COMPANIES, P4 MARKETS, P6 INTERNATIONAL, P7 TARGET CARBON NEUTRALITY KEEN ON INDIAN HARDWARE LIQUIDATION THREAT LOOMS Hybrid vehicles are cleaner than EVs, says Maruti’s Bhargava India is the best bet in emerging markets, says Mark Mobius China puts Evergrande founder Hui Ka Yan under police control CHENNAI/KOCHI, THURSDAY, SEPTEMBER 28, 2023 FOLLOW US ON TWITTER & FACEBOOK. APP AVAILABLE ON APP STORE & PLAYSTORE WWW.FINANCIALEXPRESS.COM READ TO LEAD VOL NO. XLIV 123, 28 PAGES, `12.00 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: 66,118.69 ▲ 173.22 NIFTY: 19,716.45 ▲ 51.75 NIKKEI 225: 32,371.90 ▲ 56.85 HANG SENG: 17,611.87 ▲ 144.97 `/$: 83.23 ▲ 0.01 `/€: 87.90 ▲ 0.33 BRENT: $95.62 ▲ $1.66 GOLD: `58,263 ▼ `439 IN THE NEWS GeM EXCLUDES HUNDREDS OF CHINESE VENDORS THE NATIONAL PROCUREMENT portal has excluded hundreds of companies that were either Chinese-owned or where there was substantial Chinese beneficial interest from its platform in the past three years, a senior official said Wednesday, reports Mukesh Jagota. ■ PAGE 2 HC: NOABSOLUTE BAR ON DGCATO ACTONAKASASTAFF THE DELHI HIGH court Wednesday agreed with the contention of Akasa Air that the DGCA is not completely barred from taking action against pilots who violate the terms of their employment agreements. ■ PAGE 4 AMUL EXPECTS NO PRICE HIKE AFTER TIMELY MONSOON AMUL DOES NOT anticipate any price hike as the situation is "pretty" good this year after timely monsoon in Gujarat and flush milk procurement season is starting, The Gujarat Cooperative Milk Marketing Federation MD Jayen S Mehta said on Wednesday. ■ PAGE 14 MORE NBFCs TO SECURITISE LOANS FOR FUNDING NBFCs are expected to tap the debt market & securitise loans to meet their funding needs going ahead, say experts, reports Ajay Ramanathan. ■ PAGE 15 EXPLAINER How the angel tax regime has been fine tuned ■ PAGE 9 FE S P E C I A L ‘No silver bullet for a successful data strategy’ AI can help speed up drug discovery, says Merck Group’s Walid Mehanna ■ EFE, P9 CONCERNS OVER ASSETVALUE EROSION Govt tells banks to avoid settlements Move after resumption of TIMING ITRIGHT said such RBI compromise formula ■ An officialprocess settlement could delay debt for wilful defaulters PRIYANSH VERMA New Delhi, September 27 THE FINANCE MINISTRYand the Insolvency and Bankruptcy Board of India (IBBI) want banks to exercise restraint while undertaking compromise settlements or technical write-offs for accounts tagged as wilful defaults or frauds. A senior official said such settlement process could delay debt recovery under the Insolvency and Bankruptcy Code (IBC) further,leading to erosion of asset values. “The Department of Financial Services (DFS) in the finance ministryis in touchwith the banks to persuade them to initiate insolvency process at the right time... in case of defaults, they ought to follow the IBC process without delay.The DFS is aiding the IBBI in this,” the official said, asking not to be identified. "Banks often take time to start IBC resolution process as theyprefersettlementwith the debtors.This leads to loss in value of the assets and subsequently, low recovery," the official said. The compromise settlement system has long been available to banks as one of the ways to tackle non-performing assets. This has also been one of the efficientways of debt recovery. ■ The idea is to allow lenders to exercise discretion on how to deal with individual cases of defaults by applying their commercial judgment recovery under the IBC further, leading to erosion of asset values ■ Under the IBC, financial or operational creditors could initiate insolvency proceedings against a corporate debtor, when the default is `1 crore or above ■ The code doesn't make it mandatory for a creditor to start the process, even ifthe threshold is breached ■ The IBBI is concerned about the reduced rate of loan recovery under IBC RBI may pivot to cuts from FY25 Central bank also unlikely to tinker with its stand on liquidity FE ECONOMISTS POLL PIYUSH SHUKLA & AJAY RAMANATHAN Mumbai, September 27 6.50% THE RESERVE BANK of India (RBI) is expected to leave the repo rate unchanged at 6.50%, fourth time in a row, in its next meeting on October 4-6, showed a poll of economists. High inflation, which is still hovering above the RBI’s tolerance band of 2-6%, hasdashedthe hopesof anyratecutsinthe current fiscal, said most of the 13 economists polled by FE.Over 50% of the polled economists expect the central bank to pivot to repo rate cuts only from the first quarter of next financial year. The hawkish central bank is also unlikely to tinker with its stand on liquidityas experts expect to stick to its stance of “withdrawal of accommodation”. “The Monetary Policy Committee's (MPC's) latest forecasts suggest that inflation will remain above 5% through Q1FY25, based on which Icra expects the earliest rate cut in Q2FY25.Moreover,Icra continuestoanticipatetheratecutcycleto All agree RBI will maintain repo rate at When will RBI cut repo rate Economist ▶ ICRA ▶ CRISIL ▶ CareEdge ▶ India Ratings ▶ UBS ▶ DBS ▶ Bank of Baroda ▶ RBL Bank ▶ ICICI Securities ▶ Prabhudas Lilladher ▶ Emkay Global ▶ Nuvama ▶ Standard Chartered be shallow, limited to 50-75 basis points (bps),” said Aditi Nayar, chief economist at Icra Ratings. The RBI’s MPC had voted for a pause in repo rate hike cycle in April 2023, after constantly hiking the repo rate cumulatively by 250 basis points (bps) since May 2022. The headline CPI inflation - which hit a 15-month high of 7.4% in July and moderated to 6.8% in August- is likely to moderate further in September to 5.35.5%,within the MPC’s tolerance band of 2-6%. Accordingly, the CPI inflation will likely average at 6.6% in the second quarter of FY24,overshooting the MPC’s inflation forecast of 6.2% for that quarter, she said. Continued on Page 2 ● BOTATWORK Prime Minister Narendra Modi, Gujarat governor Acharya Devvrat (right) and chief minister Bhupendra Patel being served tea by robots at Science City ahead of an event marking the completion of 20 years of the Vibrant Gujarat Global Summit in Ahmedabad on Wednesday. The Reserve Bank of India via a circular dated June 8,2023 re-introduced the option for wilful defaulters, without prejudice to criminal proceedings against them. Continued on Page 2 Byju’s interest outgo on $1.2-bn loan set to rise SAMEER RANJAN BAKSHI Bengaluru, September 27 TROUBLED EDTECH MAJOR Byju's will see its interest outgo on the $1.2 billion term loan rising further. Fidelity Advisor, one of the lenders in the consortium, has almost doubled the rate to 15.5% in a year's time, according to its filingwith the Securities and Exchange Commission. Fidelity Advisor was charging 7.01% in July 2022 and had subsequentlyraised it to 10.7% in January this year. In May, Natixis and American Beacon Funds, who are also part of the group of lenders had increased the interest rate from 7% to 12.98%. Another lender, Oaktree had also increased the same from 7% to 10.69%. Byju's had raised the $1.2 billion term loan B (LTB) with a five-year tenure in November 2021. In December last year, a group of lenders which participated in the term loan offering, renegotiated the terms of the debt,including faster repayment of part of the loan. Freezing the new terms for payment for the term loan has been one of the key pain points for Byju’s for the past few months. It has been working to secure new funds, but troubles related to test prep subsidiary Aakash Institute,as well as statements from investors like Prosus on corporate governance issues at the company have affected INTEREST BURDEN ■ Byju’s took the $1.2-billion term loan Bwith a five-year tenure in November 2021 Q2FY25 Q1FY25 Q1FY25 ---Q1FY25 H2CY24 Q1FY25 Q1FY25 -Q1FY25 Q1FY25 PTI ■ FidelityAdvisor, one ofthe lenders, increased the interest rates from 7.01% in July 2022 to 10.7% in January 2023 and 15.5% inJuly 2023 ■ The rate hike comes at a time when the company is grappling with a tight liquidity situation ■ This week Byju's new India CEO Arjun Mohan kicked off a massive restructuring exercise that may lead to 4,000-5,000 job cuts INSIDE WhiteHat Jr to be rebranded PAGE 4 the process. The current rate hike comes at a time whenArjun Mohan,who has taken charge as the new CEO of the company is restructuring the businesses,which also includes cutting the headcount by around 4,000-4,500 people to reduce costs. Continued on Page 14 India licence for Starlink by Oct JATIN GROVER New Delhi, September 27 ELON MUSK-OWNED Starlink is all set to get Global Mobile Personal Communication by Satellite (GMPCS) licence by the government next month. Oncethishappens,thecompanywillbe the third entityafter,Bharti's OneWeb and Jio Satellite, to become eligible for spectrum allocation afterwhich they can start providing satellite broadband services. OfficialsourcessaidthatSpaceX,which operatesStarlink,hascompliedwithallthe regulatory process like providing necessary information with regard to the location ofsatellites,data transferandstorage, plan for providing broadband services in India,among other things. With the completion of these processes, a formal clearance is required from department of space,department of telecommunications (DoT), and home INTERNET UPGRADE ■ Currently, OneWeb andJio Satellite Communications have got the licence to start satellite services in India ■ Government officials are expected to meet to take a final call on Starlink’s application ■ Experts believe that Starlink launch will trigger a pricewar between the players includingJio and OneWeb ■ The licence is issued for a period of 20 years and this allows the companies to offer satellite communication services in licensed service areas ministry,which is expected next month. Last year in October,FE was the first to report that the company had re-initiated talks with the DoTto apply for the GMPCS licence. Separately, the company has also applied for approval from the Indian National Space Promotion andAuthorisa- tion Centre (IN-SPACe) for offering Internet services in the country. According to officials,processing Starlink's application took a long time because the company was slow in completing the necessary documentation. Continued on Page 14 WHAT MODI HAS, VAJPAYEE DIDN’T: A HAWKISH EYE FOR IMPLEMENTATION OF POLICIES: NK SINGH Self-reliance can slide into a defence to protectionism: Summers N K SINGH, ECONOMIST AND POLITICIAN GIVEN THE MACROECONOMIC stability,coherent monetary and fiscalpolicies,andthelikelihoodofpoliticalstabilityinthenearterm,Indiawill continue to witness a 7-8% gross domesticproduct(GDP)growthrate, policymaker, economist and politicianNKSinghsaid. According to Singh,chairman of the15thFinanceCommission,Prime MinisterNarendra Modi has a hawkish eye for the implementation of policiesandprogrammes.“…thereisa veryhighprobabilitythatwewillcontinue to grow at about 7-8%, if not more,” Singh said during a panel discussionatExpressAdda,organisedby The Indian Express in Mumbai on Tuesday. Thebulkofreformsinthecountry have already been taken,except that there is a need to fine-tune regulations and legal ways to be able to attractlargevolumesofinwardflows, hesaid. Alongwith Singh,CharlesWEliot UniversityProfessor,PresidentEmeritus at Harvard and former US TreasurySecretaryLawrence H Summers was also part of the panel.Theywere LAWRENCE H SUMMERS, FORMER US TREASURY SECRETARY ...clearly, national interest would really require that we do not become hostage to unsurprise interruptions in the supply chain due to events which could be purely exogenous ENS ECONOMIC BUREAU Mumbai, September 27 One of the factor that will be advantageous for India’s growth would be harnessing digital technology, IT, quantum computing and the ability to deal with huge quantities of data in conversation with Anant Goenka, Executive Director, The Indian Expressgroup. “…eight per cent seems to me a very ambitious but not completely unreasonable stretched growth targetforIndia.Itisnotmypredictionof how fast India would grow, it is an aspirational statement for India,” Summers said when asked about ways in which India can achieve the 8% growth target. Lastweek,Summers,ataneventin NewDelhi,saidthatacombinationof freemarketforcesaddressingenergyrelated infrastructure needs, questions of reform in a number of key states,and supporting a more effective public sector could generate an eight-fold expansion in India’s econ- omy by 2050 with an annual growth rateof8%. During the discussion,Summers listedfourmajorfactorswhichwould helpIndiaachievehighergrowth. First,astable,prosperousandreasonablygrowingglobaleconomy.Second,thecountry’swillingnesstocontinue the hard work of reforms such asintheagriculturesectorandreduc- ing financial repression in the financialsector. The third factor for India to achievegrowthwillbeitsapproachto opennessintheworld,hesaid. “Traditionally, self-reliance has beenanimportantwordintheIndian economicpolicybutwhenIhearthat word,I get nervous.Obviously,there are some things where a country needstobeself-reliantbutveryoften self-reliance can slide into being a general defence to protectionism. I thinkIndianeedstotakeamuchmore openapproach,”Summersnoted. The fourth factor that will be advantageous for India’s growth would be harnessing digital technology,IT,quantum computing and the abilitytodealwithhugequantitiesof data,hesaid. Continued on Page 2
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