Margin pressure, global factors to impact copper industry's financials

The overall financials of the domestic copper industry may take a hit owing to margin pressure and a subdued global outlook.

According to a report by 'Care Ratings', the dip in domestic production, largely due to the permanent closure of Vedanta's copper smelter plant in Thoothukkudi, will force India to remain a net importer of copper while the global copper prices will remain suppressed, and in the range of $ 5,500-5,900/tonne, until a constructive trade deal is reached between the US and China.

Cumulative sales revenue of India's copper industry has declined by 6.6 per cent during the period from FY15 to FY19. The industry's revenues largely depend on the copper prices prevailing in the global economy. However, LME copper prices started declining and have been supressed ever since the US-China trade war began, the report says.

Domestically, production of refined copper had grown at a CAGR of 9.6 per cent during FY14-18. Production fell by 46.1 per cent during FY19 due to the permanent closure of Sterlite’s 400KT copper PLANT in Thoothukudi on May 28, 2018. The Thoothukkudi PLANT accounts for 40 per cent of the country’s copper smelting capacity.

With the permanent closure of Sterlite's smelter in Thoothukkudi, and the uncertainty surrounding its remission, the rating agency believes that by the end of FY20, refined copper production will be around 450 kiloton (KT), registering a 1.5 per cent drop from its FY19 level of production. Production of copper from April to July this year was at 167 KT.

"The closure of this plant has resulted in India becoming a net importer, from a net exporter of copper. Due to the increase in demand, India will continue being a net importer of refined copper during FY20 as well, unless the Madurai court passes the judgement for the remission of the this smelter," the rating agency said. India has become a net importer of refined copper after 18 years.

According to the report, during FY19, exports had fallen by 87.4 per cent, (during FY18 exports had increased by 12.3 per cent) whereas imports increased by 131.2 per cent (during FY18 imports had increased by 35.6 per cent). As a result, imports of copper cathodes have increased by 82.6 per cent and exports have fallen by 72.7 per cent.

Consequently, domestic copper companies have seen a fall in revenues by 32.1 per cent during FY19 on a year-on-year (YoY) basis. Even in the current financial year, revenues have dropped by 17.3 per cent.

On the revenue front, the profitability of Indian copper companies largely depends on the Treatment Charges and Refinery Charges (TC/RC). The TC/RC is the fees smelters charge miners for processing the concentrates and are designed to cover refining costs. However, these margins are expected to remain under pressure.

"We expect TC/RC margins to remain under pressure owing to the supply side disruptions from the major mining areas

(Chile mining strike). This could act as a double whammy for copper manufacturers given global copper prices are already low and low TC/RC margins will affect smelters' earning capacity, potentially affecting the overall financials of the copper industry," the report said.

"Operating profits largely depend on the TC/RC margins. Higher TC/C margins are favourable to companies as it increases their profitability. Mine strikes and shortages/unavailability of copper concentrates has resulted in the fall of the TC/RC margins in the last few years which has resulted in suppressing the margins of copper manufacturers as well," it said.

RInfra to cut its Rs 6,000 cr debt, follow capital-light model: Anil Ambani

Reliance Infrastructure (RInfra) which is sitting on a debt of Rs 6,000 crore, is on track to reduce leverage even further as it focuses to be an asset-and capital-light entity, the company said on Monday.

Addressing the shareholders at the AGM, chairman Anil Ambani also said the group's defence businesses will also follow an asset- and capital-light model.

"Our intent is to reduce the debt further. At present we are have around Rs 6,000 crore of debt but with a large networth," the RInfra chairman said, adding the will focus on the domestic market and take up more complex infrastructure and transportation projects.

"We hope to become one of the top five defence companies among the private players in the country, serving the needs of self-reliance and technological advancement and becoming a global supplier. Our defence business in partnership with global leaders will ensure optimum utilisation," he said.

He further said the four business verticals including roads, metro, energy and airport are fully funded.

"Going forward, both the growth engines of E&C and defence businesses will remain asset and capital light without the need for any further large capital infusion," he said.

On the defence opportunity, he further said the defence budget of Rs 3 trillion is a great opportunity for domestic players. "Of the Rs 3 lakh crore budget, Rs 1 trillion is for purchase of new weapons platforms and military hardware. This is a great opportunity for us to participate." The company has its presence in the defence business through two of its joint ventures with French firms Dassault Aviation and Thales.

"Both these joint ventures are operational and the factories are located in Mihan in Nagpur. Both are exporting high technology and high-value products to global markets in both civil as well as defence and aerospace area," he said.

Sounding bullish on the infrastructure space, given an outlay of Rs 100 trillion over the next five years, he said the country's infrastructure needs are very vast.

The government has announced Rs 100 lakh crore investment in infrastructure over the next five years and RInfra will participate in these large scale opportunities and projects which are complex, he said.

The company has bagged a few large orders including the Rs 7,000 crore Versova-Bandra Sealink project and a few metro projects in the megapolis.

On the Delhi Metro arbitration award which is around Rs 5,000 crore, he said, the company had already won the case five years ago and is still waiting to receive the amount.

The transaction of the proposed sale of Delhi-Agra toll roadway, which is expected to fetch RInfra Rs 3,600 crore, is likely to be closed in the next few weeks, he said.

Reliance Power plans Rs 4,000-cr capex to install FGD units across plants

Anil Ambani-led Reliance Power has planned a capital expenditure of Rs 4,000 crore to install flue-gas desulfurization (FGD) units across its coal-based power plants.

As a part of its strategy to achieve clean green power, the company will focus on renewable energy projects like solar and wind, apart from looking at opportunities in waste to power generation in terms of biomass and biofuels, RPower chairman Anil Ambani said at the company's 25th annual general meeting on Monday.

"Reiterating our commitment to cleaner and greener power by reducing emissions, we are undertaking a capex of nearly Rs 4,000 crore to install FGDs in our coal-based plants," he said.

He further said the company will grow its clean energy portfolio with solar, wind, bio-mass, bio-gas and waste-to- energy in the renewable energy space.

"This initiative is to meet the twin objectives of development of sustainable, cleaner and greener power generation portfolio and capital-light assets with shorter development cycle and quicker generation of reverse cash flows," he said.

Speaking about the company's plan to convert stranded gas-based asset at Samalkot into an opportunity in Bangladesh, Ambani said, "we have signed the PPA and gas supply agreements for the 750 MW gas-based generation plant in Bangladesh with a capital outlay of over Rs 5,000 crore. We have also brought in a joint venture partner JERA, the largest power utility in Japan."

He further said that this is the single largest FDI into Bangladesh enhancing the energy security of the country and taking Indo-Bangladesh relationship to the next level of economic cooperation.

"Building on the momentum of phase I development, our focus now is on the development of phase II of 1500 MW in line with the MoU signed for development of 3000 MW gas-based projects. With these developments, we will be able to completely retire the US EXIM debt of about Rs 2,400 crore," the chairman said.

RPower has an operating capacity of 6000 MW operating at a plant load factor of 80 per cent.

Saudi Arabia assures Reliance it will supply committed crude oil in October

Saudi Arabia has assured billionaire Mukesh Ambani's Reliance Industries that it will supply all the committed crude oil volumes in October as the world's largest oil exporter recovers faster than expected from the biggest attack ever on its oil industry.

Saudi Arabia's "Aramco has been a major and reliable supplier of crude oil for Reliance for over 20 years, both in terms of volume of crude supply as well as a mix of various grades of crude oil," Reliance said in an email response to a questionnaire on supplies from the Kingdom.

Saudi Arabia is still recovering from the September 14 drone and missile assault on its main oil facility that knocked out about 5.7 million barrels a day, about half of the country's output. Its state energy company, Saudi Aramco, has vowed not to reduce shipments to customers as it draws down strategic reserves.

"It was reassuring that Aramco maintained scheduled crude supplies and fulfilled their supply commitments, in spite of the setback caused by the attack on their crude supply infrastructure," Reliance said.

In the immediate aftermath of the incident, Aramco maintained supply to Reliance's twin refineries at Jamnagar in Gujarat with alternate grades of crude oil.

"The alternate grades being heavier suited Reliance's refining needs," it said without giving details. "That the volume and schedule of supply was maintained soon after the incident is creditable. Aramco has confirmed and reassured that supplies for October will be maintained both in terms of quantity and mix of grades as per our requirement."

Reliance is in preliminary talks to sell one-fifth of its oil-to-chemical business, which comprises of its Jamnagar refineries and petrochemicals plants, to Aramco at a valuation of USD 75 billion, the company chairman Mukesh Ambani had said last month.

As part of the deal, Saudi will supply as much as 5,00,000 barrels per day of crude oil or 25 million tonnes annually to Reliance.

The company did not say how much crude oil it currently buys from Saudi.

"The resilience of Saudi Aramco in ensuring uninterrupted supplies to the global markets in trying times has served as a great reiteration of their reliability as a large global supplier of crude oil," the company said.

Saudi is India's second-biggest oil supplier behind Iraq. It supplies roughly a fifth of India's oil imports.

Saudi Aramco, the most profitable company in the world, controls the world's second-largest proven crude reserves at more than 270 billion barrels. For Reliance, the partnership will go a long way in insulating it from any future oil shocks as well as help trim its debt.

Vodafone top brass seeks 2-year moratorium on deferred spectrum payment

With the telecom sector reeling under acute financial stress, Vodafone Group Chairman Gerard Kleisterlee and CEO Nick Read on Monday met Telecom Secretary Anshu Prakash, as the company sought a two-year moratorium on deferred spectrum payments, and other relief measures.

Vodafone Group officials also met Commerce and Industry Minister Piyush Goyal during the day.

Speaking to reporters after a meeting with the telecom secretary, Kleisterlee said the British telecom giant -- which is invested in the Indian telecom services market through Vodafone Idea -- had "good discussions as always" with the government.

Asked about the speculations in the market that the company may not remain a long-term investor in India given the sectoral stress, Read asserted, "We are absolutely focused on the successful integration of our business between Vodafone and Idea."

Industry sources told PTI that demand for two-year moratorium on payment of spectrum bought in the past auctions, as well as the long-standing issue of GST input tax credit locked up with the government, also figured during the discussions on Monday.

The telecom sector has been battered by falling tariffs, eroding profitability, and mounting debt, in the face of stiff competition triggered by disruptive offerings of Reliance Jio, owned by Mukesh Ambani.

The industry has been seeking urgent relief measures for the troubled sector, entailing cut in levies like licence fee and spectrum charges, and release of GST input tax credit locked up with the government.

Billionaire Kumar Mangalam Birla, head of Vodafone Idea, had sent an SOS to the government earlier also for deferring statutory payments in a sector that was not generating enough cash to even service loans. Vodafone Idea has been seeking two-year moratorium on its annual spectrum payment citing debt and stress on balance sheet.

Vodafone and Idea participated in five spectrum auctions in 2010, 2012, 2014, 2015 and 2016 before merging their businesses in August 2018. In the auctions, Vodafone acquired spectrum worth Rs 79,343 crore: the highest in terms of value compared to bids made by other operators. Idea purchased spectrum worth Rs 63,597 crore in the auctions.

Industry observers note that Vodafone Idea has also lost substantial ground in the market over the past one year. The merger of the India unit of Vodafone Group and Idea Cellular was completed on August 31, 2018, and shares of Vodafone Idea that hovered at almost Rs 31 apiece on September 3, 2018, are now down at Rs 6.16 apiece (On Monday it ended 9.03 per cent higher than Friday's close).

Vodafone Idea's consolidated losses for the June 2019 quarter stood at Rs 4,873.9 crore.

Adding to its woes, the telecom department's apex decision-making body, Digital Communications Commission recently approved imposing a cumulative penalty of Rs 3,050 crore on Bharti Airtel and Vodafone Idea for not providing sufficient points of interconnection to Reliance Jio at the time of launch of services in 2016.

The penalty on Airtel and Vodafone worked out to be about Rs 1,050 crore each. In the case of Idea, it comes to about Rs 950 crore.

Amid intense competition in the telecom sector eroding market share and subscriber base of the company, Vodafone Idea, in August this year, announced that its CEO Balesh Sharma has stepped down due to "personal reasons". The company had accepted Sharma's resignation and replaced him with the representative of Vodafone Group, Ravinder Takkar.

Rolls-Royce selects 3 start-ups for Start-up Accelerator Programme in India

R2 Data Labs, the data innovation of Rolls-Royce, has identified three start-ups for its first-ever Start-up Accelerator Programme.

The start-ups, ClearQuote (Xenon Automotive), PiChain Innovations and Imaginate Technologies, will be given an equity-free grant of £10,000 each and put through a six-month co-innovation programme that will include mentoring and technical support from Rolls-Royce.

A jury of Rolls-Royce and ecosystem mentors selected the three winners from 15 shortlisted finalists.

"The India Start-up Accelerator Programme is a reinforcement of our faith in the potential of Indian start-up minds in creating innovative solutions fundamental to the digital future of the industrial technology sector,” said Kishore Jayaraman, President, Rolls-Royce India & South Asia.

Under the programme, Rolls-Royce will mentor the selected start-ups and offer them an opportunity to connect, collaborate and commercialise their projects.

The programme will be kick-started with the allotment of £10,000 of an equity-free grant to each of the start-ups, along with the prospect of strengthening their products and building a business strategy.

The start-ups will work closely with the Rolls-Royce team and also get an opportunity to collaborate with industry experts as they work through the development of a proof of concept. The initiative is in line with Rolls-Royce’s commitment to collaborative innovation and building an ecosystem of partners that harnesses the latest thinking and technologies from a wide community of innovators.

Cognizant confident of growth, will hire more in India: CEO Brian Humphries

US-based Cognizant is confident of gaining the "bellwether" status in the IT sector as it bolsters its workforce across markets, including India, to meet the demands of clients that are investing increasingly on digital transformation, its chief executive has said.

Playing down any concerns around slowdown in demand, Cognizant CEO Brian Humphries told PTI that companies across sectors are increasingly looking at IT services not as a choice but as a fuel for growing their overall business.

"It's important to recognise that services companies like ours, sometimes regardless of the market environment, are addressing the needs of customers that increasingly view IT as the business and not as a choice or cost centre," he added.

Humphries, who took over the reins of the company earlier this year, said he has spent the past few months in marathon meetings with clients and employees.

"In the last few years, it has been said that we haven't reached our full potential, certainly relative to the heady heights of Cognizant's historical levels," he said.

He, however, added that it was his firm belief that Cognizant -- which has about 2 lakh employees in India -- is a "fundamentally healthy company" that has all the ingredients to reach its potential again.

"...and that's what I and my leadership team have been focused on... trying to unlock the potential for Cognizant to once again be the bellwether of the industry. I think we've got a great strategy, we've got great talent, and now it's time for execution," he emphasised.

Cognizant's revenue grew 3.4 per cent to $4.14 billion in the second quarter of 2019. For the July-September quarter, it expects revenue growth to be at 3.8-4.8 per cent in constant currency, while for the full year, the topline is forecast to grow by 3.9-4.9 per cent.

Asked if Cognizant was looking at job cuts and slower hiring, Humphries emphasised that there will be net addition in headcount.

"...there will be job creation in Cognizant in the years to come in India and internationally. The real story of Cognizant is a growth story. Our goal is to get back to basics and to accelerate revenue growth...we will take in more freshers each year. In fact this year, we have more than 30 per cent increase, versus the prior year," he noted.

Humphries said the the company is also partnering leading universities in India to train the workforce on new-age technologies like artificial intelligence, machine learning, Internet of Things and cybersecurity.

"In an organisation of 288,000, there will always be some reskilling, some re-balancing. But ultimately, I expect to have a net increase in headcount," he said.

On the opportunity in India, Humphries said the market should continue to grow rapidly for the company.

"...we're exploring how we can accelerate our investments in India and our commercial success in India. Our business here's a few hundred million dollars in size per annum... there's an opportunity for us to accelerate our business here in India... India sits within what's called our global growth markets, and that business should certainly hope to grow 20-plus per cent on a year over year basis," he said.

Anil Ambani's RCap to exit lending business, stay focused on insurance

The annual general meetings (AGMs) of Anil Ambani group companies on Monday saw some shareholders raising concern on the significant fall in stock prices. The coming together of various factors, said Group Chairman Anil Ambani, had caused “collateral damage”.

Ambani said group companies have had to face challenges over the past six months due to a “combination of factors, whether it was the crisis in the financial services sector, irrational action by auditors and rating agencies or the now-recognised temporary slowdown” of the economy. “These events, aided and abated by reckless selling and rumour mongering by vested parties, (have) affected the general public psychology, especially shareowners like you,” he stated.

A shareholder in Reliance Power (RPower) questioned the company's board of directors on the fall in promoter shareholding, ‘default’ ratings and significant erosion in share price. At the end of Monday’s trade, the stock closed eight per cent lower at Rs 2.2. “We could even look at a class-action suit, if the affairs are not brought back to order,” he said. In the year-to-date, RPower’s stock is down 91.7 per cent.

RCap to exit lending

The AGM line-up began with Reliance Capital (RCap), where Ambani told shareholders the group’s financial services arm would no longer be in the lending business. Instead, it would focus on the life and general insurance businesses for creating value over the long term. “Reliance Commercial Finance (RCF) and Reliance Home Finance (RHF) are working closely with lenders to finalise the (loan dues) resolution plan, expected to be completed by December,” said Anil Ambani. RCap will only be a financial shareholder in both these companies. The move will effectively reduce debt by Rs 25,000 crore, Ambani said.

Ravindra Sudhalkar, RHF’s chief executive (CEO), said the company was looking to enter the resolution process under an inter-creditor agreement (ICA); it expected more of the lenders to sign it.

Auditor notes on RHF

The firm also disclosed some of the opinions of newly-appointed auditors Dhiraj & Dheeraj and the directors’ responses on these. While stating there were no violations under Section 143 (12) of the Companies Act (on reporting of fraud), the auditors had some opinions on the group exposure, “We draw attention to… the loan advanced under the ‘General-Purpose Corporate Loan’ product with significant deviations to certain bodies corporate, including group companies, and the outstanding amount as at March 31 aggregating Rs 7,849.9 crore, secured by charge on current assets of borrowers.” Also: “The majority of the company’s borrowers have undertaken onward lending transactions and end-use of the borrowings from the company, included borrowings by or for repayment of financial obligation to some of the group companies.”

To this, the directors’ response was: “All lending transactions by the company are in the ordinary course of business, the terms of which are at arms’ length basis, and these do not constitute transactions with related parties.”

They also said the company was in the process of increasing the housing loan portfolio, after the auditors raised concern on RHF continuing as a housing finance company due to “material shift in primary business of the company from housing finance to non-housing finance, which comprise more than 50 per cent of total loan portfolio”.

Power shift

Ambani said RPower’s foray in Bangladesh was likely to significantly help the company in its debt reduction plan. “RPower’s focus now is on the development of Phase-II of (the) 1,500 Mw (project) in Bangladesh, in line with the memorandum of understanding signed for development of 3,000 Mw in gas-based projects. With these developments, RPower will be able to completely retire the US EXIM debt of Rs 2,400 crore.”

These assets in Samalkot, Andhra Pradesh, were stranded due to lack of availability of gas. RPower is also undertaking capital expenditure of Rs 4,000 crore to install flue-gas desulfurisation in its coal-based plants.

Bid wins in Infra

On Reliance Infrastructure (RInfra), Ambani said over recent years, the company had transformed from one with more than 15 different businesses to focusing on a few, such as power distribution, transportation (highways, metro rail and airports), engineering and construction (E&C), and the defence sector. He informed shareholders about RInfra winning the bid for the Rs 7,000 crore Versova-Bandra Sea Link Project in Mumbai, awarded by Maharashtra State Road Development Corporation (MDRDC). The project would be under the build, operate and transfer (BOT) mode, protecting it from any traffic or toll-collection risk. He said he expected the project’s zero date (from which implementation begins) to be announced shortly, after the Maharashtra state elections.

Defence

Ambani said the company saw huge opportunity in the defence segment, with 98 per cent of India’s requirement here being met through import. “India’s defence budget is overRs 3.18 trillion, of which Rs 1.1 trillion is capital outlay for purchase of new weapons, platforms and military hardware,” he said.

Debt

On progress in reducing debt, Ambani said the group had repaid Rs 35,000 crore in the 14 months till May 2019, and wouldl be paying another Rs 15,000 crore by March 2020. Further, the group has over Rs 60,000 crore in receivables stuck in regulatory and arbitration matters, pending for five to 10 years.

UP sugar mills demand abolition of molasses quota for distilleries

Ahead of the next sugarcane crushing season in Uttar Pradesh, with their factories holding nearly 13 million tonnes (MT) of molasses inventory, private millers have urged the Uttar Pradesh government to abolish the system of reserving molasses for state distilleries producing county liquor.

In a letter to the state government, the millers have strongly opposed reservation of molasses, claiming it is a vital byproduct and the revenue generated by it contributes towards sugarcane payments to farmers.

Molasses is a cane byproduct generated during sugar production. Its recovery is pegged at about 4.75 per cent of crushed cane. Molasses is processed to make ethyl alcohol, which is not for human consumption, and methyl alcohol, which is used for making liquor by distilleries and has medicinal uses too.

Earlier this month, the Yogi Adityanath government had hiked the molasses quota from 12.5 per to 16 per cent for country liquor, in the backdrop of shortfall in production of the byproduct from an estimated 5.5 MT to around 4.8 MT during 2018-19.

In his letter, UP Sugar Mills Association (UPSMA) secretary general Deepak Guptara noted that due to the reservation and restriction on molasses, the market prices get suppressed, affecting optimum realisation for mills. He said the projection of ample production of molasses in UP, going forward, negated any possibility of shortage.

Pointing out that realisation from free sale of molasses in the market was considered while fixing the state cane price, he suggested that the policy of reservation was unjustified even as he also referred to an Allahabad High Court order, which had ruled the state was not vested with power to reserve molasses.

While, total production of molasses in UP, the country’s top sugar producer, staood at about 48 MT in the 2018-19 season, together with the molasses’ opening balance of 9.4 MT, the total availability of the byproduct totalled almost 57 MT. Of this stock, molasses availability for country liquor was more than 7.8 MT, while till July 31, 2019, nearly 2.9 MT reserved for country liquor stood un-lifted.

Guptara lamented that during 2018-19, molasses was sold by mills at an average price of Rs 40 per quintal (100 kg) to distilleries, which subsequently increased to Rs 75 per quintal after recent hike in prices, even as the free molasses sales price in the market was ruling around Rs 550 per quintal.

“This translates into Rs 350 crore subsidy provided by the sugar industry and farmers to country liquor manufacturers. Till July 31, 2019, around 2.9 MT of molasses is lying un-lifted with sugar mills from the reserved category,” the letter stated.

He underscored that the state will have high cane crushing for 2019-20, while there was already unsold stock of 13.3 MT in UP.

The private millers also taken recourse to the Centre's ethanol blended programme (EBP), saying UP being the highest cane producer, there was greater expectation from the state for enhanced contribution to EBP.

Market Wrap, Sept 30: Sensex slips 155 pts; Indiabulls Hsg Fin tumbles 34%

Equity benchmark indices ended Monday's session in the negative territory, owing to heavy selling in banking, pharma and realty counters. Further, lack of any catalysts and subdued global cues, too, restricted market participants from making fresh bets. The S&P BSE Sensex lost 155 points or 0.40 per cent to settle at 38,667, with YES Bank (down 15 per cent) being the biggest drag and Bharti Airtel (up 5 per cent) the top performer. HDFC, ICICI Bank and HDFC Bank contributed the most to the index's loss while Infosys and Reliance Industries (RIL) gave the much-needed support.

In the broader market, both small and mid-cap indices underperformed the frontline indices. The S&P BSE MidCap index ended at 14,104.13, down 162 points or 1.13 per cent while the S&P BSE SmallCap lost 161 points or 1.21 per cent to end at 13,171.

On the NSE, the Nifty50 index closed at 11,477.25 levels, down 35 points or 0.31 per cent.

Among the sectoral indices, Nifty Bank lost nearly 800 points or 2.59 per cent to end at 29,103.85. Nifty PSU Bank index hit 52-week low in the intra-day session. The index closed at 2,293.85 levels, down 82.50 points or 3.47 per cent. Pharma stocks, too, bled in the session with the Nifty Pharma index ending at 7,549.20, down 146 points or 1.90 per cent.

IT stocks, on the other hand, logged impressive gains with the Nifty IT index surging around 2 per cent to settle at 15,527.55 levels. The Nifty FMCG index also ended in the green.

Top stocks that made news today -

Shares of Indiabulls Group companies were under pressure for the second consecutive trading day, after the Delhi High Court agreed to hear public interest litigation (PIL) seeking special investigation team (SIT) probe into Indiabulls Housing Finance. The stock saw its sharpest intra-day fall since listing, plunging 38 per cent to Rs 240, also its 52-week low on the BSE. At close, shares of the company stood at Rs 255.50, down 34 per cent.

Lakshmi Vilas Bank hit lower circuit limit of 5 per cent to end at Rs 34.75 after RBI put the bank under Prompt Corrective action (PCA).

YES Bank tumbled 15 per cent to settle at Rs 41.45 apiece.

In another news, Reliance Capital Ltd will exit the lending business, group Chairman Anil Ambani said on Monday, sending its shares to over two-decade low.

In the primary market, the IPO of IRCTC got off to a solid start as the issue got subscribed 73 per cent till 04:15 pm.

DGCA suspends licenses of two SpiceJet pilots over technical lapses

Aviation regulator DGCA has suspended the flying licences of two SpiceJet pilots for four months for lapses that led to pressurisation failure onboard a Hyderabad-Jaipur flight in June, according to a senior official.

The lapses of the crew jeopardised the safety of aircraft and its occupants, as per the watchdog.

A SpiceJet Boeing 737-800 plan made an air turn back due to pressurisation failure on June 14 this year.

The official noted that the crew forgot to put the "bleed switch to 'ON' position during cockpit preparation, departure briefiing and after takeoff checklist which resulted into pressurisation failure during climb".

Generally, bleed air switch is used to maintain cabin pressure.

Captain Sunil Mehta, who was commanding the plane, and Captain Vikram Singh have been suspended for four months from the date of the incident, the official added.

The DGCA found that at the time of finalising "'after takeoff checklist', Singh called out bleeds 'ON', however, bleeds were still in 'OFF' position which resulted in pressurisation failure during climb", as per an order dated September 27.

There was no immediate comment from SpiceJet.

Current slowdown an opportunity to grow our books: HDFC Bank MD Puri

HDFC Bank on Monday asserted there is no stress on its credit portfolio because of the slowdown and it sees the current phase as an opportunity to grow its book.

Its managing director and chief executive Aditya Puri also informed that a search panel of the board announced earlier will be formed by January, to ensure the chosen successor to lead the bank can work with him for 1-2 months.

The bank had reported a 1.40 per cent gross non- performing assets ratio in June quarter. Growth slipping to six-year low primarily on a slip in consumption has raised concerns on the way forward for banking.

"We will grow, our assets will grow, our liabilities will grow, our swipes will grow, our number of customers will grow and we are very confident," Puri told reporters here, replying to questions around the economic slowdown.

He said that there have not been retrenchments in the industry which should make a lender wary and employment is growing overall, and added that auto majors may have retrenched some temporary workers.

Listing out positives which will work in the economy's favour like the good monsoon, expectations of more divestments and the sentiment turning positive with the tax cuts, he said the bank sees this as a "major opportunity" to grow.

"We see this as a major opportunity as a bank and we see no strain on our credit portfolio," he said, adding it has not compromised on its credit standards and is not lending to over-leveraged persons.

Puri said the bank is looking at semi-urban and rural areas as a major opportunity to grow from here on and underlined that one will be amazed to see the kind of inherent demand that exists.

When asked about his successors, amid a media report saying that the RBI is unlikely to relent on the 70 years retirement age for bank CXOs, Puri said a search panel of the board will be formed by January.

The panel will hire a search agency and a successor will be chosen in such a way that he or she gets to spend at least one or two months with him, Puri, who turns 70 in October next year, said.

The bank is not looking at any acquisition at present and may only look at it in the future if something gets available at the right price, Puri said.

The veteran banker said there is a need for better corporate governance at the co-operative banks, in comments that comes in the wake of issues at PMC Bank, among the largest such lenders.

HDFC Bank regularly has dealings with cooperative banks but did not have any dealing with PMC Bank, he said.

Seeking to assuage concerns, Puri said there is no scope to have system-wide concerns on banking at present.

Sundaram-Clayton declares October 1 as non-working day for major plants

Sundaram-Clayton Limited (SCL), the holding company of two-wheeler and three-wheeler maker TVS Motor, has declared non-working day in its major plants on October 1, 2019, due to business slowdown across sectors.

The company has manufacturing plants in Padi and Mahindra World City in Chennai, Oragadam near Chennai and the industrial hub of Hosur, apart from a facility in Ridgeville, South Carolina (United States).

The announcement comes in the backdrop of the slowdown affecting production at the factories of various Original Equipment Manufacturers (OEMs) and auto component makers. Several firms have declared no-production day in their plants the past few months in order to align their operations with slow market demand.

In August, the company announced that its major plants will work only five days in certain weeks of the month.

Part of the $8.5 billion TVS Group Company, SCL is a leading manufacturer and supplier of aluminium die-cast products to domestic and global automotive OEMs.

Delhi HC refuses bail to Chidambaram, says he may influence witnesses

The Delhi High Court Monday refused to grant bail to former finance minister P Chidambaram in the INX Media corruption case.

Justice Suresh Kait denied bail to the Congress leader, saying there is no chance of tampering with evidence but there is a possibility that Chidambaram can influence witnesses.

Chidambaram, who is in custody since his arrest by the CBI on August 21, did not approach the trial court and had directly filed the regular bail plea in the high court.

He was arrested from his Jor Bagh residence in the national capital and is in Tihar Jail under judicial custody till October 3.

The CBI had registered an FIR on May 15, 2017, alleging irregularities in the FIPB clearance granted to the INX Media group for receiving overseas funds of Rs 305 crore in 2007 during Chidambaram's tenure as the finance minister.

Thereafter, the ED lodged a money laundering case in this regard in 2017.

Amazon Great Indian sale: OnePlus 7T sale, iPhone XR at Rs 44,999, and more

E-commerce platform Amazon India is currently hosting a six-day festive season sale, offering discounts, deals, exchange offers, bank offers, zero-interest equated monthly instalment schemes, and more on several products, including smartphones. Named Amazon India Festival sale, it began on September 29 and is open until October 4. The annual festival sale also gets new smartphones available exclusively during the sale. Take a look at some of the most sought-after mobiles currently on sale on Amazon India:

OnePlus 7T

OnePlus 7TChinese smartphone manufacturer OnePlus recently launched the OnePlus 7T in India. The Amazon-exclusive smartphone goes on sale on the e-commerce platform with several offers. The phone comes with 8GB RAM and two storage variants – 128GB and 256GB – priced at Rs 37,999 and Rs 39,999, respectively. Both variants are available on sale with 10 per cent instant discount (up to Rs 2,000) on SBI credit cards, debit cards (excluding RuPay/Maestro) and credit card EMI transactions. Amazon is also offering exchange discount and zero-interest EMI on the phone.

Apple iPhone XR (64GB)

Apple, iPhone XRThe most affordable iPhone in the iPhone X-series, which was launched in India last year, has become cheaper in the sale. The phone is available at a discounted price of Rs 44,999, which is 10 per cent lower than its current retail price of Rs 49,990. Amazon is also offering 10 per cent instant discount (up to Rs 2,000) on SBI credit cards, debit cards (excluding RuPay/Maestro) and credit card EMI transactions. Additionally, the phone gets free one-year screen replacement offer through Amazon partner Acko.

Samsung Galaxy M30s (4GB/64GB)

Samsung Galaxy M30sThe Galaxy M30s is a new budget offering from the stable of South Korean electronics major Samsung. The phone boasts 6,000 mAh battery, a first in its segment. It also has a triple camera set-up on the back, featuring a 48-megapixel primary sensor mated with an ultra-wide sensor and a depth sensor. In the sale, the phone is available at a discounted price of Rs 13,999, which is 10 per cent lower than its prevailing retail price of Rs 15,500. Amazon is offering 10 per cent instant discount (up to Rs 2,000) on SBI credit cards, debit cards (excluding RuPay/Maestro) and credit card EMI transactions. Additionally, the phone gets free one-year screen replacement offer through Amazon partner Acko.

Honor 20i (4GB/128GB)

Honor 20iLaunched earlier this year, the Honor 20i is a capable smartphone with triple camera sensors on the back, Kirin 710 system-on-chip, Android Pie operating system and teardrop notch-shaped fullHD screen. The phone is available at a discounted price of Rs 11,999, or 29 per cent less than its prevailing retail price of Rs 16,999. Amazon is offering 10 per cent instant discount (up to Rs 2,000) on SBI credit cards, debit cards (excluding RuPay/Maestro) and credit card EMI transactions. Additionally, the phone gets free one-year screen replacement offer through Amazon partner Acko.

Realme U1 (3GB/32GB)

Realme U1The budget smartphone from the stable of Chinese smartphone manufacturer Realme gets a 38 per cent discount on its prevailing retail cost of Rs 12,999, and it is available at Rs 7,999. The phone is also eligible for 10 per cent instant discount (up to Rs 2,000) on SBI credit cards, debit cards (excluding RuPay/Maestro) and credit card EMI transactions. Additionally, the phone gets free one-year screen replacement offer through Amazon partner Acko.

YES Bank continues to bleed, slips 15% to hit a 10-year low

Shares of YES Bank continued to reel under pressure and was trading lower for the fourth straight day in the intra-day deals on Monday, hitting a 10-year low of Rs 41.50, down 15 per cent on the BSE. The stock of private sector lender was trading at its lowest level since October 9, 2009.

In the past four days, the share price of YES Bank tanked 26 per cent after YES Capital, one of the promoter entities of the private lender, sold nearly 2 per cent stake in the bank. In comparison, the S&P BSE Sensex was down 1 per cent during the same period.

YES Bank said with the share sales, total promoter/promoter group ownership in YES Bank has been reduced to 13.4 per cent in full compliance with Reserve Bank of India (RBI’s) regulatory levels of 15.0 per cent.

In a separate regulatory filing on Monday, YES Bank said, the bank has received acknowledgment from the Reserve Bank of India (RBI) to go ahead with the proposed increase in its authorised share capital.

Last week, the bank said it has received strong interest from multiple foreign as well as domestic private equity and strategic investors for this capital raise and remains firmly on course to raising growth capital subject to the necessary approvals.

Analysts at JP Morgan believe earnings normalisation for the YES Bank will start only in FY21 and that growth will take a hit until the equity-raising issue is resolved.

With persistent deterioration in asset quality which is above the previous assessment by a considerable proportion, analysts at JM Financial see profitability improvement as a long drawn and difficult process. In addition, increasing concerns in certain sectors (real estate, renewables) point to future risks, the brokerage firm said in a company update.

Thus far in financial year 2019-20 (FY20), the share price of YES Bank has plunged 85 per cent, against a per cent fall in the Sensex. Investors have seen market wealth erosion of Rs 52,850 crore thus far in the fiscal.

A sharp decline in the market value of YES Bank has seen the bank falling to 198th position in the overall market capitalisation ranking. As on March 29, 2019, the bank was stood at 45th position in m-cap ranking.

Innovation, team work and technology to fuel India's $5 trn dream: PM Modi

Asserting that innovation, team work and technology are the three drivers of the mission to make India a $5 trillion economy, Prime Minister Narendra Modi said the three factors have become the bedrock of India’s big leap.

In his speech at IIT Madras convocation, Modi said, "India’s innovation is a great blend of economics and utility. We have worked to create a robust ecosystem for innovation, and for incubation for research and development in our country."

He added India’s great stride in start-ups has been powered by people from Tier-2, Tier-3 cities and even rural areas.

The Prime Minister said that while the country is moving forward to discard the use of single-use plastics, an environmentally-friendly replacement that offers similar use but not similar disadvantages has to be found. And this is when the country looks towards young innovators.

"Think of how your work, innovations and your research could help a fellow Indian. Not only is this your social responsibility, it also makes immense business sense," Modi said, adding that education and learning are continuous processes.

"The foundations of the 21st century rest on three crucial pillars of innovation, teamwork and technology. Each of these complement each other," Prime Minister said, adding that Indian community has made a mark for itself all over the world -- especially in science, technology and innovation, which are powered by IITians.

PMC Bank doesn't pose a systemic threat but it is a canary in the coal mine

Just when you think banks in India can’t possibly deliver any more bad news, a near $1 billion scandal drops without warning.The alleged wrongdoing at Punjab & Maharashtra Co-operative Bank differs from previous Indian banking scams in that savers are on the hook this time around, a situation that can’t be allowed to continue without chilling consequences for an already-stressed financial system.

The problem at PMC Bank only became apparent when the Reserve Bank of India last week banned depositors from taking out more than Rs 1,000 for six months without offering any explanation. That was a mistake.

Tiny and unlisted as it is, PMC is a popular option for small savers in the state of Maharashtra, whose capital Mumbai is the nation’s financial hub. With public and media pressure building, the RBI relaxed the withdrawal limit to Rs 10,000. In doing so, the regulator also gave a reason for the withdrawal curbs. These “were necessitated on account of major financial irregularities, failure of internal control and systems of the bank and wrong/under-reporting of its exposure,” it said.

Even so, the extent of irregularities came as a shock on Sunday evening, when Press Trust of India reported that as much as 73 per cent of PMC’s Rs 8,800 crore loan book – or almost $920 million – was tied to just one borrower group: Housing Development and Infrastructure Ltd., a Mumbai-based shantytown developer that’s facing bankruptcy proceedings. The news agency cited a letter written by the bank’s now-suspended managing director to the RBI. The executive had told BloombergQuint on Friday that about a third of the bank's loans were given to HDIL.

Whether two-thirds or one-third, the size of the reported advance is far in excess of the bank’s capital. This goes beyond a failure of oversight, and would require top-level complicity. PMC’s annual report shows it to be a profitable lender with a capital adequacy ratio higher than the 12 per cent minimum requirement and a bad-loan ratio of under 4 per cent – almost respectable by the current standards of India’s banking industry. If the news reports are correct, the solidity portrayed by that document is a fiction.

How did PMC’s board, its auditors and the central bank remain clueless for so long? So far nobody has been charged; the entire burden has been placed at the door of depositors, who are innocent victims.

When state-run Punjab National Bank was scammed out of almost $2 billion, it emerged that the lender was incurring liabilities on behalf of an uncle-nephew jeweler duo. It was doing so by sending instructions to overseas branches of other Indian banks over Swift, the global system used by banks to transmit payments. But the liabilities weren’t getting captured in PNB’s internal accounts. By contrast, the PMC saga points to the possibility that the very core of the bank’s operations was rotten.

Ultimately, the RBI will find a way to merge or liquidate PMC and make the depositors whole. But a resolution has to come swiftly. In the case of Madhavpura Mercantile Co-operative Bank, which collapsed in 2001 because of its exposure to a troubled stockbroker, some higher-value depositors were getting their money back as late as last year.

Given the extent of current nervousness in the financial system, it would be a bad idea to let this problem linger for even six months. And while they’re shoring up confidence, authorities also need to raise the Rs 100,000 limit on deposit insurance. The PMC debacle could affect the ability of midsize lender Yes Bank Ltd. to raise or retain deposits, IDFC Securities said in a September 29 note. Yes, too, has concentrated exposure to junk-grade firms, including a property financier. The bank’s shares fell as much as 15 per cent in Monday trading.

The real-estate market in India is a mess. Property developers are leveraged to the hilt, and unable to complete and deliver apartments. Their troubles have, in turn, damaged shadow banks, which are finding it hard to refinance their loans to builders. With the PMC scandal, even deposit-taking institutions run the risk of getting sucked into a vortex of mistrust. The more reliable banks may see a rush of deposits away from second-tier lenders with Rs 9 trillion in deposits. This dislocation in liquidity could open up yet more fault lines at banks perceived to be weaker. PMC Bank is too tiny to pose a systemic threat, but a small, dead canary in a coalmine is still a large warning sign.

Xi bows to Mao as China prepares to celebrate 70 years of Communist rule

Chinese President Xi Jinping paid his respects to Chairman Mao Zedong's embalmed body Monday in a rare gesture ahead of China's celebration of 70 years of Communist rule.

Xi and other top Chinese officials visited Mao's mausoleum -- located in the heart of Beijing in Tiananmen Square -- and bowed three times to the late leader's statue, reported official news agency Xinhua.

He also paid respects to the remains of Mao, whose embalmed body is kept in a glass display at the memorial hall.

The last time a Chinese leader bowed to the statue of the "Great Helmsman" was six years ago, when Xi commemorated Mao's 120th birthday.

The move to honour the founder of the People's Republic of China comes as the country readies itself for a day of tightly-choreographed festivities, including a massive military parade and the release of 70,000 doves.

The anniversary is meant to showcase China's extraordinary rise from the ravages of war and famine to a modern, powerful nation state whose economic and military muscle is viewed by many with increasing concern. But the celebration comes in a very bad year for the Chinese president.

The US-China trade spat threatens to pummel the global economy, while African swine fever has sent the price of pork -- the country's staple -- soaring.

Months of unrest and pro-democracy protests in semi-autonomous Hong Kong also threaten to upstage Tuesday's celebrations, with fierce clashes between protesters and riot police erupting on Sunday.

Democracy activists in the financial hub have vowed to ramp up their nearly four-month-long campaign ahead of the National Day, which Hong Kong protesters have dubbed a "Day of Grief".

On Monday morning, Xi and other leaders of the Communist Party of China also attended a wreath-laying ceremony to honour national heroes on Tiananmen Square.

A choir of children in crisp white shirts and red scarves sang before Xi approached the Monument to the People's Heroes -- a tall obelisk in the middle of the square -- where baskets of flowers decorated with red banners were placed.

"A promising nation must have heroes, and a country with future prospects must have pioneers," said state-run CCTV in a broadcast of the ceremony, quoting Xi.

FPIs withdraw $3 billion between July-September; highest in 11 quarters

Overseas investors have pulled out over Rs 20,000 crore ($3 billion) from Indian equities during the third quarter of the calendar year 2019 (Q3CY19), the steepest quarterly outflow since the October –December 2016 quarter, when they had pulled out Rs 31,222 crore ($4.6 billion) from the equity market.

Foreign portfolio investors (FPIs) have sold equity shares net amounting of Rs 21,592 crore ($3.09 billion) between July and September 26, according to the latest available depository data. However, the volume of outflow slowed down after the government announced a reduction in corporation tax rate. This is in contrast as compared to first two quarters of CY19, when they had made net inflow of Rs 79,080 crore ($11.3 billion) amid expectation of the Narendra Modi-led government coming to power for a consecutive second term.

“Post the Budget on July 5, FPI outflows had accelerated given the slowing growth environment and weak corporate earnings. Going ahead, Indian equities could see further upside, especially if the Reserve Bank of India (RBI) cuts interest rates in October and takes a dovish stance,” wrote Jitendra Gohil, head of India equity research at Credit Suisse Wealth Management in a co-authored note with Premal Kamdar, their equity research analyst.

Despite the 3 per cent gain in September 2019, the FPI sell-off during the quarter has seen the benchmark indices – the S&P BSE Sensex (down 2 per cent) and the Nifty 50 (down around 3 per cent) – register negative returns in Q3CY19.

While most brokerages remain bullish on the road ahead for Indian equities from a medium-to-long term perspective and have recalibrated their six-and 12-month target levels for the frontline indices given the cut in corporation tax rate and the other stimulus measures announced to prop-up the economy, they do not see the FPIs coming back to India in a hurry.

India Ratings and Research (Ind-Ra), for instance, expects headwinds for FPI flows into India to continue over the near-to-medium term, despite the accommodative global monetary policy stance and the central government’s efforts to alleviate uncertainty regarding the higher surcharge.

“A gamut of factors, such as slower-than-expected demand growth in major economies, geopolitical and trade tensions and a gradual weakening of the economic growth prospects in India, have contributed to a build-up of risk aversion, which has impeded the demand for emerging market (EM) debt instruments,” they said in a recent report.

U R Bhat, managing director at Dalton Capital echoes a similar view and cautions that the flows may not pick up dramatically over the next six months.

“There are too many moving parts to the ‘invest in India’ theme. Foreign investors first need to be interested in emerging markets (EMs) and only then can they look at India. EMs are a risky bet given the host of factors such as trade wars, geopolitics etc. That said, domestic institutions have built up enough muscle to prevent a sharp market fall in the absence of foreign flows, which can help indices sustain at higher levels,” he says.

And the data does prove him correct. Domestic mutual funds’ net inflow in equities during the quarter crossed the Rs 40,000 crore mark for the first time since September 2017 quarter. They were net buyers of Rs 42,306 crore till September 26, shows the latest available data.

Quarter ended Net flow in Rs crore

Mututal Funds FPIs

Dec,2016 32,083 -31,222

March,2017 11,469 44,220

June,2017 29,708 11,688

Sep,2017 47,198 -19,379

Dec,2017 30,404 16,355

March,2018 34,460 13,607

June,2018 34,355 -18,447

Sep,2018 19,652 -10,222

Dec,2018 32,207 -19,100

March,2019 1,938 47,940

June,2019 6,794 31,140

Sep,2019* 42,306 -21,592

Samsung Galaxy Fold coming to India on October 1: Specs, features, and more

South Korean electronics manufacturer Samsung is gearing up to launch the Galaxy Fold in India on October 1. The information came from the company’s official Twitter channel, where the company published a teaser video showcasing the Galaxy Fold, with the following message: “We changed the shape of the phone, and the shape of tomorrow. Future unfolds on October 1, 2019”.

Announced earlier this year, the Galaxy Fold is a new category of smartphones with foldable screens. The phone has two displays — a 7.3-inch dynamic AMOLED foldable display that bends inwards and a conventional 4.6-inch secondary super AMOLED display on the back that becomes primary display when the device is folded. The phone’s primary display supports HDR10+ and has 1536 x 2152 resolution. The secondary display has an HD+ resolution (1680 x 720), stretched in a 21:9 aspect ratio.

The device supports the app continuity feature, which allows easy transition between both displays. For example, you can open an app on a secondary display and continue using it on the primary after you unfold the device. The primary screen also supports three-window multitasking, allowing you to utilise a bigger screen estate to open three different supported apps.

Samsung India

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We changed the shape of the phone, and the shape of tomorrow. Future unfolds on October 1, 2019. #GalaxyFold: http://bit.ly/2mjFGPv 

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The device has a total of six cameras; two above the primary display, three on the back and one above the secondary display. The dual camera set-up above the primary display sports a 10-megapixel sensor paired with an 8MP depth sensor. The triple-camera set-up on the back has a 12MP primary wide-angle sensor, 16MP ultra-wide sensor and a 12MP telephoto lens. The one above the secondary display is a selfie camera of 10MP resolution.

Powered by Qualcomm Snapdragon 855 system-on-chip, the phone comes with up to 12GB RAM and 512GB internal storage. It has dual batteries with a total capacity of 4,380 mAh. The phone supports 15W fast charging and two-way wireless charging, too.

I only said no single-use plastic, not plastic-free India, clarifies PM

Prime Minister Narendra Modi today clarified that he was only talking about doing away with single-use plastic, not about making the country plastic-free completely.

AFter landing at Chennai International Airport, the PM said, "This is my first visit to Chennai after being re-elected to office this year. I am grateful for the welcome that I have received today. When I visited the United States of America where I addressed the people there, I learned that Tamil is a rich and diverse language."

"Some people are misinterpreting that I wanted India to be rid of plastic. I did not say so. What I said was that I want the country to rid itself of single-use plastic. This plastic can be used only once and creates a lot of problems later," Modi asserted, adding that it was the responsibility of citizens to shun the single-use variety in the country.

"We have achieved many successes through public participation and in the same way we should rid the country of the single-use plastic," Modi said, adding that India should develop a cost-efficient solution that would not only to address problems in India, but also across the globe.

Speaking later at the prize-distribution ceremony of Singapore-India Hackathon and the walkthrough of the exhibition at IIT-Madras research park start-ups, the Prime Minister said India's cost efficient solution should be for the poor and the deprived across the world.

He stated that programmes like Atal Innovation Mission, PM Research Fellowships, Start-up India Abhiyan are the foundation of 21st-century India, an India that promotes a culture of innovation.

"We in India have been doing the Smart India Hackathon for the past few years. This initiative brings together government departments, people associated with industry, and premier institutes such as Isro," the Prime Minister said, adding that the country had moved from competition to collaboration.

"This is the strength that we need, to work jointly on the challenges that both our countries face. I have also been told that last year, the focus of the hackathon was competition. This year, the emphasis is on collaboration and complementing each other’s efforts," the Prime Minister said.

There are few things as satisfying as seeing the effort that one is associated from the very beginning become vibrant and successful.

Modi will address the 56th annual convocation of the Indian Institute of Technology (IIT) Madras.

This is his first visit to Chennai after winning the 2019 elections, and one month before the scheduled informal meeting with the Chinese President at Mamallapuram, about 50 km from Chennai. Both leaders are expected to hold an informal summit at Mamallapuram between October 11 and 13. Next year marks 70th anniversary of the establishment of diplomatic ties between India and China.

Science, tech streams in higher education are losing students' preference

The higher education infrastructure in India is growing, and a new report throws light on achievements and areas of concern. There are about 140 million people in the 18-23 age group in the country as of 2018-19, but only 26 per cent of them actually take up education.

But, the number of universities in India are on the rise. From 760 in 2014-15, India is now close to having 1,000 universities . The United States, with a fourth of India’s population, has nearly 4,000. One aspect of quality of education, the student-teacher ratio improved in 2018-19, after falling for two years (. One teacher now takes care of 24 students, courtesy a reversal in the trend of a fall in the number of teachers . Nationwide, 1.42 million teachers teach 37.4 million students.

But, some data points raise an alarm. Science and technology streams in higher education seem to have lost students’ preference in recent years. While student enrolment in bachelor’s courses in engineering and technology was already falling for many years, enrolment in Bachelor of Science also dropped in 2018-19 .

Going ahead, at the level of a Master’s degree, the technology stream seems to be in bigger trouble. Students taking up MTech courses, where they specialise in a branch of technology, have halved in five years: From 290,000 in 2014-15 to about 140,000 in 2018-19. Many IITs are planning to raise tuition fees for the MTech course to curb drop outs.

Another area of concern is the skewed gender ratio at the top teaching positions in colleges and universities. Women have nearly caught up with men when it comes to being a lecturer, or assistant professor (70 per cent of teacher posts are these). But, at the level of associate professor and professor, men still occupy a disproportionate share 

PM Modi arrives in Chennai to address IIT Madras convocation ceremony

Prime Minister Narendra Modi on Monday arrived in Chennai to attend the 56th annual convocation of Indian Institute of Technology (IIT) Madras.

Upon his arrival at the airport, PM Modi was greeted by Tamil Nadu Governor Banwarilal Purohit along with other dignitaries.

A large number of supporters gathered at the airport to welcome the Prime Minister, who also took a brief halt to address the gathering. The crowd erupted in loud cheer after Modi greeted them in Tamil, before switching to Hindi and making a short speech.

"Vanakkam! I am delighted to get back to Chennai. This is my first visit here after 2019 Lok Sabha elections. I have come here for the IIT-Madras event but I feel so happy to be welcomed by a mammoth gathering here," said Modi while interacting with his supporters.

Prime Minister Modi also outlined his recent speech at the UNGA where he had invoked three-Millenium old Tamil poet and philosopher Kaniyan Poongundranar and called Tamil as the oldest language of the world.

"When I was staying in America, I spoke in the Tamil language once and told everyone that this is one of the ancient languages. Even today, the Tamil language echoes in entire America. During my visit to America, I realized that the entire world has a lot of expectation from India. So, it becomes our responsibility to work for the welfare of our country and this work won't be done just by the government sitting in Delhi but it will be made possible by the help of 130 crore citizens of this country," he added.

Stressing on the need to abandon single-use plastic, PM Modi stated that he had never spoken about India becoming 'plastic-free', however, the aim is to get rid of the single-use plastic.

"On the 150th birth anniversary of Mahatma Gandhi on October 2, we all will be launching a padayatra to make people aware of Gandhi Ji's principles and ideas.

PM Modi will later address the 56th annual convocation of Indian Institute of Technology (IIT) Madras here.

He will participate in the prize distribution ceremony of Singapore-India Hackathon and do a walkthrough of the exhibition on IIT-Madras research park start-ups here.

Rupee opens 14 paise higher at 70.42 against US dollar

The rupee climbed 14 paise to 70.42 against the US dollar in the opening deals on Monday. The domestic unit on Friday spurted by 32 paise to close at a nearly two-month high of 70.56 as crude oil prices receded following reports that Saudi Arabia had agreed on a temporary ceasefire in Yemen.

The local unit notched up gains of 38 paise on a weekly basis.

In the capital markets, after remaining net sellers for the past two months, foreign investors infused a net Rs 7,714 crore into the domestic capital markets in September following a slew of economic reforms by the government. However, FPI inflows into India will also be influenced by how the economy performs and how soon corporate earnings recover, VK Vijayakumar, chief investment strategist at Geojit Financial Services said. The US Fed's monetary stance and global liquidity are also crucial in determining FPI flows, he said.

On the global front, Asian stock markets, including China’s, were little changed on Monday, shrugging off news that the US administration is considering delisting Chinese companies from US stock exchanges. MSCI's broadest index of Asia-Pacific shares outside Japan was up 0.05 per cent while China's Shanghai stock index slipped 0.2 per cent, Reuters reported.

In commodities, oil prices edged higher, rebounding from a two-week low in the previous session, although gains were checked by concerns about the outlook for the global economy. Brent crude futures rose 21 cents, or 0.3 per cent, to $62.12 a barrel while US West Texas Intermediate (WTI) crude futures rose 14 cents, or 0.3 per cent to $56.05 a barrel.

Lakshmi Vilas Bank under pressure as RBI initiates PCA, IBHFL tanks 14%

Shares of Lakshmi Vilas Bank (LVB) and Indiabulls Housing Finance came under pressure in the early trade on Monday after the Reserve Bank of India (RBI) initiated prompt corrective action (PCA) plan on the former.

At 09:49 am, the stock of LVB was locked at the lower circuit limit of 5 per cent at Rs 34.75 apiece on the BSE while that of Indiabulls Housing Finance was trading over 14 per cent lower at Rs 334.15.

Both LVB and Indiabulls Housing Finance are proposed to merge. Last month, Indiabulls Housing Finance said it expects the regulator to take a decision on its merger plan with Lakshmi Vilas Bank in the next two months.

"The company has proposed Sameer Gehlaut as the non-executive chairman and Gagan Banga as the MD and CEO of the amalgamated bank.The Competition Commission of India (CCI) had given its green light to the proposed merger of Indiabulls Housing Finance (IBHFL) and Indiabulls Commercial Credit (ICCL) with Lakshmi Vilas Bank (LVB) in June 2019," said a Business Standard report.

The Competition Commission of India (CCI) had given its green light to the proposed merger of Indiabulls Housing Finance (IBHFL) and Indiabulls Commercial Credit (ICCL) with Lakshmi Vilas Bank (LVB) in June 2019.

In a press release dated September 28, Lakshmi Vilas Bank reassured customers that PCA plan does not mean moratorium on the bank and that bank can transact normal business. "There are no restrictions on operations by depositors. Bank can also undertake lending activities to all segments except corporates and other stressed and high risk sectors," it addded.

The bank further said that the corrective action plan covers various suggestions/measures to recover NPAs, reduce costs, boost capital, downsize RWAs (Risk-weighted assets) and improve profitability and the management was in the process of implementing all these measures. CLICK TO READ FILING

Other Indiabulls group stocks were, too, trading in the negative zone. Indiabulls Real Estate was down 10 per cent at Rs 45.90 apiece on the BSE while Indiabulls Ventures hit lower circuit Rs 123.75, down 20 per cent. On Saturday, Indiabulls Real Estate said shareholders have approved a proposal to sell its London property to promoters for £200 million in an annual general meeting held on September 28.

The resolution to sell the London property has been approved by the requisite majority of shareholders, according to an exchange filing. Earlier, the company had disclosed its plans to focus on its India business and cut down on debt, news agency PTI reported.

Fed-up European Union eyes a tit-for-tat response to Trump's tariff tactics

Europe’s relationship with the U.S. has been stretched to the limit by President Donald Trump’s “America First’’ foreign policy. But disputes about aircraft subsidies and auto tariffs coming to a head over the next two months could put the allies in a trade war.

And while transatlantic relations have been fraying since Trump came to office more than two years ago, the European Union’s political calculus has changed, with the bloc considering taking a more aggressive stance toward the U.S., according to officials familiar with the EU strategy.

“Europe is cornered and has to fight back,” said Hosuk Lee-Makiyama, director of the European Centre of International Political Economy in Brussels. “The problem is that the EU doesn’t have that much ammunition. There are no good policy options left for the bloc.”

Renewed hostilities between the EU and the U.S. would mark a reversal since Trump and European Commission President Jean-Claude Juncker agreed to a cease-fire last year. That agreement suspended the threat of a cycle of tit-for-tat tariff retaliation that was triggered by controversial U.S. duties on imported metals and that, if resumed, would threaten to put more pressure on a tepid world economy.

EU Retaliation

There’s no shortage of tensions: Washington is blocking appointments to the World Trade Organization’s appeals board, which will render the body inoperative in December; controversial U.S. duties on Spanish olives pose a threat to Europe’s system of farm aid; and Trump’s threat to hit cars and auto parts with tariffs would affect the $191.7 billion in passenger vehicles and light trucks the U.S. imports each year.

But the game changer could be tariffs on another nearly $8 billion of European goods the U.S. is expected to impose as soon as October in retaliation for illegal EU aid for planemaker Airbus SE.

It is this issue that has prompted Europe to weigh a more aggressive posture. Juncker’s commission, whose five-year term ends on November 1, is considering imposing tariffs on more than $4 billion of U.S. goods in retaliation, and using as justification an unrelated 22-year-old dispute over now-defunct American tax breaks. This is despite the fact that the two sides reached a “mutually acceptable solution” to the issue in 2006.

“For the EU, the risk of a conflict with the U.S. is higher now than it was a year ago,” researchers Anabel Gonzalez and Nicolas Veron said in a September 16 paper published by the Bruegel think tank in Brussels.

New Strategy

The idea is being driven by the EU’s desire for a negotiated settlement with Washington over aircraft aid and by concerns that, from the political point of view, the bloc may be unable to afford delaying retaliatory action. EU efforts to resolve the issue through talks have failed to bear fruit.

The possibility of hastier European countermeasures in the aircraft-aid dispute reflects EU exasperation with the Trump administration’s belligerence in transatlantic trade matters generally, according to an official from the bloc.

The idea amounts to scraping the bottom of the barrel of what the EU can conceivably do legally to strike back at the U.S. as soon as possible, according to the person who spoke on the condition on anonymity.

No decision has been taken and the idea could face resistance in some EU national capitals including Berlin. Aside from causing economic harm, such a move would risk undermining the EU’s claim to be working to uphold the WTO system that Trump’s protectionism is shaking.

‘Gung-Ho’

The outcome of the EU deliberations on this issue could depend on the incoming leadership team at the Brussels-based commission, the bloc’s executive arm, and in particular on the designated trade chief, Ireland’s Phil Hogan, who is currently European farm commissioner.

“It may come down to how gung-ho Phil is,” said Lee-Makiyama. “The fundamental reality facing the whole EU political establishment is that there is no real appetite by European industry in general for tariffs against the U.S.”

Forever 21 files for bankruptcy, will shutter most stores in Asia, Europe

Forever 21 Inc. filed for bankruptcy protection, the latest big fashion merchant who couldn’t cope with high rents and heavy competition as the shift to e-commerce cut a swathe through traditional retailers.

Court papers filed in Wilmington, Delaware, show Forever 21 has estimated liabilities on a consolidated basis of between $1 billion and $10 billion. The Chapter 11 filing allows the Los Angeles-based company to keep operating while it works out a plan to pay its creditors and turn around the business.

Forever 21 has obtained $275 million in financing from lenders with JPMorgan Chase & Co. as agent, as well as $75 million in new capital from TPG Sixth Street Partners and its affiliated funds. It plans to exit most of its international locations in Asia and Europe, but will continue operations in Mexico and Latin America. The stores expect to honor gift cards, returns and exchanges.

Once popular among teenagers in the 2000s for its affordable but eye-catching designs, Forever 21’s signature bright-yellow shopping bags have become a rarer sight as Generation Z consumers -- those born from 1998 onwards -- shifted rapidly over to e-commerce and streetwear brands in recent years. The bankruptcy filing could help Forever 21 get rid of unprofitable stores and raise fresh funds, allowing the private, family-held company to restructure its flailing business for a new generation.

“The financing provided by JPMorgan and TPG Sixth Street Partners will arm Forever 21 with the capital necessary to effect critical changes in the U.S. and abroad to revitalize our brand and fuel our growth, allowing us to meet our ongoing obligations to customers, vendors and employees,” Linda Chang, executive vice president of Forever 21, said in a statement.

Bloomberg first reported August 28 that Forever 21 was preparing for a bankruptcy filing.

Forever 21’s bankruptcy filing could be problematic for major U.S. mall owners, including Simon Property Group Inc. and Brookfield Property Partners LP, because it is one of the biggest mall tenants still standing after a wave of bankruptcies. The busts emptied more than 12,000 stores in the past two years, and those vacancies may be hard to fill.

Simon counts Forever 21 as its sixth-largest tenant excluding department stores, with 99 outlets covering 1.5 million square feet as of March 31, according to a filing.

Simon and Brookfield were both listed in court papers on Forever 21’s tally of biggest unsecured creditors. The retailer doesn’t have a lot of leverage over its landlords, according to Bloomberg Intelligence, which said in a Sept. 27 report that Forever 21 accounts for just 1.4 per cent of Simon’s annual rent.

Founded in 1984, Forever 21 operates more than 800 stores in the U.S., Europe, Asia and Latin America. It specializes in fast-fashion apparel-- trendy, cheap, quickly-made knockoffs of original designs that often is worn only a few times before being given away or tossed out. Competitors include Zara, H&M and Amazon.com.

Co-founder Do Won Chang has been focused on maintaining a controlling stake in Forever 21, which hindered efforts to raise new funds. Matters are likely to be out of his hands now, with creditors typically setting the agenda in bankruptcy proceedings and major decisions subject to a judge’s approval.

Kirkland & Ellis LLP is the company’s legal adviser, and Alvarez & Marsal is the restructuring adviser, and the investment banker is Lazard.

The case is Forever 21 Inc., 19-12122, District of Delaware (Delaware)

Rate cuts fail to cheer bond market worried about Modi govt's borrowing

September is shaping up to be a brutal month for Indian bonds, and traders are hoping the government’s borrowing plans this week will offer some relief.

Benchmark 10-year rupee yields have climbed almost 20 basis points since end-August, driven by fears that a $20 billion tax cut could boost an already bloated bond supply. Even an expected interest-rate cut by the central bank on Friday -- the fifth for the year -- has done little to aid sentiment.

All eyes are now on the government’s financing plans for the fiscal second half due Monday, with traders concerned that the authorities could increase bond sales beyond the 2.68 trillion rupees ($37.8 billion) set earlier.

“The worries about the fiscal overhang are so deep that it has upset optimism created by the Reserve Bank of India’s easing,” said Mahendra Jajoo, head of fixed income at Mirae Asset Global Investments Co. in Mumbai. Tax cuts have reignited worries about the breach of deficit targets, he added.

Sentiment toward rupee debt soured after Prime Minister Narendra Modi’s administration unleashed a surprise tax break on September 20 to shore up growth. Ten-year yields jumped the most since February 2017 amid fears the authorities would be forced to sell more bonds to make up for an estimated 1.45 trillion rupees of lost revenue.

Benchmark 10-year yields may rise to 7 per cent in the coming months from around 6.7 per cent due to worries about a wider budget deficit and increased bond supply, according to Mirae Asset and IndusInd Bank Ltd. Mirae warned yields could even vault past that level if the central bank doesn’t step in to conduct open-market bond purchases.

The concerns persist even after an assurance from a government official that the borrowing plan remains unchanged for the rest of the financial year. Finance Minister Nirmala Sitharaman has also said any review of the fiscal gap target will only take place nearer to the next budget in February.

Traders remain skeptical, especially after Standard Chartered Plc estimated the government will need to borrow as much as 800 billion rupees more, and Fitch Ratings flagged the likelihood of a wider fiscal deficit.

“Sentiments have been impacted by the fear of additional supply,” said Shyamal Karmakar, head of rates and credit trading at IndusInd Bank in Mumbai.

Below are key Asian economic data and events due this week:

Monday, Sept. 30: BOJ bond purchases, China manufacturing PMI, Japan and South Korea factory output, Thailand trade balance and India budget deficit

Tuesday, Oct. 1: RBA policy review, Japan unemployment, CPIs in Indonesia, South Korea and Thailand, South Korea trade balance

Wednesday, Oct. 2: Japan monetary base, Bank of Thailand’s MPC minutes

Thursday, Oct. 3: Australia services PMI and trade balance, Japan foreign bond buying

Friday, Oct. 4: RBI rate decision, Malaysia trade balance, South Korea FX reserves, Philippines CPI

Centre bans onion export, imposes stock holding limit to check price rise

To control onion prices ahead of the festive season, the central government banned its export with immediate effect. And, perhaps for the first time, directly imposed a stock holding limit on retailers and wholesalers across the country, bypassing state governments.

Earlier, it had authorised states to impose stock limits for certain items under the Essential Commodities Act. However, in an unusual move on Sunday, directly imposed a holding limit of 100 quintals on retailers and 500 quintals on wholesale onion traders across the country.

The price has over the past month soared to almost Rs 80 a kg in some retail markets, including in the capital, Delhi. The effect of the latest moves remain to be seen, as prices have risen due to depleted supply after months of rain in the major producing states of Madhya Pradesh, Maharashtra and Karnataka.

Chart“The sharp increase in prices is because of lower supply. Only around 15 per cent of last year's output is left with famers and stockists. Imposing stock limits or a ban on export will not help much,” Sanjay Snap, an onion wholesaler in Nashik, told Business Standard.

Some said the move could have a cascading impact on growers. “Onion prices rise once in four-five years, the only time farmers get the opportunity to earn some money. The government should allow farmers to earn. Stock limits and export restrictions would help correct prices temporarily but discourage farmers from sowing (more in the future).

Unfortunately, the government also takes no action when the onion price goes down,” said Jaydutta Holkar, chairman of the huge wholesale centre at Lasalgaon in Maharashtra’s Nashik district.

Central government data showed the retail price last week was around Rs 60 a kg in Delhi, Mumbai and Lucknow (and Rs 42 in Chennai). In Kanpur, it was Rs 70; in Port Blair, Rs 80 a kg. On September 13, the Centre had imposed a Minimum Export Price of $850 a tonne (Rs 60 a kg). Even so, some export continued to neighbouring Bangladesh and Sri Lanka. Sunday’s announcement is meant to stop all such shipment. Bangladesh, Sri Lanka and UAE are the top three destinations for Indian onion. The country exported fresh and chilled onion worth $496.8 million in 2018-19. In the first four months of 2019-20, around $154.5 mn.

The Centre had also directed states to take stringent action against illegal hoarding of onion. And, urged all states to utilise the 57,000 tonnes of onion it has as buffer stock. So far, the governments of Delhi, Haryana and Andhra have done so, to cool prices. On Friday, Delhi chief minister Arvind Kejriwal said his government would provide it at Rs 23.9 a kg to buyers.

India produced 23.48 million tonnes in 2018-19 (third advance estimate), up from 23.26 mt in 2017-18.

Why the festival season may not bring much cheer despite tax cuts by govt

Poor demand from Indian consumers could dampen the mood during festivals next month, especially for automobile makers and retailers that count on the season for a sales boost, analysts predict.

Indians typically buy everything from new cars to shoes for themselves and as gifts during celebrations steeped in religion and tradition. Yet the slowest economic growth in six years, unemployment at a 45-year high and tepid private consumption may see sales fall short of recent years, even after the government’s $20 billion tax break to companies earlier this month.

“You can make the product 50% cheaper, but there has to be income to spend,” said Nitin Gupta, an analyst at SBICAP Securities Ltd. in Mumbai. “In the short-term, I don’t see any kind of an income boost. Rather than giving cash to individuals, they have given it to companies.”

Car sales in August fell the most on record and Maruti Suzuki India Ltd. Friday reduced the price on its Baleno RS model by 100,000 rupees ($1,420) to pass on the benefit from the tax cut. Market researcher Nielsen has lowered its 2019 growth estimate for fast-moving goods to 9%-10% from 11%-12%, while a stock gauge of consumer discretionary firms is set for its first annual back-to-back losses since at least 2005.

Even so, the industry’s fortunes beyond the approaching festival season are poised to improve, according to BNP Paribas SA. Plentiful rainfall seen this monsoon season and cash handouts to farmers will help lift rural incomes, helping sales of staples recover in the second half of the year that began April 1, the brokerage said in a recent report.

Poor demand from Indian consumers may dim festive cheer despite tax cut

Here’s what other analysts say:

SBICAP Securities’ Gupta

The festive season is likely to be dull. Consumption is hit and household income has to increase for there to be better demand for companies selling fast-moving consumer goods.

Corporate tax cuts are a long-term phenomena and won’t help in the short term.

It’s uncertain how much companies could pass on the benefit in terms of lower prices.

Recommends buying shares in Dabur India Ltd., holding ITC Ltd., Colgate-Palmolive India Ltd., and Hindustan Unilever Ltd., and selling Nestle India Ltd.

Harshit Kapadia, an analyst at Elara Securities India

I’m not expecting a blockbuster festive season. It won’t be muted either, but will be decent. Even last year demand was largely flat, that’s why double-digit growth in demand on the lower end is possible.

Distributors are preparing for the Navratri and Diwali season, but nobody is stocking up heavily. They are following the normal trend of keeping 15-20 days of inventory, whereas in past years they would keep 30-35 days ahead of the festival season

Recommends buying Havells India Ltd. and selling Voltas Ltd. shares

Ravi Swaminathan, an analyst at Spark Capital Pte

Sales growth in refrigerators and washing machines has been moderate (mid to high single digit).

With early festive demand traction not very encouraging, dealers are hopeful for better traction over the next 2-3 months.

Recommends adding Whirlpool of India Ltd., Havells and Crompton Greaves Consumer Electricals Ltd. shares

Basudeb Banerjee, an analyst at Ambit Capital Pvt.

The best case scenario for automobiles is for demand to remain flattish on a year-on-year basis as last festival season was bad for demand. Things have gotten worse since then.

Investors should avoid commercial vehicles and producers of lower-cost two wheelers, which face a bigger inventory pileup.

Recommends selling Hero MotoCorp Ltd., Ashok Leyland Ltd. and Tata Motors shares, buying Eicher Motors Ltd., Bajaj Auto Ltd. and Maruti Suzuki India Ltd.

Shirish Pardeshi, an analyst at Centrum Broking Ltd.

Demand is there, it’s only the size of the wallet that’s come down. In difficult times, people don’t stop buying the product. If someone was buying a large pack before, maybe they’ll buy a small pack now.

In the festive season people tend to forget the bad times.

Recommends buying shares in Dabur, Britannia, and Hindustan Unilever and Bajaj Consumer Care Ltd., on improving consumer sentiment, helped by a good monsoon that should support demand from rural areas, selling shares in Colgate-Palmolive