Tag Archives: Economic Times

IL&FS puts 22 road assets on block

MUMBAI: The newly-appointed IL&FS Board today initiated the process of selling IL&FS group’s equity stakes in 22 road assets of around 12,000 kilometers. The proposal includes selling seven operating annuity based road projects in various parts of India aggregating approximately 1,774 lane kms, eight operating toll based road projects in various parts of India aggregating approximately 6,572 lane kms, four under construction road projects in various parts of India which would aggregate approximately 1,736 lane kms upon completion.It also includes three other assets and businesses, which are EPC & O&M businesses of IL&FS Transportation Networks Limited and a Sports Complex in Thiruvananthapuram.“The proposed sale of stakes held by IL&FS group in these assets may be carried out as a basket or individually or as an undertaking comprising all offered assets and businesses,” said IL&FS in a statement. Private equity firms Lone Star Funds and Cube Highways had in the past shown interest in buying road assets of IL&FS. The new board wants to carry out the sale process from the beginning and is calling for fresh bids. IL&FS’ roads development arm, IL&FS Transportation Networks (ITNL), has the largest portfolio of highways built via a public, public, private partnership (PPP), with 28 build, operate, transfer (BOT) projects. The IL&FS Board, on behalf of the entire IL&FS Group, including ITNL, has appointed Arpwood Capital and JM Financial as financial & transaction Advisors, along with Alvarez & Marsal as resolution consultantsThe IL&FS Board working with the ITNL Board have decided to publicly solicit expressions of interest to assess the interest for a sale of its stakes in the domestic roads vertical.According to the plan submitted to NCLT Mumbai, the company plans to divest stakes in subsidiaries including IL&FS Education, IL&FS Technologies, ONGC Tripura Power Company and IL&FS Paradip Refinery Water Limited in the coming weeks. The process to sell wind energy and securities business is underway. The newly appointed board is looking to sell assets overseas. Elsamex SA acquired by ITNL in 2008, has received a binding offer from a buyer for an asset namely A4 Asset which is a JV having a concession Agreement for a road Project in Madrid which Elsamex owns. It is looking at cost reduction by rationalising manpower and other austerity measures.

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Pabrai’s commandments for successful investing

Eminent value investor Mohnish Pabrai says wealth creation in financial markets should be based on ‘10 Basic Commandments of Investment Management’ in order to ensure capital protection and growth. However, most participants in the investment management business violate these constantly, putting themselves in distress.Pabrai, Managing Partner of the US-based Pabrai Investment Funds, explained these principles in a talk delivered to the students of Boston College’s Carroll School of Management.Commandment One: Thou shall not skim off the topPabrai feels it is wrong to have a fee structure in wealth and asset management. Most money managers take some percentage of fees as a fixed fee and hedge funds typically take away 1-2 per cent off the top and an additional performance fee. He specifically highlights Warren Buffett and Charlie Munger, who practised the art with no fees off the top.Pabrai says investment managers should first practise the art with their own limited assets before managing other people’s money. “With the power of compounding, even a small amount of money can become significant over a few years. If you are compounding at anything north of 15-20-25 per cent, which you should be able to do with small amounts of capital, your money will be doubling every 4-7 years. This then gives you the ability to, in effect, live off that base while the assets keep growing,” he says.Commandment Two: Thou shall not have an investment teamAccording to Pabrai, investment management is not a team sport, but is designed to be an individual pursuit. Any two humans are going to have different circles of competence because of which it doesn’t make sense for a good investment manager to have analysts in his team.There are good chances that an analyst may come up with some investment ideas, which may just be rejected because of different circles of competence which will not do justice to the analyst.“Secondly, you do not need that many stocks in a portfolio. In a year you have plenty of time to research stocks and find two-three-four that fit the bill,” he said. Pabrai said the investment analysis process is the fun part of the job, which an investment manager will not want to delegate to anyone else.Commandment Three: Thou shall accept I shall be wrong one-third of the timePabrai says investing is a very inexact science and trying to extrapolate the future of many businesses is an extremely difficult job. He feels four out of 10 businesses will not behave in the future as per expectations as various factors may affect them. So, it must be accepted that even the highest conviction ideas may or may not fulfil expectations.Commandment Four: Thou shall look for hidden 1x price-earnings stocksThe veteran investor says it is best to look for stocks based on future earnings or hidden earnings that are trading at a 1x multiple. “When you can buy at this valuation, good things tend to happen. Looking for the hidden PE is a really good exercise,” he says.Sharing his own experience, Pabrai says when he bought Fiat Chrysler, it was trading at less than $5 a share and the company had forecast that by 2018 it would be making about $5 a share. In 2016, it spun off Ferrari, but including that it exceeded the forecast number. The P/E of 1 materialised and the investment increased by 7-8 times in that time. Commandment Five: Thou shall never use ExcelPabrai says the use of excel should be avoided in making investment decisions. “The investment process is simple, and you should not take help of an Excel sheet to figure out if something is a great investment. If you cannot figure it out in your head, it can’t be a great investment. If you find yourself reaching for Excel, you take a pass,” he advised.Commandment Six: Thou shall always have a rope to climb out of the deepest wellPabrai said one of the greatest lessons he has learnt in the investment business is that there are going to be periods of ups and downs where performance is sometimes going to be great and sometimes not. Businesses are going to always have gyrations and setbacks are par of the course, but there will always be a way to deal with them.Giving his own example, Pabrai says during the global financial crisis, his company hit rock bottom in March 2009 from a peak in June 2007, with funds dropping between 65-70 per cent. But he did not lose hope and found a way to come out of the crisis. He encouraged investors to always have belief in their ability, as there will always be a rope to climb out of the deepest well.Commandment Seven: Thou shall be singularly focused like ArjunaPabrai says the golden rule for investment management is to have a focus and resolve like that of Arjuna from the Indian epic Mahabharata. “There is a need to have a focus on the business, and only the business,” he said.While looking at a business with a P/E of 1, there will usually be several concerns hanging over it, including macro concerns. Pabrai feels if we can look past these concerns, there would be a lot of opportunities. Investors must just focus on these opportunities and ignore the noise around them.Commandment Eight: Thou shall never short a stockPabrai feels shorting a stock can at most deliver a double, but often can go against an investor. Even experts like Warren Buffett and Charlie Munger have noted that they have always been right on the stocks to short but have always got the timing wrong. “The best you can do is double your money and the worst is you can go bankrupt. This is the opposite of what you want. There is no point in making bets where the highest upside is a double and the highest downside is that you are out of the game,” he said.Commandment Nine: Thou shall not be leveraged. Neither a long-term lender nor a short-term borrower beThe value investor says there is no place for leverage in life. The most important thing is to spend less than your earnings. “To finish first, you have to first finish, where you want to get to play the game for a long time,” he said.Pabrai stresses the importance of not blowing up.“If you compound at a stellar rate, but you follow a string of winning years with a single zero, you have compounded at 0 per cent,” he says.Commandment Ten: Thou shall be a shameless clonerPabrai is of the view that cloning is very good for an investor’s health. He feels there are many smart people around with the highest conviction ideas, who need to be followed as they are indeed great investors. “In many cases their portfolios are visible to us because it is required by law and so it is a great shortcut to look at them and learn,” he feels.(Disclaimer: This article is based on a video of Pabrai’s speech available on YouTube.)

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Raghuram Rajan has an advice for govt on RBI reserves

NEW DELHI: Former RBI Governor Raghuram Rajan has cautioned that transfer of excess reserve to the government may bring down rating of the central bank.Rating downgrade of the RBI from ‘AAA’ would make borrowing costlier for the central bank and will have implication for the entire economy.Asked if the transfer of excess reserve by the RBI to the government could lead to downgrade of the rating, Rajan said: “It could…it depends on how much. It may not be an issue now…may be an issue at some point of time. That’s one concern”.This is something both the government and RBI should discuss before reaching some conclusion, he told a leading news channel in an interview.”We are ‘Baa’ country. We are barely investment grade. Sometime, we need to undertake international transactions which require really high credit rating. For example swap we did in 2013. So, for that we need unimpeachable balancesheet. Why don’t we keep the RBI as an unimpeachable balancesheet with AAA credit rating that requires certain amount of equity,” he said.Highlighting that profit of the central bank largely comes due to devaluation of Indian currency, Rajan said keeping a portion for the contingency reserves, RBI usually pays entire profit.”RBI can pay profit and not whatever it holds for contingency reserves for movement up and down. For example, rupee that depreciated could also strengthen…so we should accommodate for that,” he said.There seems to be a tussle going on between the RBI and government over various issues, including transfer of excess capital of the apex bank.Last month, the RBI board decided to set up a high-level committee soon for examining the Economic Capital Framework (ECF) to determine the appropriate levels of reserve the central bank should hold.Asked whether he also faced pressure when he was the governor, he said there is always a pressure on the central bank to pay the government more.”I had it as well. I wrote a letter to the RBI when I was Chief Economic Advisor saying perhaps the RBI should look at how much it needs to hold. When I came to RBI as governor I set up a committee which essentially said we have enough capital to pay out our entire profit.”The three years that I was Governor, we paid the highest dividend in RBI’s history to the government. The issue at stake is not that anymore. The issue is more than that. It’s not just the profit, they want the excess. And the Malegam Committee had opined that you cannot pay more than the profit,” he said.Rajan, who was RBI governor for three years till September 2016, is currently teaching at the Chicago Booth School of Business.

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After Market: 172 stocks that signalled upside possibility

NEW DELHI: Domestic equity indices made merry and logged gains for the fifth straight session on Monday. The benchmark indices closed in the green, ahead of a Fed policy meeting to be held on Wednesday and despite China’s disappointing economic data released on Friday. Oil prices, which steadied on Monday after sliding around 2 per cent last week, remained under pressure owing to oversupply conditions and worries over slowing global economic growth and oil demand. Sensex advanced a whopping 307 points, or 0.85 per cent, to 36,270. Overall, 21 index stocks settled with gains against 9 that slipped. BSE Midcap and Smallcap indices rose 0.43 per cent and 0.26 per cent, respectively. Nifty advanced 82.90 points, or 0.77 per cent, to 10,888, with 34 stocks ending in the green and 16 in the red. Here are the key highlights of Monday’s session. Sensex movers and shakers:On the 30-share index Tata Motors ended the session biggest gainer, rising 4.10 per cent. Among other index stocks, Powergrid, HDFC, Vedanta, Wipro and Tata Steel logged decent gains. Kotak Bank led the losers, down 2.50 per cent, followed by Infosys, Bharti Airtel, HeroMotoCorp, HUL and Asian Paints. HDFC was the top contributor while Infosys was the top drag. Huge bounty: Rs 6.29L cr in 5 daysThe BSE listed firms piled up over Rs 6.29 lakh crore during the last five sessions of gains. On Mnday, investors became richer by Rs 98,962 crore as the market capitalisation of BSE companies jumped to Rs 1,44,22,696.22 crore, from Rs 1,43,23,734.44 crore on Friday. Metal pack shinesBSE metal pack emerged as the top gainer among the sectoral indices, with all the 10 metal stocks ending in the greens. Jindal Steel topped the leader board, rallying 3.94 per cent, followed by JSW Steel, SAIL, Vedanta, Hindalco and Tata Steel. 172 stocks show potential upsideMomentum indicator moving average convergence divergence, or MACD, showed bullish sentiment on 172 counters on BSE. Among them were Voda-Idea, Sun Pharma, MMTC, GMR, Tata Steel, ITC and others. On the other hand, Mahindra CIE Auto, Synergy Green, PI Industries, Cosco (India) featured among the 36 stocks that showed bearish crossovers. Vedanta Surges 1.88%Shares of Vedanta extended their five-day consecutive winning saga and ended 1.88 per cent higher at Rs 205 after Sterlite Copper, a subsidiary of Vedanta, Saturday welcomed the National Green Tribunal (NGT) order allowing the company to resume operations at its unit at Tuticorin, Tamil Nadu. In May, the company had to close a smelter plant in Tamil Nadu post a state government order. The company had earlier challenged the order at the NGT. Jet Airways falls 3.44%The shares of Jet Airways snapped their previously bagged gains on Friday and fell 3.44 per cent on Monday, down Rs 249.95, after Nikos Kardassis, the former CEO of Jet Airways, who had made a comeback to the carrier in an advisory role and was tasked revive the lamenting airline, once again bid farewell to the company, according to a report. Overbought & oversold stocksThe Relative Strength Index, or RSI, showed 41 stocks in the oversold zone on BSE. Among them were Arvind, IL&FS Transportation, Jindal Stainless and Vishal Fabrics. Only three stocks slipped into the overbought zone on BSE; these were- EIH Associated, Aditri Industries and Gogia Capital Services. Stocks above their 200-DMAUltratech Cement, Oberoi Realty, JSW Energy, GAIL, Ruchira Papers and Voltas featured among stocks that witnessed positive breakouts and traded above 200 DMA today. However, Voltas, Max India Limit, Mahindra CIE and Pheonix Mills were among the stocks trading below their 200 DMAs. Nifty forms Bullish candleAfter opening at 10,853.20, Nifty50 settled at 10,888. The index hit an intraday high and low of 10,900.35 and 10,844.85. During the process, it formed a bullish candle on daily chart. Rajesh Palviya, Head – Technical & Derivatives Analyst, Axis Securities said, “The daily price action has formed a bullish candle and has closed above past two sessions consolidation range indicating strength ahead.”

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F&O: Falling VIX shows Nifty firmly in the grip of the bulls

By Chandan TapariaThe Nifty index opened in the positive and gradually extended its gains towards the 10,900 level in the latter part of the session. It formed a bullish candle on the daily scale as every small decline got bought into. Now, it has to hold above 10,800 to extend its move towards 11,000 and then 11,176 levels, while on the downside support exists at 10,777 and then 10,700 levels.On the options front, maximum Put OI was at 10,000 followed by 10,500 while maximum Call OI was at 11,000 followed by 10,900 strike. There was Put at 10,900 followed by 10,800 while Call unwinding was seen at all immediate strike prices. The options band signified a trading range between 10,750 and 11,000 levels.India VIX fell 4.32 per cent to 14.50 level. It has seen a sharp cut of 32.50 per cent in last five sessions, which suggests the bulls are getting a grip on the market with the expectation of limited downside.Bank Nifty finally closed above 27,000 and formed a bullish candle on the daily scale. Now, it has to hold above the 26,666-26,850 zone to extend gains towards 27,500 level, while on the downside support is seen at 26,666 and then 26,500 levels.Nifty futures closed in the positive at 10,911 with a gain of 0.85 per cent. Long buildup was seen in BEML, Vedanta, NIIT Tech, Ajanta Pharma, Wockhardt Pharma and UBL while shorts were seen in Biocon, Kotak Bank, Apollo Hosp, Arvind and Godrej Industries.(Chandan Taparia is Technical & Derivative Analyst at Motilal Oswal Securities. Investors are advised to consult financial advisers before taking an investment calls based on these observations)

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Tech view: Nifty forms bullish candle; near-term signs favour bulls

The bulls are gradually trying to strengthen their footing on Dalal Street, as near-term indicators are show an upward momentum may continue in the coming session. NSE’s Nifty50 index opened with an upward gap on Monday and remained in consolidation during the first half. However, buying momentum in later-half led it to close with almost 80-point or 0.77 per cent gain at 10,888.After opening at 10,853, the index hit an intraday high and low of 10,900 and 10,844. During the process, it formed a bullish candle on daily chart.Rajesh Palviya, Head of Technical & Derivatives Analyst, Axis Securities, said the daily price action has formed a bullish candle and has closed above past two sessions consolidation range indicating strength ahead. “For the day, the 10,900 level remains a crucial resistance to watch out for, as any sustainable movement above this level will provide further strength and take Nifty towards the 10,940 and 11,000 levels. On the downside, the 10,850 level will act as an immediate intraday support. Daily strength indicator RSI and the momentum indicator Stochastic both are in a bullish mode indicating upward momentum to continue,” Palviya added.The index also remained above its 200-day moving average throughout the session. Nifty is now approaching towards its 100-DMA which is placed at around 10,940.97. Aditya Agarwala, Technical Analyst, YES Securities said, “Nifty’s 100-DMA placed between 10,940-10,960, a sustained trade above this resistance zone will confirm the short-term trend reversal in favour of the bulls taking the Index to levels of 11,100-11,200.”For upcoming trading sessions, Mazhar Mohammad, Chief Strategist – Technical Research & Trading Advisory, Chartviewindia said, “Traders at this point in time shall remain cautious and maintain a tight stop below 10,800 on closing basis. Contrary to this if strength continues on the upside initial targets shall be 10,940 and thereafter a bigger target of 11,069 can’t be ruled out.”

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Outperformance in select midcaps is on the cards: Sanjiv Bhasin

Our understanding is autos are going to lead from the front. The metals pack is also showing a lot of promise, Sanjiv Bhasin of IIFL Securities, told ETNow. Edited excerpts:ET Now: Are you advocating buy through the close out of 2018?Sanjiv Bhasin: I have been bullish on the market and proved correct and we are now closer to 11,000 rather than 10,000. All that pessimism is over. For the Indian market, the lesson of 2018 is buy the fear and sell the greed. There is still a lot of fear around and people are waiting for corrections. They have been caught napping if they have been tracking the other asset classes or the other indices where China is in a bear market and the US is having problem of its own. India becomes a sweet spot on the back that oil is in a bear market. We have got bond yields, rupee and most of the uncertainties on governance on the RBI over with. The next 3-4 months can be pleasantly surprising because we think earnings are going to be a catalyst, along with flows because we have again seen foreigners turn to buy. Locally, we have had the backbone of this market being the retail investor and the SIP. Put your money where your mouth is. I still think midcaps can outperform in the next few months and that is what we are advocating to buy, select midcaps in most sectors where outperformance is on the cards. ET Now: When it comes to Tata Motors, has the view now changed, with recent news coming in that they are looking at downsizing in order to turn profitable and getting in some serious cost control measures. Do you sense that Street would give this stock perhaps a rechance?Sanjiv Bhasin: Like you said, most of the pessimism of autos may be in the price and if you are looking for elections and beyond, then relatively Tata Motors can outperform. The other caveat being if the pound in which they have an unhedged position starts to stabilise, you could see some mark to market return. But we still think autos are going to lead from the front. If I could select three names, it would be Bajaj Auto, Maruti, Eicher Motors and Ashok Leyland. Ashok Leyland is my dark horse because we think this month onwards before the budget they will see much of their inventory getting cleared and we think that the 15-year norm will change which will help them gain market share in MCV and LCV segments.ET Now: Suppose from 10,000, there are a few sectors which have really done well and there are a few sectors which have not yet performed. Any churning you would recommend to portfolio holders or mutual fund managers where you feel that this sector has run up substantially, you do not see further upside from current levels which does not mean that you are negative on that space but there is more attractive sector now which has not done so far so good.Sanjiv Bhasin: IT should be given an avoid unless you want to be in fully priced stocks where we do not think earnings will be a catalyst. But yes, if I could stick my neck out, I am very bullish on the metals pack. We think the pessimism is overdone, protectionism in US will see again 2019 being a very good year for results. Locally we have seen steel prices harden. The basket of JSW, Tata Steel, Vedanta and Hindalco is looking excellent. PSU banks are going to report very good numbers starting from State Bank, Can Bank, Indian Bank. Corporate banks are already leading from the front like Axis and ICICI and a Federal Bank if you can put the midcap basket. Autos I just suggested four names. I am very bullish on the gas utilities. MGL, IGL, GAIL all are looking excellent on the charts and so a whole host of stocks. As for power stocks, the CERC new guideline will be very very positive for some of the PSUs. I would be sticking my money on CG Power to be dark horse for 2019.ET Now: Are you more bullish on the power space?Sanjiv Bhasin: We have had our top picks and we have made money in that. If you recall, we were very bullish on the power financiers before the merger talk came. PFC and REC gave almost a 30 per cent return. We still think that today’s review petition is very very positive for the likes of NTPC and Power Grid. The only caveat here is that there is a government to manage its own balance sheet is seeing merger of some stocks to raise necessary cash.In this power space, you can pick up some of the power producers or you can see some of the utilities. So Calcutta Electric looks very good to us. Reliance Infra has sold its arm to Adani Power so that could be another good play to be with, but our outperformer here would be a small company called CG Power which we think is selling some of the over leveraged assets in Europe and where return on equity could sharply improve in 2019.

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Public banks about to recruit 1 lakh staffers

MUMBAI: State-owned lenders have more than doubled their hiring plans as the likes of SBI, Bank of Baroda, Canara Bank and Syndicate Bank are in the process of recruiting as many as one lakh people this financial year amid evolving roles to match new-age banking.The government banks are tapping talents across the hierarchy with specialised functions like wealth management, analytics, strategy, digital and customer services. All such key areas are important to ensure expanding businesses in a perfectly competitive market. Public sector banks now have fewer clerks and more officers.Around 20 per cent of total employees fall in the category of clerks.Only State Bank of India has around 45 per cent employees holding such positions, showed an estimate by Team Lease, one of the largest staffing companies in the country.“State-owned banks are turning competitive after battling mammoth bad assets,” said Sabyasachi Chakraverty, business head – banking & financial services at TeamLease. “The need is to change the culture of PSUs to drive business, and this has been seen in their hiring patterns.They are now focusing on hiring talent in line with new age as well as private/multinational lenders. This, in turn, should yield results over a period of time.”“Hiring outlook for the government lenders is also brightening,” he said.Barring lateral hires, these banks collectively hired 95,000 personnel (about 47,000 each year) in the last two years at positions like clerk, management trainees and probationary officers, according to Team Lease estimate.“Going forward, the plain vanilla generalist recruitment will give way to specific niche, strateg y-based hiring,” said Mrutyunjay Mahapatra, CEO, Syndicate Bank, which is recruiting 500 people this financial year.“We need new type of manpower as they will be put in new areas like digital marketing and stressed asset recovery.Remunerations are also attractive at the first three entry levels compared to foreign and private lenders.”The average age of Syndicate bank has come down to 37 from 46.5 two to three years ago.With increasing complexities, new specialisations, requirements have risen. Such lenders are even hiring talent from private players creating designations like chief ethics officer, chief marketing officer, chief investment officer, chief learning officer, head of analytics and digital marketing campaigner.

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Salary levels could be as much as Rs 50 lakh a year.Digital banking, especially in the aftermath of the country’s currency swap programme, has also led to recruitment spree in the tech and customer services divisions.“Public sector banks have felt the urge to change their way of working as people with prior experience in private and foreign lenders are given targets to grow the banks,” said Chakraverty.State Bank of India is spearheading the recruitment drive as it sees potential of business expansions in coming quarters.Besides fresh hiring, the bank is also looking to appoint 5,000 people through lateral hires, according to TeamLease.Bank of Baroda has planned to hire 500 to strengthen their portfolio management services or wealth management divisions. It is said to be hiring legal professionals as it focuses on efforts to recover bad loans.Even IDBI Bank, which is currently under prompt corrective action, an austerity measure to bring back a bank’s financial health, notified to hire some senior executives earlier in April-May. It appointed professional consultants to carry out the job.Emails sent to SBI and BoB remained unanswered until the publication of this report. Canara Bank and IDBI Bank could not be contacted immediately for comments.The popularity of bank jobs among job aspirants can be seen by the huge numbers who appear for the recruitment exam.

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Bajaj Auto launches new Platina 110 at Rs 49,197

NEW DELHI: Bajaj Auto said Monday it has launched the updated version of Platina 110 bike, priced at Rs 49,197 (ex-showroom Delhi).The new version comes with various features like anti-skid braking system and tubeless tyres as standard fitment.”The Platina 110 now joins the highly successful existing Platina 100 ES to offer a premium option to 100cc consumers,” Bajaj Auto President Motorcycle Business Eric Vas said in a statement.The model already comes with spring-on-spring suspension with Nitrox gas charged shock absorbers to absorb jerks from all types of roads.

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How McKinsey is helping authoritarianism regimes

by Walt Bogdanich and Michael ForsytheThis year’s McKinsey & Co. retreat in China was one to remember.Hundreds of the company’s consultants frolicked in the desert, riding camels over sand dunes and mingling in tents linked by red carpets. Meetings took place in a cavernous banquet hall that resembled a sultan’s ornate court, with a sign overhead to capture the mood.“I can’t keep calm, I work at McKinsey & Company,” it said.Especially remarkable was the location: Kashgar, the ancient Silk Road city in China’s far west that is experiencing a major humanitarian crisis.About 4 miles from where the McKinsey consultants discussed their work, which includes advising some of China’s most important state-owned companies, a sprawling internment camp had sprung up to hold thousands of ethnic Uighurs — part of a vast archipelago of indoctrination camps where the Chinese government has locked up as many as 1 million people.One week before the McKinsey event, a U.N. committee had denounced the mass detentions and urged China to stop.But the political backdrop did not appear to bother the McKinsey consultants, who posted pictures on Instagram chronicling their Disney-like adventures. In fact, McKinsey’s involvement with the Chinese government goes much deeper than its odd choice to showcase its presence in the country.For a quarter-century, the company has joined many U.S. corporations in helping stoke China’s transition from an economic laggard to the world’s second-largest economy. But as China’s growth presents a muscular challenge to U.S. dominance, Washington has become increasingly critical of some of Beijing’s signature policies, including the ones McKinsey has helped advance.One of McKinsey’s state-owned clients has even helped build China’s artificial islands in the South China Sea, a major point of military tension with the United States.It turns out that McKinsey’s role in China is just one example of its extensive — and sometimes contentious — work around the world, according to an investigation by The New York Times that included interviews with 40 current and former McKinsey employees, as well as dozens of their clients.At a time when democracies and their basic values are increasingly under attack, the iconic U.S. company has helped raise the stature of authoritarian and corrupt governments across the globe, sometimes in ways that counter U.S. interests.Its clients have included Saudi Arabia’s absolute monarchy, Turkey under the autocratic leadership of President Recep Tayyip Erdogan, and corruption-plagued governments in countries like South Africa.In Ukraine, McKinsey and Paul Manafort — President Donald Trump’s campaign chairman, later convicted of financial fraud — were paid by the same oligarch to help burnish the image of a disgraced presidential candidate, Viktor Yanukovych, recasting him as a reformer.Once in office, Yanukovych rebuffed the West, sided with Russia and fled the country, accused of stealing hundreds of millions of dollars. The events set off years of chaos in Ukraine and an international standoff with the Kremlin.Inside Russia itself, McKinsey has worked with Kremlin-linked companies that have been placed under sanctions by Western governments — companies that the firm helped build up over the years and, in some cases, continues to advise.It has consulted in many sectors of the Russian economy, including mining, manufacturing, oil and gas, banking, transportation and agriculture. A McKinsey official sat on the Russian government’s energy board. Former McKinsey consultants have gone to work in the Russian companies they once advised.In August, VEB Bank — which is wholly owned by the Russian state, intertwined with Russian intelligence and under U.S. sanctions — hired McKinsey to develop its business strategy.There is no indication that McKinsey has violated U.S. sanctions, which prohibit only certain transactions with targeted companies and individuals. But the larger question is whether the company, in pursuing legitimate business opportunities abroad, is helping to shore up President Vladimir Putin’s autocratic leadership.Other consulting companies serve similar clients, but none have the stature to confer credibility quite like McKinsey, a confidant for 92 years to many of the world’s most admired companies.In China, it has advised at least 22 of the 100 biggest state-owned companies — the ones carrying out some of the government’s most strategic and divisive initiatives, according to a review of Chinese-language material by The Times.While it is not unusual for U.S. corporations to work with China’s state-owned companies, McKinsey’s role has sometimes put it in the middle of deeply troubled deals. In Malaysia, the company laid out the case for one of Asia’s most corrupt leaders to pursue billions of dollars from China at a time when he was suspected of funneling vast sums of public money into his own pocket, drawing tens of thousands into the streets to protest against him.McKinsey defends its work around the world, saying that it will not accept jobs at odds with the company’s values. It also gives the same reason that other companies cite for working in corrupt or authoritarian nations — that change is best achieved from the inside.“Since 1926, McKinsey has sought to make a positive difference to the businesses and communities in which our people live and work,” the company said in a statement.“Tens of thousands of jobs have been created, lives improved and education provided thanks to the work we have done with our clients,” it added.“Like many other major corporations including our competitors, we seek to navigate a changing geopolitical environment,” the company said, “but we do not support or engage in political activities.”Still, some analysts, veteran diplomats and experts on global governance see McKinsey’s role in a different light.While the United States pulls back from international cooperation and adopts a more nationalist stance, major companies like McKinsey are pursuing business in countries with little regard for human rights — sometimes advancing, rather than curbing, the contentious tactics of America’s biggest rivals.“It is more likely they enable these regimes and likely become complicit,” said David J. Kramer, a former assistant secretary of state. “They don’t want to alienate regimes, or they would lose business.”— Oligarchs and AutocratsHis bona fides included two criminal convictions and a rigged election that, many assumed, had finally doomed his presidential ambitions.So it was a bit surprising when McKinsey helped polish the battered image of Yanukovych and pitch him as something else: a forward-thinking leader with an economic vision of a better future for all Ukrainians.McKinsey’s role in resurrecting Yanukovych’s political career has been lost in the clamor surrounding the conviction of Manafort, Trump’s former campaign chairman, for secretly taking millions of dollars to help the Ukranian leader win the presidency in 2010.But McKinsey was financed by the same oligarch who backed Manafort, and it wrote an economic plan that Yanukovych wielded to disarm his critics — before discarding much of it after becoming president.On his 100th day in office, in a Soviet-era palace adorned with Cossack art, Yanukovych stiffly briefed the nation, laying out his economic plan. After sipping cognac and Scotch, legislators and guests packed the hall, where the cameras conspicuously stopped on a man with a bright blue suit and a résumé that touched the lives of virtually everyone in Ukraine.His name: Rinat Akhmetov, the country’s richest oligarch. As much as anyone, he was the reason for the gathering, and he had reason to feel good.He had rescued Yanukovych through a strategy that included hiring two very different consulting groups: Manafort, whose Russian-linked team had worked for dictators with little regard for human rights, and McKinsey, the purveyor of best practices for the world’s most important corporations.That these two disparate groups found common ground is a testament to Akhmetov’s vast business empire and political skill. But for McKinsey, it underscored the risk of consulting in an unstable part of the world, where the company might be perceived as enabling autocratic or corrupt governments.Manafort’s job was twofold: to soften Yanukovych’s reputation and strengthen his Russian-leaning Party of Regions, facilitating his rise to the presidency. McKinsey provided something different — an economic plan that Yanukovych could use to portray himself as a market-based reformer, tilting to the West.To ensure that the message got through, Yanukovych and Akhmetov pointedly mentioned McKinsey in talks with U.S. officials, according to diplomatic cables released by WikiLeaks. Akhmetov assured the Americans that his candidate was “a strong McKinsey supporter,” while Yanukovych emphasized that he had instructed his aides “to work directly with McKinsey experts.”Diplomats remained wary. A respected Ukrainian journalist warned U.S. officials that Yanukovych might “sing a song one moment and knife someone the next.”There were also questions about Akhmetov, who had long been suspected of links to organized crime, which he denied. One diplomat called his Party of Regions a haven for “mobsters and oligarchs,” noting that it might be trying to shed that image.Akhmetov’s financial ties to Manafort and McKinsey went beyond politics. He hired both to advise parts of his corporate empire, which included steel, mining, energy, finance, telecommunications, real estate, media, transportation, agriculture and soccer. He also hired former McKinsey consultants to help run his businesses, placing them in senior positions.Akhmetov paid Manafort by wire transfers funneled through a Cypriot shell company, court records show. Other Party of Regions operatives paid Manafort through shell companies, eventually resulting in his conviction in the United States for failing to declare the money on his tax returns.McKinsey, by contrast, was paid through a Ukrainian foundation financed by Akhmetov and run by a former McKinsey consultant now living in Moscow. Set up to promote economic reform, the foundation also sought to publicize McKinsey — and by extension, Yanukovych.To reach its prime audience in the United States, the foundation held two forums on the Ukrainian economy — one at the Four Seasons Hotel in New York and the other in Washington. On the whole, McKinsey’s work was well received.But the promise of a better future didn’t last long.Within a few years, Ukraine careened toward economic collapse while Yanukovych looted the nation, living in a palatial residence surrounded by a private zoo, a golf course, a garage filled with classic cars and a private restaurant in the form of a pirate ship.If that were not enough, he was also quietly building an enormous seaside retreat, complete with 40-foot ceilings and an indoor swimming pool, that eclipsed his presidential residence.The capital soon turned against him. Yanukovych had long promised to tie Ukraine to the West by signing sweeping political and trade agreements with the European Union. Then he abruptly reneged, siding with Russia instead.Protesters flooded the streets for months, chanting pro-Europe slogans. Yanukovych’s government responded with a heavy hand, culminating in what the European Parliament’s envoy called a “Ukrainian Tiananmen,” referring to China’s deadly crackdown on demonstrators in Tiananmen Square. More than 80 protesters were killed before Yanukovych fled the country in 2014.The chaos didn’t end there. Outraged, Putin pushed into Ukraine, annexed Crimea and stirred up a war that has claimed more than 10,000 lives. The West responded by kicking Russia out of the Group of 8 industrialized democracies and imposing sanctions. The standoff between Putin and the West had begun.McKinsey defended its role in Yanukovych’s rise by saying that the foundation was serious about promoting economic development in Ukraine and featured prominent Westerners on its board. The foundation quietly folded — without achieving its goals — just before Yanukovych fled to Russia. Neither Akhmetov nor McKinsey would say how much money McKinsey earned.“When we concluded that the government was not following through on its stated reform agenda, we ended our work,” McKinsey said in a statement.Akhmetov, who publicly broke with Yanukovych during the protests, declined to speak to The Times. Inside his gold and chrome headquarters, a spokesman said the foundation had been unsuccessful because politicians lacked the will “to embrace the reform agenda.”But critics like Anders Aslund, a Swedish-born economist who advised the Russian government in the 1990s and later the government of Ukraine, lamented how Yanokovych’s image had been sold in Western capitals. It was clear, he said, that Yanokovych “was about power and robbery.”McKinsey’s role in Ukraine did not end with Yanukovych’s downfall. “We build leaders who can deliver lasting, meaningful impact for Ukraine’s major companies, its economy and society,” the company wrote on its websiteMcKinsey quickly became a favorite of Yanukovych’s successor, Petro Poroshenko, an oligarch known as “the chocolate king” for his confectionary business.In a speech last November, Poroshenko praised McKinsey for its 15 years of work in Ukraine. His daughter-in-law also worked for the company during most of his presidency.Meanwhile, McKinsey has continued to consult for Akhmetov, sharing the top floor of a Kiev office building with an Akhmetov company. Another Akhmetov company sits a floor below. In fact, Akhmetov owns the entire building, which includes a business in the lobby fit for an oligarch: an Aston Martin-Rolls Royce dealership.— Building China’s DreamDeep in the Malaysian jungle, a sprawling construction site sits abandoned, the relentless monsoon rain taking its toll on the rusting fields of steel girders.It is supposed to be a railway — part of China’s signature Belt and Road Initiative, a $1 trillion global undertaking financed by big Chinese loans, and usually built by Chinese companies.Chief among them is the China Communications Construction Co., a state-owned behemoth whose initials are stenciled in black on the cement plant at the abandoned site.China Communications, which was barred for eight years from doing business on some World Bank projects because of a corruption scandal, played a leading role in building artificial islands in the South China Sea that have raised tensions with the United States.The company’s subsidiary also built a new port for Sri Lanka. But the debt turned out to be such a burden that the Sri Lankan government had to give up the port and hand it over for 99 years — to China.Sri Lanka’s fate was so alarming that Malaysia’s new prime minister, Mahathir Mohamad, worried that the same thing might happen to him. So he suspended the railway project in July.“That is not good for us,” Mahathir said in September. “Malaysian workers have no jobs that they can do. All the work is hired from China. You can see how one-sided it is.”But for McKinsey, it was anything but one-sided. The company represented both parties involved in the deal.In 2015, as China Communications was building the artificial islands and still under World Bank sanctions, McKinsey signed it on as a client, advising it on strategy.Months later, McKinsey won another contract: this one with the Malaysian government, to review the feasibility of the rail line.In a confidential PowerPoint report, McKinsey told Malaysian officials that the rail line could increase economic growth in parts of the country by as much at 1.5 percent. It was a figure that the prime minister at the time, Najib Razak, who now has been charged with corruption, liked to cite.In bullet points, McKinsey also said the project would help improve ties with China — “build the nation-to-nation relationship” — because of its importance in China’s Belt and Road Initiative.And McKinsey endorsed the idea of heavy borrowing from China, referring to it as a “game changer” elsewhere in the region.It isn’t hard to see where McKinsey’s enthusiasm for the Belt and Road Initiative came from: The firm had promoted the Chinese policy at the highest levels of the company.Dominic Barton, McKinsey’s managing partner at the time, made Belt and Road the theme of a keynote address in Beijing in 2015, recounting the Silk Road trade from the second century B.C. onward.McKinsey’s in-house research group, the McKinsey Global Institute, sprang into action, producing reports — widely cited in the Chinese state news media — extolling the benefits of the Belt and Road Initiative.Barton — who has served on the advisory board of China Development Bank, one of the two biggest Chinese lenders to the Belt and Road Initiative — also batted down concerns in a 2015 interview with Chinese state media that the undertaking might be used as a tool to expand China’s global influence.“The world is waiting for the ‘One Belt, One Road’ grand blueprint to move from dream to reality,” Barton and his colleagues wrote in a report published on the company’s Chinese website in May 2015, expressing McKinsey’s enthusiasm to work on it.The feeling was mutual. Nine of the top 20 Belt-and-Road contractors are or have been McKinsey clients, according to research by The Times and figures from RWR Advisory Group, which tracks such projects.In 2016, McKinsey’s client, China Communications, won the $13 billion contract to build the Malaysian railroad. McKinsey justified the project at a time when Najib was widely accused of corruption, buffeted by street protests over the disappearance of hundreds of millions of dollars from a state investment fund, and badly in need of cash from an outside lender like China.The scandal over the deal has enveloped both of McKinsey’s clients. Mahatir told local reporters that China Communications, which won a no-bid contract for the railroad, may have deliberately overstated the costs in order to help Najib and his allies shovel extra money into the investment fund to replenish the missing amounts.Tony Pua, a Malaysian lawmaker and an aide to the finance minister, said the deal was brokered by a hard-partying Malaysian businessman named Jho Low, who is accused of siphoning off hundreds of millions of dollars from the fund and is now believed to be in China, avoiding a Malaysian arrest warrant.McKinsey says it has no knowledge of any collusion between China and Najib. It said that of course it would discuss China’s sweeping Belt and Road plans but rejected the notion that, by representing both sides involved in the project, the company had a conflict of interest in any way. By the time China Communications won the bid, its work for Malaysia had already finished, the firm said.“Our firm’s rigorous internal policies and procedures” ensure that “we bring an independent perspective” to help each client “pursue its own strategic goals,” McKinsey said.But the political backdrop — a government facing crippling corruption accusations and the prospect that Najib might turn to China for funds to cover his tracks — should have been obvious to McKinsey at the time, argued Bridget Welsh, a professor at John Cabot University in Rome who focuses on Malaysian politics.“They were choosing to engage with actors that were deeply tainted,” Welsh said of McKinsey.— A Special RelationshipIt was not the first time McKinsey had been drawn into questionable arrangements through its work in China.The company opened its first office there in 1995, using consultants from the United States and Britain. By the end the decade, McKinsey was on hand to help as Beijing began pushing its moribund state-owned companies to adopt Western-style management, a McKinsey specialty.The firm landed some big clients. Its star pupil was Ping An, an insurance company set up as part of a state-owned shipping company. Beginning in 1997, McKinsey began a two-decade relationship with the company as it rose from a footnote to one of the world’s biggest insurers.McKinsey’s success soon reached into the pinnacle of Chinese politics, dragging it — unwittingly and unknowingly, the company contends — into a potential conflict of interest in the most glaring example of official enrichment in the history of the People’s Republic of China.Always in search of top talent, McKinsey brought on a 27-year-old named Liu Chunhang as a full-time associate in 2002. He had just graduated near the top of his class at Harvard Business School, according to school records, and stayed at McKinsey for less than a year. But in that time, his in-laws took steps that would turn them into billionaires.Liu was the son-in-law of Wen Jiabao, the country’s vice premier in charge of finance. Several months later, Wen became China’s premier, putting him in charge of running the government.At the time, Ping An was preparing for an initial public offering in Hong Kong. The Wen family and its business associates became secret shareholders of Ping An, having acquired their stakes at low cost in late 2002. And as premier, Wen presided over China’s Cabinet, which oversaw the insurance industry and signed off on big IPOs.According to McKinsey, Liu left the company in July 2003. It’s not clear whether he played any role in his extended family’s business activities. But when Ping An went public the next year, the Wen family amassed a staggering fortune, largely in company stock. By 2007, the family was worth at least $2.7 billion.Liu, who is now a senior official at China’s banking regulator, said through a spokesman that he “never worked on any projects for the firm’s Chinese clients,” and that it would be “misleading” to connect him with McKinsey’s work for Ping An.McKinsey said that Liu had been hired because he was qualified, not because of his family connections.“Any suggestion that Mr. Liu was hired or employed for improper purpose is false and extremely misleading,” the company said.Today, China’s best and brightest clamor to work at McKinsey. Partners in the firm have sat in on Communist Party meetings at companies. More than 90 percent of the company’s 350 consultants in China are of Chinese descent, according to its website.And the importance of China to McKinsey overall is evident: The firm’s last two managing partners, Barton and Kevin Sneader, were promoted from the region. Sneader now runs the entire company from Hong Kong.McKinsey’s name has become so prestigious in the country that a Chinese copycat sprang up, adopting the company’s Chinese name.The copycat firm — Chengdu McKinsey Management Consulting Co. — even won a contract to advise Sichuan province on its economic planning. Its ruse was so successful that the China Economic Weekly, a magazine under the Communist Party’s mouthpiece People’s Daily, wrote a cover article about the spreading influence of the real McKinsey, likening it to an octopus, and marveling at the success of the fake one.McKinsey said it had not worked on the economic planning in Sichuan province.The company, however, has not shied away from contentious programs like “Smart Cities,” worrying scholars and human rights advocates who say the approach will strengthen China’s surveillance state.The idea of smart cities is to make them more manageable by collecting data from sources like cameras. In an authoritarian state like China, that raises broad concerns.“Police patrols cannot be everywhere, for instance, but predictive analytics can deploy them in the right place at the right time,” McKinsey wrote in a report in June.“It is about political control,” said Samantha Hoffman, a fellow at the Australian Strategic Policy Institute.McKinsey is now working with Ping An to put smart cities into practice in the Chinese city of Nanning to monitor financial fraud.The company has also championed — even parroted, critics say — the Chinese government’s “Made in China 2025” initiative to become a global leader in sensitive fields like artificial intelligence and aerospace, a policy rattling European and American leaders who fear the plans will undermine their economies and set the stage for Chinese dominance.In October, Vice President Mike Pence warned that “through the ‘Made in China 2025’ plan, the Communist Party has set its sights on controlling 90 percent of the world’s most advanced industries.”McKinsey has produced at least 10 reports in Chinese focusing on “Made in China 2025.” But earlier this year, China’s government ordered the news media to stop writing about it, given the intense criticism from the United States and Europe. McKinsey’s reports also stopped mentioning the policy.“They sometimes seem to be almost like an arm of the People’s Daily,” George Magnus, a former chief economist at UBS, said of McKinsey. “Obviously they do it in a slightly more subtle way — sometimes not so subtle.”— Clients Under SanctionsWhen Senate investigators wanted to know why Jared Kushner, Trump’s son-in-law, met with the head of a Russian bank under sanctions shortly after the 2016 presidential election, Kushner explained that, as far as he had been told, the bank chief had “a direct line to the Russian president.”It is easy to see how. The bank — Vnesheconombank, or VEB — is owned by the Russian government and overseen directly by Putin’s inner circle. The bank’s former chief — the one Kushner met — graduated from the training school of the FSB, the successor agency of the KGB. The bank has also come under scrutiny in Congress and by the special counsel investigating possible collusion in the 2016 election.And the bank is a McKinsey client.In August, VEB hired the consulting firm to develop its business strategy — one of several companies that are under sanctions and that McKinsey advises.Sberbank — a state-controlled bank that is on the sanctions list and that sponsored Trump’s Miss Universe contest in Moscow in 2013 — is also a McKinsey client. In 2016, it agreed to pay the firm up to $5.2 million for advice on restructuring.Yet another state-owned bank under sanctions, VTB, agreed to pay McKinsey about $4.4 million in 2017 to develop information technology.McKinsey’s work in Russia is extensive. Its Moscow office, the largest of the Western consulting firms working there, has handled about 2,000 projects, working with market leaders in oil, gas, banking and retail, as well as the mining of diamonds, gold and coal. One of its senior partners is the son of Nobel Prize-winning novelist Alexander Solzhenitsyn.McKinsey is so valued in Russia that even as Putin and Western nations clashed over Ukraine, a partner in the firm served on a Russian energy commission until 2015, along with several business executives who were either the target of individual sanctions or had ties to companies under sanction.McKinsey clients help expand Russia’s reach abroad. One of them — PhosAgro, a fertilizer giant with ties to the Kremlin — is pushing hard for new regulations that would give it greater control over Europe’s food supply. The European Union already had concerns about Russian influence over its natural gas supply, much of which came from Gazprom, another Russian company under sanctions that McKinsey has advised on strategy and pricing.McKinsey says it takes jobs in Russia — or anywhere in the world — only when it believes it can make a positive contribution. McKinsey also says its consulting is not political in nature, but focused on helping people lead better lives.The firm has plenty of accomplishments to point to. In Russia alone, it upgraded Aeroflot, the national airline, improved traffic flow in Moscow and improved worker safety.And McKinsey is far from the only U.S. company working in legal ways with companies under sanctions. Some U.S. officials have long argued that getting involved in the Russian economy not only benefits the U.S. companies working there, but can also help foster better business practices and a greater appreciation for democratic principles overseas.Others see little evidence of that. Robert G. Berschinski, a State Department official in the Obama administration, said business leaders and policymakers often believed that actively engaging with authoritarian governments would lead to economic reform, which in turn would drive political reform.“But what is becoming increasingly clear, in Russia, China and Saudi Arabia — in all three of those instances — that belief has not proven to be true,” he said.China is a prime example, argued Kramer, the former assistant secretary of state. He said the country had lifted hundreds of millions of people out of poverty, yet companies that do business there “have nothing to point to” showing that Chinese people have been granted more civil or political rights.In some cases, McKinsey’s work may have made things worse.The firm produced a report tracking how Saudi Arabia’s most important policies were viewed by the public, singling out three individuals who drove often negative conversations on Twitter.One was later arrested, according to a human rights group. Another said that Saudi government officials had imprisoned two of his brothers and hacked his cellphone. The third — an anonymous account — was shut down.McKinsey said it was “horrified by the possibility, however remote,” that the report could have been misused. But the kingdom is a such a vital client for the firm — the source of nearly 600 projects from 2011 to 2016 alone — that McKinsey chose to participate in a major Saudi investment conference in October even after the killing of a Washington Post columnist by Saudi agents.“The world is divided into people who are for beheadings and against beheadings,” said Anand Giridharadas, a former McKinsey consultant and former Times writer. He added that McKinsey and other firms were lending “their reputation and credibility to a regime that deserves none of that.”For 19 months, Calvert W. Jones, a University of Maryland professor, crisscrossed the Gulf monarchies in the Middle East as part of her research evaluating the work of management consultants in what she calls “the black box of authoritarian governance.”“Even if democracy itself remains a distant hope, so the thinking goes, experts might improve the daily lives of citizens in fundamental ways,” Jones wrote.Her conclusions are not likely to make it into recruiting videos for consulting companies seeking idealistic college graduates.“In the beginning, the best of them want to help, want to do real research, provide data and expert opinions,” she said. But after initially speaking their minds, she said, they gradually stop.“They engage in the art of not speaking truth to power,” she said. “They self-censor, exaggerate successes and downplay their own misgivings due to the incentive structures they face.”Outside experts might even reduce, rather than encourage, domestic reform, Jones said, partly because consultants are often unwilling to level with the ruling elite. The issue is increasingly relevant, she said, as “the number of experts circulating around the world continues to grow.”The expansion is clear enough in the lobby of the Ritz-Carlton hotel in Riyadh on a weekday morning. There, a former Western diplomat quipped, you can watch the consultants departing for their jobs “like bats leaving a cave.”

from Economic Times https://ift.tt/2EtEhw6

Copper industry body hails National Green Tribunal order on Tuticorin plant

NEW DELHI: Industry body International Copper Association (ICA) India Monday said it welcomes the NGT order, which allowed reopening of Sterlite Copper’s Tuticorin plant.The National Green Tribunal (NGT) Saturday set aside the Tamil Nadu government order for closure of the copper unit at Tuticorin, which was at the centre of massive protests over alleged pollution, saying it was “non sustainable” and “unjustified”.In May, the state government had ordered permanent closure of the company’s copper unit after 13 people, among protesters, demanding its shutdown on environmental concerns, were killed in police firing. Sterlite Copper had challenged the order in the NGT.”It is a very positive move. We welcome the order. Due to the closure the import and prices of copper had gone up,” Sanjeev Ranjan, ICA India managing director said.The closure of the plant had adversely impacted copper consuming industries like consumer goods, electrical and electronics, automobile, and players were bound to import the metal, he said.ICA believes reopening of the smelter unit will bring relief to the downstream and ancillary industry, the MD added.Due to the closure, domestic chemical and fertilisers industry was also impacted, he said.Sterlite Copper’s 4,00,000 tonne per annum plant in Tuticorin met over 30 per cent of the of India’s copper demand. It also produced sulphuric and phosphoric acids as a by-product which are key raw material for manufacturing of fertiliser, the company said.It also said that “due to the shutdown in the last six months… import of the metal (copper) has seen a surge. While premium on copper has gone up by 10-15 per cent, the import of the metal has shot up 2.5 times to nearly 30,000 tonne per month”.The closure has led to a spike in prices of phosphoric and sulphuric acids, adversely affecting the downstream chemical and fertilisers industry, it noted.”The plant met 80-90 per cent of demand for sulphuric acid in the country and 15 per cent of the phosphoric acid demand. The closure of our plant has led to a sharp surge in demand, thereby driving up prices,” its CEO P Ramnath said.In the last six months, prices of sulphuric acid have shot up from Rs 3,000/tonne to Rs 12,000/tonne, and a tonne of phosphoric acid costs Rs 53,000 as compared to Rs 43,000 a tonne six month earlier, a rise of 23 per cent, he said.

from Economic Times https://ift.tt/2Lk8wav

Focus on consumption themes with strong brands: Thunuguntla

Brick and mortar as well as digital retail can go hand in hand, says Jagannadham Thunuguntla of Centrum Broking. And one should be careful about not overpaying for stock purchases, he told ETNow. Edited excerpts:ETNow: In Friday’s session, there was traction in Bharti Airtel. There is all that talk about Jio scaling up and becoming the largest telecom service provider. How are you approaching the sector and would it be really a choice between two big players because Vodafone-Idea has really dwindled down to nothing now? Would you still keep your conviction in the space?Jagannadham Thunuguntla: Reliance Jio will be head and shoulders above the entire industry and they will be the clear leaders eventually. We will have to watch whether Reliance Jio will go for IPO whenever it happens. I am sure telecom as a space will have altogether a new renewed picture. Eventually, it will be three players that will be surviving to start with — Reliance Jio, Vodafone and Bharti Airtel. And also, we will have to see up to what time Jio will maintain its aggressive pricing plan and eventually, if they stop, there can be a breather for Bharti Airtel. But having said all that, I do not see why one should be very aggressive on the trade of Bharti Airtel, better to focus on other industries and other stocks. After a correction, now market is flooded with umpteen opportunities. I do not see a reason why one should be that gung-ho about Bharti Airtel at this juncture.ETNow: What is driving some of these brick and mortar retail stocks? Trent is almost at a 52-week high, ABFRL also has done rather well, D-Mart in this market where quality is getting smoked has just not come down. The world is talking about the death of brick and mortar retail companies and companies are filing for bankruptcies in India. It seems to be a different course.Jagannadham Thunuguntla: India is different and completely different from the global context even though the digital retailing in India has been picking up extremely strong and well. But at the same time, there is enough space for brick and mortar as well as digital retail. And there is always this buzz about some M&A or funds infusion, stake acquisition, something or other that is keeping definitely these stocks in focus and exciting. Similarly, India has one more space where newspapers and digital reading both survive. We are peculiar in that manner. I think it’s better to focus on the stocks, but at the same time one should be careful in terms of overall which stocks you are picking. Some of the very well managed good profit making retail companies are extremely highly valued. One should be careful about not overpaying the price because choose your stocks well and then at the same time this is a space that is more news flow or event driven like M&A possibility. But beyond a point, there will be a cool-off on those stocks where there is no M&A coming.ETNow: I want to understand if you have taken a look at the new CERC guidelines as to how material they are and what would they mean if an investor was to look at the segment?Jagannadham Thunuguntla: I mean the new set of regulations definitely will need to be studied in more detail and this is one space which markets have been eagerly waiting for some facelift. Even though for the last 4-5 years, the markets have been eagerly awaiting some strong rerating and a strong performance, somehow that never happened in its real sense. The markets will be keeping a watch. At this moment, a better way to approach the market is to focus on consumption themes where there are strong brands. Better to focus on those names. Any which way correction happened across the board and industries, why not pick up simple easy trades and easy to understand kind of businesses?ETNow: How are you looking at the biggies, the likes of Tata Steel, Hindalco, Vedanta?Jagannadham Thunuguntla: Tata Steel and other metal names I think we have to be slightly cautious about at this moment. Not necessarily because of company specific topics but the way the global, Chinese slowdown news and also overall the liquidity squeeze that we are experiencing. The Fed has started shrinking its balance sheet by $50 billion every month and the European Central Bank has announced stopping the stimulus and Bank of Japan almost reducing the stimulus. What it will do is the overall demand will go down. At this juncture, one should be better to be slightly cautious about metals and the Chinese slowdown is only confirming that. The good times may come back.

from Economic Times https://ift.tt/2GpSH35

How the stk market took election results, RBI change in its stride

Both equity and debt markets seem to have taken the recent state election results and the change of guard at the Reserve Bank of India in their strides, with both markets moving positively post these two events last week.The Congress party registered convincing victories in Chhattisgarh and Rajasthan and narrowly surpassed the BJP in Madhya Pradesh. The two other states of Telangana and Mizoram have seen victories of local parties.The BJP has seen significant erosion in vote share in these states compared with that in the 2013 assembly elections and 2014 general elections. The loss in the three major states could raise concerns among market participants about the party’s chances of getting a majority in the Lower House in the 2019 general elections.These states had contributed significantly to BJP’s victory in 2014 general elections. The strong showing of the Congress will make it more potent force and also see other opposition parties align with it.However, it is possible that the BJP may have a stronger showing in the national elections due to continued high popularity of Prime Minister Narendra Modi and difference in relevant issues for voters between national and state elections. Also, vote shares for both parties were very close in Madhya Pradesh and Rajasthan.Average crop prices over the past few years have remained stagnant, with MSP’s growing at a CAGR of about 6 per cent while market prices increased at a much lower CAGR of about 2.5 per cent. The supply has been managed well by the government in spite of two draught years, which is also visible in low food inflation.The market also seems to have not been impacted much by the sudden resignation of the RBI governor, who cited personal reasons. The difference between the government and RBI on several issues has persisted for some time. The market perhaps believes the change in guard may lead to relaxation in certain regulations for the banking sector like higher liquidity, relaxation of PCA framework and dilution of promoter ownership rules, as also a more liberal monetary policy.

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Why Ulips are useless as insurance products

By Dhirendra KumarIf you take the Ulips route to get yourself adequate insurance, then you could end up using most—or even all—of your income. Of course, I use the word ‘insurance’ to mean what it should—money that your family will get if you die.As a general rule, any earning person should be insured for at least 10 years’ income. However, life cover in Ulips, almost universally, is exactly 10 times the annual premium. Therefore, to get life cover equal to 10 times your annual income, you will have to shell out ALL your income as premium. The maths is unshakeable. No matter what the salespeople say, anyone who has a family should not put even a paisa in Ulips (or any other investment) before they buy 10 times their income worth of life cover policy using pure term insurance. Once you have made your family’s future secure with 10 times your annual income, tackle investment as a separate and different kind of problem.Let me explain the numbers in a little more detail. Let us suppose your post-tax, in-hand income is Rs 10 lakh a year. Then you should have a life cover of at least Rs 1 crore. If you think about what all your family will have to spend on if you die suddenly, then you will find this 10 times amount is barely adequate. Most families will actually need more. If you do not believe me, make an actual multi-year budget. The good news (for you) is that such insurance is quite reasonably priced if you buy it through term insurance products. The bad news (for Ulip salesmen) is that buying a life cover of Rs 1 crore in the form of Ulips will require an annual premium of Rs 10 lakh. But how can you pay Rs 10 lakh? That’s your total income!If you actually discuss all this with an insurance salesperson, they will tell you that Ulips also have investment bundled with insurance. While that is true in theory, in practice, any sensible saver should first get adequate life cover. If you do that, you will find that the only insurance product that fits the bill is pure term insurance. Once you have done the insurance part, then you can evaluate a wide variety of investment options in a better way.Why is that a better way? That is because any investment should be evaluated on parameters like liquidity, volatility, safety, transparency, returns and suitability for different time frames. The same saver has different needs for different kinds of savings and at different points in time. Sometimes, as circumstances change, you may want to move some money from one kind of investment to another. For example, from a volatile but high returns type to a safe and steady one. At some point, one could have a professional crisis or a job loss and may need to stop investing for a year or two. These are real issues that affect almost everyone at some point. Does a Ulip, a single, inflexible product that bundles insurance and investment into a long-term commitment, serve your purpose? That’s a question you must ask.Another question that every saver should be asking is why are Ulips limited to offering cover worth 10 times the annual premium? The answer gives you an insight into the anti-saver thinking that permeates the Indian insurance industry. The insurance regulator, Irdai, has mandated 10 times the annual premium as the minimum life cover that Ulips must provide. However, in the actual products that are offered, the industry only offers this minimum. Why? It is because they are actually not interested in the life cover business.The money lies in running the investment business, and so we have in this country an ‘insurance’ industry that always designs products that only have the bare minimum insurance! Does that make sense? Well, actually, it makes perfect sense for the insurance companies and their agents. Whether it makes sense for you, the saver, is something you have to think about.(The author is CEO, Value Research)

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Power Mech Projects bags orders worth Rs 245 crore

NEW DELHI: Power Mech Projects Monday said it has bagged two orders worth Rs 245 crore in the domestic market.”The company has received letter of intent/work orders for structural and architectural works of main plant area of unit 1 at 2×800 mega watt (MW) Uppur Super Critical Thermal Power Project, Ramanathapuram District, Tamil Nadu for a total contract value of Rs 136 crore,” the company said in a BSE filing.The company said it has also secured an operation and maintenance contract for 2X800 MW coal based Yeramarus Thermal Power Station for a period of 30 months at Chikkasugur, Raichur District, Karnataka for a contract value of Rs 109 crore.Shares of Power Mech Products Ltd were 1.78 trading per cent higher at Rs 941.50 apiece on BSE.

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Modi govt is set to roll out a mega jobs drive

NEW DELHI: With unemployment emerging as a major concern ahead of the Lok Sabha elections, three ministries — human resource development, labour and skill development — are set to join hands to train undergraduates and generate jobs for them, starting in 2019.The Modi government is preparing to roll out a mega ‘apprenticeship’ programme, specifically targeting students of humanities and other nontechnical courses across private and government-funded higher education institutes, to make them more employable and help them get jobs when they graduate.A six- to 10-month apprenticeship and on-the-job training with prospective employers, backed with stipends, will be arranged for students in the final year of their degree programmes, ET has learnt.

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While technical courses tend to have a better linkage with industry and offer faster employment avenues to graduates, this doesn’t always hold true for nontechnical degree holders. This segment constitutes a significantly high number of those without jobs because only a small percentage opts for post-graduation and further studies. Career counselling and relevant apprenticeship are envisaged as part of the plan to make them job-ready.Central public sector units, sector skill councils and big industry will be linked with the programme to ensure high-quality apprenticeship, basic training and on-the-job training to each student passing out of college, ET has learnt.Ministers and top officials of the three ministries held a meeting last week to decide on the contours of the programme, set to be jointly launched over the next few days.The plan is to start implementation in 2019, targeting 1 million students in the 2019-20 academic session. The larger goal is to bring into effect a national ‘integrated apprenticeship programme’ to ‘improve the employability’ of over 8 million students passing out of degree programmes.The Rs 10,000-crore corpus of the National Apprenticeship Promotion Scheme, which has remained largely unused so far, will be unlocked to help fund the stipend-based apprenticeship. The government’s contribution to the stipend will be 25% of the stipend, up to Rs 1,500 per month, a person aware of the plan said.There will be three key focus areas — adding apprenticeship-based, end-of-degree programmes and linking them with higher education institutes, restructuring the bachelor’s in vocational courses programme to add the apprenticeship module and integrating all higher education institutes with the National Career Service portal.The portal will be linked with the website of the Ministry of Skill Development and Entrepreneurship to create a seamless dashboard displaying student qualifications, eligibility, their apprenticeship and employment status and a waitlist that is updated when the graduates find employment.

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Viral Acharya shows govt what it’ll take to run RBI its way

Mumbai: Reserve Bank of India deputy governor Viral Acharya has put across the point that a dramatic change in the role of the central bank board — on the lines of Bank of England (BoE) and US Federal Reserve as was originally suggested by the government — would virtually call for a reconstitution of the board.Acharya voiced his views in the course of the discussion on RBI governance in last week’s board meeting. It’s learnt that a note on the subject, prepared by RBI, would be shared with board members later.“Dr Acharya was simply explaining the situation as it stands today. The members of the boards of large central banks are appointed in a way so that there is no conflict of interest,” a person familiar with the issue told ET.“In many cases directors’ job is a full-time responsibility. His views, as we understand, was that if RBI has to be board-driven, manned by experts and technocrats, it would require changes in rules and structure — for instance, the deputy governors today have no voting rights,” this person said.

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Even if ‘RBI governance’ ceases to be the government’s top agenda and no immediate changes are pushed through, RBI and its directors would nonetheless consider ways where the board could play a more meaningful and active role, and not remain a purely advisory body as it has till now.“For instance, crucial decisions like imposing PCA (prompt corrective action) on banks or changing the PCA rules should be discussed at the board. If necessary, there could be provision for more frequent board meetings (instead of once in two months) or meetings called at short notice to discuss any major proposal.Dr Acharya and RBI are of the view that the boards of RBI and Bank of England are not an apple-toapple comparison,” said a source.A director on the BoE board cannot have any financial or other interests that could “substantially restrict his/her ability to discharge the functions required of a member of the Court” or board. While members of US Fed board represent various sectors, they cannot hold any other office during their terms and two years thereafter.The government had objected to RBI’s age-old practice of not consulting the board before coming out with regulations that have wide ramifications.On certain occasions, such proposals were not even brought before the committee of the central board (CCB) which meets every Wednesday.The CCB, according to RBI rules, is as powerful as the board and can take all decisions as long as one external director attends the meeting with the governors and deputy governors. An RBI release following the December 14 board meeting said that the issue of governance would need further deliberation.

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Mindtree founders resist as Siddhartha’s exit sparks M&A jitters

BENGALURU: A passive financial investor, the largest shareholder in a mid-tier IT services company, meets potential buyers to seek an exit. He is offered a multi-bagger price, but with a caveat: Bring the support of the founders too. The founders, though some are ageing, rebuff M&A overtures for a company at the cusp of a $1-billion revenue.What happens next? It’s a story rarely played out in India’s $160-billion IT services industry. But Mindtree has witnessed this in recent weeks. The star cast includes serial entrepreneur and Coffee Day founder V G Siddhartha, four Mindtree founders, some ambitious private equity buyout funds, and a strategic acquirer with heft.Siddhartha, through multiple entities, owns about 21% in Bengaluru-based Mindtree, while its founders — Subroto Bagchi, N S Parthasarathy, Krishnakumar Natarajan and Rostow Ravanan — together hold around 13% stake. Siddhartha’s interest in Mindtree does not come with any management rights or even a board seat (he quit earlier this year).

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At least two buyout funds have circled around Mindtree after discussing a possible purchase of Siddhartha’s shares. They have insisted that the company’s four founders, or at least a majority of them, should agree to the transaction. Incidentally, the action picked up after Siddhartha shook hands with a strategic buyer who offered Rs 1,150 apiece, close to Mindtree’s all-time high share price of Rs 1,183, people directly aware of the matter said. The burly, shouty corporate strongman reminded Siddhartha about the caveat, once again.Large buyout investors wouldn’t settle for a minority position with no control over their destiny, said a person involved in the negotiations but not allowed to speak due to confidentiality clauses. The strategic buyer would also need the buy-in from the founders, or the support of around 35% shareholders. With a purportedly attractive price on the offer, there were expectations of a broader deal, until the founders refused to entertain any deal talks.“Nobody has come and asked us anything. So there is no deal on the table. At this point of time, I’m focused on my people and customers. May be a deal will come tomorrow or may be in three years, I don’t want to break my head on something over which I have no control. If something happens, I will evaluate the pros and cons objectively and what’s good for the business,” Mindtree co-founder and CEO Rostow Ravanan said in a telephonic interaction last week.Mindtree, like its bigger peer Infosys, has a tradition of passing on the baton to all the founders to steer the company as chief executive. Ravanan, still in his 40s, would be the last in the line of founders to lead the company. “They (founders) aren’t an ambitious lot, are not driven by value unlocking for themselves. It makes deal-making difficult,” a banker, who met Mindtree, recently said.As the the founders hold out, bankers working on behalf of the potential acquirers are beginning to rally public shareholders. One of them claimed the backing of about 30%, including that of Siddhartha. The intention was not to go hostile but galvanise shareholders to influence the founders and the management, the above-mentioned banker added. Email and text messages to V G Siddhartha went unanswered over the weekend.“Hostile takeover doesn’t make any sense in our industry. It’s a highly people-oriented business and I’m not worried about it right now. The media speculation on it has spiked right now based on what you’re hearing. The situation on the ground hasn’t changed,” Ravanan said. While many agree that outright hostile takeovers are unlikely in the Indian technology sector, they believe that the founders could come under intensifying shareholder pressure, especially if the share price continues to climb down.Mindtree shares have lost some sheen, declining 25% in the current quarter. The company’s shares closed at Rs 865 apiece on Friday, giving it almost $2-billion market value. The company’s shares had tumbled 17% — biggest single day fall in seven years — after it reported muted September quarter numbers.“Mindtree’s founders are used to a passive investor like Siddhartha who hardly intervened in operations. But that may not happen again,” one of the sources clued into the goings-on at Mindtree said. The founders would prefer Siddhartha to sell down on the bourses. However, the possibility of selling down such a large block in a mid-cap stock wasn’t practical and it would happen only at steep discounts. Siddhartha, an early investor in Mindtree, emerged as its leading shareholder when he purchased shares held by the exiting co-founder Ashok Soota seven years ago.The 19-year-old Mindtree is an acquisition target as (slightly bigger) rivals seek bulking up, since bigger balance sheets provide R&D flexibility to boost digital transformation capabilities. The scale and size would also give them a better shot at winning bigger clients. For buyout funds, it’s either an opportunity to build a platform or consolidate with an existing portfolio company, as Indian technology services move away from the ‘old book’ of cost arbitrage.A determined buyer might snap up Siddhartha’s shares, and some more, to reach 26% from where he could exert pressure on the founders and the management. “For listed companies, ultimately the extent of the shareholding determines the extent of control. There is no special rights to the shares of founder shareholders,” Shriram Subramanian, founder and MD of InGovern Research Services, a leading corporate governance advisory firm, said.“If you go back to research, one in 20,000 companies becomes $1 billion in revenue. I’m at the cusp of getting there next year. If we have weathered all the storms that have hit us — internet bust, global financial crisis — and have built a valuable brand, the seventh largest company in your industry, I don’t know why I should think of selling today,” Ravanan said, perhaps hoping for a benign investor and a white knight.

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Your digital life may be up for sale for Rs 3,500

NEW DELHI: Your personal data may be up for sale on Dark Web for as low as Rs 3,500 that includes stolen social media accounts, banking details and credit card information from sites like Uber as well as gaming and porn websites, a new research has warned.According to cyber security firm Kaspersky Lab that investigated Dark Web markets to find out how much personal data is worth, cyber criminals can sell someone’s complete digital life for less than $50 (nearly Rs 3,500).”This can include data from stolen social media accounts, banking details, remote access to servers or desktops, and even data from popular services like Uber, Netflix, and Spotify, as well as gaming websites, dating apps, and porn websites which might store credit card information.”The Dark Web, also referred to as the Dark Net, is an encrypted portion of the internet that is not indexed by search engines.The Kaspersky researchers found that the price paid for a single hacked account is lower, with most selling for about $1 per account and with criminals offering up discounts for bulk-buying.”It is clear that data hacking is a major threat to us all, and this applies at both an individual and societal level, because stolen data funds many social evils,” said David Jacoby, Senior Security Researcher at Kaspersky Lab.Data stolen due to people’s lax security may have limited resale value, but can be put to many uses.”This can cause huge problems for an individual victim, who may lose money and their reputation, find themselves being chased for debt that somebody else has incurred in their name, or even suspected of a crime that somebody else has committed using their identity as a cover,” said researchers.The most common way criminals steal this sort of data in the first place is via spear phishing campaigns or by exploiting a web related security vulnerability in an application’s software.After a successful attack, the criminal gets password dumps which contain a combination of emails and passwords for the hacked services.”With many people using the same password for several accounts, attackers might be able to use this information to access accounts on other platforms too,” said Kaspersky Lab.Interestingly, some criminals selling data even provide their buyers with a lifetime warranty, so if one account stops working, the buyer will receive a new account for free.”There are steps we can take to prevent it, including by using cybersecurity software, and being aware of how much data we are giving away for free – particularly on publicly available social media profiles, or to organisations,” Jacoby noted.

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Oppo, OnePlus step up R&D play for localised offerings

Chinese handset makers Oppo and OnePlus are setting up research and development centres in India to improve their offerings of localised products and services for the fast-growing smartphone market and create hubs for global innovation.The move is a natural extension of their already expanding local manufacturing capability, analysts said.OnePlus, the leader in India’s premium smartphone segment, has said it wants the new facility to become its biggest in the world in the next three years. It aims to use the R&D facility — expected to be operational by March — to drive innovation in India for its global products.Oppo, among the top five in India, launched its R&D centre in Hyderabad on Saturday, aiming to make it the company’s largest outside China. It was set up as part of Oppo’s global R&D strategy, in which it is investing $1.4 billion to work on 5G, artificial intelligence and internet of things.“The India market is growing very fast and we want to get deeper consumer insights to offer a better experience that will help our business,” Tasleem Arif, head of R&D at Oppo, told ET. He said the new facility will not only focus on handsets but will also work on smart devices including watches and IoT products.According to Prabhu Ram, head of the industry intelligence group at CyberMedia Research, handset companies setting up R&D centres is the next natural extension of their ongoing India strategy.“It also showcases their commitment to India as a growth market and their continued intent on investing in, developing and leveraging made-in-India innovations,” said Ram.Products aligned to local needs and preferences will win in the long run as the market consolidates, said Tarun Pathak, associate director at Counterpoint Technology Market Research.“Local R&D will help the brand to predict and be on top of the trends faster than the competitors,” Pathak said.The R&D work of these companies is unlikely to be restricted to any specific segment but will cover aspects such as local content and services, components, quality checks, hardware trends and app development, he added.Analysts said that over the next few years, these R&D centres will catalyse the Indian mobile handset ecosystem and contribute to the generation of new intellectual property as well as new made-for-India smartphone innovations.“As a result, the India mobile handset market will become the hub for new smartphone innovations, not just for India but the world,” Ram said.Global companies such as Samsung and Huawei already have R&D centres in India that support their handset businesses.

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Govt revives plan to rein in e-tailers

NEW DELHI: The government has revived plans to put e-commerce players on a tight leash, including imposing checks on discounting and unbridled cashbacks and freebies, in a bid to clamp down on “predatory behaviour”.Sources told TOI that the commerce and industry ministry is looking at ways to strengthen the e-commerce sector while safeguarding the interests of domestic retailers. Many of them are complaining about serious loss of business to “adverse competition” from e-tailers as well as the impact of demonetisation and goods and services tax. Lobby groups such as CAIT and Swadeshi Jagran Manch, an RSS affiliate, have taken up cudgels on behalf of local kirana and small shop owners.Government officials, however, said the move was not meant to woo local traders and was instead aimed at putting in place a policy ahead of an expected push at the WTO to regulate e-commerce globally, something that unites the US and China that are engaged in a bitter trade battle.A draft e-commerce policy — which was junked for all practical purposes within days of it being shared with stakeholders last July — had proposed a sunset clause defining the maximum duration for differential pricing strategies such as “deep discounts”. It had also proposed preferential treatment for homegrown e-commerce players while allowing foreign direct investment in some segments. Although FDI has been ruled out, the issue around regulating e-commerce is back on the table, senior officials said, adding that details were yet to be thrashed out. “Globally, we have seen the disappearance of retail stores, be it book shops or smaller shops. Even large format sector has come under pressure,” said a source.

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Once physical stores vanish, the e-commerce players dictate consumer choice on what we eat and what we wear. We should not allow that to happen,” said a source. A growing view in the government is that e-commerce giants, like Amazon and Alibaba, have deep pockets and are willing to lose money for years till competition from smaller players is nearly wiped out. At the same time, Indian competition laws are not seen to be sufficient in tackling what many describe as “predatory practices”.The Indian e-commerce market is projected to touch $200 billion in a decade. The policy will not just impact companies such as Amazon, Flipkart, Paytm Mall, Urban Ladder and Lenskart but will also cover food delivery apps and aggregators.Over the next few weeks, the ministry is planning to put in place a revamped policy prescription in consultation with other departments, like information technology that had concerns about the earlier draft, before seeking cabinet approval. Several elements of draft policy like data localisation and a crackdown against foreign companies selling in India without paying duty has begun with the department of industrial policy and promotion initiating consultations.

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Power plants light up on record coal supply

New Delhi: Record coal supply has helped power plants to replenish dwindling stockpile even after pumping up generation as electricity demand spiked 14 per cent during the October festive season and continued to grow apace at 5.5 per cent in November. Government data showed coal supplies at a three-month high in December, rising steadily since September when disruptions caused by rains had resulted in stockpiles at a large number of power plants diminishing to alarmingly low levels. But improved coal supply since then has raised the average coal stock at power plants to more than 10 days in December. The number of ‘super critical’ power plants, where fuel stocks are down to four days or less of operation, has dropped to a monthly average of nine in the first 10 days of December from 14 in November and 18 in October. Coal ministry officials said the alternatives were being examined to address pockets of problem, especially for plants located far from the coal mines.”The coal and railway ministries followed a strategy to ramp up coal production and despatch not only to replenish fuel stock but also to build up inventory for festive season demand,” a coal ministry official told TOI. Inter-ministerial panels tasked with the job are meeting more frequently than before, some almost daily.

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More cash, more booze to drive growth in India’s premium spirits

By Debjit Chakraborty and Unni KrishnanThe rising affluence of India’s middle class will drive growth of as much as 10 percent a year in the $33 billion spirits market, according to one of the nation’s oldest distillers.After three years of stagnation when the industry faced sales restrictions, Indians are drinking more and spending on premium alcohol, said Abhishek Khaitan, the managing director of Radico Khaitan Ltd., a market leader in vodka with its Magic Moments brand. The trend will likely continue as urban dual-income families in the nation of 1.3 billion follow peers in the U.S. and Singapore when it comes to eating and drinking out, he said.India’s spirit sector — which includes whiskey, brandy, rum and vodka — is estimated to expand 25 percent to 2.92 trillion rupees ($41 billion) by 2022, according to Euromonitor International. The country is among the world’s most attractive alcohol markets and should increase its share of global consumption from about 2 percent given high single-digit to low-teen growth, according to a report from brokerage Nirmal Bang.“There’s a cultural change happening,” Khaitan said. “Most importantly, the middle class is emerging in India and premiumization is happening.”67122614

The Indian distiller, founded in 1943, started selling branded products about two decades back. The company introduced its Magic Moments vodka brand in 2006, added more premium products and new flavors. These along with its branded whiskey, rum and other spirits have spurred profitability. Profits jumped more than 52 percent last year.Given the local market’s potential, offshore companies have come calling, Khaitan said, though he isn’t interested in selling. “My passion is liquor,” he said.Khaitan also discussed consumption trends and plans to make Radico debt-free.Khaitan expects growth of about 8 percent to 10 percent for the spirits industry over the next three to four years. He expects vodka consumption to pick up in India and its share to triple over the next decade from about 3 percent, spurring demand for Magic Moments. Vodka accounts for close to 30 percent of the global spirits market, he said. Over the past three years, the company has focused on free cash flow and reduced its debt to 3.7 billion rupees as of Sept. 30, he said. It plans to have no working capital debt over the next year and a half and become a debt-free company.

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Side pocketing is a better way for millions of MF investors

By Sandeep ParekhIf you are an investor, why should you care about a sartorial concept of storage and where it is located? In fact, you should if you are a mutual fund investor. In plain English, side pocketing is the splitting of a mutual fund unit into a bad unit and a good unit when part of the investment of a mutual fund goes sour.More specifically, when your investment in a mutual fund gets invested in debt securities of a company, and that company defaults to the fund, you are left holding a unit with, say a clean 95 per cent and a dubious 5 per cent. While the 95 per cent is almost certain to give you back your money, the other may be say the IL&FS group’s commercial paper.Most funds would write down the value of the 5 per cent either partially or fully. Seen differently, there is, and rightly so, a discretion as to how much to mark down the 5 per cent portfolio.Fund manager A may believe that a commercial paper may, after a year of litigation under the new insolvency regime, return 50 per cent of the paper’s value, while fund manager B may believe the number to be 30 per cent.After a year, once the insolvency process is over, or other compromise is struck, the number recovered will be anywhere from 0 per cent to 100 per cent.If the amount recovered is 40 per cent then the manager who marked it down 30 per cent was too conservative and the one who marked it down 50 per cent was not sufficiently cautious. But that is wisdom gained in hindsight with the omniscience of god. Clearly, any call taken by a fund manager (not living as an Oracle on Mount Delphi) will be wrong in hindsight.These calculations are important to understand the issue because if the side pocketing is not done, the asset value of the mutual fund unit will be between Rs 95 and Rs 100, where the value of a unit is say Rs 100.The price will, however, be dependent on the extent to which the fund manager marks it down. So, if the fund marks down the asset value by 50 per cent, the net asset value per unit will be Rs 97.5. People will then buy and sell the unit at Rs 97.5.Theoretically, thousands of investors may come into the fund after the default situation had arisen. After a year of resolution, the actual value of the mutual fund unit recovered is say Rs 99. The class of investors who sold when the price was Rs 97.5 will thus have lost money if the value is discovered at Rs 99, because had they held on to it, it would have given them an extra Rs 1.50. Conversely, any new investor who bought then would get an unfair windfall of Rs 1.50. The situation would reverse if the price was Rs 96 instead of Rs 99.Side-pocketing achieves three benefits. First, it excises the frost-bitten limb from the body of the mutual fund unit. So, a person has a choice or an option of selling the good unit at an accurate price while keeping or selling the bad unit. If the person chose to sell both the units immediately, he would be in no worse a position as a person who sold the undivided unit. However that would be one option for the investor who benefits from the side pocket. The investor has three other choices besides selling both units: One, retain both units till maturity. Two, sell the good unit and retain the bad one. Three, sell the bad unit and retain the good one. Clearly a person with four choices is better than a person with one choice, especially when those four choices include that one choice.The second benefit of side pocketing is that it freezes the class of investors, so that new investors who did not face the loss and potential recovery do not share in the windfall if there is greater than expected recovery. Clearly, this is not a given and is dependent upon the level of mark-down effected by the fund manager, but it helps in reducing the chances of windfall to a person who didn’t suffer the downside.The third benefit is systemic. In a situation like the current one where contagion has spread across commercial paper issued by NBFCs, any panic in liquid funds —because investors shun mutual funds which have an exposure to NBFC paper, even if good quality — would freeze credit markets and cause a serious run for withdrawal from such funds.Selling securities in such situations is often met with a frozen market where underlying securities cannot be sold at any price. A side pocket would reduce a run on the system, though not by any means eliminate the problem.The only downside of a side pocket in theory is that it may encourage fund managers to buy riskier securities because they can always chop off the bad part when things get tough.This is an unlikely outcome, because the stigma attached to holding defaulted paper is huge and funds which held IL&FS paper recently were penalised through large redemptions even though they bought triple-A rated paper, as it was before the default.It must be said that this is an experiment by SEBI, as few countries have enabled side pocketing outside of the world of hedge funds. But it is a good experiment with little expected downside. Indian securities market regulations have been pioneers in many global best practices and there is no reason we should always copy other models, instead of starting regulatory trends.(The author is a partner at Finsec Law Advisors and is a member of the Mutual Fund Advisory Committee of SEBI.)

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Govt may tweak rules to give banks and phone cos Aadhaar access

The government is actively considering amendments to the Telegraph Act and the Prevention of Money Laundering Act (PMLA) to provide legal backing for mobile numbers and bank accounts to be linked to Aadhaar on a voluntary basis.ET has learnt that the ministry of electronics & information technology has moved a proposal to this effect, which has gone through detailed legal scrutiny and is currently being examined by other stakeholder ministries, especially finance and telecom.Further, those familiar with the details told ET that the proposal includes an amendment to the Aadhaar Act to recognise the virtual token that is used to prevent sharing of the actual Aadhaar number. The UIDAI has provided for this token through its rules, but stronger legal backing is now being sought.After several rounds of internal deliberations following the Supreme Court order on Aadhaar, sources said, it was felt that government should not look to bring back Section 57 and instead implement the order by introducing these amendments.The apex court had read down this provision, which allowed private entities to access Aadhaar database for verification purposes.However, the order left room for the government to legislate specifically for any services that it may want linked to Aadhaar. Here, sources said, the Telegraph Act provided the necessary space to bring in an amendment to include Aadhaar in the e-KYC (know your customer) options.
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The Act, it may be noted, already allows government to access or take over these services during a public emergency, added sources.Similarly, the amendment to PMLA will include the option for individuals to link their bank accounts to Aadhaar in the KYC options provided to the customer. This again would be voluntary and the customer will have the option to use other documents.PMLA already requires the government to be able to track the sources of funds in case of laundering related to terror actions, which is the basis to carrying out a periodic KYC exercise. Linking bank accounts to Aadhaar, sources said, enables the government to execute any task, if required, and amendment to this end will provide the necessary legal cushion.Besides this, the government is considering a range of other changes in rules to regulate access to Aadhaar database and increase civil liabilities for misuse.As for issues related to privacy, mentioned by the Supreme Court, the government is moving on Data Protection Bill submitted by Justice Srikrishna Commission. Many of the privacy concerns, sources said, are likely to be addressed in this Bill.

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India finds a new way to tax Google, Facebook

New Delhi: India may be pushing Internet firms such as Facebook and Google to store data locally not just to safeguard critical data of its citizens but also to ensure due taxes are paid by these digital firms for services including advertisements sold to local clients, a senior official told ET.The government’s push for internet companies to host data of Indian users in local servers is also due to concerns that they deliver services mostly from overseas, outside India’s tax jurisdiction.“Who can the government tax? Any entity with presence here.Today, Facebook can offer all their services here without having a presence. They have subsidiaries here, but that do limited business,” said a government official.“When you (Indian user) are signing up for Facebook or Google, your contract is not with their India office, so in my understanding there are other reasons certainly but location helps in taxation and revenues for sure. The official said it is not limited to Facebook but applies to all foreign online companies that do business here. “One can say that government’s approach to Facebook should not be to earn money off them but at the same time we can’t deny the fact that they are making a lot of money,” the official added.“If any other Indian company would have done the same business — online or offline — they would have ended up paying a lot of taxes, so why let them go.”Facebook has 294 million users in India as of October, says data site Statista, while its messaging platform WhatsApp in February said it had 200 million users in the country, making it the largest user base for both firms.Facebook and Google did not respond to email queries from ET on tax concerns raised by the government.Analysts say India’s push for internet companies to host data locally would help it have better supervision over them.Amit Maheshwari, partner, Ashok Maheshwary and Associates said once these companies set up servers in India, then they can be treated as a permanent establishment and authorities will get the right to tax all income attributable to the country.

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Realising the fact that India was losing out on revenue from digital firms billed overseas, the government in June 2016 introduced a 6% tax in the form of an equalisation levy or known as Google tax on the amount paid to internet companies by advertisers.In the Union Budget 2018-19, the government also proposed to amend the Income Tax Act to tax digital entities with a large user base or significant economic presence in the country.Losing out on revenues Despite initial resistance, the revenue from the equalisation levy is over Rs 1,000 crore till March 2018, according to news reports, even as the guidelines on the last Budget proposal is still awaited.Experts argue that despite the levy, India is still losing out on tax revenues since it is not valid on services such as annual or monthly subscriptions to streaming websites, or paid promotions done through platforms such as Facebook.And data localisation seems to be government’s latest weapon to get its due.Tax consultant Maheshwari said the chances of losing out on tax revenue is also higher in case of advertising or promotional deals signed which are global in nature but also run in India.“It is easy to shift profits in such scenario, the part which is reflecting in India is clearly taxable which the Indian government is losing out on the ad revenues since even the equalisation levy doesn’t apply on it,” said Maheshwari.Facebook, however, doesn’t see recent developments where it has come under the government scanner on multiple issues including data localisation, curbing rumours or fake news as conflicts. “I don’t think conversations are conflicts or battles. While governments are doing their bit to ensure public safety, as a company it’s our job to participate in those conversations…” Ankhi Das, Facebook’s public policy director for India and South Asia told ET.Facebook had posted a profit of Rs 40.7 crore on revenue of Rs 341.8 crore in fiscal 2017, according to regulatory filings in India. Facebook’s FY18 numbers are not available yet. In September, Reuters citing unnamed sources, had reported that Facebook is expected to generate revenue of $980 million from India in 2018.In November, ET reported that Google India has remitted over $2 billion from the revenue earned in the country over the last five financial years to the US-based search giant’s subsidiaries in Singapore and Ireland. The amount, which is categorised as an expense towards “purchase of advertising space,” could further increase the search giant’s tax liability in the country, even as a dispute with the Indian tax authorities — over the tax outlay on earlier transfers — continues to be heard in court.‘Dangerous game’ In fiscal 2018, Google India reported a 30% increase in revenues to Rs 9,337.7 crore with profit after tax rising 33% to Rs 407.2 crore. The amount transferred for “purchase of advertising space”, increased by 36% to Rs 4,949.6 crore, according to regulatory filings.Facebook has been under government scrutiny over user data breach and spread of fake news on its platform. The firm has maintained that it is working with the government on its concerns. It also appointed former Hotstar executive Ajit Mohan as its new India head from January.Pratibha Jain, partner at Indian law firm Nishith Desai Associates, said the need of the Indian government to tax transactions for entities in the country is understandable.“But in a globalised world, one can’t look at the transactions in isolation.As a huge exporter of software services, we take advantages of the multilateral and bilateral tax treaties, so it’s a dangerous game we are getting into through the localisation debate,” added Jain.She said that India has double taxation avoidance treaties with many countries and these companies are paying tax in one jurisdiction or the other. “The big question is, are they evading tax, the answer is no!”

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The ultimate 2019 car-buying guide is here

In collaboration with Kartikeya SingheeRains may not be common at the end of the year, but a deluge is already in the making this December. Car makers and dealers are showering buyers with discounts and freebies as they close the year and prepare for new launches. Be it Hyundai India’s ‘December Delight’ with cash discounts and exchange benefits, Honda Cars India’s 70th anniversary celebration with discounts across its model range, or Maruti Suzuki, Ford India and Tata Motors’ exchange and insurance offerings, the gains are many, for all. So if you’ve missed the festive season of October-November for buying a new car, now may be a good time to pick one.If, however, you are one of the buyers who is in a dilemma about picking a car in December or January, it’s not too difficult a decision. If you are looking to increasing your savings, buy in December to avail of the year-end discounts as car dealers prepare to clear their inventories. If, on the other hand, you have the car’s resale value in mind, buy in January. This is because you will get the new year’s registration, 2019, instead of 2018, stretching the value of your car if you were to go for a resale in a few years. There are several new offerings lined up for launch in January and February 2019, in various price categories. These include the Ford Figo (Rs 5 lakh), Maruti WagonR (Rs 6 lakh), Mahindra TUV300 (Rs 9.7 lakh), Nissan Kicks (Rs 10 lakh), Tata Harrier (Rs 13 lakh), Hyundai Elantra (Rs 15 lakh) and Ford Endeavour (Rs 30 lakh), among others.To help you with the decision-making, ET Wealth, in collaboration with CarDekho, brings to you a listing of the top five cars in four price categories: below Rs 6 lakh, Rs 6-12 lakh, Rs 12-18 lakh, and Rs 18-40 lakh. Besides listing the specifications and providing reasons for giving the top billing to these cars, we have also calculated the resale value, monthly cost of running a car, and the approximate EMI for a fiveyear loan ,if you decide to finance the car through a loan.We hope these figures will help you calculate the actual cost of owning a car and accelerate the process of decision-making. So, go ahead, pick the car that suits your taste and budget requirements. Happy shopping!The best five cars below Rs 6 lakh include Datsun Go and Ford Freestyle. Click here for a comparison of all the 5 cars in this category.The best five cars between Rs 6 and Rs 12 lakh include Maruti Ertiga and Hyundai Elite i20. Click here for more details and all the names of the cars in this category.The top five cars between 12 lakh and Rs 18 lakh include Hyundai Creta and Jeep Compass. Click here for the specs, price and other details to compare the cars in this category.The best five cars between Rs 18 lakh and Rs 40 lakh include Skoda Octavia and Volkswagen Tiguan. Click here for a comparison of the cars in this category.

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Agusta CEO was aware of norms before tender was issued

NEW DELHI: More than a year before the UPA-I government issued tenders for new VVIP choppers in September 2006, the CEO of AgustaWestland informed shareholders that the eligibility norms would be tweaked to allow the company to bid for the contract.Giuseppe Orsi shared this information at a meeting on April 27, 2005, while then Indian Air Force chief SP Tyagi signed papers on March 14, 2005, approving the lowering of the operating altitude requirement for the helicopters meant to ferry the president, the prime minister and other dignitaries.AgustaWestland’s half-yearly report prepared in March 2005, documents recovered from the helicopter manufacturer and the testimonies of two officials of the company show that Orsi was well aware of the key developments with regard to the chopper contract, said people with direct knowledge of the matter. The papers Tyagi signed had been marked “confidential” and could not have been made known to outsiders, the people said. Additionally, about a month before the operating altitude requirement was lowered, Tyagi had a meeting with officials of Finmeccanica, the then parent company of AgustaWestland, according to Italian police investigating whether the helicopter manufacturer paid bribes to win the Rs 3,600 crore contract.The Italian prosecution alleged that the meeting in February 2005 was arranged by alleged middleman Guido Ralph Haschke. However, Finmeccanica claimed the meeting took place in conjunction with an official visit by the Italian head of state to the IAF headquarters.67121642

Giorgi Zappa, the then general manager of AgustaWestland, confirmed in his testimony that the meeting took place. Claiming that the meeting was official, Zappa said, “Then, as is often the case in these missions, one takes advantage of the opportunity to meet potential or likely customers.” His deposition, accessed by ET, reads: “In all missions, in practice there is a document prepared by the office that explains the type of market, its developments, what type of sales were made by Finmeccanica, what kind of potential tenders could be expected in relation to Finmeccanica products.” Stating that the meeting lasted for almost half an hour, Zappa denied allegations of offering a “bribery agreement” with Tyagi to accommodate AgustaWestland helicopters.Zappa added that the operating altitude issue was discussed with Tyagi. “We talked about operating altitudes, I was surprised by the simple reason that in practice the EH-101 (Agusta’s helicopter) was a helicopter that had been sold almost everywhere in the world and was also competing to become the American presidential helicopter… It seemed strange that this requirement would exclude a helicopter of the same type,” he had said.When confronted on the altitude issue by the Italian prosecutor who pointed out the Himalayas in India, Zappa responded: “… Now I don’t know if the requirement was to go to the Himalayas.” Another witness, Alberto De Benedictis, who was CEO of Finmeccanica UK, said Orsi had provided “vague indications” regarding the source of his information about the Indian government’s likely decision to issue a tender enabling Agusta-Westland to bid for the contract.An Italian court acquitted Orsi of corruption charges in January on account of lack of evidence. Tyagi has denied all allegations of corruption and involvement against him.

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Side pocketing is a better way for millions of MF investors

By Sandeep ParekhIf you are an investor, why should you care about a sartorial concept of storage and where it is located? In fact, you should if you are a mutual fund investor. In plain English, side pocketing is the splitting of a mutual fund unit into a bad unit and a good unit when part of the investment of a mutual fund goes sour.More specifically, when your investment in a mutual fund gets invested in debt securities of a company, and that company defaults to the fund, you are left holding a unit with, say a clean 95 per cent and a dubious 5 per cent. While the 95 per cent is almost certain to give you back your money, the other may be say the IL&FS group’s commercial paper.Most funds would write down the value of the 5 per cent either partially or fully. Seen differently, there is, and rightly so, a discretion as to how much to mark down the 5 per cent portfolio.Fund manager A may believe that a commercial paper may, after a year of litigation under the new insolvency regime, return 50 per cent of the paper’s value, while fund manager B may believe the number to be 30 per cent.After a year, once the insolvency process is over, or other compromise is struck, the number recovered will be anywhere from 0 per cent to 100 per cent.If the amount recovered is 40 per cent then the manager who marked it down 30 per cent was too conservative and the one who marked it down 50 per cent was not sufficiently cautious. But that is wisdom gained in hindsight with the omniscience of god. Clearly, any call taken by a fund manager (not living as an Oracle on Mount Delphi) will be wrong in hindsight.These calculations are important to understand the issue because if the side pocketing is not done, the asset value of the mutual fund unit will be between Rs 95 and Rs 100, where the value of a unit is say Rs 100.The price will, however, be dependent on the extent to which the fund manager marks it down. So, if the fund marks down the asset value by 50 per cent, the net asset value per unit will be Rs 97.5. People will then buy and sell the unit at Rs 97.5.Theoretically, thousands of investors may come into the fund after the default situation had arisen. After a year of resolution, the actual value of the mutual fund unit recovered is say Rs 99. The class of investors who sold when the price was Rs 97.5 will thus have lost money if the value is discovered at Rs 99, because had they held on to it, it would have given them an extra Rs 1.50. Conversely, any new investor who bought then would get an unfair windfall of Rs 1.50. The situation would reverse if the price was Rs 96 instead of Rs 99.Side-pocketing achieves three benefits. First, it excises the frost-bitten limb from the body of the mutual fund unit. So, a person has a choice or an option of selling the good unit at an accurate price while keeping or selling the bad unit. If the person chose to sell both the units immediately, he would be in no worse a position as a person who sold the undivided unit. However that would be one option for the investor who benefits from the side pocket. The investor has three other choices besides selling both units: One, retain both units till maturity. Two, sell the good unit and retain the bad one. Three, sell the bad unit and retain the good one. Clearly a person with four choices is better than a person with one choice, especially when those four choices include that one choice.The second benefit of side pocketing is that it freezes the class of investors, so that new investors who did not face the loss and potential recovery do not share in the windfall if there is greater than expected recovery. Clearly, this is not a given and is dependent upon the level of mark-down effected by the fund manager, but it helps in reducing the chances of windfall to a person who didn’t suffer the downside.The third benefit is systemic. In a situation like the current one where contagion has spread across commercial paper issued by NBFCs, any panic in liquid funds —because investors shun mutual funds which have an exposure to NBFC paper, even if good quality — would freeze credit markets and cause a serious run for withdrawal from such funds.Selling securities in such situations is often met with a frozen market where underlying securities cannot be sold at any price. A side pocket would reduce a run on the system, though not by any means eliminate the problem.The only downside of a side pocket in theory is that it may encourage fund managers to buy riskier securities because they can always chop off the bad part when things get tough.This is an unlikely outcome, because the stigma attached to holding defaulted paper is huge and funds which held IL&FS paper recently were penalised through large redemptions even though they bought triple-A rated paper, as it was before the default.It must be said that this is an experiment by SEBI, as few countries have enabled side pocketing outside of the world of hedge funds. But it is a good experiment with little expected downside. Indian securities market regulations have been pioneers in many global best practices and there is no reason we should always copy other models, instead of starting regulatory trends.(The author is a partner at Finsec Law Advisors and is a member of the Mutual Fund Advisory Committee of SEBI.) 67091389 67071756 67069823

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Bank Nifty could outperform even more if it crosses 27,000

Mumbai: The outperformance of bank shares compared to the Nifty will depend on whether the Bank Nifty breaches the crucial 27,000-mark. The Bank Nifty, which closed at 26,826 on Friday, has performed better than the Nifty in the past three months, as indicated by the Bank Nifty to Nifty price ratio which has shot up to a six month high last week.The Bank Nifty has gained 2.77 per cent in the last four days and Nifty gained 3 per cent. The state elections outcome and the government’s decision to appoint a new RBI Governor gave a sentimental boost to the market. Bank Nifty witnessed one of the sharpest recoveries since April, according to Gupta.“In last four days we have seen strong recovery in the Bank Nifty. It made low near 26,500 and high near 26,950,” said Chandan Taparia, derivatives analyst at Motilal Oswal. “It is finding multiple hurdle near 27,000. If it sustains above 27,000, then fresh momentum of 500-700 points can be seen,” said Taparia.The 27,000 put of the Bank Nifty added nearly 6,500 contracts last week as investors bought protection against their long portfolio. A close above 27,000 is likely to trigger short covering. Analysts believe that the index is unlikely to fall below 26,500 in case of any negative trigger.
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“There are short positions in the index and those shorts are stuck as the index moved up fast after the election results. Short covering move could be there in the stocks and the index,” said Amit Gupta, Head of Derivatives at ICICIdirect.So far in December, Bank Nifty has fallen 0.1 per cent, outperforming the Nifty which has fallen 0.65 per cent. Since October, the Bank Nifty has gained 6.8 per cent while Nifty has fallen about 1.1 per cent. Analysts said Bank Nifty’s price ratio to the benchmark index has remained near 2.48 level, the highest since June this year.Gupta said that if Bank Nifty starts moving above 27,000, then we could see another 500 point gain in the December series.“The lower bond yields are coming as a support for Bank Nifty right now. The US interest rate statement has been dovish and inflation figures here have been good. Yields have corrected after that, it was close to 7.9 and now it is 7.4,” he said. 67121303 67121432

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