COMPANIES, P5 COMPANIES, P4 INTERNATIONAL, P7 AMID REGULATORY SCRUTINY NO HITS TO RURAL SALES SPACE RACE INTENSIFIES Xiaomi deepens local sourcing of phone components M&M positive on demand for SUVs, tractors China announces plan to send astronauts to the Moon by 2030 CHENNAI/KOCHI, TUESDAY, MAY 30, 2023 FOLLOW US ON TWITTER & FACEBOOK. APP AVAILABLE ON APP STORE & PLAYSTORE WWW.FINANCIALEXPRESS.COM READ TO LEAD VOL NO. XLIV 329, 28 PAGES, `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: 62,846.38 ▲ 344.69 NIFTY: 18,598.65 ▲ 99.30 NIKKEI 225: 31,233.54 ▲ 317.23 HANG SENG: 18,551.11 ▼ 195.81 `/$: 82.63 ▼ 0.06 `/€: 88.55 ▲ 0.10 BRENT: $76.24 ▼ 0.71 GOLD: `59,884 ▲ `66 STATES’ CAPITAL EXPENDITURE was subdued in FY23 as they sought to keep fiscal deficit in check, reports Prasanta Sahu. Combined capex of 19 states contracted to around `4.55 trillion. ■ PAGE 2 Bank Nifty surges to record high BANKS AND FINANCIALS led from the front on the first day of the week, with the Bank Nifty surging 0.67% to a lifetime high of 44,311.90. Its previous high was 44,151 in December 2022, reports Siddhant Mishra. ■ PAGE 8 FDI contracts 22% to lowest in 4 years FDI EQUITY INFLOWS declined 22% on year in 2022-23 to $46 billion, the lowest in the last four years, data released by the DPIIT on Monday showed, reports fe Bureau. ■ PAGE 2 Less than $100 mn stuck in Russia: OVL ONGC VIDESH, THE overseas arm of ONGC, on Monday said it has less than $100 million dividend income stuck in Russia, reports Manish Gupta. ■ PAGE 2 Reliance m-cap back above `17-trn mark RELIANCE INDUSTRIES has crossed `17 trillion in market value after a gap of four-and-half months, reports Siddhant Mishra. On Monday, it closed with an m-cap of `17.04 trillion. ■ PAGE 8 ■ EFE, P9 ■ Banks must refrain from evergreening loans, using tricky accounting methods and buyback of loans or debt instruments, and convincing good borrowers to enter into structured deals with stressed borrowers to conceal the stress in the loan account. Highlighting the methods employed, he mentioned cases where some lenders used smart accounting techniques to artificially enhance their financial performance. These methods include two lenders collaborating to evergreen each other’s loans by sale Continued on Page 2 Bank privatisation as per schedule: Sitharaman FINANCE MINISTER NIRMALA Sitharaman on Mondaysaid privatisation of public sector banks(PSBs)willbecarriedoutasperthe government’schedule,reports fe Bureau. “It (privatisation) will go on as per the schedule and there is no change,” Sitharaman said responding to a question ontheprogressofearlierannouncement to privatise two PSBs in Budget 2021-22.She was speaking at a press conference in Mumbai on the achievements of the Narendra Modi government in the last nine years. As per the new public sector enterprises policy, the government will minimise the number of staterun companies in five strategic sectors, including banking while fully exiting non-strategic sectors. ■ Page 2 Lenders’ move aims PAYMENT PLAN to curtail disputes `10,000 CRORE between creditors final plan value ROHITVAID New Delhi, May 29 and faster completion of the resolution process,” the source said. Lenders, including banks and otherfinancialinstitutions,havesupported the decision, which was taken at RCap’s CoC meeting on Monday.The CoC will meet again on Tuesday to ratify the decision, the source added. LOW-COST CARRIER GO First, whichhasfiledforinsolvency,istrying to retain its pilots with a monthlyallowance,as it tries to put in place a plan to restart operations. The airline has offered to raise monthly salaries of captains by `1 lakh and that of first officers by `50,000. Currently, the monthly average salary of captains is `5.3 lakh. On Monday,seniorexecutives of the airline discussed its revival plans with officials of the Directorate General of Civil Aviation (DGCA),according to a PTI report. In an internal mail, Go First has saidtheincreasedsalarieswillcome into effect from June 1 and will includeallcaptainsandfirstofficers who are released online for flying and are on the company's payroll as on May31.Itwill also include those who mayhave resigned till date but are willing to withdraw their resignation by June 15. The airline also plans to soon reintroduce the longevitybonus.“If things shape up as per the present progress plan, it won't take long beforewewill be flying again,which will also enable us to be regular on salary payments,”the mail said. Go First has suspended all its flights till May 30 as per the latest update. Continued on Page 2 Continued on Page 2 of RCap’s assets, according to bids submitted by Hinduja Group RAJESH KURUP Mumbai, May 29 LOOKING TO AVOID inter-creditor disputes,RelianceCapital’sCommittee of Creditors (CoC) has agreed to make equitable payment to all lendersbasedonthe‘finalplanvalue’. The final planvalue of RCap’s assets, according to bids submitted by HindujaGroup,isaround`10,000crore, which is lower than the liquidation value of `13,000crore. Thisisagainstthegeneralpractice ofpayinglenderswhohaveagreedto the proposal (on a pro rata basis) basedonthefinalplanvalue,anddissenters based on the liquidation value.Incertaincases,dissentershave bargained forhigherpayouts. “In this case, the final plan value willbeconsideredasthedistribution valueforallcategoriesoflenders.This is a significant shift as it emphasises fairness and equitable treatment. Throughthis,theCoCaimstoensure a more transparent and unbiased process, fostering trust and confidence in the overall plan,” a source close to the developmentsaid. “This will also help avoid any unnecessary inter-creditor disputes Go First to pay extra to keep pilots on board ■ General practice is to pay lenders (on pro rata basis) who have agreed to proposal based on final plan value ■ Dissenters are paid based on liquidation value; in some cases they bargain for higher payouts Brand IPL set to hit $10 billion this year VIVEAT SUSAN PINTO Mumbai, May 29 IT IS NOT without reason that the Indian PremierLeague (IPL) is counted among theworld's mostvaluablesportingproperties.TheIPLbrand shows no signs of fatigue even in its sixteenth year;ifanything,itseemstobegettingstronger. Estimates by brand experts put the league's valueat$10billionforcalendaryear2023,which is a growth of 19% versus the previous year. In 2022, IPL's brand value stood at $8.4 billion, according to Brand Finance, an international brand valuation firm. This was double its value of $4.7 billion in 2021.(See chart) “TheIPLisaninteresting casestudybecausethereare a number of factors that work in its favour,” says Ajimon Francis,managing director, Brand Finance India. “Right from fan engagement to its consistent viewership across platforms, the huge amount of money that broadcasters paid forits media rights IPL brand value over the last six years Value ($ bn) 5.3 5.7 2018 39.5# % change (y-o-y) 8.4 10 4.4 4.7 2019 2020 2021 2022 2023* « « Interview with Dilip Kumar, Global VP – AWS Applications ■ The board and audit committee must ensure banks maintain a healthy ALM position « ‘Barely 4% of total global IT spend is on cloud services’ Such practices beg the question as to whose interest such smart methods serve. I have mentioned these instances to sensitise all of you (banks) to keep a watch « « FE S P E C I A L RESERVE BANK OFIndia(RBI)governorShaktikantaDassaidonMonday that the central bank has come across instances wherein some banks have attempted to conceal the true status of their stressed loans through the use of “smart” accounting processes. “During the course of oursupervisory process, certain instances of using innovative ways to conceal therealstatusofstressedloanshave also come to our notice,” he said at the Conference of Directors of Banks organised by the RBI for private sector banks. Das noted that despite guidelines on corporate governance, these gaps in certain banks have the potential to create some level of volatility in the banking sector. SHAKTIKANTA DAS, RBI GOVERNOR « ■ PAGE 22 PIYUSH SHUKLA Mumbai, May 29 « « The fight over civil services in Delhi Governance gaps at some banks: Das RCap CoC agrees to equitable share of sale proceeds « EXPLAINER ALSO FLAGS STRESSED ASSETS’ MISREPORTING « IN THE NEWS States’ capex flat in FY23 excluding central support 7.5 22.8 6.8 78.7 19 *Estimate; most valuable IPL teams for 2023 yet to be declared #%Growth calculated based on IPL 2017 brand value which was $3.8 bn Source: Brand Finance/Industry to the emergence of newstars. AllofthisfeedsintobrandIPL,” says Francis. The 2023 edition has been marked by thrilling matches, performances of young stars such as Shubman Gill, Rinku SinghandYashasviJaiswaland Sunday’s final being rainwashed,a first in 16 years.The final was played on Monday at a packed Narendra Modi stadium inAhmedabad. Continued on Page 19 FIRMS LOOK TO WIDEN CUSTOMER BASE Space crunch: E-comm apps go lite SAMEER RANJAN BAKSHI Bengaluru, May 29 E-COMMERCE FIRMS ARE fighting for the consumers’ phone space along with their wallet share as they try to widen their reach to smaller towns and cities. Since a majority of the country’s 650 million smartphone users have devices with a ROM (read only memory) ranging between 8GB to 32GB,there’s not enough enough space to store lot of apps. In their effort not to miss out on such consumers, e-commerce firms are either coming out with a lighter version of their shopping apps which will not take much space in lower-end smartphones,or resizing their apps. Around 80-85% e-commerce activity happens through mobile phones, so it’s important that every segment is catered to. Meesho,forinstance has brought down the size of its app to 13MB from 26MB. Amazon India, on the other hand has an adjustable feature.Its app size is 60MB but on phoneswith less storage space,a lighter 1MB version,gets downloaded. SHORT ON STORAGE 8GB to 32GB ROM on majority of 650 mn smartphones in use Facebook was among the first social media platforms to launch a lite version of its app in 2015, which was about 2MB in size and couldwork even on 2G networks. Sanjeev Barnwal,co-founder and chief technology officer of Meesho, said, “We have the smallest app in terms of size in PlayStore,compared to ourpeers.We have always been particularabout making sure that our app size is smallest and performs 80-85% e-commerce activity happens through mobile phones 90% of smartphones in use likely priced less than `25,000, as per IDC India ■ Facebook among first social media platforms to launch lite version of app in 2015 well on low-end smartphones”. According to Kishore Thota, director, customer experience and marketing, Amazon India, app download size needs to be optimised so that consumers can have a hassle-free experience. “For lowendAndroid smartphones,we have a separate flavourof the app that is lighterthan the main app,”he said. Continued on Page 19 CHENNAI/KOCHI