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Liquor Gets 20% of Wedding Budget
ET Q&A – `If We Simplify Process of Tariff Fixing… it will Reduce Corruption’
PIYUSH GOYAL POWER, COAL, RENEWABLE ENERGY AND MINES MINISTERON ENERGY Energy is not a political issue for the Modi government
With the NDA government’s efforts to make India a power surplus and energysecured nation, electricity will never be a political subject, said power, coal, renewable energy and mines minister Piyush Goyal. The government has put in place an honest and transparent system in the energy sector that will be irreversible, he told Sarita C Singh, in an interview on the sidelines of Vienna Energy Forum. Goyal said states are working towards removing land ownership as requirement for providing connections to give electricity access to slums. Edited excerpts:Electricity access and lower tariff has always been a political agenda and part of electoral promises in India.With power surplus scenario, do you think this situation will change?
Energy is not a political issue for the Modi government. It is our commitment to provide electricity to every household of the country. If there are honest governments in states and the Centre, I don’t think power will now be an issue at all. Some of the things that we are doing are irreversible.
For example, reverse auction of power has put an end to the regime of negotiated tariffs, feed-in tariffs, mutual consultation tariff, etc. We have created such an honest and transparent system that anyone will be afraid of trying to corrupt it again. Once we make electricity available to every household, would it be possible to keep people deprived of electricity?
What role will rationalisation and simplification of categories of tariff play in reducing corruption?
Corruption is the by-product of discretion, when there is scope for interpretation of policies. Some states have more than 100 categories and sub categories of tariff and therefore, one gets ample opportunities to interpret those provisions.
I believe if we simplify the process of tariff fixing with lesser tariff slabs and rationalise the process, it will reduce corruption and simultaneously it will enable supply of adequate and cheap power to the poor as well as to farmers.We are also working on making merit order dispatch transparent. We want to make transparency one of the means to get rid of corruption. It has got game changing quality. You would need RTI because the government is going to tell you everything through a transparent mechanism.
The government’s target of power for all by 2019 is a challenge in states like Uttar Pradesh and Bihar. How would you ensure every citizen gets legal electricity connection?
Earlier, the Union government used to give money to grant free electricity connections to poor and farmers but states like Uttar Pradesh were not doing it. Now, Uttar Pradesh government is working towards providing electricity to all. Yogiji’s government has accepted my suggestions that the state government will give free electricity connection to urban as well as rural poor, and will ensure that power is available when demanded by simplifying the application process. There shouldn’t be undue paper work and questioning for giving a new connection.
Earlier, one had to prove ownership of the property for getting a connection but the current government in Uttar Pradesh is working on a system to de-link ownership with electricity connection whereby you will be given a connection where you are residing. If you have to leave the property for any illegality, the connection will be removed. Uttar Pradesh has decided to do it and other states are willing to do it.
There have been instances where people are not willing to take legal electricity connections. How are you tackling that?
It’s a problem we are facing that a number of people are not willing to apply. I have asked states to organise awareness camps that people need not worry about huge power bills anymore.UPA has been a sad example as during its tenure people used to receive high power bills all of a sudden. In some cases, the poor will not receive bills for months together and one day he will receive a bill for last two years. Then he is harassed to pay up. We are talking to all the states that they have to ensure monthly bills, so people don’t get a shock. If there is a default, then action can be taken on a monthly due amount.
Isn’t this phenomenon of not applying for connection a problem for achieving the target of power for all?
Power for all includes people who are interested in getting a connection. It cannot be for people who don’t want the connection. Having said that, I am confident everybody will apply for power once they are sure that they will not be short-charged. It will be helped by my smart meters programme. Once smart meters come in at the desired scale, the consumer can control his power consumption and the possibility of inflated bill will reduce substantially.
What was the key agenda of India’s participation at the Vienna Energy Forum?
The Vienna Energy Forum dovetailed the poverty elimination programme with the energy access programme. In a way, they have taken up a more holistic view of the sustainable development goals. For India, overcoming the twin challenge of alleviating poverty and giving access to electricity to all is necessary.
(The correspondent was invited to the Vienna Energy Forum by FICCI)
AGRI COMMO INDEX FALLS 0.98% – 4th Straight Weekly Fall
The Agriwatch Agri Commodities Index fell 0.98% to 107.60 during the week ended May 13, 2017 from 108.66 during the previous week, marking its fourth consecutive weekly decline. The base for the Index and all sub-Indices is 2014 (= 100). The Index was led lower by declines in the Cereals, Pulses and Fibres sub-Indices with gains in edible oils, vegetables and sweeteners sub-Indices unable to offset those declines. The commodity group sub-Index values and their weekly changes are as follows: Cereals: 111.20 (-2.52%), Pulses: 138.34 (-2.15%), Vegetables: 39.92 (+1.66%), Edible Oils: 102.00 (+0.48%), Oilseeds: 89.60 (-0.30%), Spices: 83.75 (-0.79%), Sweeteners (Sugar, Gur & Khandsari): 125.56 (+0.67%), Fibres: 101.96 (-1.43%) and Other Non-Food Articles: 88.78 (-3.79%). Further details can be viewed on the ET website and on Agriwatch.com.
ET Q&A – `Earnings will Start Taking Off…We See North of 15% Growth’
SHIV PURI Managing Director, TVF Capital Advisors
India is steadily moving to wards becoming a cashless society, and in this scenario, digital infrastructure is a game changer, says Shiv Puri, managing director at Singapore-based TVF Capital Advisors. Puri says one can play this theme in the equity market through well-run private sector consumerfocused financial services companies, which are best positioned to take advantage of this. In an interview with Sanam Mirchandani, Puri says he expects corporate earnings in India to catch up by the year-end and grow at over 15% going forward. Edited excerpts:Indian markets are near record high levels. What have been the key contributing factors to this rally? Will the trend continue?
It should consolidate a little bit from here, waiting for earnings to catch up. There are few positive things about India. Demonetisation did not have a negative impact but, in fact, it encouraged the adoption of digital infrastructure. GST (Goods and Services Tax) is going to be a huge positive. It is still being under appreciated because it is new. The housing focus is also a huge positive. Not only it is positive for the real estate sector but it also has a positive influence on many other sectors such as cement, steel and home improvement companies. The Uttar Pradesh elections also gave com fort to investors as to how the next few years can play out.
Are you concerned about market valuations?
Selectively there are good opportunities in the market. There might be some pockets of small and mid-cap segment where valuations are concerning. The larger, well-run companies’ valuations are reasonable. I see an earnings catch up coming through by year end.
Domestic institutional flows have lent a lot of stability to the market in recent months. How do you expect this trend to pan out going ahead?
Lower inflation generally encourages people to move from hard assets into financial assets. We are in a lower inflation environment as compared to the past. Fair amount of capital is coming from SIPs (systematic investment plans). Usually, SIP money tends to be a lot stickier.Domestic inflows into the market should continue.
The Modi government is going to complete three years in power soon. What is your assessment of its performance so far?
The government is getting a lot of credit for playing the long game. It is not doing any short quick fixes but has made a constructive foundation that can lead to very longterm growth.
What is your expectation on earnings growth going forward?
Earnings growth is going to be strong because of the base effect.Last year, PSU banks had taken huge write-downs and they are not going to do the same this year. Secondly, commodity companies had reported poor set of numbers. That is now changed already. These two sectors will add a fair bit to market growth. Good quality financial services firms and non-banking financial companies will continue to grow at a healthy rate. Earnings will start taking off in other sectors also. We will see north of 15% growth.
What are the investment themes that you are looking at currently in Indian markets?
The biggest game changer in the country is digital infrastructure. We are entering into a world of digital KYCs, cashless, paperless transactions etc and the implications will be huge given that millions of people will move into the financial system.It is also very beneficial for the well-run private sector financial services companies. Those that can leverage it to their benefit will see significant growth and those that are unable to do will be left behind very quickly.
How does one play this theme in the stock market?
Well-run private sector consumerfocused financial services companies are best positioned to take advantage of this.
With steps being taken to resolve bad loan issues, what is your outlook on PSU banks?
Structurally, many of the PSU banks still have a lot of work to do in terms of embracing technology and being more customer-centric. The way the banking industry is evolving, it will be very difficult to compete. Just having a large physical branch network is not going to be enough in the years to come.
Is the worst over for the informa tion technology sector?
The new lower growth normal for technology companies is here to stay. It is probably not a 20-25% growth business, but maybe a 1012% growth business. Valuations are reasonable especially because these are high free cash flow generating businesses. The big issue though is that the transition to digital and cloud are disrupting even their business. It is not as exciting a sector as it had been the past.
Crude oil prices saw a sharp fall recently. What does this indicate about strength of the global economy?
The steep fall in oil price is a reflection of the fact that the OPEC (Organization of the Petroleum Exporting Countries) cartel is non-functioning and the tremendous quantities of shale gas in the US, which keep a lid on prices. I don’t see it as a reflection of any sudden weakness in the global economy.
US-North Korea tensions have been rising recently. What will be the impact on markets if geopolitical tensions escalate from here?
There is always a major geopolitical or economic risk to worry about each year but one should remain focussed on investing in great companies, which have a long run way for growth and a solid economic moat.The major global economic dislocation can still come from China although the risks seem to be slightly lower than this time last year.
Kapil Threatens to `Drag’ Kejri to Tihar, Alleges Money Laundering
Our Political Bureau
SLEW OF ALLEGATIONS Mishra says AAP has used fictitious donor names and shell companies to launder money while party claims BJP trying to defame Arvind Kejriwal through former minister
Making a fresh round of allegations against Aam Aadmi Party (AAP) leader and Delhi Chief Minister Arvind Kejriwal, rebel AAP MLA Kapil Mishra on Sunday claimed that the party has concealed from the Election commission (EC) the total amount of donations it has received.Mishra alleged that AAP has used fictitious donor names and shell companies to launder the money. He also threatened to `drag’ Kejriwal by the collar to Tihar Jail and said he will submit documentary evidence to the CBI on Monday.
AAP leaders however, refuted all allegations made by Mishra and claimed that he is just a face of the BJP efforts to `defame’ Kejriwal and have AAP `derecognised’ as a political party.
Mishra at a press conference alleged that the AAP did not fully disclose to the EC the donations it had received during the financial years 2013-14 and 201415. He also accused Kejriwal of filling party coffers through a network of shell companies.“All this happened with the knowledge of Arvind Kejriwal as these shell companies deposited money in the AAP bank account on the same day and time in January 2014,“ Mishra said.While the Income Tax department has already issued four notices to AAP for discrepancies in its submissions related to funding and about four fraudulent companies involved, Mishra said there were more such companies involved and also brandished two fraudulent che ques issued to the party. “He (Kejriwal) actually has hundreds of companies which he holds illegally. Lakhs and crores are in each of these company accounts,“ the former minister said. The money laundering, he alleged, was being carried out through a branch of Axis Bank in Delhi, whe re raids had been conducted after demonetisation. He also named two AAP MLAs Naresh Yadav and Shiv Charan Goel as being in complicit in the `scam’.
Also, in a dramatic turn of events, Mishra fainted in the middle of the press conference and was rushed to Ram Manohar Lohia hospital for treatment. Sacked from the Delhi cabinet 10 days ago, Mishra has been on a hunger strike for the last five days.
Meanwhile, AAP leader Sanjay Singh accused BJP of trying jay Singh accused BJP of trying to `defame’ AAP and Kejriwal through Mishra. “Kapil Mishra is a mere pawn in the hands of the BJP and his allegations of financial irregularities are completely baseless,“ he said.Singh further refuted allegations of the involvement of AAP MLAs Yadav and Goel claiming that they have no connections with the companies mentioned by Mishra. “Nearly 92% of our donor fundings happen through cheques and online transactions and only 8% is in cash. Our dealings are absolutely transparent,“ Singh said.
Mishra’s allegations, however, are not new as former AAP member Neil Haslam, who was sacked from AAP’s social media cell in 2014, had made similar charges against the party in December last year.
TOP GOVT JOBS – Criteria Set for Pvt Co Heads to Join PSUs
Private candidates applying for top-level jobs at Public Sector Companies will need to furnish their company’s audited turnover, specify their Cost to Company (CTC) and also write a 400-word note on themselves.This is part of a new application form that Public Sector Enterprises Board (PSEB) is bringing out with effect from June 1 to enable private sector individuals to apply for boardlevel positions at the Central Public Sector Enterprises (CPSEs), nearly two dozen of whom are headless as of now.
The PM-led Appointments Committee of Cabinet takes the call on PSU top-level appointments. Last year, the Union Cabinet had decided to open up CPSE senior posts for the private sector to broad base the catchment for these positions and take advantage of domain expertise. But in absence of clear criterion, nearly 75 top posts in PSUs have fallen va cant, including the top posts of many chairpersonsmanaging directors in PSUs like ONGC, Coal India, NHPC, IRCTC, Northern Coalfield. Director level posts are also vacant at MMTC, SAIL, GAIL and NTPC.
The new application form, a draft of which has been circulated by the Centre and is planned to be implemented from June 1, now specifies the process for private candidates to apply and information to be furnished. The private candidate will have to furnish audited annual turnover of his present Company for previous three financial years and his cost-to-company . The person will also have to provide Corporate Identity Number of his company, his Director Identification Number if he is working at the Board level.
Brick-and-Mortar Gives Away the Store to Match Ecomm Discounts
Rasul Bailay & Richa Maheshwari
New Delhi | Bengaluru
Offline players tailor offers, sacrifice margins to take on online rivals
Several of India’s brick-and-mortar retailers are striking back at online giants Amazon and Flipkart with their own mini sales, which are being held over weekends or whenever the ecommerce sites offer discounts.US fashion house Gap Inc offered a flat 60% discount with an additional 10% off on the purchase of five items in Bengaluru on May 12-14, coinciding with sales on Flipkart and Amazon. The Lifestyle department store chain offered flat 30% discounts on the same days, while Aldo gave 25% off and Tommy Hilfiger a 30% discount on the purchase of two products. The story is similar across brands such as Scullers, Chemistry , Only, Aeropostale and Forever 21, which have discounts or other offers in their stores. Hardly a day has gone by when one or the other brand was not on sale since the note-swap exercise announced in November, retail experts said. The sector was hit by demonetisation, with the currency shortage forcing consumers to reduce spending, though most retailers said sales are now back to normal.
While the Central department store ran full-page newspaper ads announcing a 50% discount on footwear, handbags and sportswear from dozens of labels including Steve Madden, Nine West, Nike, Puma and Adidas on Saturday, Van Heusen called up female customers over the weekend to provide details of its offers. “Ma’am, we are missing you. Please visit our store today for.`1,000 off on purchase of `. 5,000 and above, only for you,“ a caller from the brand’s Commercial Street store in Bengaluru told a woman customer.
“The ongoing sale is a response to online. They (brands and retailers) don’t want to be left out,“ said Suresh Singaravelu, executive director of retail at Prestige Estates Projects, which operates the Forum malls in south India and the UB City luxury mall in Bengaluru. “Competition is now not just within the brands but within the channels too,“ he said. The offers are helping malls with a jump in footfalls and gross turnover.
Retailers, however, said their latest promotional events have nothing to do with ecommerce dis counting offers. “Ours is neither a sale nor reaction to online sales. Ours is a specific category-led promotion, just for a day or 12 hours. Nothing beyond that,“ said Vishnu Prasad, chief executive of the Central chain. “Categories that we are promoting are footwear, handbags and sportswear. Other categories are not part of the promotion.“ Jacob John, de puty CEO of Lifestyle, said: “It is just tactical (move), just to get some walk ins.“ Everybody does this, he added.
Discounting by brick-and-mortar reta ilers were earlier mostly restricted to two seasons -January-February and June-July. Now, they are becoming almost round the year, thanks to India’s cash-rich ecommerce companies that over the years have unleashed unprecedented discounting to gain customers and prop up sales, prompting the offline stores to react in similar fashion.
“Globally, fashion brands will always be on sale. They will call it mid-week sale, afternoon sale. This is how JC Penney and Macy’s do it,“ said Harminder Sahni, founder of retail consultancy Wazir Advisors. “So, India is going through the same. There is now sale all the time.“
Over the years, physical retailers have increased discounting even by sacrificing margins. This has to an extent blurred the deep price cuts offered by online retailers. Discounts in the ecommerce sector, though, are from their previous steep levels, as the players chase profitability.
About three years ago, the average yearly discount provided by brick-and-mortar was around 15%. It has now gone up to 23% and for some brands it is even as high as 30%, said Pawan Khandelwal, chief executive of the Iconic chain of department stores. “Consumers feel cheated if they are not given any discounts or offers,“ he said.“Retailers generally don’t want to give so much discount but this is an external push from the online retailers.“
Flipkart, which launched its latest sale at midnight on Saturday, said it has for the first time lined up discounts on almost 99% of fashion styles, ranging from 50-90% on brands such as Reebok, Lee, Benetton and Vero Moda.
Amazon said a majority of its top fashion brands saw jump of more than nine times in sales on the first three days of the May 11-14 Great Indian Sale.
However, some retailers are trying to mellow down the offline sale fever. “Sales and discounting is the new normal. Online continues to discount at the drop of a hat and it will hurt everybody,“ said Govind Shrikhande, managing director of Shoppers Stop. “We are planning to cut short the July sale by about 10-15 days as the sales period has extended too far.“
Liquor Cos Join the Wedding Party
Diageo, Pernod Ricard, William Grant find new channel to boost sales, woo customers
Liquor shops are moving away from highways and so are the big fat Indian weddings, which are incomplete without colourful cocktails, champagne and Scotch, often delivered directly by the likes of Diageo, Pernod Ricard and William Grant.These three liquor majors are increasingly helping wedding planners in the country set up pop-up bars at their events as this has become a key channel to boost their sales and win over new customers.
Experts say Indian weddings now have a higher focus on creating food and beverages experiences with decorated bars serving premium wines, single malts and cocktails, some resembling a giant watering hole at times.
“Spirit companies have recognised this opportunity and work with planners, caterers, and at times even directly with the wedding couples to plan it,“ said Sandeep Arora, director at luxury spirits consultancy and services provider Spiritual Luxury Living. “With the large number and higher frequency of weddings in India, it creates high volumes for spirit brands, besides a new channel for reaching out to customers.“
Ivan Menezes, CEO of Diageo plc, had last week identified weddings as an important segment for it in India.
“In India, we are expanding our route to market to enable us to access occasions such as weddings, and use popup bars to be present in festivals and other events which provide opportunities for consumers to enjoy our drinks and for us to share our brand stories with them,“ Menezes said in an investors conference. Even the Supreme Court ban on serving liquor within 500 metres from national and state highways with effect from April 1 did not jeopardise spirits makers’ sales from weddings much even though it is estimated that nearly 80% of marriage banquets and halls in the Delhi-Chandigarh area -a key belt for big fat weddings –are located near highways. That is because hosts are willing to change the venue, but not their budget on spirits, experts say.
“The biggest mandate is that we should not run out of liquor during functions,“ said Chetan Vohra, managing director at event management company Weddingline. He said nearly 15-20% of wedding budget is being spent on spirits alone. “On an average, liquor can cost up to . `20 lakh on a decent wedding function.“
From engraving personalised messages on bottles, to custom designed menus, bar trolleys and even cocktails bearing names of brides or grooms, companies are doing every bit to capitalise on the opportunity.
“While Glenfiddich is the top option for wedding ceremonies, the new found preference towards Mon key Shoulder’s cheeky cocktails for bachelors party and Hendrick’s iconic serves at mehendi ceremonies are the newest additions to the grand Indian wedding trends,“ said Shweta Jain, marketing director at William Grant India.
Wedding planners say people are getting multiple bars these days -one for youngsters who are more interested in cocktails near the dance area, and a separate bar for guests who are interested in conversation over single malts in a quiet corner.
Why not? Hosts are increasingly being judged by the quality and quantity of liquor available at the function. The spirits majors’ focus on weddings comes at a time when the Indian liquor market is experiencing its slowest growth in more than a decade.
Lodha Gets Rs 1,800 cr from Piramal Arm
Saikat Das & Baiju Kalesh
Realty major likely to use proceeds from fresh loan to finance projects and refinance existing debt
Piramal Fund Management, the financial services arm of billionaire Ajay Piramal-led Piramal Group, is extending a fresh loan of about Rs 1,800 crore to Mumbai-based Lodha Developers, a builder of premium residential projects, two people familiar with the matter told ET.The funding suggests a revival in demand for real estate after demonetisation, the high denomination currency note swap programme that was seen as a dampener for the sector that accounted for a high proportion of cash deals.
An email sent to the Piramal group remained unanswered till going to press, but a top official from the group confirmed the deal, saying that Lodha was a long-term client. Talks are in an advanced stage with both the parties busy finalising the details, sources said.
“We maintain a strong relationship with our lenders and from time to time, increase or lower our facilities based on business needs and our stated objective to lower cost of funds and increase tenure,“ a Lodha spokesperson said.
Market sources said the deal is likely to be structured differently. Repayments could be made through different slabs spread across maturities. The proceeds will be used to finance the builder’s residential projects in Mumbai and Thane as well as to refinance existing debt, which would help lower the credit cost.
“Our focus is to fund top-tier developers in top cities and continue to grow in that segment,“ Ajay Piramal, chairman of the Piramal Group, told ET last Friday. “After the introduction Real Estate Regulatory Authority it has become better. Our strategy is to grow in the existing segments of wholesale and real estate finance.“
In September last year Piramal Fund invested . `2,320 crore in the same realty developer for a portfolio of projects in south and central Mumbai, including The World Towers. This was the single largest debt transaction to take place in the real estate funding space, they claimed.
Piramal Finance, a subsidiary of Piramal Enterprises, has applied to the National Housing Bank, the regulator for housing finance companies, for a licence to run a housing finance business. The company may soon get the licence as the group may have already matched the regulatory parameters, said an executive involved in the process.
In January global rating agency Moody’s Investors Service downgraded the corporate family rating of Lodha Developers to B2, to speculative and subject to high credit risk, from B1. The outlook on the rating was negative. A rating downgrade normally increases a company’s borrowing costs.
Foreign Exchange Reserves Grow Faster Under Modi Regime
India’s foreign exchange reserves have grown by $63 billion between May 24, 2014, when Narendra Modi was sworn in as Prime Minister, and May 5, 2017, handsomely outstripping the $52 billion increase between May 22, 2009 and May 23, 2014 under the rule of Manmohan Sigh.