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Updated: 6 min 10 sec ago

Siddaramaiah's failure in Karnataka highlights a fallacy in India's political economy

6 min 10 sec ago
By Narendar PaniIn the Karnataka assembly election, Congress’ seats fell from 121 in 2013 to 78. While the party cobbled together a coalition with Janata Dal (Secular) after much political drama, the failure of the incumbent government to smoothly return to power continues a three decade-long tradition.Congress’ Siddaramaiah may have been the first chief minister since the 1970s to have completed a five-year term, but he too failed the re-election test. It is customary to analyse the immediate political triggers of each such failure. But, in the process, the larger reason behind this pattern gets brushed under the carpet.The repeated failure of governments in Karnataka is also a rejection of the conventional wisdom in India’s political economy that it does not matter how growth is achieved as long as it provides sufficient resources for welfare. That conventional wisdom had, arguably, its best advocate in Siddaramaiah.He succeeded in attracting large enough amounts of capital to the state to ensure it grew faster than the national average. He then went on to use the resources this growth generated to launch a series of successful welfareschemes.The effectiveness of these schemes convinced him that he had done enough to return to power. But they were not enough to overcome the politically unfriendly nature of Karnataka’s growth.There are at least two features of the state’s growth that ensure that the political costs to its governments remain very high. First, Karnataka’s growth has been Bengaluru-centric, thereby minimising the benefits of this growth to large parts of the state. What’s more, this growth has a limited effect even in the hinterland of Bengaluru.There was a time when the city’s growth was dominated by the garment export industry that offered tens of thousands of jobs to people seeking to migrate from villages in the vicinity of Bengaluru. This growth dominated the city till the mid-1980s, which, incidentally, was the last time a government was re-elected in the state.As the city’s growth began to be led by the information technology (IT) industry, its ability to absorb labour being released from agriculture declined very substantially. Even as hitech jobs became out of reach for migrants from villages, the high-cost modernisation of Bengaluru made the city too expensive for those being released from agriculture.Exit the Agri CultureSecond, as the number of people leaving agriculture rose substantially, they found it difficult to be absorbed in non-agricultural activities. Unlike neighbouring Tamil Nadu, Karnataka has had very few major success stories in getting those with agricultural capital to invest in industry and services. This task of generating nonagricultural jobs for those leaving agriculture has been left largely to the government.With the government trying to protect agriculture under stress even as it steps up investment in Bengaluru, it has had no resources to generate the dispersed growth that is needed. In the second half of his term, Siddaramaiah did try to develop new centres of urban growth. But it was too little, too late.In the absence of an effective economic strategy to absorb those leaving agriculture, politicians have sought to find answers within the political domain itself. This is most evident in coastal Karnataka where the landto-tenant movement was most successful. However, once tenants got land, they were no longer interested in Left politics. Instead, they took the cadre-based politics of the Left to the other end of the political spectrum, making this region extremely communally polarised.Elsewhere in the state, the political class sought to address the economic pains of transition by seeking specific benefits from the government. As the competition for these benefits increased, people tended to fall back on their caste identities. These identities were cultivated in the social domain by muths (monasteries) associated with specific castes. Lingayats have been associated with such a muthcentric approach to identity for centuries. But other castes have now followed the same path with varying degrees of success.Politics here has essentially become a combination of varying sociopolitical clout of muths and state patronage.When there are several muths within a major caste, there is also competition among muths, as can be seen in the conflict between the Lingayat monasteries seeking a minority religion status and those that are opposed to it. The competition between identity groups is further accentuated by the smaller castes beginning to assert themselves.In this mass of decentralised and extremely competitive identity politics, patterns can change locally, makingvirtually every constituency unique.Karnataka’s politics is then determined by the sensitivity of political parties to constituency-specific needs. Some parties have greater skills in this domain than themselves. JD(S) relies almost entirely on this skill. BJP’s effectiveness in this domain, too, must not be underestimated.Harvesting the Rural PulseCoastal Karnataka has seen the largest number of workers leaving agriculture, thereby changing the very nature of political demands. BJP put up new candidates who could identify with this change, and swept this region.Underlying Prime Minister Narendra Modi’s charisma is Amit Shah-led ability to spot the requirements of individual constituencies. In the absence of a political economy that will address the transition taking place in Karnataka, only constituency-sensitive parties will prevail —until they, too, fail in governance.(The writer is professor, National Institute of Advanced Studies, Bengaluru)
Categories: Business News

Me or We? Sushma Swaraj delivers a stinging takedown of Trump's favourite slogan

6 min 10 sec ago
External Affairs Minister Sushma Swaraj today warned that the world was reeling under a storm of protectionism and said India did not agree with American President Donald Trump's "Me First" approach on the issue. India, she stressed, believed in the concept of "We, Us and Ourselves". "I was sad when President Trump, in the UN General Assembly, said his slogan was Me First," the external affairs minister said. She was referring to Trump's speech at the United Nations in September last year when he had said, "As President of the United States, I will always put America first, just like you, as the leaders of your countries will always, and should always, put your countries first." "There is a storm of protectionism at the global level which is centred around the concept of Me and Myself but India believes in the concept of We, Us and Ourselves. If everyone views the other as equal then there is no place for protectionism in it," she said. Swaraj was delivering the first Pandit Deen Dayal Upadhyay Memorial International lecture on 'Soft Power Diplomacy: Strength of India', organised by the ICCR. After Trump's speech, Swaraj said she had a meeting with ministers of Latin American and Caribbean States. "A foreign minister of a small country spoke about President Trump's speech of Me First. She said if everyone says (and follows the policy) of Me First then how will my country sustain." Swaraj said she pointed out that India had a different approach. "I said India does not have the tradition of (following the policy of) Me First. I said my speech will have (the concept of) Om Sarve Bhavantu Sukhinah," she said, quoting a sloka from the Vedas that translates into "May everyone be happy". "When everyone is happy then everyone will have the provision of food and security," she said. The minister said India believed in the policy of assisting other countries, especially those who required a helping hand. "If we don't do this then developed countries will continue to grow and under-developed countries will remain under-developed. So how will economic disparity reduce," she asked. Swaraj said Indian culture, yoga, classical dance, movies, cuisine and Information Technology were a "treasure of soft power". Narrating anecdotes about the craze for Indian films abroad, the external affairs minister said the passion was not restricted to Hindi cinema but extended to regional language films such as 'Bahubali'. "Chinese President Xi Jinping wanted 'Dangal' to be screened at the BRICS Summit at Xiamen. The Indian ambassador in Mongolia wanted the movie dubbed in Mongolian as wrestling is the national sport of that country. When I met Prime Minister Ukhnaagiin Khurelsukh of Mongolia , he said he wanted to be an actor in Bollywood. To this, I quipped we need handsome leaders in politics too," she said. Swaraj said during bilateral meetings, foreign delegations proposed that the Bollywood industry shoot in their countries as it boosted tourism. She also shared an anecdote on how leaders in the recently held India-ASEAN Commemorative Summit came up with a demand for a song from the Shah Rukh Khan-starrer 'Kuch Kuch Hota Hai' and for 'Bol Radha Bol Sangam' from the 1964 Raj Kapoor- starrer 'Sangam'.
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Airtel, Vodafone and Jio bet on blockchain to cut costs, push revenue

6 min 10 sec ago
NEW DELHI:Top telcos Bharti Airtel, Vodafone India and Reliance Jio Infocomm are evaluating the deployment of blockchain technology-based platforms as they look to create new revenue streams and lower operational costs amid pressure on revenue and margins.Vodafone India is already at the proof of concept (PoC) stage with blockchain technology, working with IBM, while Sunil Mittal-led Airtel is currently involved in initial trials, people familiar with the matter said. Mukesh Ambani-led Jio has set up an engineering team to work on blockchain technology with the goal of developing new use-cases and applications.“There are 15-16 PoCs going on with various companies. Jio is also using startup accelerator Jio-GenNext to bring blockchain-related startups on board for development,” a person familiar with the matter said.Blockchain, which came into prominence with the Bitcoin cryptocurrency, is a digital ledger for storing data including financial transactions. The technology decentralises information, which is held in a shared database that can be accessed in real time. Telcos can use blockchain in areas like data and content monetisation and number portability.Queries sent to Airtel, Vodafone and Jio went unanswered.IBM, which is working with telcos to develop blockchain-based platforms, expects the first commercial deployments to take place this year. “A majority of the (telecom) market is actively in discussions. PoCs have been done to give comfort to the platform and for the intended business outcome. We would be surprised if it’s not in 2018,” Jitan Chandanani, blockchain leader at IBM, told ET. He didn’t share the names of IBM’s telco partners.“Almost all telcos in India are actively seeking ways and means to deploy blockchain for various usecases. Telcos, being at the centre of the digital revolution, are going to be key movers and shakers in making blockchain pervasive across the landscape,” said Vishal Awal, telco leader at IBM. Awal said blockchain is primarily being seen as a platform that enables the creation of the successful business networks.However, not a single telco is looking at introducing cryptocurrency using the blockchain technology in the country, the executives said. There has been speculation that Jio is planning its own cryptocurrency, JioCoin.
Categories: Business News

RCom, arms move NCLAT to halt insolvency proceedings against them

6 min 10 sec ago
Reliance Communications and its subsidiaries filed pleas in the appellate tribunal to set aside the National Company Law Tribunal’s decision to start insolvency proceedings against them on a petition filed by network vendor Ericsson.The move comes as the Anil Ambani-controlled companies are in talks with Ericsson to settle a long-pending dispute over unpaid dues worth more than Rs 1,000 crore owed to the Swedish telecom equipment maker.Reliance Communications, Reliance Infratel and Reliance Telecom filed the pleas in the National Company Law Appellate Tribunal asking it to set aside the NCLT’s order on the grounds that Ericsson was an operational creditor, one of two lawyers aware of the development said, asking not to be identified.“There is a dispute, so under Section 9, insolvency proceedings cannot begin,” the person said, adding that the plea was filed on Monday. RCom and Ericsson did not respond to ET’s queries as of Monday evening.The other lawyer said RCom was in talks with Ericsson’s headquarters in Sweden and is yet to settle the dispute out of court. ET reported last week that the latest settlement amount discussed was Rs 700 to Rs 800 crore, after Ericsson rejected an initial offer of Rs 400-500 crore. RCom confirmed the discussions, adding that resolution of the issue would help it exit the insolvency process.Ericsson has sought an undertaking that State Bank of India, one of Reliance Communications’ lenders, will pay up the dues if the telco does not clear the settled amount. Discussions around this are still going on. RCom shares fell 12.7% to Rs 13.40 at the close on the BSE on Monday on speculation that talks with Ericsson were unlikely to result in a settlement.The NCLT admitted Ericsson’s plea seeking insolvency against the telco and reasoned that the aspects of debt and default from RCom’s side were proven by the Swedish company. The tribunal’s order, which barred the telco from selling any of its assets, triggered insolvency proceedings for all three companies, which were to have started on May 15.Following the order, RCom’s plan to sell its wireless assets – spectrum, towers, fibre network and switching nodes – to Reliance Jio Infocomm for Rs 18,000 crore and pare debt of Rs 46,000 crore was stalled. A settlement with Ericsson outside the insolvency process, if allowed, could revive the plan to sell the assets.The tribunal appointed three interim resolution professionals from RBSA Restructuring Advisors LLP to run each of the three companies. The IRPs have 270 days to come up with a solution for RCom, failing which the company could face liquidation.The second lawyer said Ericsson has filed a caveat in the appellate tribunal and would be informed before it admits the matter and decides on hearing it. He added that the telco’s move was unlikely to help it much, since it has to publicly declare insolvency through newspaper advertisements by Tuesday, as per the NCLT order.
Categories: Business News

Trading in the stock market can kill you much sooner than smoking can

May 21, 2018 - 11:09pm
By Vijay KediaFrom the days of open outcry trading under a banyan tree to high-speed trading in the iconic PJ Tower, the Indian stock market has surely come a long way.From being nowhere in 1990 to the world-class infrastructure for securities trading that we have today and Sebi putting up a robust regulatory mechanism, it has been an impressive journey.What is not impressive is the fact that the advantage of all this modern infrastructure and systems has mainly gone to four intermediaries, the regulators and exchanges themselves besides, of course, the tax department and brokers. The traders at large were poor back then and have still remained poor. Only a handful of them have become successful in this journey, that also in investing, not trading. Success percentage in trading is hardly 1 per cent. Why? Because, it’s not in our DNA. We learn things three ways: by birth when it comes in our DNA; in our childhood through school curriculum or as a culture at home; and by observing the world, reading books and watching others in our youth.But, as they say, you cannot run 100 metres in 8 seconds by coaching. That’s why the Kenyan always comes first in marathons. Our ancestors lost their fortunes in stock market; that is why in many old industrial houses even investment is banned, forget trading. They look down upon the stock market. How do you expect them to teach their children? So we did not have it in our DNA nor were taught at home or school or colleges. When I was watching the movie Udta Punjab, I was really moved to know how the youth of one of our bravest communities is being ruined. After some time in the movie , I realised this is what exactly is happening even in our stock market in the name of trading. Trading is the biggest addiction. No less than drug. You will sell your house to buy drugs and trade to recover your losses. During a speech I delivered at IIM Ahmedabad, a student told me he wanted to use his father’s pension to trade in stock market. I held his hand and asked him to promise me he would not do that. My wife’s English teacher, now in her 60s, is asking me whether she should allow her son to use her savings in the stock market. I was shocked!It is something like giving a gun in the hand of an innocent person. Sebi should not allow stock trading, unless one has done a course etc. Hard training is a must before one starts trading. Else, all the intermediaries and their employees will keep on becoming arabpatis and crorepatis and 99 per cent of traders will keep on struggling even for their livelihood. For a starter, the best way to become a millionaire through trading is to trade with a billion. Trading is a different ball game. It cannot be learnt without experiencing losses. And to sustain till you have learnt it fully, it requires big discipline which again needs to be learnt systematically. It’s a process. It is impossible for a new person to learn it by reading books. Trading is injurious to your wealth. You can lose 50 years’ of savings in one trade. Today, majority of broker ads, TV channels and technical analysts are encouraging and luring youth into trading. It is a recipe for disaster. Buy at Rs 65, stop loss Rs 60, target Rs 70. Even god can’t predict that. They are fooling people to generate their business and income in the name of the liquidity. I remember an old movie where Raj Kapoor runs a scheme and assures to sell houses for Rs 100 each on a future date. When asked how can he give a house at Rs 100, he says I can’t. I am not selling house I am selling dreams. In other words, I am making them fool. I think the name of the movie was also Shri 420.In the name of seed capital, people indulge in trading. Instead of that, they should use ordinary mobile phones, ordinary unbranded cloths, avoid eating at fancy restaurants and travel by public transport to build that seed capital over a few years. Otherwise, forget capital, you may not be left with the seed money.Wanting to be crorepati in the shortest time is the biggest reason for failure in the stock market. People often confuse between investing and trading. In investing always remember Rome was not built in a day and in trading always remember Hiroshima and Nagasaki were destroyed in a day. Market rewards you as per your perception. If you treat it as a gambling den, then it will prove a gamble for you, and the best place to go would be Goa, not stock market. Before punching any trade, remember you have four above-mentioned dependents to feed before you feed yourselves. So, protection of your capital should be top priority and it is the biggest gain of your capital. In earlier days in Calcutta Stock Market at Lyons Range, people used to say only four Hindi alphabets can make money in trading ie TA, THA, DA, DHA, NA – TA means Taruni (jobber), Tha means thoda small quantity), DA means dalal (broker), DHA means dhanwan (wealthy) and NA means no payment (Who can refuse to pay losses). See if you fall in any of these categories. Being fully dependent on futures trading will make you inactive in life and cripple your other businesses. Plus, you are most likely to turn a blood pressure patient at an early age. So chose your life carefully. The purpose of our life is to be happy.(Excerpted from a speech Vijay Kedia delivered at the London Business School last month) 63556484 58784177 64253447
Categories: Business News

India to achieve 9 per cent growth rate by 2022

May 21, 2018 - 11:09pm
Aayog vice-chairman Rajiv Kumar today exuded confidence that Indian economy will achieve 9 per cent growth rate on sustained basis by 2022 on the back of reforms like GST, demonetisation and the Insolvency and Bankruptcy Code (IBC). Indian economy grew by 6.6 per cent in 2017-18 and expected to grow at 7.5 per cent this fiscal. "Given that we have done GST, demonetisation, IBC, recapitalisatioon of bank, we will grow at 9 per cent growth by 2022. We will also able to sustain it at that level," Kumar said in facebook live organised by NITI Aayog. He pointed out that Indian economy averaged 8.3 per cent from 2003-11. Replying to a question on popularising electric vehicles, he said that this is best time for India to encourage, promote electric vehicles as petrol price is now touching USD 80 per barrel. "So we really should not wait even for a day to get this off the ground," the NITI Aayog vice chairman stressed. Answering questions on farm sector, he said,"We are doing pilot projects which can demonstrate that farmers income can be doubled." The government proposed double the income of farmers by 2022.
Categories: Business News

Flipkart bullish on selling furniture online

May 21, 2018 - 11:09pm
Flipkart expects its furniture division to be the next big driver of growth and sees it growing four-five times this year, a top executive of the e-commerce giant said.The company claims that its furniture division, relaunched in September with its private label ‘Perfect Home’, has a 30% market share in furniture bought online.“Since our launch in September, we have grown three times in terms of value and volume,” said Nandita Sinha, head of furniture category at Flipkart. “We have been working on improving our supply chain, moved the fulfilment centres closer to the customer to ensure faster deliveries, etc.”The country’s online home and furniture market was pegged at about $1 billion in 2017 and was expected to grow at 36% year-on-year, according to industry experts.With 40,000 SKUs (stock keeping units) at present, Flipkart is bullish on larger furniture due to its large ticket size and potential in the smaller cities and towns. The company claims that the current average order value of its furniture products is almost four times higher than other products on the marketplace, with beds, mattresses, sofas, etc. being the popular picks. The company delivers furniture in 110 cities.“There is a lot of potential in tier 2 and 3 cities because there is a dearth of selection in those areas,” said Sinha.Popular among the other players operating in the furniture space are Pepperfry and Urban Ladder. ET had reported in November that Flipkart has shown interest in investing in Pepperfry or Urban ladder.While Flipkart claims to be larger than its competitors in the online furniture space, experts tracking the space say that Pepperfry is leading the pack with 40% market share, followed by Urban Ladder, placing Flipkart in a possible third position. Both Pepperfry and Urban Ladder have made aggressive offline expansion to capture more market share, as experts believe that the next wave of growth for this sector would be through an omnichannel strategy.But Flipkart’s Sinha maintains that the company does not have any plans to foray into the offline space, given that the online market potential is massive and untapped. Meanwhile, the company has launched ‘FurniSure’, a durability seal for products listed under the furniture category, to build trust and reliability for customers to purchase furniture online.
Categories: Business News

Online selllers body moves CCI against Flipkart's wholesale company

May 21, 2018 - 11:09pm
NEW DELHI: Retailers have joined hands to approach fair trade regulator CCI against USD 16 billion Walmart-Flipkart deal as they apprehend that the it would lead to massive job loss and be a "nightmare for retail trade" of the country.Traders body CAIT in a strongly worded statement today alleged ruling party BJP of bias towards multi-national companies and deviating from its commitment made in 2014 election manifesto.The Confederation of All India Traders (CAIT) said that it will move fair trade regulator CCI to file objections on the proposed Walmart-Flipkart deal, claiming that the agreement would lead to an uneven playing field and massive job losses.On the other hand, an online sellers industry body today moved the Competition Commission of India (CCI) against Flipkart India Pvt Ltd, a wholesale company, for allegedly abusing its dominant position on Flipkart's online marketplace.Emails sent to Flipkart did not elicit a response.Global retail giant Walmart had last week approached the Competition Commission of India (CCI) for approval of its proposed acquisition in Flipkart, saying the deal doesn't raise any competition concerns.Walmart seeks to acquire 77 per cent stake in the homegrown e-commerce firm with a buyout of USD 16 billion."The CAIT as a first step is moving to Competition Commission of India for filing its objections to Walmart deal," CAIT Secretary General Praveen Khandelwal said in a statement.Opposing the deal, the CAIT also wrote to Commerce Minister Suresh Prabhu and sought to know what steps the government has taken to scrutinise the deal.The traders' body alleged that the deal involves important issues related to FDI policy, cyber security, apprehension of using e-commerce for entering retail trade by circumventing the law etc.Khandelwal alleged that the government has not taken any step to consult traders despite lodging their objections with the commerce ministry."Such an attitude indicates the turning balance towards MNCs at the cost of ignoring the domestic retail trade. It is much against the BJP manifesto of 2014 which has committed no encouragement to FDI in retail. It appears that government has taken a U-turn on its declared commitment," he said.According to CAIT, the US, Europe etc, the financial lending entails an interest rate from 1.5 to 2.5 percent only whereas in India the finance is lend by the Banks from 12 per cent to 20 per cent per annum."This difference in interest rates in itself is enough to kill the domestic trade. The Walmart-Flipkart deal will prove to be a nightmare for retail trade and economy of the country. There will be enormous job losses and an uneven playing field," Khandelwal saidWhile the All India Online Vendors Association (AIOVA), which claims to represent over 3,500 sellers on various e-commerce platforms, demanded investigation on Flipkart market place run by Flipkart Internet Pvt Ltd due to the abuse of its dominance by indulging in unfair and discriminatory practice in dealings related to sister concern Flipkart India Pvt Ltd.The online retailers body alleged that Flipkart India Pvt Ltd is a wholesale dealer who own brands such as Billion, Marq, Smartbuy etc.It also sources goods from various brands and sells it to sellers such as WS Retail Pvt Ltd and many others who eventually sell the goods to consumers on Flipkart.com which is owned and operated by Flipkart Internet Pvt Ltd, AIOVA alleged.The representative body claimed that such a "preferential treatment and discriminatory conduct", which is prohibited under the Competition Act, "is killing many independent sellers who depend on its platform for their livelihood".It has prayed to the Commission to immediately prevent Flipkart from selling goods at a discounted price to certain sellers which are further sold on Flipkart.com."If not stopped immediately, many independent sellers would be forced to leave the market, resulting in concentration of the market," it asserted.The online vendors has demand for a regulatory body for the sector should be formed before any changes are made in the ownership and control of power of any of the marketplace.
Categories: Business News

Forget crude at $80. This can be global markets’ worst nightmare

May 21, 2018 - 11:09pm
By Catherine Ngai, Alex Longley and Javier BlasBrent crude oil grabbed all the attention after spot prices hit $80 a barrel last week. And yet, almost unnoticed, a perhaps more important rally has occurred in the obscure world of forward prices, with some investors betting the "lower for longer" price mantra is all but over.The five-year Brent forward price, which has been largely anchored in a tight $55-to-$60 a barrel range for the past year and a half, has jumped over the last month, outpacing the gains in spot prices. It closed at $63.50 on Friday."For the first time since December 2015, the back end of the curve has been leading the complex higher," said Yasser Elguindi, a market strategist at Energy Aspects Ltd. in New York. "It seems that the investor community is finally calling into question the ‘lower for longer’ thesis."Bob Dudley, the chief executive of oil giant BP Plc, coined the "lower for longer" mantra in early 2015, warning of a protracted period of cheap crude. He later clarified that he meant "lower for longer, but not for ever."64261470 More to RunWhile spot prices fluctuate wildly, often driven by geopolitics such as U.S. sanctions on Iran, the five-year forward usually trades in a narrower range, anchored by longer views about future supply and demand.Over the past three years, long-dated prices had been weighed down by the belief the growth in U.S. shale production, combined with the adoption of electric vehicles, would keep prices under control.Investors are now questioning that hypothesis, pushing up forward prices. Over the past month, Brent five-year forward futures gained 11 percent, compared with a 6.8 percent increase in futures for immediate delivery."We think there is more to go for the longer date contracts,” SEB chief commodities analyst Bjarne Schieldrop said. “This will send very positive price signals into the whole oil space with higher confidence, optimism and evaluations as a likely consequence."Demand SurpriseThere are several reasons for the sudden surge in forward prices. Oil consumption is expanding much faster than anticipated, adding growth in two years that would normally take three. At the same, oil investment has dropped significantly over the past three years, particularly in projects that take longer to develop such as ultra-deep water offshore, raising doubts about future supply growth despite the gains in Texas, North Dakota and other U.S. shale regions.Moreover, a change in marine fuel oil specifications by 2020, which should increase significantly the demand for diesel-like refined products, is further reinforcing the belief among some investors that the oil market will be tighter than expected in the future.The buying has sparked a rally in later-dated contracts in the past week-and-a-half that traders say is even more impressive than Brent’s march past $80. The grade for delivery in December 2022 has surged 10 percent since to beginning of the month to nearly $64 a barrel. The December 2023 has risen above $63 a barrel.The higher forward prices are also catching the attention of some equity investors as they usually use longer-dated prices to value energy companies.Despite the rally in forward prices, oil exploration and production companies, which typically hedge their production further out in the curve, have remained reticent to buy in, according to John Saucer, vice president of research and analysis at Mobius Risk Group in Houston. Oil producer selling typically puts pressure on the back of the curve.Investors aren’t just buying outright long-dated futures, but also betting through the options market on much higher prices in the early part of next decade by buying call options. The contracts, which give investors the right to buy at a predetermined price, are popular among commodities hedge funds.Call options that would profit from Brent rising to $130 a barrel by the end of 2020 traded 2,000 times on Friday. That follows a similar amount of $100 contracts for the same period trading over the past two weeks.“The war premium at the front of the market masked the fact that future significant demand increases and questions over supply levels equate to higher prices down the line,” said Richard Fullarton, founder of commodity focused hedge fund, Matilda Capital Management Ltd.
Categories: Business News

Tech view: Nifty forms bearish candle; supports shifting lower

May 21, 2018 - 11:09pm
NEW DELHI: The Nifty50 fell for the fifth straight session on Monday to end near the 10,500 level. In the process, it formed a bearish candle on the daily chart. The index made lower highs and lower lows for the fourth consecutive session, suggesting that its supports are shifting lower. But a small pullback cannot be ruled out, analysts said. The Nifty50 should hold the support at 10,440 level, which is the 50 per cent retracement of the entire rise from 9,951 to 10,929 over the past eight weeks, said Vikas Jain, Senior Analyst at Reliance Securities.For the day, the index dropped 79.70 points, or 0.75 per cent, to close at 10,516. It hit a low of 10,505 during the day and is now approaching the 50-day simple moving average (SMA).As long as the Nifty50 holds below 10,550, its weakness could extend till its next support at 10,440 and 10,400 levels, said Chandan Taparia of Motilal Oswal Securities, who believes the index will see upside hurdle at 10,600.Both the daily RSI and Stochastic indicators are in the negative terrain. That said, the index is hovering around its earlier breakout level between 10,500 and 10,480 and hence a short pullback cannot be ruled out, said Rajesh Palviya, Head – Technical & Derivatives Analyst at Axis Securities."On the higher side, the 10,550 and 10,560 levels are likely to act as crucial resistance for any pullback in the near term. Any sustainable move above this will trigger a recovery towards 10,580 and 10,600 levels. On the downside, the 10,500 level remains an immediate support," the expert said.Mazhar Mohammad of Chartviewindia.in said if a particular level offers strong resistance, then on a breakout above that point, Nifty shall have strong support."In the current downswing, the Nifty50 shall ideally find support around its 50-day SMA, whose value for the next session is placed around the 10,459 level. Momentum oscillators on the lower time frame charts reached the oversold territory as the market was continuously on a selling spree for last five days with the advance-decline ratio extremely favouring the bears, but a pullback attempt in next one or two sessions can’t be ruled out," Mohammad said.
Categories: Business News

ShareChat rolls out three new features, adds private messaging and hashtags

May 21, 2018 - 11:09pm
Vernacular social media app, ShareChat has rolled out three new features that include private messaging, tagging, and a personal messaging feature which allows users to connect with other unknown users. The features are intended “to encourage connections between the users with similar interests and to promote content diversity on the platform”, ShareChat said in a statement. The platform that targets new internet users currently has a total 30 million unique registered users on the platform and 17.5 million monthly active users. The platform supports 14 different vernacular languages. The three-year-old startup has raised about $24 million till now. Earlier this month ET had that ShareChat is in talks to raise about $100 million in funding that might increase its valuation to $400 million. The personal messaging feature ‘Shake-N-Chat’ will connect two users engaging with content from similar genres, over personal chat, at random. While the "open tagging" feature allows users to create tags and post relevant content under the user generated tags. The tags that trend will be visible in the ‘explore’ section of the platform.The rollout comes after a survey by ShareChat on user meet-up in 2017 across six Indian cities. The survey showed that more than 88 percent of its users wanted a private messaging feature on their social media platform, following which the one to one messaging feature was rolled out.“Users have responded better than our expectation with the launch of Open Tagging feature. Users are actively creating diverse tags on the latest events and posting relevant content around the theme,” said Shashwat Chandra, Senior Product Manager at ShareChat.Sunil Kamath, Chief Business Officer at ShareChat said, “Over the years, we have observed that many users shift to other direct messaging apps for privacy purposes… The launch of new features like private messaging and Shake-N-Chat strengthens the platform’s social experience between both known and unknown users”.
Categories: Business News

SBI and PNB just got a $5.2 billion breather, but it may not last

May 21, 2018 - 8:08pm
The biggest asset sale under India’s new bankruptcy law offers a breather to the nation’s banks, a number of which posted record losses for last quarter.Tata Steel bought insolvent Bhushan Steel and is paying $5.2 billion to Bhushan’s creditors. This is about 63 percent of the Rs 56,000 crore claimed by a consortium including State Bank of India and Punjab National Bank, the biggest government-controlled lenders in the country and Bhushan Steel’s largest creditors. Their shares rose on Monday.Banks had provisioned for a discount on the outstanding debt of more than 50 percent, said Ravikant Bhat, an analyst at Emkay Global Financial Services Ltd. in Mumbai. “The successful resolution of Bhushan is a positive structural development for the banking sector.”SBI, which a Bloomberg survey predicts will post a loss of about 17 billion rupees for January-to-March when it reports Tuesday, will write back about Rs 1500 crore of the provisions it had set against its exposure to Bhushan, Chairman Rajnish Kumar told BTVI. PNB, which reported India’s biggest ever quarterly bank loss last week, sees a 7.35 billion rupee gain to profits in the April-to-June quarter, Business Standard reported, citing the lender.“The previous open-ended resolution framework allowed vested interests to perpetually delay bankruptcy proceedings,” Krishnakumar Somasundaram Vishwanathan, an analyst at S&P Global ratings in Singapore, wrote in a note. “The bankruptcy code tilts the balance of power in resolution frameworks toward lenders.”Yet, it may be too early to celebrate as Neeraj Singal, a founder of Bhushan, has challenged the Tata Steel takeover. A bankruptcy court on Monday said that while it won’t suspend the deal right now, the transaction will be subject to the final outcome of the case. A hearing is scheduled for May 30.Tata Steel’s spokesperson said the company doesn’t comment on matters being decided in court.Moreover, the resolution of Bhushan is aided by strong steel prices, while demand cycles may not favor other stressed companies. More than $15 billion of steel assets are up for auction, according to S&P, part of the $210 billion of stressed assets estimated to be held by Indian banks.
Categories: Business News

Want to join the civil service of your dreams? The path to that goal might soon change

May 21, 2018 - 8:08pm
If one wants to become an IAS officer, all one has to do is ensure one gets enough marks in the civil services entrance examination and the interview. That can soon change. If a proposal from the Prime Minister's Office (PMO) becomes policy, all those who clear the entrance examination and interview might be granted the service and cadre after their performance in a short course is evaluated. What exactly is the proposal?The Ministry of Personnel has asked all ministries for comments on a suggestion received by the PMO that service and cadre allocation for civil servants should be done after they undergo a three-month foundation course at the government's training academy in Mussourie, and their performance in the course also be made a parameter. How it works at presentEvery civil services aspirant has a choice of service. Many want to become IAS officers while others want to join the IFS or the IPS. If one gets top marks, one gets a service of one's choice. Usually, IAS is the most preferred service among candidates, followed by IFS and IPS. Those with lower ranks get into allied civil services such as Indian Revenue Service, Indian Audit and Accounts Service and Indian Railways Service. They are allocated cadre and services before commencement of a foundation course, according to their rankings in the exam, conducted by the Union Public Service Commission.How will the new system work?Currently, the IAS and IFS probationers undergo a three-month foundation course at Lal Bahadur Shastri National Academy of Administration in Mussoorie. Probationers from other services are sent to other academies after they have been been allotted service and cadre. In the new system, the service and cadre will be allotted after the foundation course. Their performance during this course will be evaluated and the marks added to their score in the entrance examination. The allotment of service will be based on the total score and also the candidate's aptitude.Positive impactEffectively, the new system will add one more layer of scrutiny to the entrance examination. The new system can better evaluate probationers for their choice of service. It can ensure the candidates are tested not just on their knowledge but also other attributes such as group activities and leadership. Negative impactEvaluation of a probationer's performance during the three-month foundation course would have a lot of scope for subjectivity. One's performance in class, group activities, projects or workshops will involve a lot of human element and can make the process evaluation vulnerable to influence, bias, favour and discrimination.
Categories: Business News

China may end its four-decade-old policy on birth limits as soon as this year

May 21, 2018 - 8:08pm
China is planning to scrap all limits on the number of children a family can have, according to people familiar with the matter, in what would be a historic end to a policy that spurred countless human-rights abuses and left the world’s second-largest economy short of workers.The State Council, China’s cabinet, has commissioned research on the repercussions of ending the country’s roughly four-decade-old policy and intends to enact the change nationwide, said the people, who asked not to be named while discussing government deliberations. The leadership wants to reduce the pace of aging in China’s population and remove a source of international criticism, one of the people said.Proposals under discussion would replace the population-control policy with one called “independent fertility,” allowing people to decide how many children to have, the person said. The decision could be made as soon as the fourth quarter, the second person said, adding that the announcement might also be pushed into 2019.Danone, which has doubled its share of China’s baby food market in the past five years, rose to a session high in Paris before paring gains. Reckitt Benckiser shares erased declines in London.The policy change would close the book on one of the largest social experiments in human history, which left the world’s most-populous country with a rapidly aging population and 30 million more men than women. The policies have forced generations of Chinese parents to pay fines, submit to abortions or raise children in the shadows.The US and other Western nations have criticized the coercive measures required to enforce the birth limits, including steep fines, sterilization and forced abortions. The 2015 shift toward a two-child policy was part of a gradual effort to loosen the birth limits over the years as China’s working-age population began to wane.An initial feasibility study was submitted to Chinese Premier Li Keqiang in April, according to one of the people familiar with the discussions. That study found there would be “limited” benefits to lifting birth restrictions nationwide. Li requested more research on the social impact of scrapping the policy altogether, the person said.Neither the State Council Information Office nor the National Health Commission immediately returned faxed requests for comment Monday.The move underscores growing concern among Chinese policy makers that more dramatic action is needed three years after allowing all families to have two children instead of one. Births fell 3.5 percent to 17.2 million nationwide last year, according to the Bureau of National Statistics, erasing almost half of the increase in births caused by relaxing the policy.China’s graying society will have broad consequences for the nation and the world, weighing on President Xi Jinping’s effort to develop the economy, driving up pension and healthcare costs, and sending foreign companies further afield for labor. The State Council last year projected that about a quarter of China’s population will be 60 or older by 2030, up from 13 percent in 2010.“The low birth rate and low number of newborns from the previous two years after the two-child policy sent a strong message to the decision-makers that the young generation has a weak willingness to have more children,” said Chen Jian, a former division chief at the National Family Planning Commission, who’s now a vice president of the China Society of Economic Reform. “China’s population issues will be a major hurdle for President Xi Jinping’s vision of building a modernized country by 2035.”In March, China removed the term “family planning” from the name of the newly consolidated National Health Commission -- the first time since 1981 that no agency bears the name. Xi and Li also omitted any reference to the phrase from key policy reports in recent months.While China credits birth limits with helping to launch a decades-long economic boom under reformer Deng Xiaoping, they have also exacerbated demographic imbalances, with many parents choosing to abort female fetuses. China has 106 men for every 100 women, compared with 102 globally, according to the CIA World Factbook.Such moves have done little to increase the fertility rate, with many parents concerned about the costs of raising additional children in a society accustomed to focusing family resources on one. Nonetheless, Chinese policy makers have resisted calls by economists and demographers to relinquish control amid concerns over the impact of a sudden increase in births or older parents angry about missing the chance to expand their families.Even a short-lived baby boom could prove lucrative for businesses who cater to childrens’ needs in the world’s most populous county. Chinese consumers bought $19.4 billion of infant products between September 2016 and August 2017, an 11 percent increase, according to an annual report released by Nielsen Holdings Plc in November.
Categories: Business News

Former MD of PNB was aware of Nirav Modi fraud, says CBI

May 21, 2018 - 8:08pm
Former MD and CEO of the Punjab National Bank Usha Ananthasubramanian and some other senior bank officials were aware of the "fraudulent" dealings with diamond merchant Nirav Modi but kept "misleading" the RBI, the CBI has alleged in its charge sheet. A special CBI court here took cognizance of the charge sheet today and permitted the investigating agency to issue fresh non-bailable warrants against Nirav Modi, his brother Nishal and an executive of the Nirav Modi Group Subhash Parab. In its charge sheet into the nearly Rs 13,000 crore scam, the CBI said the RBI had since October 2016 sent several questionnaires to the PNB, seeking to know what procedures or measures the bank follows before issuing Letters of Understandings and Letters of Credit. "This was duly dealt by accused Ananthasubramanian and the bank's Executive Directors - K V Brahmaji Rao, Sanjiv Sharan and Nehal Ahad and instead of replying to the queries in true spirit and facts, Ahad and the general manager of the International Banking Division of the bank's headquarters prepared a misleading reply and sent it to the RBI after getting the same approved from Sharan," the CBI said. The 12,000-page charge sheet further claimed that a similar fraud was detected in 2016 following which the RBI took up the issue and issued circulars to all banks. "The accused PNB officials, including Ananthasubramanian and others, were aware of this fraud involving PNB Dubai and the Indian Overseas Bank Chandigarh and yet they did not take any corrective action and remained silent spectators. This facilitated continuance of the fraud resulting in wrongful loss to the PNB," it said. From August 2015 to May 2017, when Ananthasubramanian was the MD and CEO of the PNB, relevant circulars, caution notices and urgent questionnaires issued by the RBI were brought to her notice and she dealt with the same, the CBI said. "Inspite of her knowledge about the modus operandi in these frauds, she (Ananthasubramanian) did not take any meaningful corrective measures in her capacity as the executive head of the bank and had unauthorizedly delegated the RBI guidelines work to her subordinates without any follow up action," the charge sheet said. The CBI has further claimed that senior officers from the Nirav Modi Group including accused Vipul Ambani were constantly meeting Ananthasubramanian in order to continue with the credit facilities to the group. "This indicated clearly that she (Ananthasubramanian) was aware of the facilities extended to the various group entities of Modi," it said. The agency said the accused bank officials held supervisory roles in the bank and had through their acts facilitated the issuance of the fraudulent LOUs. "The fact that bank official Gokulnath Shetty continued to issue fraudulent LOUs with impunity despite issuance of several RBI circulars indicates an environment of protection he enjoyed in the form of lack of reconciliation and absence of bank visits by seniors," the CBI said. The patronage extended by the senior officials of the bank to the accused persons working in the PNB Brady House branch of Mumbai resulted in a huge wrongful loss to the bank and wrongful gain to the accused persons, it said. "MD and CEO Usha Ananthasubramanian and other senior bank officials by failing to take any precautions or preventive steps to prevent the fraud perpetrated by firms controlled by Nirav Modi thereby committed criminal misconduct in conspiracy with the other accused persons," CBI alleged.
Categories: Business News

Dhanlaxmi Bank board suggests names for CEO post, RBI yet to respond

May 21, 2018 - 8:08pm
The Dhanlaxmi Bank board, which is in a controversy over the resignation of a director, is consulting with the Reserve Bank of India on the appointment of a new chief executive to replace the current incumbent G Sreeram, two people familiar with the matter said.Although Sreeram’s term ended in April 5, the banking regulator has asked him to continue till a new CEO takes charge.Dhanlaxmi board has proposed three or four names as the next CEO but RBI is yet to take a decision, sources within the bank said. The bank’s board is against extending a fresh term to Sreeram. People close to the Thrissur-based lender said Sreeram has not been on the best of terms with other board members.The board last week deferred its meeting on quarterly financial results to May 23 as members differed on whether to take the loss on treasury operation at one go or to use the RBI dispensation to stagger the losses over four quarters.The bank said in a regulatory filing that the board at its meeting on May 15 decided to defer the adoption of accounts “in order to rework by including certain items, which are eligible to be deferred as per regulatory dispensation, in view of better presentation on conservative basis."The bank reported Rs 22 crore net loss in the third quarter with its return on assets turning negative. The bank was making losses when Sreeram joined as CEO on April 5 2015. It had Rs 242 crore net loss for FY15 with 7% gross NPA and a negative 7.9% return on assets on annualized basis.Dhanlaxmi Bank had been on the news last week for all wrong reasons. First, its independent director G Vijaya Raghavan, a former member of the Kerala Planning Board, resigned from the bank board citing 'constant interference' by the central bank. Two days later, RBI asked the board to keep in abeyance, till further advice, the appointment of a new non-independent director Arun Rao MG, who was inducted on the board on May 15.
Categories: Business News

India still one of the most exciting growth stories to bet on

May 21, 2018 - 8:08pm
For an investor with a medium-term perspective, there are lots of opportunities around the theme of Indian economy and one should buy on dips, says Pankaj Murarka, Founder, Renaissance Investment Managers. He was talking to ET Now.Edited excerpts:The fall in the broader markets is apparent. How do you see it? We are seeing clear sign of capitulation when it comes to the midcap and small cap space and that is something which was long overdue. Last year, we had phenomenal move in midcap and small caps. A lot of midcap and small cap stocks have gone up 3x or 5x irrespective of the underlying fundamental and there was a clear disconnect between the underlying fundamentals and where the price action was. A lot of this price action was driven without an institutional participation. It was largely retail and HNI participation which was driving all of that. We are clearly seeing an unwinding and a capitulation there. Globally emerging markets are seeing a round of profit taking and in India we are seeing some impact of that but for an investor with a medium-term perspective, there are a lot of green shoots around the Indian economy and this correction should be an opportunity to buy into desired stocks. How much of this selling in midcap, would be the impact of this mutual fund scheme rejig which is taking place in the market? It might have some impact but I do not think that is the only thing that is driving the entire selloff. There was a magnitude of froth that existed in all these midcap and small cap stocks. We had a situation where the midcap and the small cap indices were trading at about 40% to 50% premium to your large cap indices. We have not seen a follow-through in terms of earnings in a lot of those names. Clearly the growth expectation that were priced in into lot of those midcap and small cap stocks were too high and we have seen some round of disappointment there. There was a degree of froth in the way retail and HNI participation was happening. So, it is largely unwinding of positions. Valuations in consumer staples is at a historic high. HUL is trading at some bizarre PE multiple, Titan at 60-70 times, Jubilant 40-50 times, Colgate Palmolive 21. I do not track PE multiples, but it has to be out of sync. TCS PE multiple almost 25-30 times. How come nobody is talking about rich valuations in these stocks where we know the growth is not going to be in line with what the underlying strength. PE multiple of 70 times for Titan means that everybody is assuming that the company will only grow at 70% for god knows how many years? What has happened is over the last five or six years, the basket of growth stocks which have been delivering very consistent growth in India has narrowed and we have had too much of money chasing those baskets. These are large companies. For example, when you are talking about Titan, it used to be one of those midcaps but it is an index company and all these companies despite their size, are still growing in high teens or more than that.A Titan is expected to grow 30% over the next two years and you are seeing a huge consolidation that is happening in the whole segment there because of change in government regulation. The result: the stronger or the bigger player is becoming bigger. The valuations in the context of the growth over the next two years are probably well justified and are probably trading at some premium but unless and until growth becomes more broad-based, you will have a situation where too much of money will chase a narrow basket of stocks and their valuations will continue to remain elevated.What amazes me is that three years ago my view was that broad-based economic recovery was coming and with every quarter, forget the recovery being broad-based, the growth is getting narrower and narrower. If I had 150 stocks where I was confident of a 1-20% growth, that number has become 25-30. In your own words the growth visibility is only restricted to maximum 40-50 stocks. What is the story here?Things are changing at margin. Last three or four years, India has gone through a difficult economic environment where we had to deal with a situation where we had broken balance sheets, twin deficits and we were coming on back on two successive failed monsoons. Also, you should bear in mind that last year was a year when in a matter of 12 months, we have done some of the biggest reforms that India has ever seen in India’s economic history in a matter of 12 months and the GST followed by RERA and IBC. All these have been hugely disruptive. But today we have reached a situation where the real economy has started showing positive traction. The impact of disruption because of GST and demonetisation is behind us now and we have started addressing the twin balance sheet issues. The core sector of the economy have started responding pretty positively. If you look at the fuel consumption data, the electricity data or the freight indices they are all showing pretty strong growth over the last six or eight months. If you look at the airline passenger traffic, that is growing at 20%. There are pockets of economy which have already started recovering. The way I look at it is India has actually been into an industrial recession for the last four years but now we are nearing the end of it and we are seeing positive traction in the real economy. Going forward, growth will become far more broad-based than what it has been for the last three years. One highlight for the quarter gone by has been some of the so called consumption names where the unorganised market is shifting to the organised market. We have seen that in Sheela Foam, Britannia. How are you betting on that theme? That is bound to happen. GST is the mother of all reforms and now as they are implementing those e-way bills. The point is we have taken all the pain of disruption caused by GST. We are yet to see the gains of it. The gains will start materialising now and the gains are two or three-fold. One, the organised players will have an edge over the unorganised player because the business model of a lot of these small unorganised player thrived on evading taxes. They lose that advantage now. You will clearly see a shift in markets from unorganised to organised player and more importantly, over the next few years, that will take India’s revenue collection or tax collection significantly higher. The kind of tax buoyancy that can emerge out of GST grows to underestimating that.That is a fair point. When I started my career, the retail space in India had arrived, Reliance was moving into retail, Kishore Biyani had opened a Big Bazaar. Everyone told me that the kiranawala, the Laxmi Store outside our houses are going to disappear. But they all continue to exist? Yes, what you are saying is absolutely right but.. I hope you are not getting carried away with this theme because the smaller players will always have some advantage. What you are saying is right but what has also changed is that organised retail which was non-existent until 2001 or 2002, today has a 3% market share in India’s overall retail, India’s retail is so huge and growing because you are adding more and more consumers with more spending power.The overall retail market will keep growing but organised retail, which was zero, is 3% today. Five or 10 years out that will be something like 10% or 12% and probably 15 years out that will be 20%. So that shift is happening but maybe it is not as visible because these are very long-term structural shifts which take 20 years to play out. So that story will play out. What is the one word of caution you would want to exercise in a market like this? Given all the macro variables, given rising oil prices, how should investors approach their portfolio to protect their downside risk?We do have some macro headwinds, especially from rising oil prices but at the same time, we also need to be cognizant of the fact that last time around, when oil prices was at $80 or $100, India was a trillion-dollar economy. After almost seven years, India is a $2.2-trillion economy. So, while higher oil prices does create some headwinds for India, it is far more resilient to deal with it this time around.More importantly, the good thing is globally growth is accelerating and Indian economy has reached a stage from where growth is accelerating. So, I would say investors should look upon this correction as an opportunity to buy into some good quality names which are related to domestic economy because that is where it has started showing signs of recovery. India’s investment cycle which was completely broken over the last four or five years, is getting back into shape and we see a lot of value and some cases of deep value there. Investors should be careful or cautious about the broader mid-cap and small cap basket because that is where there is a lot of froth but aside from that, I find a lot of opportunities for investors because the Indian growth story still remains very much intact and from a global perspective, one of the most exciting growth stories to bet on.
Categories: Business News

Samsung launches four Galaxy range smartphones, priced Rs 13,990 upwards

May 21, 2018 - 8:08pm
NEW DELHI: Electronics giant Samsung today unveiled four new phones to bolster its position in the mid-price segment (Rs 10,000-25,000) and fend off rival Xiaomi in the hyper-competitive Indian smartphone market.The four handsets, Galaxy J6, Galaxy J8, Galaxy A6 and Galaxy A6+, are priced between Rs 13,990 and Rs 25,990 and will be available across both online and offline retail channels.Samsung India Senior Vice President (Mobile Business) Mohandeep Singh said that among other features, the phones are equipped with the Samsung Mall app that is powered by artificial intelligence."Users can click a picture of a desired product and the app gets results for the item across popular e-commerce platforms," he said.Features have been developed keeping in mind the millenial users, he said adding that "the Rs 10,000-25,000 category is an important one as it accounts for a significant share of the industry's sales volumes and is growing at a strong pace".For Samsung, the Rs 10,000-20,000 segment accounts for over 40 per cent share in terms of sales value and volume.The South Korean company has been facing strong competition from Xiaomi in the Indian market. Reports from various research firms like IDC and Counterpoint show that Xiaomi has pipped Samsung to become the biggest smartphone vendor in the country in terms of shipments.However, Samsung -- citing data from GfK that tracks actual sales of devices in offline retail channels -- claims to be the dominant player in the Indian smartphone market, which is among the largest markets globally.Galaxy J6, A6 and A6+ will be available from May 22, while J8 will be available from July onwards.
Categories: Business News

Adani, Tata, M&M and a China co all want the best seat in this bus

May 21, 2018 - 5:08pm
In March, a Tata Motors joint venture bagged electric bus supply contracts for nine out of 10 cities. What turned the heads was a Chinese company that was part of the JV. China’s biggest e-vehicles seller BYD is backed by Warren Buffett. By bidding nearly 30% lower than the market price, the JV left other bidders Mahindra & Mahindra, Eicher Motors and JBM Solaris empty handed. The stormy entry of China’s giant e-vehicles company in India worried Indian auto majors.Two months later, there is talk of another biggie jumping on to the electric bus bandwagon. An ET report citing sources said that Gautam Adani-led Adani Enterprises was set to make a big-ticket entry into electric buses manufacturing. The group, which plans to set up a manufacturing base in its special economic zone at Mundra in Gujarat, is in talks with a Taiwanese electric bus maker for technological tie-up, the sources told ET. Experts believe that Adani's entry, along with a foreign player, will change the dynamics of the Indian electric buses segment that has limited players.Why are big companies with deep pockets queuing up for India's e-bus market? The government is aggressively promoting electric vehicles for mass transit and the market potential is seen too huge. The department of heavy industries had in December 2017 sanctioned Rs 440 crore to 11 states for procurement of electric buses, electric taxis and e-autos as a pilot project under Faster Adoption and Manufacturing of Hybrid & Electric Vehicles (FAME) scheme. The government is now working on the second phase of Faster Adoption and Manufacturing of Hybrid & Electric Vehicles (FAME) scheme, which offers a slew of incentives to manufacturers of electric vehicles for public transport, battery manufacturers and charging infrastructure developers. The policy proposes to extend huge subsidy support to the electric bus segment in the next three years. The draft Fame-II policy provides incentives for purchase of bulk batteries for a fleet of above 50. The policy provides for bulk procurement of EVs by agencies such as EESL.States such as Delhi, Gujarat, Maharashtra and Pune are soon likely to come out with bulk e-procurement tenders for electric buses. The Andhra Pradesh cabinet recently cleared an electric mobility policy that aims to replace its entire bus fleet with electric tenders by 2030.The Union Cabinet may soon consider for approval the proposal entailing financial support of Rs 9,381 crore in the second phase of the FAME scheme spanning five years, PTI reported a week ago. The second phase of the scheme will be restricted to new energy vehicles used for public transport, commercial purposes and high-speed two-wheelers.With an aim to promote eco-friendly vehicles, the government had launched the FAME scheme in 2015 offering incentives on electric and hybrid vehicles of up to Rs 29,000 for bikes and Rs 1.38 lakh for cars. Under FAME II, the report said, demand aggregation would be attempted for city buses, electric three-wheelers and electric four-wheeler taxi segment to bring down the cost of vehicles. Agencies such as EESL, ASRTU (Association of State Road Transport Undertakings) could be considered as potential aggregators. India's huge public-transport sector will offer a bonanza for electric bus makers as more and more cities and states would want to shift their entire fleet to electric vehicles, inspired by the Central government's aim to have only electric cars by 2030. Bidding wars for electric buses are going to be messier due to the attraction of bulk orders and government subsidy. Already, competition is revving up. After Tata Motors-Goldstone-BYD joint venture won contracts for nine out of 10 cities, other bidders termed some of the winning bids as unviable as the JV quoted nearly 30% lower than the market price.
Categories: Business News

Don't fall for MF traps. Just 4 types of funds can give you all the return you want

May 21, 2018 - 5:08pm
By Dhirendra KumarAs you must have read elsewhere in this newspaper, after literally decades of laissez faire, mutual fund regulator Sebi has formalised a system of mutual fund classification. This is a very big step forward in fund regulation, even though it is still not 100% satisfactory.The biggest criticism of the new system is that from the investor’s perspective, it does not really simplify the process of choosing a fund to invest in. There are 2,043 mutual funds in India, and counting all the plans, options and variants, there are 9,680 possible choices. This huge number starts to become manageable if there is some kind of a systematic classification that is applied to the funds. The system that Sebi has now evolved has 36 categories. Are 36 categories easier to begin with than 9,680 schemes? Certainly, they are. However, if you start with close to zero knowledge, which fund investors do, then even 36 is too much. Let’s see how an investor can use the new Sebi system to simplify the investing process. Of course, the basic idea of categories is that one can divide funds into different buckets based on investment usages and characteristics. With such categorisation, investors can first understand which category meets their investment needs and then evaluate only the funds that fit into that category. However, someone has to do that hard work of classification, and that too on a continuous and consistent basis. In India, that’s the specialist mutual funds research and analysis role that Value Research has played for more than two decades.During this time, we have needed to make plenty of changes to this system. More and more funds of different types have been launched. Moreover, fund companies have worked hard to make their funds unclassifiable and thus uncomparable. Added to this is the problem of drift in characteristics. Funds can—and often do—change their investment styles to look better. For example, an investor who invested in a large-cap fund could find that it has gradually drifted towards a higher risk mid-cap fund.Many of these problems are now getting solved because of the new regulations. There will be an officially-stated category which is based on precisely defined investment characteristics. This means that there can be no doubt as to where a fund belongs and who are the peers it should be compared to. It also means that if you invest in a fund of a particular type, there will be a guarantee that it will stay that type, not just in name but also in fact. What Sebi has done is to bring predictability and regulation to a complex situation. However, the complexity still remains.Here’s a recipe to slice through the thicket of funds and get you to your investing goals: ignore almost all the categories. Practically speaking, if you are an individual investor whose financial goals are the normal ones that most people have, then you can easily ignore 32 of these 36. Here’s what remains; multi-cap for long-term savings, aggressive hybrid funds for medium term savings, ELSS funds for tax-savings combined with longterm savings, and short-term debt funds as a superior alternative for bank fixed deposits. That’s it.It will be hard work to do this because Sebi’s set of 36 has many categories that have little purpose except to give sales people complicated stories to tell. While there are funds in many other categories that may have some justification, but if you want a easy to implement plan that also covers all bases and serves all normal investment goals, then you will get along fine. I know that sounds a little extreme, but it will make things extremely simple and still serve all your needs.The author is CEO, Value Research.
Categories: Business News

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