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View: Gig workers are employees

January 19, 2021 - 10:55am
One of the nation’s largest grocery chains, Albertsons, announced this month that it would replace many of its staff delivery drivers with independent contractors working for the delivery service DoorDash. Those contractors will not receive important labor protections that have been provided to the full-time employees they will be replacing.For years, companies and legislators have debated whether so-called gig workers like those who drive cars for Uber or deliver groceries for DoorDash should be entitled to benefits like minimum wage and unemployment insurance. But in the wake of a California ballot proposition passed in November and a rule just released by the Trump administration, it appears that the erosion of labor protections is advancing aggressively.When the gig economy sprang up during the Obama years, it seemed novel. Companies like Uber used software to offer assignments to people on call who set their own hours. One major caveat: As independent contractors, these workers wouldn’t get traditional wage protections, workers’ compensation, health insurance or unemployment benefits. But that didn’t stop the quick expansion of the gig economy.In 2019, California legislators sought to improve life for gig-company workers, passing a law that required companies to treat app-deployed workers as employees. In response, the companies spent $200 million promoting Proposition 22, a state ballot initiative that affirmed gig companies’ classification of their workers as contractors while enshrining limited protections.This hybrid labor category came from an unexpected source. In 2015, Seth Harris and Alan Krueger, labor economists from the Obama administration, argued against giving gig workers employment status. Instead, they proposed a compromise: App-deployed workers could receive some rights, like tax withholding and a right to organize, but not others, such as a minimum wage and unemployment insurance.But researchers like us who have documented the exploitive conditions of gig work worried that this approach would hurt a much larger group of service workers — just as the Albertsons decision will.App workers need the same benefits afforded to traditional workers, including payment for time between assignments, unemployment benefits and the right to organize. The pandemic, which greatly worsened conditions for delivery workers and “shoppers” (the people assembling grocery orders), has exposed just how vital basic protections are for vulnerable workers.In ongoing research with colleagues at Northeastern University, one of us, Dr. Schor, analyzed a delivery platform that converted its California workers to employees before the passage of the 2019 law. Both top and middle management said they felt positively about the switch, citing improved performances and increased productivity that partly offset the costs of employment protections.In ethnographic research on Uber and Lyft ride-hail drivers, Dr. Dubal found that, contrary to the companies’ promises of freedom and flexibility, longtime drivers feel trapped in grueling work schedules and controlled by their algorithmic bosses. Notably, these findings undermine Uber and Lyft’s arguments against employment status.In a bad omen for workers outside California, Dara Khosrowshahi, the chief executive of Uber, has vowed to support efforts similar to Proposition 22 elsewhere. Lyft, a competitor, is behind political action committees that will support candidates who will protect its business model. Shawn Carolan, a venture capitalist whose firm has invested in Uber, has written that the Proposition 22 model should be extended to other industries, such as education, health care and computer programming — which would increase the number of Americans who toil without a safety net or predictable earnings.In some sense, gig-economy companies have been moving in parallel with Washington. The Trump Labor Department this month released a rule, set to go into effect in March, that will make it easier for companies to designate their workers as independent contractors.But the incoming Biden administration can undo the rule. And working with Congress, it can move to dignify app-deployed work by calling it what it is: employment.The Biden administration can end the state-by-state, sector-by-sector battle over basic workers’ rights. It can clarify that exemptions from employment and labor laws violate the Fair Labor Standards Act, therefore invalidating Proposition 22.Marty Walsh, Joe Biden’s nominee for labor secretary, can also move to revoke a Trump administration letter from 2019 that classifies gig workers as contractors. Perhaps most important, the Biden administration could work on winning passage of the Protecting the Right to Organize Act, which would untie the hands of workers who seek to organize their workplaces.As inequality reaches record highs, the hybrid-worker category threatens the future of all service workers. With the building of progressive momentum to address racial and economic inequality, the Biden administration should expand protections for all workers, not allow them to erode for millions more.
Categories: Business News

Budget could extend LTC cash voucher scheme

January 19, 2021 - 10:55am
The Finance Minister has indicated that Budget 2021 will be a budget like "never before" as the government looks to steer the pandemic battered economy and push growth. The FM has also mentioned that investment in health will be the top priority for the government in Budget 2021. The government needs more revenue to meet the cost of various relief measures to revive the economy hit by the COVID-19 pandemic, drive growth and invest in essential infrastructure. However, many taxpayers have also been adversely impacted by the pandemic due to loss of jobs, shutdown of businesses, reduction in salary, increased medical costs etc. Given this, it becomes necessary for the government to look at ways to increase its revenue without further adversely impacting the common taxpayer.Additional tax In order to increase its tax collection from individuals, the government may consider introduction of higher rates of income-tax or additional tax for owners of high-end properties or high valued assets. The tax rate applicable at present on Long Term Capital Gains(LTCG) arising from sale of property is 20 percent. Such LTCG may be subject to tax at higher rates or at normal slab rates for individuals who own more than a specified number of properties. The government may also consider imposition of a COVID cess on taxpayers who are in the 30 percent slab rate.Tax incentives for individuals to push consumption and growthChanges that provide for additional deductions for individuals while stimulating consumption and growth in various sectors may also be considered. Section 80EEA of the Income-tax Act provides for deduction up to Rs. 1,50,000 in relation to interest on loan taken to purchase residential house property subject to specified conditions being met. The conditions include the sanction of loan between 1 April 2019 and 31 March 2020, stamp duty value of the house property not exceeding Rs. 45 lakh and the individual not owning any residential property on the date of sanctioning of the loan. To incentivise purchase of residential house property, relaxation may be provided in the conditions to be satisfied to claim this deduction, for example, extend the time limit in relation to sanctioning of loan or extend the deduction to two properties. Similarly, Section 80EEB provides for deduction up to Rs. 1,50,000 in relation to interest on loan taken for purchase of electric vehicles subject to conditions. The government may consider providing such a deduction even where no loan is taken. This would incentivise purchase of electric vehicles and will also be a step towards encouraging sustainable living practices.Section 80D provides for deduction in relation to health insurance premium paid for self and family subject to limits specified. In case of senior citizens, such deduction is also available for medical expenditure incurred, where there is no health insurance. The deduction available for medical expenditure, where there is no health insurance may be extended to all. Extension of LTC cash voucher schemeThe government through press releases has introduced the Leave Travel Concession (LTC) Cash Voucher Scheme, first for the Central government employees, which was later extended to the non-Central government employees as well. Legislative amendments to adopt the scheme are expected to be introduced in the budget. The government could extend this Scheme beyond 31 March 2021. Extension of relief for stranded NRIsFurther, the government may also introduce legislative amendments to adopt or extend some of the measures already introduced to provide relief during the pandemic.The government had announced relaxation in relation to stay in India for determining residential status for financial year 2019-20 for individuals based in India who had come on a visit to India but had to prolong their stay in India due to travel restrictions owing to the pandemic. Considering that the travel restrictions and suspension of international flights extended into financial year 2020-21, the government could announce similar relaxation for financial year 2020-21 as well.In every budget, the government is faced with the task of introducing measures to meet its revenue needs and at the same time cater to the taxpayers' expectations for relief from taxes. Given the unprecedented times, the need to balance these requirements is much more than ever in this budget.(Shalini Jain, Partner - People Advisory Services, EY India. Meena Narayanan, Senior Tax Professional with EY India has also contributed to this article. The views expressed are personal.)
Categories: Business News

What will move the needle for Reliance?

January 19, 2021 - 10:55am
The energy vertical is fairly steady but does not really impact the stock movement, says Mahantesh Sabarad, Head, Retail Research, SBICAP Securities.On RelianceFirst a disclaimer, I own Reliance stock. One question that comes up is what is the capex programme going to be ahead as the 5G auctions are coming up. Telecom has become an important vertical for Reliance lately. The energy vertical is fairly steady. Any changes on the energy side does not really impact the stock movement. The Reliance outperformance during the pandemic period was attributable to the telecom vertical and the upcoming 5G auction is going to be an important event. Reliance will want to take a stance there. On Reliance’s old economy businessAs I said, while the energy vertical is fairly steady, it does not move the needle for the company. The valuation of Reliance used to be single digit EV/EBITDA multiples not too long ago. Now they have moved into double digit EV/EBITDA multiples. That is one way of looking at Reliance. One can also look at Reliance from a valuation perspective. But the standard EV/EBITDA multiple has moved into double digits and that has not happened because of the energy vertical. That double digit EV/EBITDA multiple will not move much even if there are expanding GRM margins on the refining side or the petrochemical margins improve. In such a situation, for a good part of that business, there are no worries on the demand side now that the recovery has started. Petrochemical consumption in India is well above the pre-pandemic levels of last year and there is growth ahead. Something similar is happening across the globe. I do not think petrochemical or the refining businesses is something which we should be looking at with renewed focus as far as Reliance is concerned when it comes taking a call on the stock. On the auto, auto ancillary pack Automobile companies have done quite well. They have delivered a surprise on the positive side when it comes to production and a quick recovery. In the year ahead, despite the challenges on the cost side, metal prices are up and so there is an opportunity for the companies to raise their prices. In a situation where demand has become buoyant, they have the ability to raise prices. Most of the automobile companies will be taking this opportunity around the Budget time because they will wait to see the Budget proposals , particularly those related to automobile companies and then take a price hike. There is also an expectation about automobile companies looking for lower GST. While the Budget does not decide GST rates, the cess that is levied on automobile companies can be reviewed favourably and that pushes the prospects of automobile companies for the better. Irrespective of that, demand is fairly strong and since they have started delivering double digit growth in a pandemic affected economy, most of the automobile companies will do well. When there is so much liquidity in the market, quality is the first corner where it will accumulate. On Budget expectations of beleaguered sectorsIt will be a very difficult task for the finance minister to balance the Budget this time around as the buoyancy in tax revenue is not really good. The first thing she needs to look at is how to increase the tax buoyancy without taxing the general public or the industry as a whole. The tried and tested method that has been adopted in the past is reducing the marginal rate of tax. The other way is not reducing the marginal rate of tax but reducing the multiple levels of personal income tax slabs. If that is simplified, there will be better tax compliance and tax buoyancy will follow through.
Categories: Business News

Traffic violations may be linked with motor premium

January 19, 2021 - 10:55am
Mumbai: Speed thrills but kills – at least your savings.Very soon, your motor insurance premium may depend on your traffic-ticket count. So, there’s sufficient incentive – besides better mileage - to go easy on the accelerator.A committee appointed by insurance regulator IRDAI has recommended that traffic violations be linked with motor premiums to encourage better road sense.The report published Monday by the nine-member working committee suggested inserting “Traffic Violation Premium” to the ambit of motor insurance. The panel included officials from the Delhi Traffic Police, IRDAI, Insurance Information Bureau (IIB) and insurance companies have“This section will float over both Own Damage and Third-Party sections of motor insurance and can be attached to any section of motor insurance cover being purchased, chiefly, Own Damage or Third-Party insurance,” said the report. “This will ensure, regardless of any insurance cover a motor owner wants to buy, he/she will be subjected to Traffic Violation Premium, unless he already has in force a motor insurance policy wherein traffic violation premium has already been paid.”In practice, every motor insurance buyer will be assessed for traffic violation points based onwhich the premium will be fixed.
Categories: Business News

Gold funds offer -2.52% returns in 3 months

January 19, 2021 - 10:55am
Gold funds and ETFs are under scanner for the drop in their performance in the last three months. Experts blame the fall in gold fortunes on the global vaccination drives and optimism around the world economies. Gold prices in India fell amid weak global cues today to a one-month low. Falling for three consecutive days, gold futures on Multi Commodity Exchange (MCX) fell 0.14% to over one month low of Rs 48,636 per 10 gram.This trend is reflected in the returns offered by the gold funds. The category has offered -2.52% returns in the last three months, 0.10% returns in one month and -2.15% in one week. The YTD returns from the category have also fallen to the negative category. The negative returns have led to an impact on the inflows in these schemes. The inflows into gold ETFs have fallen from Rs 907.85 crore in August, 2020 to Rs 430.65 crore at the end of December, 2020.After seven consecutive months of net inflows, Gold ETF category witnessed net outflows in November, largely on the back of profit booking by investors. “Gold prices have come down from their all-time high in the recent months. Gold has witnessed an uninterrupted rally in 2020 and we shouldn’t expect similar returns from it now. Economies have started moving towards normalcy and equity markets are doing well. With the vaccination finally happening on ground, gold prices can go down in the coming time or remain flat. Hence the returns from these schemes might be low for a while,” says Himanshu Srivastava, Associate Director – Manager Research, Morningstar India.Let’s take a look at how gold funds have performed in the last eight calendar years. The data shows how gold can go from negative to positive over the years:Calendar yearGold fund returns (%)202026.38201922.6620186.8920172.34201610.872015-8.292014-4.202013-10.78 Is it too soon to believe that the rally in gold is over or can we still see some steam left there? Chirag Mehta, fund manager- alternative investments, Quantum Mutual Fund believes that gold is expected to benefit from the additional fiscal stimulus from the US government and improving investment demand as well as consumer demand from India and China. However, the optimism surrounding the economic rebound and the cheap liquidity backdrop might go against the prospects of gold funds. “The continued optimism on the economic recovery and surging risk assets could be a headwind for gold that could limit its rise in 2021. However, the fact remains that the economic rebound has been losing steam. When the liquidity led momentum recedes and markets start reflecting ground reality, gold should re-price on back of constructive fundamentals, says Chirag Mehta. Experts believe that gold prices and global economies have an inverse relationship. Right now there is optimism because of vaccines and the expectations of a V-shaped economic recovery. However, as and when there are uncertainties, gold prices might go up and the returns will also go up. Retail investors are generally advised to take a maximum 10% exposure to gold funds. “Gold will give you returns in the long term and also cushion your overall portfolio against the volatility of riskier assets. One can’t expect high double digit returns from gold funds year on year. I would say one should have a 5-10% allocation to gold funds for a longer term,” says Himanshu Srivastava.Some experts also believe that apart from Covid-19 threat, the macroeconomic conditions that supported gold are now being carried forward by the world to 2021. Global policy makers will continue to resort to monetary inflation, credit expansion and government spending to tackle the extraordinary economic fallout of the pandemic. “Use of this increasingly impotent monetary policy will mean failure to normalize the world economy as central banks will be trapped in a state of perpetual policy manipulation, financial systems will continue to walk on fiscal crutches, and the system will be marred with vulnerabilities. This will ensure that gold remains a preferred portfolio asset in 2021 and beyond,” says Chirag Mehta.
Categories: Business News

WHO criticises countries over bilateral deals

January 19, 2021 - 10:55am
Mumbai: World Health Organization (WHO) director general Tedros Adhanom Ghebreyesus has urged countries that have struck bilateral deals with vaccine makers to be transparent on the control of vaccine supply, including volumes secured, pricing and delivery dates.The global health body has warned that such deals were driving up vaccine prices and could delay the launch of COVAX, an initiative aimed at equitable distribution of Covid-19 vaccines to low- and middle-income countries. These bilateral agreements have also resulted in vaccine makers prioritising regulatory approvals in rich countries where the profits are the highest, rather than submitting their data with the WHO for approval. Under the COVAX initiative, 2 billion doses from five vaccine makers have been secured for an equitable distribution. It also includes options to source 1 billion more doses.The WHO aims to start deliveries under COVAX in February. But this timeline might get delayed, as it says more than 39 million doses of vaccine have been administered in 49 high-income countries while in one lowest-income country, just 25 doses have been given.India is expected to receive vaccine doses as part of COVAX. Serum Institute of India has signed up with the facility to deliver up to 400 million doses for low- and middle-income countries.The WHO wants vaccine producers to provide full data for regulatory review and to accelerate approvals, besides asking these companies to allow countries with bilateral contracts to share doses with COVAX, and to prioritise supplies to COVAX rather than striking new bilateral deals. As many as 44 bilateral deals were signed last year between vaccine makers and governments, according to the health body. At least another 12 have already been signed so far in 2021.“This could delay COVAX deliveries and create exactly the scenario COVAX was designed to avoid, with hoarding, a chaotic market, an uncoordinated response, and continued social and economic disruption,” Adhanom said on Monday in the opening remarks at WHO’s executive board meeting. Even as some rich countries and pharma companies speak the language of equitable access, some of them continue to prioritise bilateral deals, going around COVAX, driving up prices and attempting to jump to the front of the queue, he said, adding: “This is wrong.”
Categories: Business News

Opportunities in equities make India interesting

January 19, 2021 - 10:55am
Investors should be realistic about return expectations from global equities, and a dollar investor should expect 5% from global equities, said Joe Little, chief global strategist, HSBC Global Asset Management. In an interview with Prashant Mahesh, Little said equities are well placed compared to bonds. Edited excerpts:Where does India stand in your list of global markets?I am reasonably enthusiastic about the Indian market. I think the positioning on the rupee for an international investor is interesting and there is scope for appreciation. News will be supportive and constructive for Indian economy and markets after the vaccine delivery. We might have to wait a bit of time and be patient and it may be a second-half-year story compared to a first-half story due to number of challenges. Rupee’s strength and attractive opportunities in fixed income and equities make it an interesting market. It also benefits from not having seen rapid appreciation as compared to what North Asian equity markets have seen.Where are global investors allocating money now?I will be overweight equities and alert to any challenges. There are some concerns over valuations and treasury yields. It would be wrong to dismiss them entirely. I want to be positive on recovery trade and restoration; it is risky not to be positive equities at this time. I would be positive on international equities like EMs and laggard markets like Europe and a bit cautious on the US. I would be wary of global government bonds as yields are low and returns will disappoint. Ability of many government bonds to hedge portfolios and perform when equities are weak is not a certainty. EM and Asian fixed income, Chinese bonds, South Asian bonds including India, Indonesia are important for me.How do you expect equities to play out in 2021?We can see a continued phase of economic restoration playing out in 2021 linked to the vaccine and its delivery. I am reasonably optimistic for the global economy and it will just take some time to get off this big economic shock.Global stock market capitalisation is now 120% of global GDP. Are valuations stretched?Conventional valuations matrix gives a sense that equity pricing has become quite rich. What we miss is how do equity valuations look relative to other asset classes that investors can own? The environment of lower interest rates and lower for even longer interest rates is an important element in the analysis to think about. There is a clear sense of forward guidance from systematically important central banks that interest rates will remain low not just this year but for the foreseeable future that has significant implications about what we think of equity valuations. This does mean that we should expect equity markets to trade at higher PE ratios than we have typically seen when at higher interest rates.What kind of returns could investors expect from equities?I would urge investors to be realistic about return expectations for global equities; we should expect 5% from global equities in US dollar terms, but if you compare that to what you can achieve in global government bonds, equities are still well placed. I am not yet convinced we are seeing a bubble in equities or irrational exuberance in the investment markets but I do think that after last year where economic, corporate fundamentals were deteriorating and equity pricing was moving higher, we need to be realistic about what we should expect from equity markets in 2021.
Categories: Business News

Renegotiate loan terms, auditors warn cos

January 19, 2021 - 10:55am
MUMBAI: Auditors are telling companies to either renegotiate their existing loan terms or be prepared to face the risk of recategorising them as ‘current liabilities’ on their books because some debt covenants were breached while raising additional funds to deal with Covid-19 disruption. Many companies, including some of the largest Indian companies, have seen their debt increase due the impact of the pandemic. Unless renegotiated, many existing loan agreements would give additional rights to lenders that would lead to recategorising of loans as per audit standards, experts said. “Many companies that have significant debt on their books could be in breach of one or more of the covenants on their loan agreements due to the adverse impact of the Covid-19 pandemic on their business, as a result of which such loans may become payable on demand, and in some cases this could also trigger a cross-default on their other loan agreements,” said Sai Venkateshwaran, partner at KPMG India. “In such situations, companies and their lenders will need to work together to have these breaches waived or cured, failing which these loans would be classified as current liabilities and thereby adversely impacting key ratios such as current ratio.” In several situations, auditors are required to “test” the debt based on whether it’s an immediate risk or long term liability.If the loans are classified as “current liabilities” in the year-end financials, it will impact the company’s liability-to-asset ratio, hindering its ability to raise further funds. Most companies have seen their debt jump drastically amid the pandemic.Many auditors are pushing companies to get their house in order in the next one month or so. Auditors are required to give their opinion in the yearend financial statements, and will have to raise red flags relating to the debt, experts said.“Covid-19 pandemic has resulted in breaches of certain debt covenants like revenue, EBITA, debt service ratio, leverage ratio, material adverse change, liquidity, etc,” Vinayak Padwal, a senior auditor, told ET. “This has created challenges for both management and auditors pertaining to appropriate classification and disclosure of such loan liabilities in financial statements on reporting dates. While corporations are in process of renegotiation with lenders for such debt covenants, auditors are hoping that entire process to be complete before they sign off financial statements.” Some of the biggest companies have already started these negotiations and would be looking to update these contracts. In some cases where the lenders are not willing to agree to more lenient terms, companies are also looking to trigger the force majeure clause, insiders said.This comes at a time when auditors are also preparing to implement new audit standards on the line of global standards – International Financial Reporting Standards, or IFRS.“In addition to the impact of the pandemic, the recent amendments to the accounting standards, which become effective in 2023, could lead to even more loans being classified as current liabilities, as the new requirements and related clarifications ignore the contractual terms and their design, and instead requires a hypothetical test of covenant compliance to be carried out at period-ends,” Venkateshwaran said. “Considering the significance of these changes, companies are encouraged to take action now and work with their lenders to redesign the construct of some of these loan covenants.” While the new standards are two year away, auditors said this is the only window companies have to renegotiate contracts. Lenders may not agree to newer terms for existing loans at a later stage, resulting in a wider impact when the newer accounting standards are implemented.
Categories: Business News

Anarock buys out NestAway’s ApnaComplex

January 19, 2021 - 10:55am
Bengaluru: Indian real estate services firm Anarock Group has acquired 100% stake in society and apartment management platform ApnaComplex from NestAway Technologies for an undisclosed amount. Bengaluru-based ApnaComplex, which offers society and apartment management services, was funded by Goldman Sachs, Tiger Global, UC-RNT Fund, IDG India, Chiratae Ventures and InnoVen Capital.The SaaS company empowers over 600,000 households across 80 Indian cities to automate all aspects of running large gated housing complexes.“From buying and selling homes to managing and maintaining them, real estate digitalisation is now a root concept. We are ready to invest aggressively in this platform to bring in the required product features and to hire key talent to help deliver value to all stakeholders,” said Anuj Puri, chairman, Anarock Property Consultants.“Our acquisition rationale is to extend innovative features and tech upgrades for homeowners, residents, society managing committees, as well as facility and security management teams.”
Categories: Business News

Entry of Tesla in India doesn't worry us: Mercedes-Benz

January 19, 2021 - 10:55am
NEW DELHI: Mercedes-Benz, the leader of the Indian luxury car market, has said that the entry of Tesla “doesn’t worry the company at all” and added that the addition of the American electric giant will only help in strengthening the position of premium green cars in the country.Martin Schwenk, who leads Mercedes in India, said his company’s business in India remains on a strong footing and faces no apparent threat from the Elon Musk-run auto giant which has been gaining in scale and market capitalisation over the past few years.Mercedes and Tesla have been competing across various markets, including neighbouring China, the US, and many countries in Europe.Asked whether the entry of Tesla in India is a source of worry for the business of Mercedes, Schwenk said, “Rather it’s the opposite… Entry of any new brand creates additional interest and additional markets. And it’s not only Tesla (that we compete with). There is lots of activity across manufacturers.”In clear indications that it is finally setting foot in India, Tesla has got an Indian subsidiary registered with the registrar of companies (RoC) in Bangalore and this is called, Tesla India Motors and Energy Pvt Ltd.Musk has often spoken about his desire to sell cars in India, and recently Union minister Nitin Gadkari said the company will start operations here in 2021 which may include setting up a manufacturing unit.Worried over rising pollution across cities and the burgeoning fuel import bill, the Modi government has been pushing the Indian auto industry to transition to electrics, throwing in a variety of incentives to encourage the adoption of green cars. These include a lower GST rate (only 5% against 28%-plus for non-electric cars), buyer subsidies, and income tax benefits on their purchase.Tesla has been enthused by the policy direction of the Indian government and is currently engaged in charting out an India plan for its launch that may initially happen through imports and thereafter through local production as its factory comes up. There have been indications that the company may enter into a local tie-up, though homegrown companies such as Tata Motors have denied such speculations.In November last year, replying to a Twitter user who asked about the progress of the company's India plans, Musk had said, "Yea… Next year for sure". Even in 2019, replying to a Twitter query, Musk had said he "would love to be there this year. If not, definitely next!" However, in 2018, he had cited the country's “challenging regulatory environment” among the reasons for not foraying into India.Mercedes currently has the Rs 1 crore-plus EQC SUV as the only electric car in its India line-up. The company plans to beef up its green lineup going forward.Tesla, on the other hand, had received bookings for its Model 3 model in 2016 but has officially not rolled out the model here so far.
Categories: Business News

‘DHFL takeover to be structurally positive for Piramal Enterprises’

January 19, 2021 - 10:55am
Mumbai: The Dewan Housing Finance Corp (DHFL) takeover will not only be structurally positive for Piramal Enterprises but also for lenders such as Bank of India, Canara Bank, Union Bank and Yes Bank. However, DHFL shareholders might not benefit much as the stock is valued at zero, said analysts. DHFL’s creditors chose Piramal Capital and Housing Finance over US-based asset manager Oaktree Capital Management and the Adani Group in the administration-monitored takeover.“Structurally, we see this development as a positive for Piramal Enterprises, resulting in much needed diversification in the portfolio, effective use of capital and a possible improvement in the credit rating,” said Alpesh Mehta, analyst, Motilal Oswal Financial Services. “It also helps in reduction of cost of funds and an increase in granularity on the balance sheet.”Shares of Piramal Enterprises declined 2.5 per cent to close at Rs 1,584 on Friday while DHFL stock ended at 5 per cent upper circuit at Rs 27.50.Analysts warn retail investors to stay away from DHFL as they are likely to get nothing at the end of the resolution.“Retail investors should not be carried away by these defaulting companies being bought by top brands under the Insolvency and Bankruptcy Code (IBC) as investors in majority of the IBC cases have lost their entire capital,” said Ambareesh Baliga, independent analyst.As per the resolution plan, Piramal Group would pay a total of Rs 37,250 crore, including upfront cash of Rs 12,700 crore, Rs 4,000 crore of interest income on DHFL’s book and Rs 19,550 crore of non-convertible debentures to be repaid in 10 years. Thus, the estimated recovery for creditors stands at 43 per cent .“The deal may lead to 40 per cent recovery and be marginal positive for lenders such as Bank of India (BOI), Canara Bank, Union Bank and Yes Bank with higher exposure,” said Jefferies in a note.Among the key lenders, SBI has the highest exposure of Rs 10,200 crore followed by BOI at Rs 4,100 crore and Canara Bank Rs 3,800 crore.
Categories: Business News

Traffic violations may be linked with motor premium

January 19, 2021 - 7:54am
Mumbai: Speed thrills but kills – at least your savings.Very soon, your motor insurance premium may depend on your traffic-ticket count. So, there’s sufficient incentive – besides better mileage - to go easy on the accelerator.A committee appointed by insurance regulator IRDAI has recommended that traffic violations be linked with motor premiums to encourage better road sense.The report published Monday by the nine-member working committee suggested inserting “Traffic Violation Premium” to the ambit of motor insurance. The panel included officials from the Delhi Traffic Police, IRDAI, Insurance Information Bureau (IIB) and insurance companies have“This section will float over both Own Damage and Third-Party sections of motor insurance and can be attached to any section of motor insurance cover being purchased, chiefly, Own Damage or Third-Party insurance,” said the report. “This will ensure, regardless of any insurance cover a motor owner wants to buy, he/she will be subjected to Traffic Violation Premium, unless he already has in force a motor insurance policy wherein traffic violation premium has already been paid.”In practice, every motor insurance buyer will be assessed for traffic violation points based onwhich the premium will be fixed.
Categories: Business News

Global harmonisation of spectrum allocations an important priority: Ajit Pai, US FCC chairman

January 19, 2021 - 7:54am
US Federal Communications Commission (FCC) chairman Ajit Pai has backed opening up of 6 Ghz spectrum band in India for unlicensed WiFi services, saying it would benefit consumers and innovators, and that the US telecom regulator would be happy to share its experience with India. Pai, who steps down on January 20, in tandem with US President Donald Trump's exit, told ET’s Kalyan Parbat in an interview that India should follow US’ lead in preventing insecure technologies into its telecom networks. Edited excerpts:US tech giants want India to emulate US FCC and back opening up of 6 Ghz band for unlicensed technologies. But telcos warn this would spoil the 5G business case. Your thoughts...This would be a decision for my friends in India to take but I am very proud of FCC’s decision on the 6 Ghz band, which has increased the amount of spectrum available for Wi-Fi in the US almost by a factor of five, and I’m more than willing to share my experience with our friends in India. This will provide a huge benefit to consumers and innovators. From WiFi routers to home appliances, Americans’ use of devices that connect to the internet over unlicensed spectrum has exploded, and our actions will go a long way towards accommodating that increase in WiFi demand. But telcos in India say 6 Ghz is ideal mid-band 5G spectrum that must be auctioned and not delicensed... It is a decision for my counterparts in India to take. I would, though, add that global harmonisation of spectrum allocations is an important priority for us as it can lead to more efficient use of spectrum and economies of scope and scale.India plans to declare a list of ‘trusted sources’ for buying network gear. Do you welcome the decision?I can’t speak for what the Indian government is planning with this action, but I would welcome India and all free, democratic nations to follow our lead in preventing insecure technologies into their telecom networks. FCC has named Huawei/ZTE as threats to US national security. Is there a list of ‘trusted sources’? The framework we created does not endorse particular telecom equipment manufacturers or vendors as ‘trusted sources’. The rules we have adopted create a process for designating certain entities as ‘covered companies’ that pose a national security threat to the integrity of communications networks or the communications supply chain. Your views on uproar over WhatsApp's privacy policy...In the US, these issues are generally within the jurisdiction of another federal agency, the Federal Trade Commission.Indian telcos are split over 5G standard. Some say it can lead to first Indian 5G IPR. Others warn it won’t work commercially and could make India an island on the global 5G stage...Internationally adopted standards allow for economies of scope/scale in production of communications gear as well as inter-operability in cross-border communications. FCC and the US telecom industry have thrived under light-touch regulations, including flexible-use policies for spectrum assignments. We have relied on industry-led standards bodies like 3GPP (3rd Generation Partnership Project) for industry standards to ensure inter-operability.
Categories: Business News

Collateral gains: Rally helps lower promoters’ pledges

January 19, 2021 - 7:54am
Mumbai: The rally in stock prices over the past few months has helped promoters of smaller companies get back a portion of the shares they had pledged to raise funds.Out of 650 companies — mostly mid- and small-caps — promoters of at least 60 have released their pledged shares in the December quarter, according to data from stock exchanges.Since March last year, several promoters were forced to increase their share pledges as collateral to raise cash following the Covid-19-induced nationwide lockdown. The plunge in share prices had resulted in lenders asking for top-up collateral to make up for the loss in value.Around 642 promoters had pledged part of their holdings valued at Rs 2 lakh crore as of September 30, 2020. The rally in mid- and small-caps has given them a breather.80338551For instance, the share pledge of the promoters of Max India declined from over 78 per cent in September to 6.24 per cent as of December 31. Similarly, promoters of LG Balakrishnan got their entire pledge of 20.26 per cent released. In the case of Emami, the pledges reduced from 46.5 per cent in September to 38.94 per cent at the end of December.Also, companies such as Apollo Pipes, SMS Lifesciences, Astron Paper, Atul, Apollo Hospitals, Shoppers Stop, Ajanta Pharma, Jubilant Food, Gateway Distriparks and Deepak Fertilisers among others, have seen a decline in share pledges during the quarter.“The rally in stock prices in the last few months has helped promoters to reduce pledge while the need to pledge shares for raising working capital to run their companies has come down now,” said Gaurav Dua, head – capital market strategy at Sharekhan.The BSE Sensex rallied 23 per cent in the December quarter while the BSE MidCap and SmallCap indices gained 21 per cent and 26 per cent, respectively.When there is a sharp rise in stock prices, fewer shares are required to be pledged as collateral to raise the same amount. In the event of a decline in value, lenders ask for more shares to be pledged. If promoters fail to give more, lenders sell the pledged shares to recover money.
Categories: Business News

India’s now among top 10 buyers of US treasuries

January 19, 2021 - 7:54am
For the first time, India has featured in the list of top 10 sovereign investors in US Treasuries.At the end of October, the count was at a new record high of $222.4 billion, showed latest data. That should give sufficient cushion to Asia’s third-biggest economy when interest rates turn globally – and currency volatility becomes manifest in the money hubs of London, New York and Tokyo.“Yield income is not the purpose of such investment,” said Madan Sabnavis, chief economist at CARE Ratings. “This is to ensure the safety of forex reserves. Instead of keeping it idle, the central bank invests in highly liquid US bills. Safety and liquidity are the two motivations and not the returns. The central bank should be in a position to liquidate such assets without loss in case of adverse market swings.”Between March and October last year, the benchmark US paper dropped to a historic low, yielding as low as 0.52%.India has now outpaced Cayman Islands, Taiwan and Singapore in improving its UST investment rank to 10 from 13 a few months ago.Since March last year, the Reserve Bank of India (RBI) invested about $66 billion in US treasuries. Mint Road may extend the purchases given its expanding foreign currency reserves.India’s forex reserves hit a new all-time high at $586 billion, show data from the central bank.“In the world of uncertainty, the only defence that India has against any contagion is high forex reserves,” said Indranil Sengupta chief India economist BoA Securities. “One of our three certainties for an uncertain 2021 is that the RBI will continue to build forex reserves to buffer against contagion. You will not get foreign investors if the rupee is volatile.”Japan and China remained top two investors in the US Treasuries. Hong Kong is just ahead of India by about $7 billion.Sustained accretion to foreign exchange reserves, according to RBI governor Shaktikanta Das, has improved reserve adequacy in terms of conventional metrics such as cover for imports.“Sound external sector indicators augur well for limiting the impact of spillovers of possible global shocks and financial stability concerns as investors and markets are credibly assured of the buffer against potential contagion,” he said last week.
Categories: Business News

Farmers-govt talks postponed to Jan 20

January 19, 2021 - 1:54am
NEW DELHI: The tenth round of talks between the government and representatives of protesting farmers on controversial new farm laws was on Monday pushed back by a day to January 20, with the Centre saying both sides want to resolve the stalemate at the earliest but it was getting delayed due to involvement of people of other ideologies.Asserting that the new farm laws are in the interest of the farming community, the government said obstacles do come whenever good things or measures are taken and it is taking longer to resolve the issue as farmers' leaders want a solution their own way."The government's ministerial meeting with farmers unions will be held on January 20 at 2 pm at Vigyan Bhawan, instead of January 19," the Agriculture Ministry said in a statement on Monday.A Supreme Court-appointed panel to resolve the crisis is scheduled to hold its first meeting on Tuesday."The Government's ministerial meeting with protesting farmers' unions was fixed on January 19. Due to inevitable reasons, it has become important to postpone the meeting."Now the meeting will be held on January 20 at 2 pm at Vigyan Bhawan, New Delhi. Request you to attend the meeting," Agriculture Secretary Sanjay Agarwal said in a letter to 40 farmer unions.The previous rounds of talks between the government and farmers have failed to reach any concrete results, as protesting unions have stuck to their main demand for repealing the new laws, but the government has refused to do so.Speaking to PTI, Minister of State for Agriculture Parshottam Rupala said: "It is different when farmers talk to us directly. When leaders get involved, then it becomes difficult. There could have been early solution had the discussions were held with farmers directly."Since people of different ideologies have entered into the protest, they want a solution in their own way, he said."Both sides want a solution, but they have different points of view and hence it is taking more time. But a definite solution will emerge," he noted.Separately, the Supreme Court told the Centre on Monday that the proposed tractor rally on the Republic Day by protesting farmers is a "law and order" matter and Delhi Police is the first authority to decide who should be allowed to enter the national capital.Thousands of farmers, especially from Punjab, Haryana and parts of Uttar Pradesh, are protesting for nearly two-months at various Delhi borders against the three farm laws enacted by the central government in September 2020.Union Agriculture Minister Narendra Singh Tomar, while addressing a virtual event, reiterated that the three farm laws will be beneficial for farmers."These laws were expected earlier but the previous government could not implement because of pressure. It was the Modi government that took a bold step and brought these laws passed in Parliament... Whenever a good thing happens, there are obstacles," Tomar said.On eve of the tenth round of meeting, a delegation of farmers representing over 270 farmer producer organizations from Madhya Pradesh, Uttar Pradesh, Assam, Karnataka, Chhattisgarh and Odisha met Rupala and appealed not to repeal the laws.Minister of State for Agriculture Kailash Choudhury was also present in the meeting."We support the new laws. We don't want the government to repeal them," Narendra Tomar of Gwalior-based Chambal Agro FPO said after the meeting.
Categories: Business News

How cos are tackling e-waste challenge

January 19, 2021 - 1:54am
The Global E-waste Monitor 2020 says the world generated a record 53.6 million tonnes of e-waste last year. India is the third biggest contributor to this dump with 3.2 million tonnes, after China and the US. While the environmental hazard is worsening, some companies are beginning to take e-waste management seriously. “Things are certainly looking up since 2017 with several brands doing their bit in responsible ewaste management,” says Pranshu Singhal, Founder, Karo Sambhav, a PRO (producer responsibility organisation) offering e-waste solutions and EPR (extended producer responsibility) services.For example, South Korean consumer durables giant LG has created a pan-India network of 40 recyclers, and collected and recycled almost 100 kilo MT of ewaste during 2017-2020. The company has also aligned its call centres to register take-back requests besides introducing exchange programmes. Hardware maker Dell, in a decade-long programme, has used plastic recovered from old computers to new make parts. “We provide free end-of-life management direct to the consumer in 75+ countries and territories,” says Deepak Ohlyan, Dell Technologies’ Vice President for global facilities across Asia-Pacific, Japan and China. “In India, we have set up ewaste drop-off points at 23 locations.”By 2030, for every product a customer buys, Dell plans to reuse or recycle an equivalent product.Smartphone market leader Xiaomi has introduced a Product Take Back & Recycling Programme, by which a customer’s Mi account is credited with a Rs 100 discount coupon for every old product collected. The company has also tied up with Karo Sambhav to set up over 1,150 e-waste collection points -- for old phones, batteries, accessories -- at all Xiaomi Mi Homes and Mi Authorised Service Centres in over 500 cities. A company spokesperson said Xiaomi collected more than 400 tonnes of e-waste over the past three years: “We recognise our unique potential towards promoting responsible e-waste management of our end-of-life products and urge everyone to join our cohesive e-waste movement.”While these efforts are laudable, several challenges are extant. “The sector suffers from lack of investment, infrastructure and consumer awareness,” says T.J. Chang, Head of Customer Service at LG Electronics India.“Plus, existence of a large informal sector and consumers’ expectation of high returns for their old product makes ewaste collection a costly affair in India.” From a policy perspective, the Centre introduced the EPR framework in 2017, which has helped, but it doesn’t set recovery targets for recyclers. “Unless recovery targets are set, it will be very difficult to monitor how much of actual recycling is happening,” says Singhal. In addition, the EPR must include the informal sector for better results, and more innovative technologies are needed for extraction of precious metals from e-waste, according to Shantanu Srivastava, Lead-Public Affairs, Thinkthrough Consulting.There are 312 registered recyclers with the Central Pollution Control Board (CPCB), but the key challenge is that “most registered recyclers don’t even have a working shed, forget about a plant. So, there is no monitoring happening while giving the licences”, says Nitin Gupta, Co-founder, Attero, a recycling company. “If the licences are given by CPCB instead of the state pollution control boards, monitoring would be strict and the system more streamlined.” Effective monitoring would also require data, but India’s recycling data is just not there. “Can anyone say how much metal has been recovered from the recycling that has happened in the past two years? There is no data available,” rues Satish Sinha, Associate Director with Toxics Link, an environmental research and advocacy organisation.Currently, there are more questions than answers for the ever-increasing e-waste challenge, but the initiatives by companies do give us some hope for the future.(This article is part of a series on sustainability in association with Mondelez India. The company had no editorial input)
Categories: Business News

Does the YES vote for Franklin mean you will money soon?

January 19, 2021 - 1:54am
The wait to get back their money stuck in six schemes of Franklin Templeton can be longer for the mutual fund investors. Even though Franklin Templeton has said that they have got an overwhelming response in the favour of the winding up of schemes, the Supreme Court of India might take some time. In a hearing on Monday, the court said that they will decide on the distribution of money to Franklin Templeton unitholders after hearing the submissions objecting to the e-voting process. The apex court has granted three days for filing of objections to the e-voting on winding up by Franklin Templeton. The Court has now posted the hearing further on January 25. Franklin Templeton Mutual Fund said that they got a YES nod from the unit holders to wind up the six shut schemes. According to the observer’s report, over 90% of the unit holders in these six schemes have voted for winding up. The six shut debt schemes have received cash flows worth Rs 2,667 crore since April 24. This is about 10% of the Rs 26,000 crore that are stuck in these schemes. If the legal uncertainties are resolved soon, the investors might get their money soon in some schemes. “The schemes have got a fair share of the liquid cash now till December and that can be processed soon. For schemes like the liquid fund and the ultra short term fund, there is a possibility of getting 90-100% of your money back. Schemes like the short-term income plan and others may take 2-3 years to refund the full amount,” says Babu Krishnamoorthy, Chief Sherpa, FinSherpa Investment Services, a financial advisory firm, based in Chennai. After this step, if the Supreme Court gives the fund house a go ahead for liquidation of the schemes, the next step would be to decide how the money will be monetised. The investors can either authorise the Trustees assisted by Kotak Mahindra or DeloitteTouche Tohmatsu India for the liquidation process. “We are thankful to our unitholders for voting overwhelmingly in favour of the orderly winding up in all 6 schemes. We deeply appreciate the support of our investors and partners and hope to commence distribution of investment proceeds at the earliest, subject to the directions of the Hon’ble Supreme Court in the next hearing scheduled to be held on 25 January 2021,” Franklin Templeton Mutual Fund stated. The e-voting process took place from December 26-28, 2020. SEBI had appointed Taruvai Subayya, the former chief election commissioner of India as the observer for e-voting.
Categories: Business News

3,81,305 beneficiaries received Covid vaccine

January 19, 2021 - 1:54am
NEW DELHI: India reported 133 more adverse events following immunisation (AEFIs) as 25 states and union territories administered Covid vaccine jabs to 1.48 lakh healthcare workers on Monday. The ministry of health and family welfare, however, said that there has not been a single serious or severe AEFI attributable to vaccination till date. As public immunisation drive against Covid-19 entered its Day 3 on Monday, more AEFIs were reported. So far, 580 AEFIs have been reported since the public immunisation drive began ion Saturday. These 580 AEFIs include seven hospitalisations – 3 in Delhi, one each in Chhattisgarh and Uttarakhand and two cases in Karnataka. Two deaths have been reported following immunisation. However, health ministry maintained on Monday that these were not related to immunisation. Additional secretary (health) Manohar Agnani said, “The post mortem in the first case (52-year-old male from Moradabad) has shown that it is not related to vaccination. In the second case (a 43-year-old male from Bellary) the post mortem is planned today.”The actual numbers vaccinated, however, remained fairly low. On the first day 1.91 lakh persons were vaccinated. On Monday till 5 pm, 1,48,266 healthcare workers were vaccinated. The highest vaccinations were administered by Karnataka at 36,888, followed by Odisha 22,579, West Bengal 11,588 and Telangana 10,352.
Categories: Business News

RTGS 24x7, 365 days is a game changer for markets

January 19, 2021 - 1:54am
Mumbai: The central bank move to allow large-value fund transfers 24×7 through the Real Time Gross Settlement (RTGS) system has the potential to eliminate delays in the movement of money, helping quicken the pace of trade in India. Funds above Rs 2 lakh can now be transferred through the RTGS system anytime of the day or night starting December 1, 2020, making India one of the select countries globally to have this facility. The Reserve Bank of India (RBI) move that was announced as part of the monetary policy review in October follows a similar action to make the National Electronic Funds Transfer (NEFT) system available 24x7 since December 2019. Unlike RTGS, NEFT does not have a minimum transaction limit and is used mostly by retail customers to transfer funds. Central bank governor Shaktikanta Das had said he expects the move to foster innovation in the large-value payments ecosystem, helping companies transact more easily. Bankers said RTGS will now be increasingly used by businesses to settle large amounts even on weekends. 80335452“So far, RTGS was only available on banking days. So, if a supplier sent goods on a Saturday evening, he might have to wait until Monday for payments,” said R Venkattesh, head of operations, technology and HR at DCB Bank. “Now, he can expect to receive the money the same day. Also, since RTGS was available only during a particular time of the day, there used to be a rush, particularly in the evenings to send money. That pressure on banks will ease.” The RTGS system handled around six lakh transactions daily for a value of around Rs 4 lakh crore across 237 participant banks with the average ticket size of Rs 57.96 lakh as of November 2020, RBI data showed. Before it was made 24×7, RTGS was available from 7.00 a.m. to 6.00 p.m. on all working days. However, some banks had an earlier cut-off to ensure smooth settlements.Bankers say that since this route allows instant large value transactions that demand careful handling, banks will offer it only selectively to customers based on their needs. “Even for NEFT, banks have set limits on how much can be sent by one account, though there is no upper limit. Since these are high-value transactions, banks may want to limit this to clients who ask for it or those who genuinely need it,” said a banker. RTGS is used for transactions between businesses but there’s some reluctance among customers to use it for high-value transactions like real estate due to its instant settlement. The convenience of 24×7 usage could enhance commercial use of RTGS. However, retail customers have many modes for payments, including Immediate Payment Service (IMPS) that is a real-time payment service available even on holidays.
Categories: Business News

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