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How FM can make her Budget best in 100 yrs

January 19, 2021 - 1:54am
British Prime Minister Margaret Thatcher famously said that there is no such thing as public money, only taxpayers’ money. Every Union budget is important not because it presents GoI’s accounts, an otherwise boring exercise, but because it is a statement of how the government is managing our — the taxpayers’ — money.Often, it is said that only a very small minority of Indians pays tax. That is only true for income-tax (I-T). Almost everyone pays indirect tax when they spend on consumption. In India, two-thirds of total tax collection comes from the indirect side. Every Indian must, therefore, care about the budget, the upcoming one being particularly important.It is the first budget in independent India that follows such a sharp contraction in growth. The last time India registered negative annual growth was in 1979, when the economy was a fraction of the size it is today and the decline not as sharp. In the circumstances, conventional Keynesian economic wisdom would demand a fiscal expansion. But while the economy has recovered well from the shock of the first two quarters, growth will only be marginally positive in the last two quarters. India needs to grow fast, at over 8% in 2021-22, just to return to the place it was before Covid-19 struck.Economic growth runs on four engines: consumption, investment, government expenditure and exports.Despite the larger-than-life role of government, the share of its spending in GDP at around 13% makes it the least weighty of the four. (Consumption is by far the largest at over 55% of GDP.) Can the smallest, and arguably least efficient, engine be the prime driver of speedy growth?In the first two quarters, when the lockdown was in force in varying degrees, and confidence at rock bottom in the face of an unknown virus, the answer would have been an unambiguous yes. In the circumstances that prevailed at that time, the other three engines of growth were unlikely to fire. A physical lockdown depressed private consumption, the global nature of the Covid-19 pandemic and cross-border controls squeezed exports, and complete uncertainty took a toll on private investment with firms and people tightening belts for difficult times. Only GoI could loosen its belt and spend more to prevent a total collapse.In India, the government gave a greater emphasis to liquidity support to struggling firms and individuals than to spending, unlike in many other countries. If GoI did not splurge then, what is the probability it would do so now? The difference is that at that time, government revenues had also dried up, which dissuaded additional spending. But they have now recovered since the rebound in the economy. The temptation to do a fiscal stimulus by spending more is higher this time. However, there are two ways to do a fiscal stimulus. Either GoI spends more, or it earns/spends less leaving more money to households and firms to spend/invest. The budget must focus on the latter. This is not the time for GoI to increase its spending by taking a bigger share from taxpayers.On the contrary, it should cut taxes on individuals and firms and allow them to play a bigger part in the revival story. Confidence is back. An effective stimulus could address over-the-top taxation, such as cesses, which can be removed. It could also involve cash transfers to the poorer sections of the population, which will spend immediately.These will immediately boost investment and consumption, thereby stimulating a supply response creating a virtuous cycle for growth. To the extent that GoI wishes to spend more, on infrastructure, for example, it should avoid additional taxation. Because of India’s legacy of a State-led economy, GoI has its own sources of wealth and revenue — public sector undertakings (PSUs) and land assets. One option it has is to direct PSUs to undertake investment expenditure.But given the fragile state of finances of most PSUs and the inefficiencies in their operations (like government, they too are bound by lengthy processes), the superior option is to divest PSUs. The demand for assets driven by plentiful cheap liquidity, as evidenced by the booming stock markets, is very high. This applies to assets other than PSUs as well, like airports, ports and highways, as well as tracts of unused land owned by the Indian Railways, defence services and other agencies. Revenue from the monetisation of these assets may be used to finance additional government investment expenditure, without burdening taxpayers.The finance minister has promised the best budget in 100 years. If GoI can engineer a stimulus while reducing the taxpayers’ burden, indeed it will be.The author is chief economist, Vedanta 80334380 80328682 80324417
Categories: Business News

India gears up for a robust digital ecosystem as e-payments witness an upward trend

January 19, 2021 - 1:54am
The coronavirus pandemic, which crippled many sectors, has inadvertently aided India’s credentials as an innovative and digital payments market rapidly gaining in scale. Every day, more than 100 million Indians use a plethora of digital and electronic channels such as debit cards, Unified Payments Interface (UPI), e-wallets, Fastag, or Aadhaar Enabled Payment Systems (AePS), putting their trust on an intricate network of companies and technology architectures seeking to make the process “invisible.’ This is, by no stretch, a simple task in a country attempting to displace the centuries-old practice of handing over tangible currency to the nearby merchant in return for desired goods or services, and counting the change to foolproof the exercise. “The future of digital payments is in making them natural and effortless and thereby invisible,” said Navin Surya, founder of fintech company Itzcash, who is now building a New Umbrella Entity (NUE) So Hum Bharat along with CC Avenue and Yes Bank. “There is an inherent risk in handling currency, which gives it a certain value. With technology enabling cash to go digital, these risk appetites could get personalised, and in India, the innovations could be in this direction,” according to Surya, who is also the chairman emeritus of the Payments Council of India.ON THE DIGITAL HIGHWAY In a country with diverse cultural and risk sensibilities, a completely digital economy may not be an immediate reality, but there is no dearth of entrepreneurs, researchers and engineers attempting to make the process of payments more convenient. The payments industry, which saw adoption like never before in the pandemic-stricken year of 2020, expects 2021to be the year of innovation. From traditional banks to new-age fintech firms, the digital payments in the country are enabled by a network of companies that see payment innovation as an endeavour to not just create convenient solutions, but also to drive mass adoption among consumers through sustainable business models. The ease of digital on-boarding and adoption of transaction technologies will pave the way for businesses to be built on top of payment platforms such as UPI bringing in next 100 million users to digital payments, says Harshil Mathur, co-founder and CEO of Razorpay. “We’ll see a massive influx of registrations among small businesses adopting digital channels,” said Mathur. The transaction volumes processed by Razorpay have grown by 40-45% over the last six months. “In a year of unprecedented changes and challenges, 2020 also posed some interesting opportunities for businesses to embrace digital payments. Many moved their business online for the first time, ushering in a new digital transformation,” he said.A WINDOW OF OPPORTUNITYEven as millions of first-time customers adopted digital channels in 2020, less than 25% of the banked population in the country, or about 200 million users, actively transact on any mode of digital channels, according to industry estimates. This makes India a unique country which, while processing among the most volume of digital payments in the world after China, also leads the chart on being among the most underpenetrated digital economies in the world. “During the pandemic, we saw use of local become more vocal, people started shedding use of traditional banking channels and caught on to using alternative digital channels,” said Rishi Gupta, the CEO of Fino Payments Bank. “I was in the interiors of UP last week; customers are using thumb prints to make payments…You will see distribution of insurance products at petrol pumps. The point is that you no longer need to go to a bank branch to avail banking services,” he says. Fino Bank is among a group of new-age fintech-oriented banking establishments leading the charge in piloting new technologies to improve payments experience for the last-mile fund transfer in rural interiors. 80335938BANK AT MY DOORSTEP Gupta believes that the ultimate objective is true democratisation of financial intermediation where a customer need not visit a physical branch to avail services at all. “The movement to merchants and mobile started to roll much faster in 2020 and this theme will further play out in 2021. I feel in 2020, we saw the democratisation of the financial channels where banking services became available to the lowest strata of the society,” he adds. According to Ketan Doshi, the CEO of Pay Point India — a rural focused fintech player —2021will see legacy public sector banks partnering with last-mile fintech firms to offer value-added financial service on top of payment rails. “There is a massive push from the government to enable micro-lending to the last mile and this is the space where I believe where most innovation will take place,” said Doshi. “A lot of public sector banks are looking to digitise their services and are creating end to end digital platforms that will use alternate data and payments technology to acquire customers and then disburse credit.”THE REGULATORY SUPPORT Meanwhile, regulatory impetus shown by the Reserve Bank of India (RBI) in enforcing customer-friendly regulations around contactless payments, offline payments, regulatory sandbox, video KYC and co-lending could go a long way in bringing the next 100 million users to digital payments. The central bank in December 2020, after months of deliberation with key stakeholders, eased the limit on tap-and-pay transactions without PIN at payment terminals to Rs 5,000 from the earlier Rs 2,000. The central bank last year also initiated a pilot to test offline payments on feature phone in no-internet and low-internet zones of the country. According to Rajeev Agarwal of Innoviti, a deployer of payment terminals, these are the two most significant moves that could shape up innovation in 2021. “It’s about bringing convenience to payments and reducing the turnaround times or speed at which the transactions are processed. A transaction of Rs 5,000 covers nearly all ticket-sizes. This has the potential to bring massive consumer behaviour change,” says Agarwal. “I also have the feeling that 2021 will be the year when the offline payments market will finally crack. By the end of the year, we may see 200-300-million new users enter the digital payments ecosystem,” Agarwal adds. Experts believe that 2021 could be the year when card-based payment innovation enabled by technologies such as tokenisation, near field communication, unified QR codes and Buy Now Pay Later (BNPL) could really kick off emulating the success of such modes in European countries. There are several examples of companies leading innovative payment solutions on top of these technologies.TOGETHER THEY CAN State Bank of India is partnering with Titan to launch the country’s first contactless payment-enabled smart watch. Merchant commerce platform Pine Labs is working with over 30 lenders, including ICICI Bank to offer instant BNPL credit through a payment platform which integrates thousands of its POS terminals, with banks underwriting engines. DotPe, a fintech startup, is working with restaurant chains to digitise billing flows through a network of QR codes. Citycash is creating billing solutions through contactless technology for bus corporations. Meanwhile, global payment giants such as PayPal is working with NPCI to test UPI for receiving international remittances. According to Amrish Rau, CEO of Pine Labs — a leading merchant commerce startup — two trends that could really kick off this year are digitisation of small businesses and mass adoption of the Buy Now Pay Later mode of shopping. “The businesses you and I never thought about — from plumbers to dentists — will adopt digital technologies to accept payments,” Rau said. “The second trend I envisage is the digitisation of commerce and stores.”Effective implementation of payment technology has the potential to make life easier. Experts said that the most effective mass market use cases of contactless payments always begin with digitisation of transit systems such as the metro rail systems of London, Tokyo, Bucharest and Moscow. In India, the New Delhi and Mumbai metros could lead the way for mass adoption. “The biggest opportunity for digital payments in a post-Covid-19 world is transit and contactless will have a big role here,” Sameer Nigam, founder of PhonePe, said at a recent ET panel discussion. “India is missing out on a big opportunity — the consumer adoption of contactless payment in the transit and transportation sector. When the market recovers, it would be amazing if we could figure a way to do queue busting,” says Nigam. According to Sonali Kulkarni, lead, financial services, Accenture in India, the innovation for payments participants can’t be just restricted to front-end interfaces visible to customers. There is a need to build cost-effective back-end platforms for banks to handle massive volumes of digital transactions anticipated over the next five years. “There is a need for banks to restructure their architecture and bring in resiliency and low latency in their operations,” says Kulkarni. “The issue is that core banking systems have got created over several years, mainly on old technology, it’s a monolith that’s got created, a lot of business functions are tightly coupled with core banking and most of the transactions that today touch CBS are only read transactions. The good part is few banks are implementing hollowing out of the core exercise.”
Categories: Business News

Kamala Harris submits her Senate resignation

January 18, 2021 - 10:54pm
WASHINGTON: Vice President-elect Kamala Harris on Monday officially resigned from her Senate seat, according to a media report, ending her four-year innings in the the upper chamber of the United States Congress. The move comes two days before the 56-year-old would be sworn in on Wednesday along with President-elect Joe Biden, making history as the first female, first Black and first South Asian American vice president. Harris, a Democrat, has formally submitted her letter of resignation to California Governor Gavin Newsom, CNN reported, quoting a Harris aide. Harris won her seat in November 2016 and was sworn in January 2017. At the time, Harris was California's attorney general. Newsom has already named Alex Padilla, California's secretary of state, to fill Harris' seat. The incoming vice president has spoken to Padilla before he comes into office, according to a person with knowledge of the discussion. Harris made history throughout her career, becoming the first Black woman in California to serve as a senator. In her November victory speech, she recognised the hard battle women faced to exercise their civic rights and break into the upper echelon of American politics. "While I may be the first woman in this office, I will not be the last," Harris said. "Because every little girl watching tonight sees that this is a country of possibilities." Now, Harris will preside over the same chamber that she is stepping down from, becoming president of the 100-member Senate. In an op-Ed in the San Francisco Chronicle, Harris wrote, "Thus, as I leave the United States Senate, this is not goodbye. This is hello," a nod to her changing position in the Senate as president of the chamber. "As I resign from the Senate, I am preparing to take an oath that would have me preside over it," she wrote.
Categories: Business News

Centre confirms bird flu in poultry in 5 states

January 18, 2021 - 10:54pm
NEW DELHI: The centre, on Monday, confirmed outbreak of avian Influenza in 5 states for poultry birds and in 9 states for crows, migratory birds and other wild birds. Union animal husbandry commissioner Praveen Malik told ET that the situation of bird flu in poultry is under control with culling operation almost completed in states like Maharashtra, Madhya Pradesh, Chhattisgarh, Kerala and Haryana. “There are sporadic cases in states except in Maharashtra and Haryana where cases of the disease in poultry have been reported in large number. The situation is, however under control and there is no risk in consumption of poultry and poultry products,” he said.Meanwhile, Himachal Pradesh government also confirmed avian influenza in poultry. The state government extended the ban imposed till January 18 for one more week on sale of chicken and poultry products in the state. The centre, however, has asked states not to impose ban on sale of poultry and poultry products and allow such selling sourced from the non-infected areas and states.Apart from that, avian influenza has been confirmed in samples of dead heron from Tis Hazari and in crow from Red Fort in Delhi.“Advisory has been issued to animal husbandry department of Delhi for taking necessary action,” said a senior official of union animal husbandry ministry. In Maharashtra, rapid response teams (RRTs) have been deployed and culling of poultry birds is underway in all the affected epicentres. “Culling operations have been completed in Central Poultry Development Organisation (CPDO), Mumbai and cleaning and crows and disinfection is in process. Similarly, culling and sanitization operations have been completed in the epicenters of Latur district in Village Kendrewadi, Ahmedpur, Village Sukani, and Village Tondar (Vajrawadi) in Udgir taluk and village Kurdwadi in Ausa taluk,” the official said. In Madhya Pradesh and Chhattisgarh, RRTs have been deployed for culling of poultry birds around 1km radius of epicentres of the outbreak in poultry. “Culling operation of poultry is continuing in the epicentres of Haryana while visit to Kerala is over,” the official said.
Categories: Business News

3,81,305 beneficiaries received Covid vaccine

January 18, 2021 - 10:54pm
NEW DELHI: A total of 3,81,305 beneficiaries have so far been vaccinated for coronavirus, even as 580 adverse events following immunization were reported in the country, the Union health ministry said on Monday.Addressing a press briefing, Manohar Agnani, Additional Secretary in the ministry, said 1,48,266 beneficiaries were vaccinated across 25 states and Union territories till 5 pm on Monday."A total of 3,81,305 beneficiaries have so far been vaccinated (till 5 pm on Monday) as per provisional reports," he said.Of the 1,48,266 beneficiaries who were administered the vaccine on Monday, 8,656 were from Bihar, 1,822 from Assam, 36,888 from Karnataka, 7,070 from Kerala, 6,665 from Madhya Pradesh, 7,628 from Tamil Nadu, 10,352 from Telangana, 11,588 from West Bengal and 311 were from Delhi.Agnani said a cumulative 580 adverse events following immunization (AEFIs) and seven hospitalizations have so far been reported in the country since the nationwide COVID inoculation drive which began on January 16.In Delhi, three hospitalisations were reported, out of which, two have been discharged, and one with fainting is under observation at Max Hospital, Patparganj.In Uttarakhand, one of the beneficiaries is stable and under observation at AIIMS Rishikesh, the official stated.In Chhattisgarh, one beneficiary is under observation, while in Karnataka, two cases of hospitalizations were reported, he said."No case of serious/severe AEFI attributable to vaccination till date," the additional secretary added.
Categories: Business News

'No serious adverse effect post COVID immunisation'

January 18, 2021 - 10:54pm
There has been "no case of serious or severe" adverse event following immunisation (AEFI) till date, the health ministry said on the third day of the COVID-19 vaccination drive on Monday. Two men -- one each in Uttar Pradesh and Karnataka -- have died after they received COVID-19 jabs. In a press conference, additional secretary in the health ministry Manohar Agnani said the man from Moradabad in Uttar Pradesh died due to cardiopulmonary disease. The death "is not related to vaccination as per the post-mortem report", he said. The health worker who was vaccinated on January 16 and died the next evening. Agnani further said that the cause of death of another man from Bellary in Karnataka is anterior wall infarction with cardiopulmonary failure. The post-mortem of the man, who was vaccinated on January 16 and died on Monday, is scheduled to be conducted at Vijayanagar Institute of Medical Sciences in Bellary. "No case of serious/severe AEFI attributable to vaccination till date," Agnani added. A total of 3,81,305 beneficiaries have so far been vaccinated for COVID-19 and 580 adverse events following immunisation were reported in the country till now, the Union health ministry said on Monday. Agnani said 1,48,266 beneficiaries were vaccinated across 25 states and Union territories till 5 pm on Monday. He said a cumulative 580 adverse events following immunisation (AEFI) and seven cases of hospitalisation have so far been reported in the country since the nationwide COVID-19 inoculation drive began on January 16.
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Modi, Xi to participate in virtual Davos summit

January 18, 2021 - 10:54pm
Prime Minister Narendra Modi and Chinese premier Xi Jinping will be among the top world leaders who will participate in a five-day online Davos Agenda Summit of the World Economic Forum (WEF) later this month. Several union ministers including Narendra Singh Tomar, Nitin Gadkari, Smriti Irani, Piyush Goyal and Dharmendra Pradhan along with top business leaders such as Mukesh Ambani and Anand Mahindra will also participate in the event. While the WEF will host its physical annual meeting in May in Singapore, as against the regular venue of Swiss ski resort town of Davos, the Geneva-based organisation is hosting an online event, named 'Davos Agenda' around the same time it generally hosts its yearly congregation of the rich and powerful of the world. The online Davos Agenda Summit from January 25-29 will see several heads of state and government deliver special addresses and engage in dialogue with business leaders at the start of a "crucial year to rebuild trust". In a statement, the WEF said the heads of state/ government who have confirmed their participation include Xi, Modi, Japanese Prime Minister Yoshihide Suga, French President Emmanuel Macron, German Chancellor Angela Merkel, European Commission President Ursula von der Leyen, Italian Prime Minister Giuseppe Conte, South Korea President Moon Jae-in, Israeli Prime Minister Benjamin Netanyahu, and Lee Hsien Loong, Prime Minister of Singapore, the host of the World Economic Forum Special Annual Meeting 2021. The WEF's Davos 2020 summit was the last major global event that took place before almost the entire world got locked down due to the COVID-19 pandemic. The 'Davos Agenda' will also mark the launch of WEF's "Great Reset Initiative'' and begin the preparation of the special Annual Meeting in the spring, said the Geneva-based entity, which describes itself as an international organisation for public-private cooperation. Heads of state and of government and international organisations will give special addresses on the state of the world, besides engaging in dialogue with business leaders. Industry leaders and public figures will discuss how to advance and accelerate public-private collaboration on critical issues such as COVID-19 vaccination, job creation and climate change, among others, according to the WEF. Those who have already registered for the event also include former RBI governor Raghuram Rajan and ex-IMF chief Christine Lagarde. From India, the registered participants from the business community are Mukesh Ambani, Sanjiv Bajaj, Shyam Sunder Bhartia, Hari S Bhartia, Ajay Khanna, Jayadev Galla, Dipali Goenka, Ajit Gulabchand, Shobana Kamineni, Hemant Kanoria, Neeraj Kanwar, Onkar S Kanwar, Vikram Khemka, Grandhi Kiran Kumar, S P Lohia, Anand Mahindra, Sunil Bharti Mittal, Rajan Bharti Mittal, Pawan Munjal, Salil S Parekh, Jai Shroff, Sumant Sinha and Vaishali Sinha. The ministers registered for the event so far are Nitin Gadkari, Piyush Goyal, Smriti Zubin Irani, Dharmendra Pradhan and Narendra Singh Tomar. While the WEF annual meeting for 2021 will be held during May 13-16 in Singapore, the high-profile summit will return to Davos in 2022. The WEF said the Davos Agenda 2021 will convene under the theme 'A Crucial Year to Rebuild Trust'. More than 1,500 business, government and civil society leaders from over 70 countries will set the agenda for a critical year ahead and discuss how to catalyse impact in the rapidly advancing Fourth Industrial Revolution, it added. The conclusions from the Davos Agenda week will feed into task forces working on global issues for the upcoming Special Annual Meeting in Singapore, the WEF said. "In the context of the COVID-19 pandemic, the need to reset priorities and the urgency to reform systems have been growing stronger around the world," said Klaus Schwab, founder and executive chairman of WEF. "Rebuilding trust and increasing global cooperation are crucial to fostering innovative and bold solutions to stem the pandemic and drive a robust recovery. This unique meeting will be an opportunity for leaders to outline their vision and address the most important issues of our time, such as the need to accelerate job creation and to protect the environment," he added. The COVID-19 pandemic has demonstrated that no institution or individual alone can address the economic, environmental, social and technological challenges of our complex, interdependent world. The pandemic has accelerated systemic changes that were apparent before its inception. The fault lines that emerged in 2020 now appear as critical crossroads in 2021. The Davos Agenda will help leaders choose innovative and bold solutions to stem the pandemic and drive a robust recovery over the next year, it added. Special addresses from G20 heads of state and government and international organisations will provide crucial insights into a range of important issues in the year ahead, the WEF said. The private sector will be represented by more than 1,000 leaders from the Forum's member and partner organisations.
Categories: Business News

WHO, China could have acted more quickly: IPPR

January 18, 2021 - 10:54pm
Geneva: The World Health Organization and China could have acted faster when Covid-19 first surfaced, a group investigating the global response has concluded, regretting that the "largely hidden epidemic contributed to the global spread".In its second report, Independent Panel for Pandemic Preparedness and Response (IPPR) said that an evaluation of the "chronology of the early phase of the outbreak suggests that there was potential for early signs to have been acted on more rapidly".
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Low production due to COVID-19 raising fuel prices: Dharmendra Pradhan

January 18, 2021 - 10:54pm
Bhopal: Union Minister for Petroleum and Natural Gas Dharmendra Pradhan on Monday said fuel prices had gone up because of lower production in oil-producing nations due to the coronavirus pandemic.This lower production had caused an imbalance in demand and supply, the minister said."Oil producing countries stopped production or reduced it during the coronavirus epidemic. A pressure on fuel prices was seen due to this imbalance in demand and supply. A few months ago, crude oil prices were USD 35-38, which has gone up to USD 54-55," he told reporters here."Our basic challenge is we have to import 80 per cent of crude oil of our requirement. Consumption has been increasing. India is third as far as energy consumption is concerned," he said.He said the focus of the government was on electric vehicles (EVs), solar energy, production of ethanol etc to become self-reliant in the energy sector.Ethanol production, which was less than 1 per cent of demand when the NDA government came to power in 2014, was set to reach 9 per cent this year, he said.In reply to a query on some people doubting the efficacy of COVID-19 vaccines, Pradhan said countries across the world were looking at India with hope in the fight against the pandemic.
Categories: Business News

Falling gold prices boost jewellery demand up by 10-20%

January 18, 2021 - 10:54pm
KOLKATA: India’s jewellery demand has increased by 10-20% this month compared with December with the fall in gold prices prompting consumers to place orders now for weddings slated for the next quarter.This year, April, May and June have the most number of wedding dates. Also, most of the marriages that were postponed in 2020 due to the coronavirus outbreak are taking place during this period, raising the demand for jewellery.Jewellers said demand is up by 10-20% compared with December, when prices were ruling over Rs 50,000 per 10 gm. Price of 24 carat gold is now hovering around Rs 48,900 per 10 gm and that of 22 carat gold, which is used for making jewellery, is hovering around Rs 47,900 per 10 gm.“Demand has revived in the last ten days as the fear of Covid is going away with the arrival of the vaccine,” Anantha Padmanabhan, managing director of Chennai-based NAC Jewellers, told ET. “People have started visiting stores and are placing orders for the wedding season. Also, a drop in prices is helping an increase in consumption. At our stores, we are seeing demand up by almost 20% compared to December.”Gold had crossed Rs 57,000 per 10 gm mark in August due to the viral outbreak, uncertainty over the US presidential election, and souring of ties between the US and China over tariffs. From the peak of Rs 57,000 per 10 gm, gold prices have fallen by Rs 8,000 per 10 gm or 16.5%.Aditya Pethe, director of Mumbai-based Waman Hari Pethe Jewellers, said, “There has been a revival in demand for gold jewellery from Diwali onwards. The demand continues to remain good in January as the wedding season is coming. What is more interesting is that now the demand has started coming in from tier 1 cities and metros as life is returning to normalcy in these areas.”Mumbai-based Ishu Datwani, founder of Anmol Jewellers, said where there is need-based buying, price sensitivity does not affect demand or the buying as much as it would have if one were an investor. “So, when consumers are buying for a wedding, they are not so concerned by changes in price. We are seeing a nice and steady trend where brides and their families are coming to buy for the wedding,” he said.Vaibhav Saraf, director, Aisshpra Gems and Jewels, in Gorakhpur, Uttar Pradesh, said the market has picked up due to a correction in prices. “We have been witnessing positive footfall for wedding shopping. Customers are doing their purchases in advance for the April-May weddings. There is a positive sentiment for both gold and diamond jewellery for weddings,” he said.Meanwhile, the sharp rise in price of gold by 20% has reset consumers’ expectation of a new normal.Somasundaram PR, managing director, India, World Gold Council, recently said that higher risk of stock prices driven by liquidity, low interest rates, coupled with the inevitable return of family and social occasions and the experiential value of gold buying will release pent-up demand.
Categories: Business News

Govt may keep Rs 7,500 cr outlay for IT hardware manufacturing under PLI scheme

January 18, 2021 - 10:54pm
NEW DELHI: The government may keep an outlay of Rs 7,500 crore under the production linked incentive scheme for IT hardware products like personal computers, laptops, tablets and servers, according to a source aware of the development.Foreign companies looking for incentives under the scheme may have to invest Rs 500 crore over four years, while the threshold for domestic firms is likely to be around Rs 20 crore for five years, the source who did not wish to be named said."Meity (Ministry of Electronics and Information Technology) will take the Cabinet approval of the detailed guidelines soon and is hopeful of rolling out the scheme from next financial year. The incentive outlay is likely to be around Rs 7,500 crore," the source said.The government has announced a cumulative production linked incentive of Rs 2 lakh crore for 10 sectors to encourage domestic manufacturing after seeing traction of global giants like Apple's contract manufacturers, Samsung etc for the scheme in the mobile devices segment.According to mobile devices industry body ICEA, India has the potential to scale up its cumulative laptop and tablet manufacturing capacity to over Rs 7 lakh crore by 2025 through policy interventions.Scaling up laptop and tablet PC manufacturing can take the share of India in the global market to 26 per cent from 1 per cent at present.Besides, it will generate 5 lakh new jobs and lead to a cumulative inflow of foreign exchange to the tune of Rs 5.5 lakh crore and investment of over Rs 7,300 crore by 2025.
Categories: Business News

MEA on Chinese ramping up border infrastructure

January 18, 2021 - 7:53pm
The Ministry of External Affairs (MEA) on Monday said that it has seen recent reports on China undertaking construction work along the border areas with India and asserted that the government keeps a constant watch on all developments having a bearing on India's security and takes all the necessary measures to safeguard its sovereignty and territorial integrity. The MEA said China has undertaken such infrastructure construction in the past several years and the government too has stepped up border infrastructure which has provided much-needed connectivity to the local population. "We have seen recent reports on China undertaking construction work along the border areas with India. China has undertaken such infrastructure construction activity in the past several years. In response, our Government too has stepped up border infrastructure including the construction of roads, bridges etc, which has provided much-needed connectivity to the local population along the border," the ministry said. It said the government remains committed to the objective of creating infrastructure along the border areas for the improvement of livelihood of its citizens, including in Arunachal Pradesh. "Government keeps a constant watch on all developments having a bearing on India's security and takes all the necessary measures to safeguard its sovereignty and territorial integrity," the ministry said. MEA's response came after a media report that China has resorted to construction in border area in Arunachal Pradesh. There were reports earlier of China having constructed three new villages near Arunachal Pradesh border. India and China are in standoff in Ladakh for over eight months following actions of the Chinese Army.
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What will be the biggest theme for next 10 years?

January 18, 2021 - 7:53pm
One theme that will play out throughout next decade is that of the big becoming bigger and concentration of market share and profit pool in favour of big guys in every sector, says Gautam Duggad, Head Of Research - Institutional Equities, Motilal Oswal Financial Services.How does earnings upgrades and earnings delivery move in tandem with the market? Where are we on the cycle right now?Tempting as it may sound, one does want to compare this with the 2003 or 2008 cycle but numbers belie that because 2003-2008 was a very different period we have seen 25% earnings CAGR in that five-year period. Global markets were buoyant, everything was working well, fiscal consolidation was also happening and the government was also spending on investments and consumption was also doing well. That was an ideal period as far as the cycle is concerned. As far as cycles are concerned, not just in India but in other markets also, one thing which is very important to note is each cycle is different and each cycle brings to fore its own set of winners and losers. During the 2003-2008 period, we used to talk a lot about infra names, construction names and power and all. Those sectors are nowhere to be seen today. Today we are talking about the beneficiaries of PLI, the consumption theme and the broadening of the financialisation of savings. So as far as cycles are concerned, this cycle will bring its own set of beneficiaries and there will be a set of losers. Clearly, one of the themes that will remain prevalent even throughout the next decade is the big becoming bigger and concentration of market share and profit pool in favour of big guys in every sector which is there. That is a very important and very big theme to play out. As far as valuations in a cycle are concerned, it is fair to expect that when you start an earnings upcycle, markets tend to be slightly ahead of the reality and in an environment like this, where there is a glut of global liquidity and interest rates are low, not just in global markets but even in India, then the market will try and run ahead of itself. But that is a hazard that you have to contend with in a bull market where earnings upgrades are happening after a long time and where expectations are getting reset. And to add to that, we have just seen the beginning of vaccination. It is tough to pinpoint a finger and say these are the valuations where I will buy and these are the valuations where I will sell. The point is you have to have a basket of stocks across sectors where the earnings visibility is going to be high and where you think the market is willing to ascribe a slightly higher multiple than what is present currently. That is where one will make bulk of the money in a bull cycle or in an earnings upgrade cycle. So it involves a combination of earnings upgrade plus rerating. That is why BFSI, consumption, IT, and some of the cyclicals will add spice to the portfolio. One has to think twice before looking at any stock in today’s environment thanks to valuations. Unless and until one is very confident about earnings visibility, paying such high multiples will prevent a good compounding over the next three or five years.
Categories: Business News

'Tandav' controversy: Ali Abbas Zafar says sorry

January 18, 2021 - 7:53pm
New Delhi: Amid growing dissent over his recent web series Tandav, show creator Abbas Zafar has apologised on behalf of the entire cast and crew, saying they did not intend to offend anyone or insult any religion and political party."Our sincere apologies," Ali wrote on Twitter while sharing the "Official statement from the Cast & Crew of Tandav".Our sincere apologies . https://t.co/Efr9s0kYnl— ali abbas zafar (@aliabbaszafar) 1610975891000In the statement, Ali shared that they have been closely monitoring the row, and stressed that the series is a complete work of fiction."We have been closely monitoring viewer reactions to the web series 'Tandav' and today during a discussion, the Ministry of Information and Broadcasting have informed us regarding a large number of grievances and petitions received on various facets of the web series with serious concerns and apprehensions regarding its content hurting the sentiments of the people," the statement read."The web series 'Tandav' is a work of fiction and any resemblance to acts and persons and events is purely coincidental. The cast and crew did not have any intention to offend the sentiments of any individual, caste, community, race, religion or religious beliefs or insult or outrage any institution, political party or person, living or dead. The cast and crew of 'Tandav' take cognizance of the concerns expressed by the people and unconditionally apologise if it has unintentionally hurt anybody's sentiments," the statement added.Set in Delhi, the series revolve around the theme of power, ambition and greed through a very political story.The series came under fire with several people claiming that it provokes communal disharmony and hurts sentiments of the Hindus. According to the complaints, a scene featuring Mohd. Zeeshan Ayyub performing a college play insults the Hindu deity Shiv.The Information and Broadcasting Ministry had earlier issued notice to Amazon Prime, the OTT platform airing the show, seeking its response to the complaints.The series features Saif Ali Khan, Dimple Kapadia, Sunil Grover, Kritika Kamra, Sarah Jane Dias, Gauahar Khan, Dino Morea, Kumud Mishra, Shonali Nagrani, Anup Sonii, Neha Hinge, Sandhya Mridul, and Amyra Dastur.
Categories: Business News

'Will defeat Mamata in Nandigram or quit politics'

January 18, 2021 - 7:53pm
KOLKATA: BJP leader Suvendu Adhikari on Monday accepted the challenge thrown by West Bengal Chief Minister Mamata Banerjee to contest from his Nandigram assembly seat, asserting he will defeat her in the election or quit politics. The TMC turncoat, however, said the final decision to field candidates will be taken by the BJP leadership after thorough discussion and not in an arbitrary way like in the ruling TMC. Banerjee sprang a surprise earlier in the day when she declared she will contest the assembly election from Nandigram, the seat held by political heavyweight Adhikari. "If I am fielded by my party from Nandigram, I will defeat her by a margin of at least 50,000 votes or I will quit politics," he asserted. Adhikari, however, said unlike the TMC, which is run "autocratically" by Banerjee and her nephew Abhishek, in BJP the candidates are decided after discussion and it was for the party to take a call on his candidature. "I don't know from where I will be fielded, whether I will be fielded," he said, addressing BJP workers after a three-km road show. He said Banerjee remembers Nandigram only before elections, and accused her of giving extension four times to an IPS officer involved in the Nandigram firing. Banerjee, Adhikari alleged, was playing with the sentiments of the people of Nandigram. "That will not work this time and her party will be democratically dumped into the Bay of Bengal." Adhikari claimed not more than 30,000 people, mostly brought from other places, attended Banerjee's meeting at Tekhali in Nandigram on Monday.
Categories: Business News

3 sectors which will drive earnings next 3 yrs

January 18, 2021 - 7:53pm
Financials, auto and oil and gas will drive earnings over the next three years, says Gautam Duggad, Head Of Research - Institutional Equities, Motilal Oswal Financial Services. Motilal Oswal Strategy Report is something which almost the entire market watches out for very closely. How are you looking at the Nifty earnings picture, the Nifty EPS for this year and next year and even one year ahead? As far as earnings are concerned, after five consecutive years of earnings downgrade, last quarter was the first quarter where saw a beat in earnings and then the first earnings upgrades after many years. I remember we had upgraded earnings by 9% at the end of the second quarter result season in October-November and as we step into this third quarter, when we released our preview 10 days back we had again upgraded numbers by 3% to 4%. So between the two quarters, we have seen a 12% earnings upgrade on Nifty for FY21 and FY22. As far as EPS is concerned, we are at Rs 516 for FY21. This number was Rs 454 at the bottom in March-April and from there, we have come to Rs 516. If we indeed deliver this number, it will be a growth of 11% which will be the highest in the last five or six years. In a year ravished by pandemic and lockdowns, we have seen so many challenges but the growth in earnings for Nifty FY21 will still be higher than the previous four or five years. As far as FY22 is concerned, expectations are running very high. We are right now at around Rs 700 for FY22 which will be a growth of more than 30% from where we will end in FY21. Clearly earnings expectations are very high now, corroborated by upbeat management commentaries on demand in multiple sectors, improvement in asset quality or rather the fears on restructuring as far as the BFSI sector is concerned. It is a big one because it is roughly 40% of the index. Fortunately, those fears have not materialised. At the margin, we are seeing that the drivers of earnings are cyclicals. For example, in this quarter, we are expecting almost 80% of incremental YoY earnings growth to come from metals and cement. They have run up from 17-18 times to 21 times on FY21 earnings and 17 times on FY22. Clearly these are not cheap valuations. They are factoring in a lot of improvement in earnings ahead, but if you go back into the previous cycles, you will always find that at the beginning of an earning sub cycle, when markets turn, the near term valuations always look juicy. The question is how much belief is there in this earnings improvement over the next two or three years? If these earnings materialise, we have a lot more to look forward to over the next two or three years. Having said that, in the short term, it is very difficult to predict. Things will depend on how the result season proceeds and what commentary we will get. Then there is a big event ahead of us on the 1st of February. Over the next two to three years, where is the biggest delta coming in as far as earnings are concerned and how much of that is the Street already pricing it in?Obviously it is going to be BFSI or the financials. We have seen earnings improve from Rs 90,000 crore for our Nifty BFSI universe to around Rs 1,10,000 crore for FY21 and expectations of FY22 is Rs 1,50,000 crore. Given that it is a large part of the index, it ends up being the primary driver of the earnings growth. Second, things are turning around for auto. FY18 was the peak year of earnings for auto when the Nifty Auto universe did earnings of Rs 30,000 crore. From there, it has been three years of downward journey and we are ending FY21 with Rs 10,000 -11,000 crore. Things are expected to go back to Rs 30,000 crore in FY22. The third biggest driver of earnings is oil and gas, primarily Reliance where we are expecting earnings to move to Rs 1,20,000 crore in Nifty oil and gas from Rs 80,000 crore in FY21. It looks very high but we had already done Rs 1 lakh crore of earnings two years back. So, these are the three big sectors where incremental earnings or delta is expected to accrue from. All the stable sectors are continuing to do very well. We are expecting FY22 earnings to pick up, led by TCS and Infosys which will see 16-17% growth and then come sectors like consumer and healthcare which are expected to show 14-15% earnings growth in FY22. So, the big delta will come from auto, BFSI and oil & gas. As far as stocks are concerned, our preferences in BFSI remains quite stable throughout the last eight or nine months. HDFC Bank can remain the core part of the portfolio along with Kotak Bank, but the real spice will come when you see corporate banks showing improvement or rather further improvement in asset quality. Given the provisioning coverage ratio is 70% to 85%, the room for earnings upgrade remains quite high out there. So, those are the three or four sectors where we are expecting FY22 earnings to see material improvement. How are you analysing the broader markets and themes? Where are you witnessing durable demand, pricing power coming back, margin profile improving and hence your clients are discussing those kinds of names or sectors or themes?In the broader markets, over the last two months, I have noticed one very important change in the behaviour of our clients. The amount of queries or discussions that we are having on cyclical sector in the last two months, I have not had for the last four years. One of the sectors where the earnings is going to be strong and commentary is going to improve further is cement which is benefiting from multiple themes like housing, infrastructure and people expect the fiscal spending to get a leg up in the Budget. In cement, we like UltraTech, JK Cement and Dalmia Bharat. The other important cyclical sector which is not a large part of the index and contributes more to the broader market is metals. For the last three or four years, metal stocks had gone nowhere. So earnings also have not gone anywhere. But now we are expecting earnings to pick up substantially. In FY21 last six months, we have seen a rally in commodity prices. The underlying commodity prices of rebar or HRC prices from our analyst would have upgraded the earnings three or four times in metal stocks in the last four months. That is one important sector where earnings are picking up. We like Hindalco and JSPL among metal stocks. Besides this, it is a mix of multiple other themes but the biggest underlying or overarching theme in India right now is the consolidation of market share in favour of bigger players or branded organised players in every segment -- be it consumer staples, consumer durables, BFSI or IT. Vendor consolidation is a very important topic in IT sector over the last one year, post pandemic and then as I said without repeating it, BFSI remains at the forefront of the big theme of financialisation of savings. Within the BFSI sector, while traditional lenders are very well known, non-lending financials are seeing a lot of improvement -- be it in insurance or companies which are a play on capital markets. Lastly, consumption remains an evergreen theme in India. If urban demand were to improve in 2021, a lot of this discretionary consumer stock or consumer staple stock which are a play on urban markets can continue to do well. What we like out there has remained constant for the last four or five years. Hind Lever, Titan, Britannia, Pidilite and may be Tata Consumer are some of names which right now are doing quite well, but if I were to summarise it in one line -- cyclicals are showing a lot of potential over the last two or three months.
Categories: Business News

India likely to outperform Asia in 2021: Nomura

January 18, 2021 - 7:53pm
Sonal Varma, MD & Chief Economist (India and Asia ex-Japan) Saion Mukherjee, MD & Head of India Equity Research, Nomura, in conversation with ET Now.How are you looking at the overall valuation for the Indian equity markets?Sonal Varma: Globally, a few factors have surprised us. One, the pace of recovery has been much stronger than expected across-the-board, notwithstanding the more recent virus-led wobbles in some of the developed economies. Two, particularly for India, the containment of Covid-19 has been a positive surprise and that has enabled continued normalisation in activity because that is something that other economies have actually not seen as much. There have been cases of virus picking up. Third, clearly the overall policy stimulus, monetary and fiscal have been quite substantial. It is a positive global environment and particularly for India, given the virus containment. Our view is that the lag effects of easy policy of India are yet to reflect in the growth numbers. We think India’s growth is going to outperform other countries in Asia this year. So in calendar year 2021, we are expecting close to 12.8% growth which is partly base effects driven but from a fundamental standpoint, is a fairly solid growth number. What is the outlook and also how have you looked at India stacking up vis-à-vis some of the other emerging markets when it comes to the big themes to play?Saion Mukherjee: We have seen a significant rally in the Indian market. The recovery has been strong and besides the liquidity that we have seen coming into India, we have corporate earnings. There was a fair bit of pessimism at the start of the fiscal year as the pandemic was unfolding. The corporate earnings, particularly from the second quarter and now, into the third quarter, we are seeing resilience in corporate earnings and consensus estimates are going up. Therefore, to that extent the stocks have done well. When I look at the numbers for the next couple of years because as we go through this year, the markets will start factoring in what is going to happen in FY23, we find the consensus is factoring in almost 20% earnings growth on a CAGR basis between FY20 and FY23 and in that context, it appears to be pretty optimistic given what we have seen in the last four-five years. Our concern is essentially about the rise in commodity prices which can put pressure on margins for various companies. If we look at the non-oil and gas, non-financial space, the EBITDA margin is actually at a decade high. There can be some potential risks there. We would like to be cautious and more selective in equities currently. The key themes that we are looking at is essentially deep cyclical recovery and we are positive on specific banks where we see good valuation support. We are positive on infra construction space and that is one theme that should start playing out. Also we remain constructive on IT and the pharmaceuticals, where there are structural growth stories from a medium term perspective. In the backdrop of the current liquidity environment, we would see valuation multiples in these sectors go higher from the current level. The dollar weakness is leading to foreign money finding its way into emerging markets like India. When in 2021 will we see the RBI rate trajectory moving upwards or the interest rate trajectory stalling?Sonal Varma: As we navigate 2021, our view is we need to differentiate between the liquidity policy versus the rates policy of RBI because the rates policy is guided more where the output gap is, inflation relative to target and even though we are seeing a recovery, right now the output gap is likely to be negative. So on the repo rate side, the rates will be on hold through this year. It is only in early 2022 that we can expect the repo rates to go up but the process of normalisation of liquidity is likely to begin very soon. The variable rate, the reverse repo option does not really tamper the durable liquidity but going forward, from a macro standpoint, as growth picks up and cost push pressures are picking up, there is a need to reduce the size of durable excess liquidity that is there in the banking system. That process will start with the CRR hike and reset which happens at the end of March but post that, the process of gradually reducing liquidity to a lower surplus will begin which implies that the effective policy rate which has been below reverse repo and are closer to reverse repo gets closer to repo rate as the year progresses. Liquidity normalisation will begin very shortly this year but the actual repo rate hike is still some time away. How are you expecting earnings to shape up within the financial space and where do your preferences lie?Saion Mukherjee: We do see opportunities in the financial space particularly in terms of valuations. Post the pandemic, there were lot of concerns on the asset quality side but we see essentially things are a lot better than what was earlier anticipated and companies have already made enough provisions for that. The credit cost is under-shooting and that would probably continue in the near term. Of course, we have to watch out what happens from a slightly medium-term perspective but in the near term, it looks pretty good. Also, we are seeing growth coming back in some of the banks which are well capitalised. They are gaining market share and therefore the well run, well capitalised banks are likely to surprise on the upside as far as earnings are concerned in the near term. Overall, we are positive and overweight in the financial space. How have you read into the top-tier IT companies’ commentaries as well as earnings growth? Ddoes Infosys continue to remain a favourite?Saion Mukherjee: Yes, we have been positive on IT through last year but as the stocks had rallied, we reduced our weight gradually. The quarterly results have been better than expected on the revenue front on a sequential basis. Margins were 100 bps better. We are aware of large deal wins which give visibility to growth over the medium term. This structural change in growth can potentially surprise on the upside. There is some expectation which is already there in the stock prices but as that plays out, there is scope for multiples to expand in the sector, particularly in the context of the current liquidity environment. Do you believe that RBI will maintain a fairly accommodative stance going into this year as well?Sonal Varma: This year of course has a long way to go. But what the market policy committee committed to back in October last year is to maintain an accommodative stance at least into the next financial year. That implies at least for the February policy and most likely even for the April policy, the accommodative monetary policy stance will be maintained. From a 6-12 months’ perspective, the macro dynamics are changing and our view is growth is likely to surprise positively. For Financial Year 2022 (FY22) we are looking at a growth number which is above 13% from here. This is partly base effects driven, not entirely. On the private sector side, we think there will be a faster pick up, particularly as vaccinations pick up both in the developed world as well as in India. On the inflation side, we have seen headline inflation impact come down to close to 4.5%, thanks to collapse in vegetable prices. But the underlying price pressures have surely picked up with the pickup in global commodity prices and as demand is picking up in India. There is a risk that because of pricing power, we could see a greater pass through in the coming quarters. So, from the central bank’s perspective, we think they are going to adopt certain hierarchy in terms of how they manage their policy. The first step is more in terms of allowing some of the regulatory dispensations which inspire. The liquidity side has been gradually normalised and the starting point from a durable liquidity perspective is the CRR hike that happens at the end of March. But even beyond that, the banking system’s liquidity cannot stay at these levels because the economy is no longer in crisis level. Third, we think the policy stance will stay neutral going into April. Sometime after June-July, there is a chance that the stance also should go to neutral from accommodative and the final step will be an actual hike in the repo rate. But we think that is more likely in the first half of CY2022 when we are expecting a 50 bps hike.
Categories: Business News

Indian companies prepare to buy vaccines for employees

January 18, 2021 - 7:53pm
BENGALURU: Several Indian companies are making plans to buy COVID-19 vaccines for their employees, just days after the country's government began one of the world's largest vaccination drives with healthcare and other frontline workers. Steel producer Jindal Steel and Power Ltd, autos-to technology conglomerate Mahindra Group and consumer goods giant ITC Ltd have begun initial checks on hopes that vaccines will be available for purchase after the government covers priority segments. "ITC would certainly like to extend the vaccination to employees... We have approached vaccine manufactures and are in exploratory talks," Amitav Mukherji, head of corporate human resources, said. India is currently using Britain's Oxford University/AstraZeneca vaccine, which is being produced in India by the Serum Institute, and a government-backed alternative developed by India's Bharat Biotech. Tata Steel said it would get employees inoculated as soon as shots are available commercially. Indian factories are recovering from one of the world's strictest lockdown last year, which led to large-scale job losses and migration of workers back to their villages. "We are reaching out to vaccine manufacturers for bulk supply of doses and will try to get these doses after completion of all frontline Covid warriors' vaccination," Pankaj Lochan, chief human resource officer, JSPL, said. The company did not give more details on either the number of doses it plans to buy or with whom it was in talks with. The world's second-most populous country, India trails only the United States in numbers of COVID-19 infections. Billionaire Anand Mahindra-led Mahindra Group said it was also interested in buying vaccines for employees "in accordance with the priorities and sequence to be specified by the government". Global consumer goods giant Unilever last week said it was strongly encouraging employees to get vaccinated as soon as possible and floated the idea that it could buy shots to share with people in poorer countries. As governments rush to inoculate the most vulnerable, however, most corporations globally have so far been quiet on whether they would seek to secure early supplies for employees.
Categories: Business News

General Motors India exit hits a speed breaker, plant closure may stall on differences with workers

January 18, 2021 - 7:53pm
Mumbai: US carmaker General Motors’ plan to exit India has hit a roadblock, with workers at its Talegaon factory in Maharashtra rejecting its separation scheme.The union has also demanded that the over 1,500 factory workers be absorbed by Great Wall Motors, the Chinese carmaker that’s signed an agreement to acquire the plant from GM. The agreement is valid till the middle of 2021, said people aware of the matter, and the government is yet to approve the accord.GM stopped production on December 24 and has applied for closure of the factory. It wants the workers to accept the separation scheme, which will allow the company to complete the legal formalities and write off the India investment.The workers may have opposed the closure application to put pressure on Great Wall Motors to provide job continuity or look at increased compensation from GM India, the people said.Union representatives have met local administration officials, including those from the state government’s labour department.The Talegaon plant has 1,578 blue-collared workers and 250 white-collar staff. While there have been informal talks to break the impasse, the union is yet to participate in a formal negotiation. A union representative told ET they don’t want to come in the way of the Centre’s stand, but they are keen to secure their jobs.“Compensation is not enough, we want our job secured. It can be GM or Great Wall Motors or any other company that takes over the factory,” said the representative, requesting anonymity.George Svigos, director of communications at GM International, told ET the company is fully focused on winding down at the site in accordance with the law. The best course of action for both GM and the workers would be successfully negotiating a fair separation package.“We are concerned at the mistruths being communicated by the workmen’s union, which have the potential to negatively impact the reputation of the state of Maharashtra as a business-friendly state that recognises that both entry and exit from businesses need to occur based upon business realities and changing market conditions,” said Svigos.The company emphasised that there are no further GM projects for the Talegaon site.“Contrary to the union’s claims, there is no scenario where GM can continue operations and provide jobs at the Talegaon site since GM has ended all production and other economic activities at the Talegaon site,” Svigos added.The company says its winding-down plan is consistent with similar shutdowns in Australia, Thailand, Indonesia, South Africa, Europe, and Russia and there is a detailed plan to support employees.The transfer of employees was not part of the agreement between GM India and Great Wall Motors. It would have taken at least a year to wind up the factory and set up new lines for the Chinese automaker and it would not have been practical to retain the workers, the people said.The US carmaker is willing to sweeten the separation package, but the union has declined to negotiate with the company.Against the statutory requirement of offering 15 days compensation for every year of service by an employee, GM has offered 75 days compensation for every year of service. GM may increase this to 95 days compensation as it did in Halol, Gujarat, if the workers were to negotiate formally, one of the three people said.Svigos said it would be regrettable if short-sighted actions of the union threaten the orderly transition of the site to the new investor, hamper employment opportunities at the site and create uncertainty for all stakeholders like the state and vendors, in addition to the workers.GM invested $1.4 billion in India over two and half decades. Svigos said GM has already taken a significant charge on the books due to the closure and the remainder can be accounted for only on conclusion of the winding-down process.GM India declined to comment on eventualities other than the sale plan with Great Wall Motors.
Categories: Business News

Mindtree Q3 results: Net profit rises 66% to Rs 326.5 cr

January 18, 2021 - 7:53pm
L&T group IT firm Mindtree’s net profit rose 65.7% to Rs 326.5 crore, while revenues came in at Rs 2,023.7 crore in the quarter ended December 31.In dollar terms, net profit was up 59.3% at $44.2 million and revenues were down marginally by 0.4% at $274.1 million. The company added eight new clients during the quarter and had 276 active clients at the end of the quarter. Its total headcount was at 22,195 with a trailing 12-month attrition of 12.5%. Deal wins for the quarter were up 50.7% year on year to $312 million. The company rolled out increments in January, and has onboarded all its campus hires, said CEO Debashis Chatterjee. "Our 4x4x4 strategy is showing strong demand across the sectors, and we expect the growth momentum to continue in the coming quarters," he said. Its EBIT margin was up 222 basis points sequentially to 19.6%, the highest ever level, on account of revenue growth, cost control, lower travel cost, higher utilisation and higher offshore mix, said Harit Shah, lead IT analyst at KR Choksey Shares & Securities. The key Microsoft business posted a 3.6% revenue increase during the quarter. The company signed a five-year deal with a global wind turbine manufacturer and partnered a global airline to enhance consumer experience on mobile digital platforms during the quarter. Among the various geographies, the Asia-Pacific region grew 10.5% sequentially, followed by North America at 4.7% and Europe at 4.3%. The data and intelligence unit grew by 10.2% followed by Cloud at 6.1% and Enterprise IT by 4.6%. IT firm Mindtree on Monday reported a 65.7 per cent rise in consolidated net profit to Rs 326.5 crore for the December 2020 quarter.The company had posted a net profit of Rs 197 crore in the corresponding period last year, Mindtree said in a regulatory filing.The Bengaluru-based company saw its revenue grow 3 per cent to Rs 2,023.7 crore in the quarter under review from Rs 1,965.3 crore in the year-ago period, it added.In dollar terms, its net profit rose 59.3 per cent to USD 44.2 million, while revenue declined marginally to USD 274.1 million in the December 2020 quarter over the year-ago period.At the end of the December 2020 quarter, the company's active client base stood at 276, and eight new clients were added during the quarter, the filing said.Mindtree had 22,195 employees at the end of the December 2020 quarter with trailing 12-month attrition at 12.5 per cent."Our third quarter has by far been the best performing in recent years backed by broad-based revenue growth of 5 per cent across our verticals and service lines, robust margin expansion of 350 bps (basis points), and a healthy order book of USD 312 million," Mindtree CEO and Managing Director Debashis Chatterjee said.He added that the company is witnessing strong business momentum across all verticals with a significant demand for cloud, data and analytics capabilities."We continue to capitalise on the evolving market dynamics with solutions that help enterprises navigate the new normal and grow their businesses."Thanks to the strategic focus and hard work of our Mindtree Minds, we are now well-positioned to continue delivering profitable growth," he said.
Categories: Business News

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