merger of HDFC with HDFC Bank. HDFCAMChadtappedthemarketforan initial public offering in 2018 and was the secondAMC to list on the bourses afterNippon IndiaAMC. In the past few years, several foreign sponsors, including JP Morgan, Morgan Stanley, ING, Fidelity and BlackRock, have exited the mutual fund business in India. Centre gives more assurances to potential buyer of IDBI Bank PRASANTA SAHU New Delhi, December 6 AHEAD OF THE December 16 deadline forsubmission of expressions of interest (EoIs) for60.72% stake in IDBI Bank,the government on Tuesday issued a set of clarifications, seeking to allay the concerns of potential investors.It said a consortiumofforeignfundsandinvestment vehicles can own more than 51% in the lender and that it would continue primary dealer business even if a foreign bank acquires a majority stake in it. As per the extant FDI policy, the aggregate foreign investment in a private bank from all sources is allowed up to a maximum of 74% through the ‘approval route’. Responding to the last batch of six investor queries, the department of investment and public asset management (Dipam) also said that the government in consultation with the Reserve Bank ofIndia couldconsiderrelaxingthe five-year lock-in period for 40% stake CLARIFICATIONS ■ Govt may relax five-year lock-in in case of merger with another bank/NBFC in consultation with RBI ■ Aconsortium of foreign funds and investmentvehicles can own more than 51% in the lender, the govt said applicable to the promoter of a private bank,in case a bank/non-banking financial company is merged with IDBI Bank. According to the lock-in condition,if an NBFC is merged into a private bank, the stake of the bidder/consortium can’t bereducedtolessthan40%eventhough none of the shares originally acquired have been sold. According to RBI regulations, the ■ Govt to continue primary dealer business even if a foreign bank picks a majority stake in IDBI Bank potentialbuyerhastolockina40%stake in a private bank for five years before reducing thereafter as per a glide path. As per the EoI guidelines for IDBI Bank, the glide path is rather easy to comply with, as it requires the new promoterto bring down the stake to 26% in only 15 years. Continued on Page 12 New Delhi Industry seeks simpler ‘safe harbour’ norms ASHLEY COUTINHO Mumbai, December 6 INDUSTRYPLAYERSARE hopefulthatsome of the onerous conditions prescribed under section 9A of the income tax Act will be simplified in the upcoming Union Budget. A‘safe harbour’regime foronshore managementofoffshore funds,bywayofsection 9A,was introduced in the I-TAct in 2015 to encourage the fund management activities of offshore funds from India. According to these norms, the presence of a fund manageroraninvestmentadviserinIndiawould not constitute business connection,permanentestablishmentorataxresidenceforthe offshore funds RUN-UP TO THE in India, subject to fulfilment of 17 prescribed conditions. “While conditions have been designed to qualify only funds which have a broad investor base and prevent round-tripping and money laundering, they have become very straight-jacketed and at the same time opentovaried legalinterpretation,”Vishwas Panjiar,partner,Nangia Andersen,said. Oneoftheconditionsstatesthattheaggregate participation or investment in the fund, directly or indirectly, by persons resident in India should not exceed 5% of the corpus of thefund.Itisdifficulttomonitorindirectparticipation of persons resident in India, especially on a continuous basis. Given that KYC requirements under the Sebi FPI regulations 2019 have a threshold for identification of beneficialowners,thereisarelativedisadvantageonmarketabilityofFPIsavailingthesafe harbourregimevis-a-visthosenotavailingit. BUDGET Continued on Page 12