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XX 212, 12 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 IN THE NEWS RISING PRICES: GOVT TO INTERVENE IN RETAIL RICE MARKET AS THE RETAIL inflation in rice continues to be in double digits for over a year, the government is considering several measures, including sale of grain from its stocks as well as asking retailers to reduce "high margins”, reports Sandip Das. ■ PAGE 2 PETCHEM INDUSTRY OPPOSES OMAN FTA; DELAY LIKELY THE NEGOTIATIONS ON India-Oman free trade agreement that were racing towards conclusion may drag a bit longer as Indian petrochemical producers have opposed any deep duty cuts on polypropylene and polyethylene that might be offered in the pact, reports Mukesh Jagota. ■ PAGE 2 INDUSTRY SEEKS LOWER DUTY ON SOLAR MODULES INDUSTRY PLAYERS HAVE asked the government to cut customs duty on capitals items, including solar modules, in an attempt to make production of green hydrogen commercially viable in India, report Priyansh Verma and Arunima Bharadwaj. The import of items like solar modules is subject to "heavy" customs duties and taxes. ■ PAGE 2 CP ISSUANCES MAY RISE AFTER ISSUER LIST EXPANSION THE ISSUANCE OF commercial paper is expected to rise with the RBI expanding the list of eligible issuers, reports Sachin Kumar. InvITs, REITs, cooperative societies and LLPs have also been allowed to raise funds via CPs from April. ■ PAGE 6 FE S P E C I A L ■ EXPLAINER, P6 How are systemically important banks identified by RBI SBI, HDFC Bank and ICICI Bank retains their SIB status; SBI’s, HDFC Bank’s grade of importance escalated by RBI HIGH SINGLE-DIGIT RISE IN PROFITS LIKELY India Inc set for a robust quarter GROWTH TREND RESULTS BSE-30 Index earnings growth (%) PREVIEW 50 40 INDIA INC’S EARNINGS for the December2023quarterareexpected toshowstronggrowthonthebackof good numbers from auto manufacturers, banks, capital goods makers, cement producers and residential real estate developers. In aggregate, companies mayreport a high singledigit increase in profits when seen year-on-year,though the rise maybe somewhat modest sequentially. Good results INSIDE from oil marketNBFC AUM ing companies (OMCs) will to sustain boost aggregate growth profits thanks to ■ PAGE 6 the helpful base inQ3FY23when thesefirmsreportedlosses.However, IT services players are expected to turn in an ordinaryperformance. With the rural economy yet to recover, makers of consumer staples are tipped to report averysubdued low-to-mid single-digit volume increases.This might result in a slower growth in revenues and operating profits for many FMCG players.Those companies that have taken price increases will post bet- 30 20 18.9 11.6 10.4 10 0 Dec Mar Jun Sep Dec Mar Jun Sep Dec Mar Jun Sep Dec 2020 2021 2022 2023 2023E Sector-wise sales, Ebitda and PAT growth of Nifty 50 Index Growth (y-o-y %) Sales Nifty-50 Index Automobiles & Components Banks Capital Goods Construction Materials Consumer Staples Metals & Mining Pharmaceuticals 5.4 20 12 13 6 4 5 9 Ebitda margin (%) Ebitda Sep ‘23 Dec ‘23E 7.7 45 — 15 39 2 45 8 19.9 13.7 — 11 13.9 27.5 11.5 26.8 19.3 14.2 — 11.1 16.9 27.3 11.4 26.5 PAT 12.2 62 13 32 60 1 1,225 11 Source:Companies, Kotak Institutional Equities ter operating margins. The high off-take in the festive season demand is expected to have driven up revenues by 10-12% for most auto manufacturers especially sincetheproductmixwasricher.Volumesforbothcarsandtwo-wheelers were reasonably strong in the October-December period. Moreover, companies have been able to take Minister bets on new online dispute resolution regime JATIN GROVER New Delhi, January 7 60 FE BUREAU New Delhi, January 7 Telecom to be free of litigation: Vaishnaw price increases so the average selling price (ASP) is expected to have gone up bylow-to-high single-digits. With not too many big deal announcements,highfurloughsand cutbacks by clients in discretionary spends, the IT pack is expected to report modest numbers. Continued on Page 12 TELECOM HAS BEEN the most litigious sector, but going forward around 80% of disputes would get settled at the department level and 99% at the telecom tribunal level, communications and IT minister Ashwini Vaishnaw told FE. Theministersaidthatthenewlyenactedtelecomlawhasputinplace an online dispute resolution mechanism between users, service platforms, and the government. “Between government and service providers, the law now provides for voluntaryundertaking.Thismeans, freedom to accept mistake, pay penalty and move on.Around 80% STRONG SIGNAL `75,000-80,000 cr ■ Around 80% of disputes to be settled at the dept level, 99% at the telecom tribunal level worth litigation cases still need resolution ■ Vaishnaw says the template ofonline dispute resolution mechanismwill be adopted by other sectors aswell ■ Cases like the `25,000-crore OTSC matter,which are before the courts,would remain outside theAct's purview ASHWINI VAISHNAW, COMMUNICATIONS AND IT MINISTER THE LAW NOW GIVES FREEDOM TO ACCEPT MISTAKE, PAY PENALTYAND MOVE ON. WHY SHOULD WE GO TO COURT FOR THAT? of cases are related to non-fulfillment of terms and conditions in licence provisions. Why should we go to court for that?”Vaishnaw said. The Act stipulates appointment of an adjudicating officer as well as a separate designated appeals committee (DAC) before a case goes to TN signs `58,000-cr deals with Tata, Pegatron, others TAMIL NADU ON Sunday signed investment deals worth around `58,000 crore from JSW Group,Tata Electronics,Hyundai andPegatron,amongothers,onthefirstday of the Global Investors’Meet,reports Sajan C Kumar. Major investment deals include `16,000 crore from VinFast,JSW’s`12,000crore,TataElectronics’`12,082 croreandHyundai’s`6,180crore.Thestatealsosigned agreementswithTVS Group (`5,000 crore),First Solar (`2,500 crore), Pegatron (`1,000 crore), Godrej Consumer (`515 crore), Mitsubishi Electric (`200 crore) and Qualcomm (`177 crore). ■ Page 2 the Telecom Disputes Settlement and Appellate Tribunal (TDSAT) level for resolution. Vaishnawsaidheissurethatthis template will be adopted by other sectors of the economy as well. Continued on Page 12 Capital infusion in OMCs may be halved to `15k cr CAPITAL INFUSION IN state-run oil marketing companies (OMCs) may be halved to around `15,000 crore from `30,000 crore earmarkedintheBudgetestimatefor202324, given their improved finances, sources told FE, reportsPrasantaSahu.Robustprofitsinthefirsthalfof thecurrentfinancialyearonthebackofsubduedcrude oil prices enabled these firms to offset the losses incurred in year-ago period. “Crude prices, which declinedtoacomfortlevelforIndiaintheinitialmonths of FY24 before reversing,has thankfully again moderated aftera fewmonths,”an official said. ■ Page 4 IT firms to CXOs: No poaching after exit SAMEER RANJAN BAKSHI Bengaluru, January 7 ITFIRMSAREnowreworkingthecontractswith their senior executives by putting in a clause which restrains them from soliciting,hiring or poachingemployeesafterjoiningrivalcompanies.The clause is being reinforced after the recentlegalspatbetweenWiproanditsformer CFOJatinDalal,whojoinedrivalfirmCognizant soonafterleavingthecompany.Thematterwas referredforarbitrationlastweekbyaBengaluru district court. Even Infosys sent a missive to Cognizantwarningagainstunethicalpoaching. SincetakingchargeinJanuarylastyear,Cognizant CEO Ravi Kumar, a former Infosys veteran,hashiredovertwentyexecutivevicepresidents and fourseniorvice presidents,manyof whom are from Wipro and Infosys. Around eightInfosysand10Wiproexecutivesquitand joined rival firms in the last calendaryear. Dalal’s contract with Cognizant restrains him from soliciting orhiring anyemployee for one year post his termination of service at the IT firm. Similarly, Infosys’ contract with CEO Salil Parekh also has a clause that restricts him fromrecruitingorsolicitingorassistanyperson in hiring an employee from the IT firm till six months afterthe termination date. “Companies are making agreements with senior management employees watertight. TERMS OF EXIT ■ New ■ Trend is acceleratingwith recent row betweenWipro and its former CFOJatin Dalal,who joined Cognizant clause in ■ Firms are also clearly contract specifyingwho their says no competitors are soliciting, hiring or ■ Infosyswrote to poaching Cognizant recently after a employees number ofsenior personnel after exit left to join the firm INSIDE 3 of 10 highest-paid employees quit Infosys and Wipro last year PAGE 4 Therearemanygreyareas,especiallywhenone getspromotedtotheseniormanagementlevel,” saidPareekhJain,founder,PareekhConsulting. Continued on Page 12 LARGE PACKS IN SELECT GENERAL STORES IN TOP 100 TOWNS HUL puts focus on family packs VIVEAT SUSAN PINTO Mumbai, January 7 STRATEGY SHIFT HINDUSTAN UNILEVER (HUL),the country's largest consumer goods company, is pushing large or family packs into select general trade outlets in top 100 towns,as it seeks to shore up volume growth, at least three distributors INSIDE from Maharashtra, Gujarat and Madhya Can HUL Pradesh have told FE. win its The move is also game of aimedatbringinglarge margins? general trade stores, ■ PAGE 12 those measuring 1,000-1,200 sq ft and above in terms of size, up to speed with modern trade by providing them large packs commonly found in modern trade outlets. The initiative has been rolled out across soaps and detergents,foods,beverages and personal care in what HUL calls 'Bharat ke Shehar', distributors said. The initiativealsoallowsHUL,saydistributors, to offer steep price-offs and discounts (as stores, measuring 1,0001,200 sq ft and above, up to speed with modern trade ■ Larger packs are normally pushed first into modern trade and e-commerce, traditional trade is last on priority ■ To bring large general trade The initiative also allows to offer steep priceoffs and discounts of as much as ■ `100-150 on some packs ■ To increase sales volumes with fewer store visits through the move by tapping into stable urban demand much as `100-150 on some packs),making it attractive for consumers to buy and helping them uptrade in the process. HUL also hopes to increase sales volumes with fewer store visits through the move, experts said, by tapping into stable urbandemand.“Formostfast-movingconsumergoods (FMCG) companies,the challenge is to increase volume growth. Rural ■ Distributors point out that general traders have felt left out with regard to packs, products demand remains weak at the moment, while urban demand is steady.Large packs maynotwork in rural areas since purchasing power of rural consumers is limited. Theinitiativethereforeisfocusedonurban areas,” G Chokkalingam, founder & MD, Equinomics Research &Advisory,said. Continued on Page 12 HYDERABAD