COMPANIES, P5 COMPANIES, P4 INTERNATIONAL, P9 SLOWDOWN WEIGHS TRANSFORMING FOR FUTURE AVOIDING DEFAULT Top fashion retailers kick off end of season sales a month early Essar 2.0: Ruias script zero debt, asset-light business model US debt-limit bill passed in bipartisan vote to avert default MUMBAI, FRIDAY, JUNE 2, 2023 FOLLOW US ON TWITTER & FACEBOOK. APP AVAILABLE ON APP STORE & PLAYSTORE WWW.FINANCIALEXPRESS.COM READ TO LEAD VOL NO. LXIII NO. 129, 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: 62,428.54 ▼ 193.70 NIFTY: 18,487.75 ▼ 46.65 NIKKEI 225: 31,148.01 ▲ 260.13 HANG SENG: 18,216.91 ▼ 17.36 `/$: 82.41 ▲ 0.31 `/€: 88.26 ▲ 0.05 BRENT: $72.25 ▼ $0.35 GOLD: `59,898 ▼ `235 TVS, Ather, Ola hike e-2-wheeler prices ELECTRIC TWOWHEELER MAKERS TVS Motor Company, Ather Energy and Ola Electric have increased prices of their products as curtailed subsidy structure comes into effect from June 1. ■ PAGE 4 Govt close to new industrial policy A NEW INDUSTRIAL policy is in the works, reports Mukesh Jagota. It willfocus on new industries and issues like carbon-neutrality, DPIIT secretary Rajesh Kumar Singh said. ■ PAGE 2 Dish TV board rejects demand for EGM Dish TV said on Thursday its board has dismissed a request for an extraordinary general meeting (EGM) made by minority shareholders, saying that it was invalid, reports Viveat Pinto. ■ PAGE 5 EXPLAINER Why Sebi tightened norms for FPIs ■ PAGE 8 FE S P E C I A L JioCinema’s OTT gambit: Life after IPL The platform has its work cut out to keep the audience glued ■ BRANDWAGON, P7 funds raised concealed by Byju's, creditors have claimed in US court 300 bps increase in coupon was offered by startup to renegotiate agreement Byju's dollar loan trading at discount as recast talks fail (cents on dollar) 100 95 90 85 80 75 70 65 60 High: 99.125 Dec 2022 Mar 2023 Source: Bloomberg-complied data themonloanrestructuring,declined to comment on queries about the talks being called off. The firm had offered to increase the coupon on the loan due 2026 by asmuchas300basispointsandprepay part of the debt to renegotiate theagreementafteritmissedadeadline to file audited financial results. The loan, one of the largest unrateddebtraisedbyastartupever, slumpedtoarecord64.5centsadollarinSeptemberandisnowquotedat around79cents,asperdatacompiled byBloomberg. — BLOOMBERG Note: Reading below 50 suggests contraction and above it indicates expansion Source: PMI by S&P Global 12 9 6 3 0 Volume (in bn) Source: NPCI 2022 14.89 May 16 (YoY % 12 growth) 8 4 58.01 0 2023 42.96 IDBI Bank buyer to get tax waiver on LIC stake PRASANTA SAHU New Delhi, June 1 THE CENTRE HAS extended a specific tax waiver for buyers of government stakes in companies being privatised to those who acquire stakes heldbystate-runentitiesaswell.The immediate beneficiary of the move will be the potential buyer of IDBI Bank, which is promoted by Life Insurance Corporation (LIC). In essence,this will exempt IDBI Bank’s buyer from tax liability on notional gains if the market value of shares sold by LIC is higher than the price discovered through a competitive bidding process.A similar concession is already available to buyers SELL-OFF PUSH ■ New amendment exempts shares bought from state-run entities from Section 56(2)(x) of Income-tax Act ■ Relief already available when govt is seller, since deals take long, with share prices usually rising after financial bids are received ■ Section provides for 30% tax on notional gains if off-market price of shares sold is lower than market price in strategic disinvestment deals, where the government is the seller. OnJanuary7,theCentrereceived expressions of interest (EoIs) from domestic and foreign investors for the 60.72% stake in IDBI Bank (30.48% from the government and 30.24%fromLIC).Financialbidsare expected bySeptember. Section56(2)(x)shallnotapplyto 13.1 10.11 10.35 11.4 11.67 12.73 12.54 12.06 12.89 12.88 9.7 2023 “any movable property,being equity shares,of a public sectorcompanyor acompany,receivedbyapersonfrom a public sector company or Central Government or any State Governmentunderstrategicdisinvestment”, theCentralBoardofDirectTaxessaid, notifyingthe amendment. Continued on Page 13 Sales of passenger vehicles Domestic volumes 340,000 350,000 300,000 294,393 250,000 200,000 May 2022 May 2023* *Estimated Source: SIAM and companies INSIDE PNB reduces 1-year deposit rates by 5 bps PUNJAB NATIONAL BANK has cut the interest rate on 1-year fixed deposits by 5 basis points foramountsbelow`2crore. The newrateeffectivefromMonday for public, senior citizens, and super senior citizens is 6.75%, 7.25% and 7.55% per annum respectively. ■ Page 10 ICICI Bank cuts MCLR by 15 bps on short tenures PRIVATE SECTOR MAJOR ICICIBankonThursdayslashed its marginal cost of fundsbased lending rate on shorter tenure loans by 15 bps, but increasedtherateonsix-month and 1-year tenure. ■ Page 10 Go First submits 6-month revival plan Global funds eye ROHITVAID New Delhi, June 1 THE INTERIM RESOLUTIONprofessional(IRP)ofGoFirsthassubmitted asix-monthrevivalplantotheDirectorate General of Civil Aviation (DGCA), saying it is ready to resume operations with 26 operational aircraft and 400 pilots on its rolls. Sources aware of the development told FE that Go First, whose petitionforvoluntaryinsolvencywas admitted by the National Company Law Tribunal (NCLT) on May 10,has told the DGCA that oil marketing companies have also offered their support. Before the carrier filed for insolvency,oilmarketingcompanies had put its operation on cash and carry terms,which means it had to clearits dues on adailybasis. Currently,theairline’soperations FLIGHT PATH 8-10 aircraft can be deployed for scheduled services ■ Can immediately start chartered flights between DelhiSrinagar, Delhi-Leh ■ Cites support from ■ In few days, can resume scheduled services on Pune, Bardogra, and Goa routes OMCs, 15 of 20 major travel agents are undersuspension tillJune 4. Therevivalplanalsocitessupport of 15 of the 20 major travel agents with regard to ticketing services. Once the DGCA approves its revivalplan,GoFirstsaiditcandeploy two aircraft to start Delhi-Srinagar and Delhi-Leh chartered flights immediately. Within the next few days,it will be able to resume scheduled services, mainly on the Pune, Bagdogra,andGoaroutes.Theairline has said itwill be able to deployeight to 10 aircraft for scheduled services. GoFirsthadearliersaidtheDGCAwill audit its preparedness before allow- ing it to resume operations. Recently, the carrier offered a monthly retention allowance of `100,000tocaptainsand`50,000to first officers.Currently,the monthly average salary of captains is `530,000. Themainchallengefortheairline is to retain its aircraft as lessors have approached the DGCA to deregister 45 of them. Though NCLT and NationalCompanyLawAppellateTribunal have fornowrejected the plea, lessorshavemovedDelhihighcourt. Go First has 7,000 employees on itsrolls,andhascommittedadefault of `2,660 crore toward aircraft lessors and `1,202 crore towards its vendors. Its total liabilities are at `11,463 crore, of which bank dues are of `6,521 crore. Of this, `1,300 crore was drawn under the emergencycredit line guarantee scheme. Qualcomm to bring ChatGPT-like tech on phones AS GENERATIVE AI applications likeChatGPT,DALL-E,andBardgain traction, San Diego-based mobile chip manufacturer Qualcomm is workingtobringthesetechnologies to smartphones through its newgen processors. The built-in generative AI technology in smartphones would help users put in their queries just like theydowith applications like ChatGPT and can get the answers. Currently,with generativeAI technologies,all the queries are run through the cloud. But that won’t be costeffective for companies running such systems going forward. With smartphones, the load of query can be shared and based on the processor capability and com- Value (` trillion), RHS 10.41 HYBRID AI DEVICES TO CO-EXIST WITH CLOUD JATIN GROVER New Delhi, June 1 11.46 2022 Source: DGCA UPI transactions 2023 10.51 May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May 55.9 Oct 2021 (` trillion) 2022 5 58.7 May 2023 GST collections CBDT amends taxation rules for notional gains over acquisition price Low: 64.500 58.4 Apr 8.9 May 9.4 deadline for Byju's to make interest payment on loan ■ Reports on pages 2, 4 Apr 2023 Feb 7.5 Mar 8.6 June 5 $500 mn Air passengers (in mn) 62 Nov 7.3 Dec 7.8 Jan 8.03 CREDITORS TO BYJU’S, India’s most valuable startup, have pulled out of negotiations with the companytorecasta$1.2billionloan,posinganewsetbacktothebeleaguered techfirm,accordingtopeoplefamiliarwith the matter. The talkswere called off afterthe creditors moved court and accused the firm of hiding $500 million of funds raised, the people said, asking not to be named. Lenders can now sell the term loan B securities of the firm as the restraint that came as part of the negotiations is lifted,theysaid. The move is a fresh challenge for one of India’s hottest tech companies, which has been working to appease creditors by offering prepayments and higher coupons to restructure the loan. Though the steering committee of lenders has discontinuedthetalks,thecompany will try to reach out to all lenders independently to renegotiate the terms,one of the people said. Byju’s has to make an interest payment on the loan by June 5, the people said.The companywill get“a large capital infusion”soon thatwill allow it to pay down the loan, its lawyer said in a US court last month while denying allegations of hiding the funds raised as loan. The transfer of borrowed funds wasin“fullcomplianceofloanagreement and did not contravene any termsoftheagreed-uponrightsand responsibilities”,a Byju’s spokesperson said on Thursday.“Even lenders havenotallegedthatthetransferwas notpermittedunderparties’existing contractual arrangement.” Spokespersons for Houlihan Lokey, hired by creditors to advise ON A BUMPY COURSE Manufacturing PMI Services PMI Sep 6.7 Oct 7.3 HCLTECHNOLOGIES HAS reverted to the pre-pandemic practice of paying engagement performance bonus as part of the variable salary component, which has seen the monthly salaries coming down, reports Sameer Ranjan Bakshi. ■ PAGE 3 ANTO ANTONY & RESHMI BASU June 1 A CLUTCH OF high-frequency economic indicators on Thursday raised hopes that the tempo seen in the March quarter may have stayed since, if not accelerated. GST revenue was up 11.5% on year, despite a moderation in inflation, and manufacturing PMI hit a 31month high. UPI transactions hit new records. Strong airline passenger traffic and auto sales too mirrored brisk activity. Jul 6.2 Aug 6.5 HCL salaries back to pre-Covid structure Byju’s lenders scrap $1.2-bn loan rejig talks May data echoes growth tempo May 5.9 Jun 5.8 WITH COAL INDIA'S offer for sale for non-retail investors subscribed by 3.46 times the base size on Thursday, the government will exercise the green shoe option for retail and non-retail investors on Friday, reports Mithun Dasgupta. ■ PAGE 8 FIRM HID $500 MN: CREDITORS Jun 1.45 Jul 1.49 Aug 1.44 Sep 1.48 Oct 1.52 Nov 1.46 Dec 1.5 Jan 1.58 Feb 1.5 Mar 1.6 Apr 1.87 May 1.57 IN THE NEWS Coal India share sale: Institutional portion oversubscribed Consumers also feel that whatever query they ask stays with them within their device owing to several privacy and security concerns. Those things will also get resolved once generative AI technology comes to smartphones RAJEN VAGADIA, VP & PRESIDENT, QUALCOMM INDIA & SAARC plexity of query, the devices can be used for generating responses. “India is a mobile-first country. Over the next few years,we will see the evolution of generativeAI,with consumers expecting the technol- CHIPPING AWAY AT COSTS ■ Built-in AI tech would help users put in queries on phones like in apps like ChatGPT ■ Currently, all such queries are run through the cloud ogy to be leveraged on devices such as smartphones,” Rajen Vagadia, vice president at Qualcomm and president of its India and SAARC operations told FE. He said such technology must ■ Cost to run generative AI on cloud estimated to increase 10 times against simple internet search come to smartphones because the cost of running it on cloud is estimated to increase 10 times compared to a simple search on the internet.Vagadiasaidthephonewill soon become a hybrid AI which will co-existwith the cloud to scale generative AI technology. “Apart from the cost benefits, consumers also feel that whatever query they ask stays with them within theirdevice owing to several privacy and security concerns. Those (concerns) will also get resolved once generative AI comes to smartphones," Vagadia said, adding that the technology would first come in premium phones and would then be extended to phones in other price ranges. Qualcomm recently demonstrated a generativeAI model using itsSnapdragon8Gen2mobileplatform. The company tested a stable diffusion model,whichtakestextas a prompt or query and generates images based on it. Continued on Page 13 entry into Indian pvt credit space RAGHAVENDRA KAMATH Mumbai, June 1 GLOBAL INVESTOR FORTRESS Investment Group, US-based HPS Partners, Qatar-based Power International Holding (PIH) and others are evaluating deals in the Indian private credit space.All of them are intouchwithinvestmentbankersin India for deals in private credit,said sources aware of the developments. “These global firms want to do deals of at least $50-100 million and are in touch with bankers,” the sources said.HPS Partners declined to comment on the subject. Mails sent to PIH and Fortress did not elicit any response. PIH is a diversified busines s conglomerate, grouped into five main sectors: general contracting, industries & services,agriculture & food industries, real estate, and lifestyle(hospitality,entertainment & catering). “PIH is keen to get intoprivatecreditinIndiaandlooking into deals,” said a senior investment banker. HPS Investment Partners manages various strategies across the capital structure that include syndicated leveraged loans and high yield bonds to privately negotiated seniorsecured debt and mezzanine investments, asset-based leasing and private equity, its website said. It manages $101 billion of assets under management as of April, of which $22 billion is public credit and $79 billion is private credit. Fortress is a leading, diversified global investment manager with $44.2 billion of assets under management as of March 31. Recently, a Bloomberg report said Carlyle is in the early stages of FUND FORAY ■ Carlyle in early stages of exploring entry into India’s private credit market ■ SoftBank Investment looking to provide debt/ debt-like financing ■ Shapoorji Pallonji looking to raise $1.6 bn through private credit ■ SP in talks with Varde Partners, OMERS, Cerberus and Farallon exploring an entry into India’s private credit market, joining the likes of Oaktree, Blackstone, Goldman Sachs and Apollo Global Management which are already active in this segment. Similarly, SoftBank Investment Advisers,whichmanagestwoVision Funds,is exploring launching a private credit strategy that provides debt ordebt-like structured financing for late-stage tech startups, Reuters said in a recent report. More global names looking at private credit deals are doing the rounds. Continued on Page 13
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