Waiver of earnest money deposit relief for mid-sized highway players: Icra

Waiver of earnest money deposit for highway projects in EPC mode comes as a relief for mid-sized highway players, ratings agency Icra said on Thursday.

In place of bid security, the bidders are now required to sign a bid securing declaration accepting that if they withdraw or modify the bids during the period of validity or if they fail to submit a performance security for the awarded contract before the deadline, they will be suspended from participation in the tendering process for a year.

The Ministry of Road Transportation and Highways' (MoRTH) decision that all nodal agencies for national highway project implementation -- NHAI, MoRTH and National Highways and Infrastructure Development Corporation (NHIDCL) -- will no longer be required to seek bid bond guarantees (earnest money deposit/bid security) for engineering, procurement and construction (EPC) projects is a welcome step, it said.

"This waiver comes as a relief for mid-sized contractors especially at a juncture when the players are struggling to get enhancements in non-fund based limits," Icra said in a statement.

Central road implementation agencies seek 1 per cent of contract value as bid bond guarantees and the same is higher for other central government agencies at 2.5 per cent.

Depending on the bid success ratio (which typically ranges between 10-30 per cent), the value of contracts bid for and consequently the requirement of bid bond guarantees varies for each contractor.

Shubham Jain, SVP and Group Head, Corporate Ratings, Icra said: "For every Rs 100 crore of new order addition, the contractors require around Rs 6.25 crore of collateral plus margin money for securing bid bond guarantees; this would get freed up now. In addition to freeing up of margin money which can now be deployed towards working capital requirements, the waiver would also result in savings on bank guarantee commission charges which will be a direct addition to bottom line."

On bid securing declaration, Jain added, "Debarring the contractors from participating in tendering process for a period of one year in case of non-compliance is a good deterrent to weed out erring players. Otherwise the bidding process would lose its sanctity. Overall this is a win-win for both parties.

FinMin claims huge progress in report on measures to boost economy

In a status report on measures announced to boost economy, the Finance Ministry on Thursday claimed to have fulfilled many, while making significant progress on several others.

As per the report card, all public sector banks (PSBs) have introduced Repo Rate Linked Products (RRLP).

Further, the RBI has mandated that all scheduled commercial banks introduce repo-linked home loan products and external benchmarked linked floating rate loans for retail and MSME borrowers starting October 1.

For customers' ease, the banks have informed the government that they have implemented the 15 day norm for return of security documents after loan closure.

The official data show that in case of 3.59 lakh accounts out of 3.61 lakh loan accounts closed since August 23, security documents were released within 15 days of loan closure.

In order to protect honest decision making, the CVC has communicated that the recommendations of the Internal Advisory Committee of the bank regarding classification of a case as vigilance or non-vigilance as accepted by the DA & CVO and will be treated as final.

As regards relief for the slowdown-hit auto sector, revision of one-time registration fee has been deferred. It has also been clarified that both electric and internal combustion engine-based vehicles will continue to be registered as long as they meet safety and emissions standards.

Further, the much-awaited scrappage policy has been formulated and circulated for comments of stake-holders/general public by November 15.

In a bid to provide relief to MSME sector, almost 97 per cent of pending GST refunds, as on August 23, has been cleared. A total of Rs 10,490 crore has been refunded to smaller firms.

Kick-starting the task of building infrastructure worth Rs 100 lakh crore over the next 5 years, the Task Force to finalize various projects have held 12 meetings so far and deliberated with 17 ministries and departments.

Many measures to push economic growth are currently in the process of implementation and have seen significant progress.

 

Odisha signs pact with Abhijit Banerjee's J-PAL for anti-poverty schemes

The Odisha government has inked a Memorandum of Understanding (MoU) with Abdul Lateef Jameel Poverty Action Lab (J-PAL) to engage in a strategic evidence based approach to policy making.

The partnership aims at maximizing the impact of anti-poverty programmes of the state across a wide range of sectors. Under this partnership, J-PAL South Asia will provide the Odisha government with technical assistance for scaling up evidence based programmes to improve development outcomes across the state.

Abhijit Banerjee and Esther Duflo who were feted with the Nobel Prize for Economic Sciences recently are co founders of J-PAL.

The partnership establishes an overarching collaboration between J-PAL South Asia and the Odisha government under which J-PAL will work with several departments. Additionally, a diagnostic exercise and subsequent workshops to build state capacity in the areas of monitoring and evaluation.

The agreement was signed by Odisha's Development Commissioner Suresh Mohapatra and executive director of J-PAL South Asia Shobhini Mukherji.

J-PAL South Asia and the Odisha government will conduct an annual policy dialogue to identify the government's top policy priorities, conduct discussions to share evidence and jointly come up with innovative solutions that can be tested on the field through rigorous randomised evaluations. The topics for the policy dialogues will centre on malnutrition, women's empowerment, distress migration, health-worker performance and improving agricultural productivity.

Manufacturing, services firms to drive apprentice hiring in H2 2019: Report

The apprentice hiring sentiment is expected to grow by 41 per cent from second half of 2019, as manufacturing and services sectors have opened their doors for apprentices, according to a report.

According to TeamLease Skills University report, 'The Apprenticeship Outlook and Index', the apprentice hiring sentiment is expected to grow from current levels of 36 per cent to 41 per cent in JulyDecember 2019.

The report revealed that the top manufacturing sectors to hire apprentices in the second half of this year are FMCG & durables (45 per cent) and automobile and ancillaries (42 per cent).

It is followed by services sector with retail (45 per cent) and travel and hospitality (44 per cent), it added.

The growth is primarily attributed to employers increasingly invested in the apprenticeship model over the last two years especially for cost effective talent creation and enhancedproductivity, it said.

The other factors that are driving apprenticeship adoption are the demand for advanced skill sets, financial support from the government, bringing in the services sector under apprenticeship programme, it added.

The report is an outcome of survey done among 502 employers across 12 sectors and four regions (South, North, East and West).

"Employers are fast realising the potential of adopting apprenticeship. The lack of skill based education and basic employability skills even among graduates are the biggest drivers of this growth. The absence of formal training is also a reason," TeamLease Skill University vice president - National Employability through Apprenticeship (NETAP), Sumit Kumar said.

He said, out of the required 130 million skilled workers, less than 5 per cent undergo formal training and around 80 per cent do not have the opportunity for skill training.

"Further, the recent amendments to the Apprentice Act 1961 have also added to the positivity," he added.

The report also revealed that functional areas like production and engineering (23 per cent), sales and marketing (18 per cent) and IT (17 per cent) are likely to see more hiring.

Technical knowledge (24 per cent) and communication skills (23 per cent) are the major skills that is required for the hirings.

Most employers prefer male candidates for reasons ranging from physical strength (37 per cent), better performance (28 per cent) and safety and security (25 per cent), it said.

Majority of employers (72 per cent) pay stipends below Rs 12,000 per month with no plans to increase over the next 6 months.

Around 78 per cent of the respondents said they do not plan to increase stipends for new engagements over the next 6 months, it said.

About 89 per cent of the respondents said they are likely to hire apprentices for a period of 6 months to 1 year, it added.

Coal India's October output likely to be 20% lower than last year

Coal India's production in October is likely to be 19-20 per cent lower at about 40 million tonne, as compared to 49.77 million tonne produced in the year-ago month, the output data suggested.

The miner, which has a target to produce 57.17 million tonne for the month, has actually produced 37.92 million tonne of coal till October 30, according to the data.

The coal behemoth had produced 30.77 million tonne in September this year.

The data indicates that the miner's rate-of-production has not been picked up, which led to a shortfall in the month.

Coal India aspires to produce 660 million tonne of the dry fuel in FY20.

According to provisional data, the miner produced 278.92 million tonne of coal till October 30 in FY20, achieving 82.17 per cent of the target of 339.43 million tonne.

The miner's data also suggested that its offtake target was 360.44 million tonne for the period while the company achieved 314.59 million tonne.

Rating agency ICRA had predicted that Coal India's output target will be missed by 55-75 million tonne.

WTO panel upholds US case, rules India's export subsidies illegal

Upholding a complaint brought by the United States, a World Trade Organization (WTO) panel ruled on Thursday that India’s export subsidies were illegal and should be removed.

 

The panel largely agreed with US claims challenging export subsidies granted in the form of exemptions from customs duties and a national tax, while rejecting some US arguments. It called on India to withdraw the export-contingent subsidies within periods varying from 90 to 180 days.

 

The US Trade Representative's Office, in a statement, said that the panel had agreed that India provided prohibited subsidies to Indian exporters worth more than $7 billion (5.4 billion pounds) annually, including to producers of steel products, pharmaceuticals, chemicals, IT products and textiles.

Paytm E-commerce reports net loss of Rs 1,171 crore, revenues jump by 25%

Paytm E-commerce Private Limited (Paytm Mall), the online shopping platform, reported a net loss of Rs 1,171 crore for the financial year 2018-19. This is a 34 per cent decrease from the last financial year. However, the company reported its revenues for the same fiscal as Rs 968 crore, a 25 per cent jump since the last financial year, according to data accessed by business intelligence platform Tofler. The company’s total expenses for the fiscal were reported as Rs 2,140 crore.

The company is integrating its offline merchant base with international sellers on a single platform in a bid to take on the competition such as Amazon and Flipkart. This will help its 300,000 offline merchants access international brands from across the world. The company has also set up an office in China and was planning to source and identify items it believed would sell in India. Listing Chinese merchants on its platform from where customers can buy directly was another new initiative.

Paytm Mall has raised a total of $795 million in funding from top investors including SoftBank Vision Fund and Alibaba, according to data platform Crunchbase. This year in July, US-based e-commerce firm eBay bought a 5.59 per cent stake in Paytm Mall for $160 million. The deal enabled Paytm Mall to start getting catalogues from the US and Europe.

Eager to make their presence felt during the festive season, Paytm Mall and eBay were bulking up their offers of the global catalogue. This month, Paytm Mall said it would generate at least Rs 500 crore in actual sales for its offline brick-and-mortar retailers this festive season. The announcement came at a time when trader bodies are at loggerheads with Amazon India and Flipkart over the massive discounts during such sale drives.

Over the past six months, the firm had worked out massive discount and cashback schemes, with more than 100 brands and major offline retailers. Overall, Paytm Mall said it was targeting not less than $2.1 billion (Rs 14,900 crore) in gross merchandise value (GMV) for the entire year.

During the festive season itself, the company said it was aiming at least $300 million (Rs 2,100 crore) in GMV.

E-commerce companies are facing huge losses in pursuit of dominating the country’s growing online commerce market which is expected to touch $200 billion by 2028, from about $30 billion last year.

Amazon has faced losses in several of its business entities in India, such as seller services, wholesale, transportation services and digital payments, for the 2018-19 financial year. According to the regulatory documents, the combined losses of these entities stand at over Rs 7,000 crore.

Also, Flipkart India Private Limited, the wholesale entity of Walmart-backed homegrown e-commerce firm Flipkart, has suffered an increase in net loss by 85.91 per cent in the financial year 2018-2019 compared to the previous year. Flipkart India Private Limited reported a net loss of Rs 3,836 crore as compared to Rs 2,063 crore in the previous financial year, according to the regulatory documents.

WagonR, Santro fare poorly in Global NCAP crash test, score two stars

The entry-level variants of Made in India models from Maruti Suzuki, Hyundai Motor and Datsun score poorly in the latest round of crash testing conducted by Global NCAP (New Car Assessment Programme), a UK-based not-for-profit entity.

It says there is ample scope for improving safety in these models. India has one of the largest number of road collisions in the world. The official count of accidents on the roads in 2018 was 461,000. That's an hourly average of about 53 or nearly one every second.

While the WagonR and Ertiga received two stars and three stars out of five, respectively, the Santro and redi-GO got two and one star, respectively. The sixth round of the test, conducted as part of the 'Safer cars for India campaign' launched by Bloomberg Philanthropies and the FIA Foundation-backed GNCAP, chose the entry-level version of each model. As a result, only the Ertiga was fitted with at least two airbags as standard; the other models offered only a driver airbag.

The results highlight significant differences in adult occupant protection, in cars that fomally meet the latest Indian government vehicle technical regulations. "Disappointingly, there are no five star performers," said David Ward, chief excutive of Global NCAP.

Adding: “The Suzuki Maruti Ertiga achieves a creditable three stars for both adult and child occupant protection but it’s obvious to us that more can and should be done to improve overall protection levels for cars sold in the market.”

Both the WagonR and Santro offer only a driver frontal airbag as standard. The test results rate their structure as unstable. Though head and neck protection was good, both showed poor results on child occupant protection. The redi-Go achieved only one star for adult occupant protection and two stars for child protection. The model's structure was rated unstable.

Spokespersons at Maruti Suzuki India and Hyundai Motor India declined to comment. This is not the first time that top selling models from the two companies have got low safety ratings from GNCAP. Over the years, since launch of the campaign, officials from the two companies have maintained that their cars meet Indian laws, which are more attuned to the driving environment in India.

Kaushik Madhavan, vice-president for mobility practice at Frost & Sullivan, says: “Technically, the manufacturers in India are meeting safety regulations mandated by the government. Therefore, they aren’t obligated to offer more than what is required, as there is a cost to it.”

Automobile makers, he said, need to do more in terms of creating awareness. And, regulatory push to improve safety standards has to come from policy makers.

A Datsun India spokesperson said, “Safety is the key priority for Datsun. The Datsun redi-GO meets all safety standards and regulations in India, and we will continue to invest in the brand towards offering high value and competitiveness.”

The spokesperson claimed the results were conducted on an old model. In June this year, the company says it launched an upgraded one, equipped with safety features such as vehicle dynamic control, anti-lock braking system, electronic brake force distribution, brake assist and traction control system.

Vodafone denies India market exit rumour, says actively engaging with govt

Amid concerns around how telecom operator Vodafone Idea (VIL) will cope with the Supreme Court ruling on adjusted gross revenue (AGR) payments, the company and its UK based JV partner Vodafone Group issued separate statements to assuage investor concerns. There have been rising concerns that the UK based Vodafone Group would exit the Indian telecom joint venture, according to some reports.

“Vodafone is aware of the unfounded and baseless rumours circulating in some of the Indian media that we have decided to exit the (India) market. We would like to categorically state that this is not true and is malicious,"said Vodafone Group in a statement.

The statement further noted that Vodafone is actively engaging with government and they are fully supportive of their local management as they continue to manage the joint venture (with Aditya Birla Group) in these challenging times.

In response to the same queries, VIL issued a statement to the exchanges stating "As regards exit of India operations by Vodafone Group is concerned, we wish to inform you that the Company (VIL) is not aware about anything on the subject as it pertains to Vodafone Group and hence cannot comment on the same."

Vodafone Group has struggled to keep its losses in check over the past year with VIL only adding to the burden since merger last year.

VIL had already issued a statement to deny reports that the company had approached lenders for a debt recast.

" We categorically deny and dismiss this as baseless and factually incorrect. We have not made any request for debt recast to any lender or asked for reworking of payment terms. We continue to pay all our debts as and when these fall due,"informed the company.

Rating agency CARE has downgraded its rating on VIL's long-term loans and debentures from “A” to “A-” and also paced the rating under watch with negative implications.

The revision in long-term ratings factors in the Supreme Court’s (SC’s) recent ruling that telecom players have to include non-core revenues in their AGR to calculate their license fee dues. Based on the court order, the Department of Telecommunications (DoT) can now raise its demand from VIL to Rs 28,309 crore. The company has to comply with the SC order within three months.

Analysts expect this payment to put VIL on an extremely weak footing compared to its telecom rivals due to mounting subscriber losses and integration hurdles.

Indusind Bank finalises 'potential successor' to MD & CEO Ramesh Sobti

Indusind Bank on Thursday informed exchanges that it has selected a potential successor to Ramesh Sobti, the current MD and CEO of the bank. However, it did not name the successor.

In a statement, the bank said, "As mandated under the extant RBI norms, the bank has submitted an application to the Reserve Bank of India (RBI), seeking approval for the appointment of the new MD & CEO of the bank".

Three names which are doing rounds for the corner-room are Sumant Kathpalia, the lender’s head of consumer banking, Paul Abraham, the current chief operating officer and Suhail Chander, head of corporate and commercial banking.

Sobti's tenure comes to end in March 2020, when he turns 70. He joined the bank in February 2008. All the three names which are making rounds joined the private lender along with Sobti as a team.

There has been a change in the leadership at three larger private sector banks. Sandeep Bakshi joined ICICI bank in October 2018, Amitabh Chaudhry joined Axis bank in January 2019 and Ravneet Gill became the MD and CEO of Yes bank in March 2019.

Indian Oil to open retail outlets in Saudi Arabia in JV with Al Jeri

To mark a retail presence in West Asia, Indian Oil Corporation (IOC) is expected to start its first retail outlet in Saudi Arabia within six months by setting up an equal joint venture company with Riyadh-based Al Jeri Group.

Based on the plans lined up by both companies, at least 200 retail outlets will be set up initially in Saudi Arabia. IOC’s foray will be significant at a time when Saudi’s national oil company Saudi Aramco is looking to enter into the Indian downstream market through a tie-up with Mukesh Ambani-led Reliance Industries.

During Prime Minister Narendra Modi’s recent visit to Saudi Arabia, an agreement was signed between IOC’s West Asian unit and the Al Jeri group, a local company that specialises in transport and delivery of bulk petroleum products as well as other bulk transports.

“This will be a 50:50 joint venture as local regulations require a partner from Saudi Arabia for retail entry. We will also sell our lubricants in that country; we currently do that through an agent,” said Gurmeet Singh, IOC’s director (marketing). Singh added that the companies were now waiting for some local clearances and the first outlet should come up within six months. “We have not decided on the number of outlets that we are going to come up with,” Singh added.

According to Al Jeri, it is the biggest transporter of Aramco products in the region, carrying more than 28 per cent of the company’s products currently. It also offers border-crossing services at all major Gulf Co-operation Council (GCC) border crossings. “There is enough local demand in both fuel and lubricant space in Saudi,” Singh said.

At present, IOC has marketing subsidiaries in countries like Sri Lanka, Nepal and Mauritius. Singh said IOC was also looking to enter into fuel marketing and retail business in Myanmar. This was after Myanmar Petroleum Products Enterprise (MPPE) invited private companies to form a joint venture for import, storage, distribution and sale of all petroleum products. IOC is also in the process of laying a pipeline between Raxaul in Bihar and Amlekhgunj in Nepal for an annual capacity of 1.3 million tonnes.

Apart from Aramco, other companies including Russian giant Rosneft, French major Total, Abu Dhabi National Oil Company (Adnoc) and Kuwait Petroleum International (KPI) have also shown interest in the Indian market. Several foreign players, including Saudi Aramco, BP, ExxonMobil and Total, are also expected to show their interest in the proposed strategic sale of government-controlled Bharat Petroleum Corporation.

ReNew Power becomes 11th firm globally to reach 5,000-Mw green capacity

ReNew Power has joined the global club of top renewable power generation companies by becoming the eleventh firm to reach 5,000 megawatt (Mw) of installed capacity. Of this, 3,100 Mw is wind and 1,900 Mw is solar.

India’s largest renewable power company on Sunday commissioned a 250 Mw plant in Rajasthan’s Bikaner. The plant with robotic cleaning technology is the second-largest solar firm of ReNew — the first being in Maharashtra. Power from the Bikaner plant would be supplied at Rs 2.72 a kilowatt per hour (unit) to Maharashtra.

“There are 10 other companies globally that have crossed this mark. When we started off eight years back, the largest portfolio was just 150 Mw. The whole scale of the industry has changed dramatically,” Sumant Sinha, chairman and managing director, ReNew Power, told Business Standard.

Sinha said crossing the 5,000-Mw mark was a big achievement, which was made possible because of opportunities, size of the market, and the government’s push.

ReNew’s capacity in India is followed by 3,700 Mw of Greenko, 2,700 Mw of Tatas, 2,300 Mw of Adani, and 2,000 Mw of ACME.

The company would be achieving 8,000 Mw capacity in another eight months, with additional 3,000 Mw coming largely from tenders of NTPC and Solar Energy Corporation of India (SECI).

Currently, the company has utility scale units in eight states, including Rajasthan, Gujarat, Madhya Pradesh, and Tamil Nadu. In 20 states, the company has distributed solar capacity.

ReNew Power was founded by Sinha in 2011 and is currently backed by Goldman Sachs, Canada Pension Plan Investment Board, and Abu Dhabi Investment Authority, among other investors.

In 2018, the company bought 1,100 Mw of wind and solar power assets of Ostro Energy, which was one of the biggest acquisitions in the Indian renewable energy space.

According to Sinha, the total share of NTPC and SECI capacity would jump from the current 10 per cent to 40 per cent for the company when it reaches 8,000 Mw.

The next 3,000-Mw capacity is already under construction. “We have fairly advanced in it and issues in Andhra Pradesh will not impact. We will still have significant cash flows for the company,” he added. At 8,000 Mw, the Andhra Pradesh project would be less than 10 per cent of the company’s portfolio.

ReNew is among those green power companies that have been impacted by the Andhra Pradesh government’s decision to revisit power purchase agreements signed by the state’s previous government.

Under a court order, Andhra Pradesh’s distribution companies were asked to immediately pay a tariff at Rs 2.44 to ReNew Power till the disposal of the matter by the state regulator. It has also directed the state to avoid curtailing generation from the company’s plants without issuing any prior notice.

MG Motor unveils India's first car-less digital showroom in Bengaluru

The latest MG Motor digital showroom in Bengaluru is everything that a typical car showroom does not look like. Most importantly, it has no cars on display. Envisioning the future of retailing, the car manufacturer has unveiled the country’s first carless digital studio which is driven by visual immersive technology to give potential customers a 360 degrees tour of the vehicles before they make the buying decisions.

Started on a pilot basis, the company aims to take this car-less showroom concept to several locations across India as it drastically reduces the cost of operations.

“The purpose of setting up a car-less showroom is that typically in big cities, one cannot open big showrooms in busy neighbourhoods. Through this concept, the cost of operations goes down to one-fourth the cost of a normal car showroom, which is between Rs 20 lakh and Rs 25 lakh (per month),” said Rajeev Chaba, President and Managing Director, MG Motor India.

“This can revolutionalise retailing as we can go to several touch-points closer to the customers at a much lower price,” he added.

Spread in a small area of 600 square feet, which is much lesser than the size of a regular automobile showroom, the digital studio welcomes a customer with an artificial intelligence (AI) based human recognition screen. Once a customer enters the showroom, the screen captures his/her picture and asks some basic questions. Based on that data, it customises the potential buyer’s profile so that the salesman can communicate with the customer in a personalised way.

Next you move to a navigator which is connected to a giant 9 feet visualizer. There are three variants of the tour that the visualizer provides based on the time available with the customer -- that is 5 minutes, 10 minutes and 15 minutes 3D tours. By giving the voice command of “Hello MG”, one could activate the visualizer. One can get a 360 degree view of the exteriors, interiors, and safety features of the car either via touch screen or voice command. The engagement tool provides a close experience of navigating through the car, without the car, such as adjustment of seats, dimensions, opening and closing of sunroof, switching on and off of lights, opening of boot space. It also gives the option of scanning through the engine and innards of the car which is not possible in a physical vehicle. The visualizer also assists a user to scan through the interactive iSmart screens, which are fitted in the company’s flagship Hector models.

MG Motor has tied up with Mumbai-based start-up Eccentric Engine for its automotive visualization platform. “We believe that the future of automotive sales is omnichannel. We look forward to partnering with MG Motor to visualize their products through more futuristic touch points,” said Varun Shah, co-founder, Eccentric Engine.

Once a customer is done with the visual tour, he/she can opt to test drive the car, which will be available in the parking lot outside the showroom. Bookings for the vehicle can also be done simultaneously from the same place.

With competition intensifying in the utility vehicles segment, a lot of players are shifting gears and moving towards technology to attract buyers. Hyundai Motor is providing an AI-based technology service called Blue Link which provides an easy flow of critical information between the user and the car. This technology has an inbuilt SIM card and a 24x7 call centre that has features like live tracking, crash and panic alert. It also has a remote engine start feature limited to automatic variants.

General Motors is also looking at embedding Google technology in its cars to enable voice activated controls, starting 2021. Even Amazon is in talks with car companies to embed its voice enabled technology Alexa in vehicles.

Commercial vehicle makers unlikely to see festive cheer in October sales

The passenger-vehicle and two-wheeler segments of the automobile industry seem to have got some sales boost this festive season, but there might be little respite for the commercial-vehicle (CV) segment. Weighed down by an economic slowdown, increase in axle load (30 per cent additional capacity) among other things, major CV companies are expected to report a decline of around 20 per cent in sales volumes in October 2019.

In September this year, the total automobile industry sales was the lowest for the month in at least 10 years. According to the Federation of Automobile Dealers Associations (Fada), the apex body of Automobile Retail Industry in India, new CV registration was down 18.5 per cent during the month. Society of Indian Automobile Manufacturers (SIAM) data for wholesale market, meanwhile, showed total CV sales in September 2019 falling 33.06 per cent on a year on year basis.

The outlook for October 2019 sales is also subdued.

"The CV segment’s growth may be negative, as the slowdown in economic activity, increase in axle load, and weak freight rate have softened the overall interest of large fleet operators. However, we expect LCVs (light commercial vehicles) to fare better than medium and heavy commercial vehicles (M&HCV). We expect Tata Motors and Ashok Leyland to respectively report 18.8 per cent and 16 per cent year-on-year decline in CV sales to 32,000 and 12,700 units in October 2019," said an analyst from Dolat Capital.

Motilal Oswal Institutional Equities has said there are no signs of recovery in the CV segment, but continued production cuts by original equipment manufacturers (OEMs) in the past few quarters have led to an inventory correction (of 30 to 35 days). While there may have been some demand improvement during Diwali for passenger vehicle and two-wheelers — low single-digit sales growth — demand in the M&HCV segment is yet to see a pick-up.

"We expect CV wholesale numbers for both Tata Motors and Ashok Leyland to decline about 37 per cent YoY (about 49 per cent decline for M&HCV) in October," said an update from the firm.

Tata Motors’ president for the commercial vehicles business unit, Girish Wagh, said during a recent investor call: "It's very difficult to project what kind of growth or de-growth is likely to happen. One is seeing some green shoots in demand drivers, but not in demand.”

Some of the demand drivers like the freight availability after monsoon is looking up slightly. The transporters' sentiment index is an indication of their satisfaction with the current business and purchase going ahead. In the case of cargo trucks, the transporters' sentiment index bottomed out during the June quarter; it moved up only slightly in the September quarter. The impact of a low sentiment, however, was seen more in the latter quarter.

Amid a slew of relief measures announced by the government, some fund disbursement to infrastructure projects took place; this is expected to get things moving gradually.

Tata Motors was awaiting the start of some of the new projects and allocation of new projects like allocation of mining licences, said Wagh.

Fleet operators in the M&HCV segment have started some purchase mainly because it makes business sense to replace a 5-7-year-old vehicle with a BS-IV one; there is a huge operating cost advantage and they can also avoid pricier BS-VI vehicles.

Umesh Revankar, managing director of Shriram Transport Finance, which lends to commercial vehicle users, said in an interview that while demand was yet to pick up, the rural market was expected to start seeing a positive change in the last two months of the year. The urban market may take longer for revival, though the LCV market, backed by e-commerce sales, is better. Infrastructure and real estate revival is essential for sales of heavy vehicles.

While there had been a slowdown, it had been different in different end-use segments: Sales of vehicles used for logistics in e-commerce companies had been growing well, said Wagh.

Sales of multi-accelerators and tractor-trailers, used for cement and steel transportation, among other things, had gone down more than the overall industry volume fall. Going forward, the overall industry volume growth would depend on demand growth in the end-use segments during the second half of the year, he added.

Mahindra & Mahindra gets patent for solar power system on vehicle rooftops

Automobile maker Mahindra and Mahindra Ltd has received a patent for its multimodal solar power system, which reduces the electric load demand on vehicle battery, and supports the operation of an air-conditioner. This innovation will help increase the life of vehicle batteries and reduce greenhouse gas emissions.

Documents show that solar panels will be fixed atop vehicle roofs to act as supplementary power source for electrical load demand without impacting the vehicle’s aerodynamics.

A sensor will help its control unit identify various modes, such as the running mode, parked mode and night mode and act accordingly. Vehicle type will not be restrictive as it works with all types — internal combustion, hybrid or electric vehicle — and is designed to operate both during day and night.

The solar panel, chosen on the basis of vehicle requirements, charges the primary battery during the running mode to reduce the load on the alternator, the power generator part which usually charges the battery and supplies additional power for the electrical system in the vehicle.

When the vehicle is in parked mode, it charges the secondary battery for the night mode operation of the vehicle. When the batteries are fully charged, the system powers the cooling or heating accessories like the Air Conditioner in the vehicle.

"The solar panel is integrated onto the vehicle roof in such way that it is an integral part of the vehicle roof. Making the solar module a part of the roof is required to ensure that it does not hurt the aerodynamics of the vehicle," it says.

Night mode is an advanced feature of the system in which there is secondary battery in the vehicle to cater to the electrical demands of the vehicle at night. The solar power assist system charges the secondary battery during the day, to be used at night. This ensures that the alternator load on the engine is reduced also during at night.

The solar panels keep the battery charged at all times. This, in turn, reduces the alternator load on the engine and saves part of the power needed to run the alternator and reduces the greenhouse gas emissions.

At night, the vehicle uses the secondary battery charged during the day. Hence, there is lower greenhouse emission even at nights. By ventilating the vehicle parked in hot sun, the cabin temperature is considerably reduced. This reduces the extra pumping required to be done by the AC compressor at the time of starting the vehicle and helps bring an early steady-state cabin temperature. Hence, the extra power required by the AC compressor and the engine is saved and emission is reduced.

The company informed the Patent Office that it has not filed any application for patent outside India in respect of the invention. The concept and application of utilising the solar power to charge any type of battery and utilising the power for different modes of the vehicle is not obvious.

The company, which has its electric car brands Mahindra e2O and eVerito, cargo van eSupro and Mahindra Treo autorikshaw, and eAlfa Mini, earlier developed the Sun2Car technology for directly charging its electric vehicles with solar energy according to reports.

Indian journalists, activists were spied on using Israeli spyware: WhatsApp

Facebook-owned WhatsApp on Thursday said Indian journalists and human rights activists were among those globally spied upon by unnamed entities using an Israeli spyware Peagasus.

WhatsApp said it was suing NSO Group, an Israeli surveillance firm, that is reportedly behind the technology that helped unnamed entities' spies hack into phones of roughly 1,400 users spanning across four continents and included diplomats, political dissidents, journalists and senior government officials.

However, it did not say on whose behest the phones of journalists and activists across the world were targeted.

Refusing to divulge identities or the exact number of those targeted in India, WhatsApp said it had in May stopped a highly sophisticated cyber attack that exploited its video calling system to send malware to its users.

The mobile messaging giant said it had sent a special WhatsApp message to approximately 1,400 users that it has "reason to believe were impacted by this attack to directly inform them about what happened".

While the messaging giant didn't disclose the details or the number of people affected in India, a WhatsApp spokesperson said: "Indian users were among those contacted by us this week".

WhatsApp has over 1.5 billion users globally, of which India alone accounts for about 400 million.

Denying allegations, NSO said it provides "technology to licenced government intelligence and law enforcement agencies to help them fight terrorism and serious crime" and is not "designed or licensed for use against human rights activists and journalists."

Meanwhile, the Indian IT Ministry has written to WhatsApp, seeking a detailed response by Monday.

A senior government official told PTI that WhatsApp has been asked to give a detailed response to the entire allegations and the extent of users compromised in India.

WhatsApp had on Tuesday filed a lawsuit in a California federal court against NSO Group, which allegedly developed the spyware, saying an attempt was made to infect approximately 1,400 "target devices" globally, including some in India, with malicious software to steal valuable information from those using the messaging app.

WhatsApp said it "believes the attack targeted at least 100 members of civil society... this number may grow higher as more victims come forward".

WhatsApp Head Will Cathcart said these victims include human rights defenders, journalists and other members of the civil society across the world.

"Tools that enable surveillance into our private lives are being abused, and the proliferation of this technology into the hands of irresponsible companies and governments puts us all at risk," Cathcart said in an op-ed in The Washington Post.

Cathcart asserted that WhatsApp was committed to the fundamental right to privacy and that it is working to stay ahead of those who seek to violate that right.

A cybersecurity research lab at the University of Toronto, Citizen Lab, had helped WhatsApp investigate the hacking incident.

In response, NSO said: "In the strongest possible terms, we dispute today's allegations and will vigorously fight them. The sole purpose of NSO is to provide technology to licenced government intelligence and law enforcement agencies to help them fight terrorism and serious crime. Our technology is not designed or licensed for use against human rights activists and journalists. It has helped to save thousands of lives over recent years."

"The truth is that strongly encrypted platforms are often used by pedophile rings, drug kingpins and terrorists to shield their criminal activity. Without sophisticated technologies, law enforcement agencies meant to keep us all safe face insurmountable hurdles. NSO's technologies provide proportionate, lawful solutions to this issue," it said.

NSO said any use of the product other than to prevent serious crime and terrorism was a misuse.

"We take action if we detect any misuse. This technology is rooted in the protection of human rights - including the right to life, security, and bodily integrity - and that's why we have sought alignment with the UN Guiding Principles on Business and Human Rights, to make sure our products are respecting all fundamental human rights," it said.

Twitter banning political ads globally from Nov 22, says CEO Jack Dorsey

Twitter CEO Jack Dorsey on Thursday said that the microblogging platform would stop all political advertising globally, becoming the first mainstream social media company to do so.

In a series of tweets, Dorsey explained the reasons for the decision. Saying that internet advertising was “incredibly powerful” and effective for commercial advertisers, it posed “significant risks to politics, where it can be used to influence votes to affect the lives of millions”.

Political ads on social media platforms have been a growing cause for concern globally, especially since reports of foreign interference in the 2016 US Presidential elections surfaced.

“These challenges will affect ALL internet communication, not just political ads. Best to focus our efforts on the root problems, without the additional burden and complexity taking money brings. Trying to fix both means fixing neither well, and harms our credibility,” said Dorsey.

Dorsey said the company would share the final policy by November 15, and will start enforcing it from November 22 to provide current advertisers a notice period before the change goes into effect.

Among the biggest platforms for political ad spending, companies like Facebook, Twitter and Google have made efforts to bring transparency to the process by releasing political ad spending data globally, including in India’s general elections this year.

“In addition, we need more forward-looking political ad regulation (very difficult to do). Ad transparency requirements are progress, but not enough. The internet provides entirely new capabilities, and regulators need to think past the present day to ensure a level playing field,” Dorsey added.

India has also been struggling to deal with political ad issue in recent times. The government has also, in an ongoing case, been asked to frame rules for social media firms.

Dorsey's tweets found a lot of support on Twitter, and several Twitter users tagged Facebook in replies to Dorsey’s tweets.

JK Tyre jumps 14% as Q2 net profit surges over three-fold to Rs 168 crore

Shares of JK Tyre & Industries surged as much as 13.87 per cent to Rs 80 apiece on the BSE in the early morning deals on Thursday. The company on Wednesday reported over three-fold jump in consolidated net profit to Rs 167.70 crore in the September quarter driven by gains from deferred tax liability.

It had posted a profit of Rs 45.78 crore in the same period last fiscal.

Consolidated revenue from operations during the second quarter stood at Rs 2,154.95 crore as against Rs 2,493.76 crore in the year-ago period, down 13.59 per cent, it added. During the period under review, the company said it has re-assessed deferred tax Liability at 25.17 per cent as against 34.94 per cent earlier following reduction in corporate tax rate to 22 per cent announced by the government.

"Indian economy, more particularly the Auto Industry, is passing through challenging times. Production for both passenger and commercial vehicles has been cut drastically during the quarter gone by. The Company is navigating through these difficult times by focusing on all-round cost reduction on one hand, and renewed focus on exports on the other," said Raghupati Singhania, Chairman & Managing Director of the Company.

JK Tyre recorded an impressive 20 per cent increase in sales in 2/3 wheeler tyres in the current quafier, compared to preceding quarter, though it is a new entrant in this segment, Singhania added.

The tyre manufacturer also expects the economy improve in the second half of the current financial year (FY20) saying the the green shoots are already visible with some improvement in economic activity.

At 09:47 am, the stock was trading nearly 11 per cent higher at Rs 77.85 apiece on the BSE. In comparison, the benchmark S&P BSE Sensex was trading at 40,263 levels, up 211.50 points or 0.53 per cent.

So far in the calendar year 2019, the stock of the company has underperformed the market by falling over 32 per cent (as of Wednesday's close) as against a nine per cent rise in the Nifty50 index

Tata Global Beverages rallies 6%, nears record high on healthy Q2 numbers

Shares of Tata Global Beverages rallied 6 per cent to Rs 309 on Thursday, gaining 10 per cent in the past three trading days on the BSE, after the company reported a strong set of numbers for the quarter ended September 2019 (Q2FY20). The stock of Tata Group Company was quoting at its 52-week high level and was close to its all-time high price of Rs 329, touched on the BSE in January 2018.

The company’s profit before taxes (PBT), excluding one-off items included under other Income in the prior year, grew 28 per cent year-on-year (YoY) at Rs 192 crore in Q2FY20. Consolidated net profit jumped 45 per cent to Rs 160 crore on YoY basis.

The consolidated revenue from operations during the quarter increased 4 per cent to Rs 1,834 crore, driven by improvements in both branded and non-branded business. In the constant currency (CC) terms, revenue grew 5 per cent. EBITDA (earnings before interest, tax, depreciation and amortisation) margin improved 100 basis points (bps) to 12.9 per cent.

The management said improvement is driven by branded business, both India and international, coupled with stable performance in non-branded businesses. The India business recorded continued value and volume growth. The flagship brands in India recorded good growth and the company will continue to focus on white space opportunities in the Indian market. International markets reflected volume growth in both tea and coffee, it added.

The joint venture company Tata Starbucks clocked a 26 per cent growth in revenue for the quarter. It entered Gujarat in August, with 10 stores, now has total 163 stores spread across 10 cities in India. The consumer connection scores are at an all time high, the company said.

At 10:20 am, the stock was trading 5 per cent higher at Rs 305, as compared to a 0.44 per cent rise in the S&P BSE Sensex. The trading volumes on the counter surged nearly four-fold with a combined 9 million shares changing hands on the NSE and BSE so far.

Infosys surges nearly 5% today; should you buy the stock?

Leading information technology (IT) players such as Infosys, HCL Tech, and Tata Consultancy Services (TCS) were trading in the positive territory on Thursday. Infosys (up over 4.50 per cent) was the top performer on the S&P BSE Sensex, while TCS was trading close to its all-time high of Rs 2,296 on the BSE. HCL Tech, too, was trading nearly a per cent higher. Tech Mahindra, however, was trading over a per cent lower at Rs 747.40 apiece on the BSE.

Shares of Infosys were trading higher for the fifth straight day, up 9 per cent in past one week, as compared to a three per cent rise in the benchmark index. Prior to that, share price of Infosys slipped 17 per cent in just three trading days from Rs 768 to Rs 635 after an anonymous whistleblower group called 'Ethical Employees' alleged that the company’s current management was taking 'unethical' steps to spur short-term revenue and profits.

According to the whistleblower's complaint to US Securities and Exchange Commission and the board of Infosys, the Bengaluru-based firm's current CEO Salil Parekh was not taking necessary approvals before entering into large deals. "Several billion-dollar deals of last few quarters have nil margin," the letter said. "In large contracts like Verizon, Intel, joint ventures (JVs) in Japan, ABN AMRO acquisition, revenue recognition matters are forced," the letter added.

Post the development, the company issued a statement saying the board was committed to uphold highest standard of corporate governance and protect the interests of all stakeholders.

SHOULD YOU BUY THE STOCK

Analysts at Edelweiss Securities remain positive on the stock saying they have full faith on the company's fundamentals and that it is well on course to outclass the industry. "Infosys has corrected by 14 per cent over the past 12 days in the wake of a whistle-blower complaint, alleging misdemeanors by management. The knee-jerk correction in the stock price implies it now trades at a mouth watering 16.5x FY20E EPS, thereby widening its discount to TCS (which has a similar growth profile) to 35 per cent from 19 per cent," they wrote.

The brokerage has increased Infosys’s weightage in its model portfolio from 15 per cent earlier to 27 per cent. It has maintained ‘BUY’ rating on the stock with the target price of Rs 955, implying 20x Q4FY21E EPS.

Ambareesh Baliga, independent market analyst, too feels the correction in the stock provides a good opportunity for the investors to buy the stock.

"The allegations are trivial compared to what is followed by most of the listed entities – booking personal expenses, booking future income, postponing expenses etc to boost profits is done by most of the list entities. It becomes a big news as the entity involved is supposedly the epitome of Corporate Governance," Baliga said.

In case, the allegations are proven, the CEO and CFO would have to go, taking us back to the situation when Vishal Sikka had to go. However, in such a situation, the new CEO/CFO would be clear on what Corporate Governance means in Infosys. And if the allegations are proven to be false, we could see an immediate bounce. Either ways it could be good entry point, the analyst added.

As regards the IT sector, Edelweiss Securities remains bullish. "Record deal-wins, an encouraging deal pipeline and sanguine management commentaries on demand strengthen our conviction in the Indian IT’s solid earnings trajectory," the brokerage said in a note dated October 30.

Tata Motors hits 5-month high; zooms 42% in four days on strong Q2 results

Shares of Tata Motors hit a five-month high of Rs 180, up 4 per cent on the BSE on Thursday, zooming 42 per cent in the past four days, after it delivered a better-than-expected September quarter (Q2FY20) earnings show, with improvement in the operational performance at Jaguar Land Rover (JLR), its Britain-based luxury vehicle arm. The stock of the Tata Group's company was trading at its highest level since May 29, 2019.

In Q2FY20, Tata Motors’s consolidated net loss narrowed to Rs 217 crore, from Rs 1,049 crore reported in the year-ago period, while net revenue dropped nine per cent to Rs 65,432 crore. Driven by an improvement in JLR’s operational metrics, earnings before interest, tax, depreciation and amortisation (Ebitda) in the quarter rose 250 basis points (bps) to 12.4 per cent, the highest in 16 quarters.

The management hopes that measures announced by the government, as well as their commitments to significant front-end infrastructure investments, introduction of scrappage policy, and ensuring adequate liquidity to micro, small & medium enterprises (MSMEs) will improve the situation in the coming months.

The board approved preferential allotment / warrants to Tata Sons aggregating Rs 6,500 crore at Rs 150/share and implying dilution of 13 per cent. This will help deleverage the standalone balance sheet and is a positive signal for the stock sentiment.

“The progress on cost savings program and improvement in China is driving the much-needed margin improvement at JLR. India business, however, registered a big loss mainly due to sharp CV slowdown, though we think worst is over with large channel clean-up done”, analysts at JP Morgan said.

Going ahead, analysts at JM Financial Institutional Securities believe that in H2FY20, JLR can show an improvement in quarterly sales, while China JV sales will continue to decline albeit at a slower pace.

"After witnessing a strong performance by JLR during Q2FY20, efficacy of ‘Project Charge’ is not under question," it said. The brokerage firm maintains ‘buy’ rating on Tata Motors with 12-month target price of Rs 230 per share.

At 01:08 pm, the stock was trading 3.7 per cent higher at Rs 178 on the BSE, as compared to a 0.59 per cent rise in the S&P BSE Sensex. A combined 57 million shares have changed hands on the counter on the NSE and BSE till the time of writing of this report.

Rescuing India's PSU behemoths coming at the cost of fiscal restraint

For years India’s state-run companies coughed up hefty dividends when the government needed cash. Now the treasury is being forced to return the favor.

Prime Minister Narendra Modi will spend about $9.5 billion to resuscitate telecom firms Bharat Sanchar Nigam Ltd. and Mahanagar Telephone Nigam Ltd., Telecom Minister Ravi Shankar Prasad said at a briefing last week. The government is already pumping 300 billion rupees of tax payers’ money into state-run Air India Ltd., while fighter-jet maker Hindustan Aeronautics Ltd. has been borrowing to pay employees this year after parting with its cash reserves as dividends to the government.

Protests by angry employees at the telecom companies demanding that salaries be paid on time are piling pressure on Modi. The risk is that placating them could widen the 7 trillion rupee ($99 billion) hole in public finances, which has already pushed the government to resort to record borrowings.

Modi has received more than $28 billion from state firms since he came to power in 2014, by extracting dividends or getting them to buy out the government’s stake in other state companies, data compiled by Bloomberg show. While previous administrations also resorted to similar measures, the payouts have risen almost 60 per cent from the levels seen under Modi’s predecessor.

The numbers exclude dividends from the Reserve Bank of India and state-run banks. MTNL last paid a dividend of 6.3 billion rupees in the financial year ended March 2009.

“India has been killing the geese that were laying the golden eggs,” said Madhavi Arora, an economist at Edelweiss Securities Ltd. in Mumbai. “It just doesn’t have the resources at hand right now to write big checks to revive or shut down some of the behemoths.”

Arora says the government will resort to fire sales of some of these companies, while also auctioning some better-performing ones. That may explain why the government has, for now, left its borrowing target for the year through March 2020 unchanged.

There’s also growing expectation that the government will do an accounting sleight of hand to keep its deficit in check: borrow via state-owned firms and issue special bonds. Total public sector borrowings have reached as much as 9 per cent of gross domestic product by one estimate and a Bloomberg survey predicts the federal shortfall will widen to 3.9 per cent -- versus the 3.4 per cent target -- due to the government’s $20 billion tax break for companies.

The S&P BSE PSU index, which tracks 61 public sector units, has fallen 2.5 per cent this year compared with an 11 per cent gain in the benchmark gauge. Yields on top-rated 10-year bonds sold by state companies have dropped 61 basis points in 2019, less than the 87 basis point decline for sovereign yields.

“The government is unable to maximize the value of its central public sector enterprise ownership due to low valuations of government-owned companies,” analysts at Kotak Institutional Equities Research, led by Sanjeev Prasad, wrote in a report. “This route of revenue mobilization may run out in 1-2 years.”

Jio in letter war with COAI over telecom stress

Reliance Jio slammed its peers, Bharti Airtel and Vodafone Idea, and questioned the telecom sector stress in a strongly worded letter to the Cellular Operators Association of India (COAI).

This started on October 24, when the Supreme court dismissed a plea moved by the telecom operators, challenging the definition of adjusted gross revenue (AGR).

The verdict allows the government to recover Rs 92,000 crore of AGR from the already financially stressed telecom industry that includes many operators who’ve already gone out of business or are under insolvency proceedings.

However, the incumbent telcos Bharti Airtel and Vodafone Idea reacted strongly to the judgment. While Bharti believes it would weaken the viability of the telecom sector, Vodafone has said it may consider filing a review application.

Shares of Bharti Airtel and Vodafone Idea reflected the verdict’s adverse impact on the telcos during that day, but recovered later.

In view of this, the COAI had written to Communications Minister Ravi Shankar Prasad, on Tuesday, October 29, claiming that the Supreme Court (SC) judgment on the adjusted gross revenue (AGR) will lead to a monopoly in the sector and the government’s digitisation programme will suffer.

But Jio has a different point of view! To know more listen to this podcast...

Govt not considering any proposal for gold amnesty scheme: Report

The government is not considering any gold amnesty scheme as part of efforts to unearth unaccounted wealth stashed in the form of yellow metal, official sources said on Thursday.

The clarification comes amidst media report indicating the government move to launch amnesty scheme that will allow individuals and entities to declare their unaccounted gold holding without risk of being prosecuted.

There is no such gold amnesty scheme under consideration of Income Tax Department as being reported in media, the sources said.

As the budget process is on, typically these type of speculative reports do appear ahead of budget process, they said.

Reports indicated that scheme would try to overcome limited success of an earlier amnesty scheme Pradhan Mantri Garib Kalyan Yojana (PMGKY), also known as IDS-II, launched in 2017, post-the demonetisation exercise.

It was reported that the new amnesty scheme would allow gold hoarders a chance to come clean on investment made using black money by declaring their possession and paying tax on it.

The tax will have to be paid on entire value of gold declared by an individual that has been purchased without any receipt, as per the reports.

It is estimated that the total stock of gold held by Indians will be about 20,000 tonnes. However, the actual holding after taking into account unaccounted imports, ancestral holdings etc should actually be in the region of 25,000-30,000 tonnes.

As part of efforts to curb black money, the government's decided to demonetise old Rs 500 and Rs 1,000 notes on 8 November, 2016.

As much as 99.3 per cent of the junked Rs 500 and Rs 1,000 notes have been returned to the banking system.

Of the Rs 15.41 lakh crore worth Rs 500 and Rs 1,000 notes in circulation on November 8, 2016, when the note ban was announced, notes worth Rs 15.31 lakh crore have been returned.

Cognizant to exit Facebook content review contract, 6,000 jobs under threat

Cognizant Technology Solutions Corp , one of Facebook Inc's content review contractors, said on Wednesday it would shut some content moderation business, including those focusing on identifying objectionable content, resulting in about 6,000 job cuts.

The information technology services provider will also eliminate up to 7,000 jobs in its other units to invest in growth areas such as cloud and internet of things to cushion the impact from a decline in spending by its financial customers.

The exit from some parts of the content moderation business will hurt financial performance in the coming year, Cognizant said.

Chief Executive Officer Brian Humphries said on a call with analysts the company had decided that work focused on determining whether content violated client standards was not part of its strategic vision. The work "can involve objectionable materials," he said.

Cognizant had about 500 workers in India's southern city of Hyderabad looking for sensitive topics or profane language in Facebook videos, Reuters reported in May. The Verge also reported that some Cognizant employees scouring potentially objectionable content for Facebook faced difficult conditions.

A Cognizant spokesman did not say whether the Verge story led to the decision described on Wednesday. The spokesman said the move reflected the company's new strategy and that Cognizant was not completely exiting content moderation.

"We'll work with our partners during this transition to ensure there's no impact on our ability to review content and keep people safe," said Arun Chandra, vice president of scaled operations at Facebook.

Facebook works with at least five outsourcing vendors in at least eight countries on content review, according to a Reuters tally.

In response to this change, Facebook will increase the number of reviewers at a review site in Texas, which is operated by a different partner, Chandra added.

Facebook's spokesperson said the company's current plan is to move some work to another content review site operated by Genpact Ltd in Texas.

The social network said in December it has about 15,000 people, a mix of contractors and employees, working on content review and had over 20 content review sites around the world.

Cognizant had come under pressure after activist investor Elliott urged the company to boost shareholder value after disclosing a more than 4% stake in November 2016. The hedge fund exited the stake last year.

The company said it expects to save between $500 million and $550 million in 2021 and record restructuring charges of between $150 million and $200 million by the end of next year.

The New Jersey-based company said revenue from its financial services segment rose 1.9% to $1.49 billion while that from healthcare services dropped 1.2% to $1.18 billion. The two segments make up more than half of the company's total revenue.

Cognizant has warned of lower spending by its banking sector clients in the second half of the year.

The company said it now expects full-year revenue growth of between 4.6% and 4.9%, compared with its earlier guidance of a growth of between 3.9% and 4.9%.

Excluding items, the company earned $1.08 per share, above estimates of $1.05 per share.

Facebook records 29% rise in revenue as user base continues to grow

Despite regulatory woes, privacy scandals and backlash from governments the world over, Facebook has once again posted strong results for its third quarter that ended on September 30.

The social networking giant reported net income of $6.09 billion -- compared with $5.14 billion in the year-ago period while revenue jumped 29 per cent to $17.65 billion from $13.73 billion a year ago.

Advertising sales accounted for 98 per cent of the total revenue.

"We had a good quarter and our community and business continue to grow. We are focused on making progress on major social issues and building new experiences that improve people's lives around the world," Facebook CEO Mark Zuckerberg said in a statement late Wednesday.

Daily active users (DAUs) were 1.62 billion on average for September 2019, an increase of 9 per cent year-over-year while monthly active users (MAUs) reached 2.45 billion -- an increase of 8 per cent (YoY).

Mobile advertising revenue represented approximately 94 per cent of advertising revenue for the third quarter of 2019, up from approximately 92 per cent of advertising revenue in the third quarter of 2018.

Facebook today employs 43,030 people -- an increase of 28 per cent year-on-year.

"We estimate that around 2.2 billion people now use Facebook, Instagram, WhatsApp, or Messenger every day on average, and around 2.8 billion people use at least one of our Family of services each month," said Facebook.

Facebook on Wednesday agreed to pay 500,000 pound fine as part of a settlement with the UK's data protection watchdog over the Cambridge Analytica scandal.

The company has paid a record $5 billion fine this year to the US Federal Trade Commission for privacy violations.

Cognizant Sept quarter net up 4.1% at $497 million; to cut 12,000 jobs

IT major Cognizant on Thursday posted 4.1 per cent increase in net profit to $497 million for September 2019 quarter, and said it will slash up to 7,000 jobs in the next few months as part of a cost reduction programme.

The US-based company, which has a significant portion of its workforce based in India, had posted a net profit of $477 million in the year-ago period.

It has also raised its annual revenue growth outlook to 4.6-4.9 per cent for 2019.

Its revenue grew 4.2 per cent to $4.25 billion in the third quarter, compared to $4.07 billion in the year-ago period, Cognizant said in a statement.

The topline rose 5.1 per cent on constant currency basis, exceeding the guidance of 3.8-4.8 per cent revenue growth given for the third quarter.

The company has also raised the lower-end of its annual revenue growth guidance. It now expects its topline for the fiscal to grow 4.6-4.9 per cent in constant currency basis, from its previous expectation of 3.9-4.9 per cent.

It expects its October quarter year-on-year revenue growth to be in the range of 2.1-3.1 per cent in constant currency basis.

"Over the past few months, we've sharpened Cognizant's strategic posture and begun executing plans aimed at improving our competitive positioning," Cognizant CEO Brian Humphries said.

He added that the company is now announcing a simplification of its operating model and a cost reduction programme that will allow it to fund investments in growth.

Cognizant will remove about 10,000-12,000 mid-to-senior level associates worldwide from their current roles in coming quarters, it said.

The gross reduction is expected to lead to a net reduction of approximately 5,000 to 7,000 roles (about 2 per cent of its total headcount) and re-skilling and redeployment of about 5,000 of the total associates impacted.

"We expect the remaining 5,000-7,000 associates to exit the company by mid-2020 either through attrition or role elimination," Cognizant CFO Karen McLoughlin said.

The company has not detailed out the geographies that would be impacted by the reductions.

However, given that India accounts for the biggest share of the company's headcount, the impact of these layoffs is expected to be significant.

Cognizant's total headcount stood at 2,89,900 people at the end of September 2019 quarter. The company had recently stated that its headcount in India has crossed the two-lakh mark.

"Looking ahead, we see a clear path to unlock the organisation's full growth potential, win in our key digital battle-grounds, and return Cognizant to its historical position of being the bellwether of the IT services industry," Humphries said.

The optimisation of cost structure is expected to result in total charges of approximately $150-200 million, primarily related to severance and facility exit costs.

This is expected to result in an annualised gross savings run rate of approximately $500-550 million in year 2021, the company said.

Cognizant saw its financial services segment - which accounted for over 35 per cent of the company's revenues - posting 1.9 per cent growth in constant currency terms, while healthcare decreased 1.2 per cent.

Samsung warns of tepid mobile business profit, bets on chip sales instead

Samsung Electronics warned of a smaller mobile business profit on Thursday as its rival Apple gave a positive iPhone sales outlook, dampening hopes new models will help the world's largest smartphone vendor finally get back on a growth track.

Investors have pinned their hopes on a recovery in the mobile business that once made up over half of Samsung's profit, as its chip operation remains in the doldrums due to over-supply and weak global demand.

Strong sales of the Galaxy Note 10 smartphone helped the South Korean firm report its best mobile business profit in six quarters in the three months ended in September, as it recovers from a battery explosion scandal in late 2016 that hurt sales.

The mobile business posted a 32% rise in operating profit to 2.9 trillion won ($2.5 billion) in the third quarter, the highest since the first quarter of 2018.

But Samsung warned that fourth-quarter mobile earnings would decline as marketing costs rise and sales of flagship models soften from their post-launch peaks.

The downbeat forecast came hours after Apple Inc said holiday-quarter sales would beat Wall Street expectations, citing demand for services, wearables and its latest iPhones.

"The new smartphone effect will likely fizzle out in the fourth quarter, as people don't find Samsung's new Note model, which came out several months ago, very attractive anymore," said Song Myung-sup, an analyst at HI Investment & Securities.

"That will result in a drop in shipments and eventually less profit."

Lee Jong-min, Samsung's vice president of mobile communications business, told an earnings call that mobile was on a downward trend.

"Although the mobile market in general will soon enter a period of a strong year-end seasonality, demand is expected to keep trending down year-on-year due to persistent uncertainties in the global macro environment," he said.

Samsung is betting on growth in the markets for 5G and foldable phones next year.

Just this week it unveiled a design for a phone that can fold into a square, hinting at its next innovation in the foldable segment.

Samsung's smartphone shipments rose by 8% in the third quarter to 78.2 million phones, outgrowing Apple whose iPhone sales dropped by 3%, according to Strategy Analytics.

Analysts say Samsung's smartphone sales were boosted by US sanctions on Huawei Technologies [HWT.UL], which hurt the Chinese firm's mobile business in the global market.

Chip Recovery

In contrast to its caution over the mobile sector, Samsung said chip sales should pick up next year with positive signs for demand from data-centre customers and 5G smartphone manufacturers.

The world's largest memory chipmaker said September-quarter operating profit fell by 56% to 7.8 trillion won ($6.7 billion), slightly above the 7.7 trillion won estimate the company released earlier. Revenue fell 5.3% to 62 trillion won, in line with its earlier estimates.

The semiconductor business - by far Samsung's main source of income - reported operating profit of 3.1 trillion won, less than a quarter of its take in the same period last year amid oversupply and falling global demand for electronics.

Samsung's profit has slumped on-year for four consecutive quarters and is expected to fall again in the current quarter, before recovering next year on the back of stronger chip sales, analysts say.

"Global 5G smartphone sales will be in full swing next year, supporting solid memory-chip demand growth," said analyst Park Sung-soon at Cape Investment & Securities.

Samsung cautioned that prospects for semiconductor sales in 2020 were shrouded in uncertainty around the macroeconomic environment, a likely reference to the future of US-China trade relations.

Boeing grounds up to 50 737NG aircraft globally after detecting cracks

Boeing announced Thursday up to 50 of its popular 737NG planes had been grounded after cracks in them were detected, in another blow to the US aircraft maker following two deadly crashes.

Australian national carrier Qantas became the latest airline to take one of the planes out of the air, as it said it would urgently inspect 32 others but insisted passengers had nothing to fear.

The announcement by Qantas came after authorities in Seoul said nine of the planes were grounded in South Korea in early October, including five operated by Korean Air.

Boeing had previously reported a problem with the model's "pickle fork" -- a part which helps bind the wing to the fuselage.

This prompted US regulators to early this month order immediate inspections of aircraft that had seen heavy use.

Following the Qantas announcement, a Boeing spokesperson on Thursday told AFP in Sydney that less than five percent of 1,000 planes had cracks detected and were grounded for repair.

The spokesperson did not give an exact figure, though five percent equates to 50 planes of 1,000 inspected.

Boeing and Qantas stressed travellers should not be concerned. "We would never operate an aircraft unless it was completely safe to do so," Qantas head of engineering Chris Snook said.

But the discovery has heightened fears that the scale of the 737NGs' problem may have been underestimated.

The US Federal Aviation Administration had initially ordered immediate checks of Boeing 737NG planes that had flown more than 30,000 times.

But Qantas said it had found the fault in a more lightly used aircraft than those singled out for early checks; one that had recorded fewer than 27,000 flights. "This aircraft has been removed from service for repair," Qantas said in a statement, adding it had hastened its inspections of 32 other 737NG planes to be completed by Friday.

The airline said it generally used the aircraft on domestic routes, flying primarily between major cities as well as shorter-haul trips to New Zealand.

A spokesman for Australia's aviation regulator said the industry response was about "nipping a potential safety problem in the bud by taking proactive action now". Australia's Virgin Airways also conducted checks on its 17 Boeing 737NG planes and did not find any issues, the regulator spokesman added.

But there were calls for Qantas to ground its entire 737 fleet until checks were complete.

"These aircraft should be kept safe on the ground until urgent inspections are completed", an engineers' union representative, Steve Purvinas, said in a statement. Qantas described the call to ground its 737 fleet as "completely irresponsible". "Even when a crack is present, it does not immediately compromise the safety of the aircraft," said Snook.

Stephen Fankhauser, an aviation expert at Australia's Swinburne University of Technology, said that the parts were designed so the "structure can tolerate some level of damage or degradation".

"The inspection period is set to ensure the cracks do not continue to grow to a dangerous length and then significantly compromise the strength of the airframe," he said.

A Boeing spokesperson said the company "regrets the impact" the issue was having on its customers and was "working around the clock" to fix the problem. "Boeing is actively working with customers that have airplanes in their fleets with inspection findings to develop a repair plan, and to provide parts and technical support as necessary," the spokesperson said in a statement. The NG is a precursor plane to the Boeing 737 MAX, which has been grounded since mid-March following the two deadly crashes in Indonesia and Ethiopia. Boeing is still trying to restore its safety reputation after two 737 MAX crashes last year that killed 346 people and highlighted problems with the planes' flight handling software. Boeing chief executive Dennis Muilenburg faced another round of tough questions on Wednesday from US lawmakers who accused the company of a "lack of candour" over the crashes.

Cognizant unveils restructuring plan; to reduce headcount by 7,000

IT major Cognizant, based in Teaneck, US, on Thursday announced a significant realignment in its current operations with plans to cut around 7,000 mid to senior level jobs apart from exiting its content business, expected to impact another 6,000 employees.

The company, which posted largely expected numbers for the third quarter ended September 30, unveiled these steps as part of its '2020 Fit for Growth Plan'. The Nasdaq-listed IT services firm, which competes fiercely with Indian IT services firms such as TCS and Infosys, has close to 200,000 employees located across 13 centres in the country which translates to around 70 per cent of its global headcount.

In the September quarter of 2019, Cognizant's net profit rose 4.1 per cent on year-on-year basis (YoY) to $497 million as compared to $477 million posted in the corresponding period of previous year. On a sequential basis, net profit declined by 2.4 per cent.

For the September quarter, revenues stood at $4.25 billion, a growth of 4.2 per cent YoY and 2.65 per cent when compared with the preceding quarter. In constant currency terms, revenues rose 5.1 per cent over the same period last year. Digital revenue growth came in the mid-20 per cent range in the third quarter and represented 35 per cent of the company’s total revenue.

For the whole year, Cognizant increased the lower end of its revenue guidance and said it was expecting its revenues to grow at 4.6-4.9 per cent in constant currency terms in 2019 as against its previous guidance of 3.9-4.9 per cent.

As part of its restructuring, Cognizant said it would remove 10,000-12,000 mid-to-senior employees from their current roles, and re-skill and redeploy about 5,000 of those impacted. Thus, the IT firm is likely to witness a net reduction of around 5,000 to 7,000 employees, either through attrition or role elimination. This accounts for around two per cent of its total employee base.

"Today, we are announcing a simplification of our operating model and a cost reduction programme, which will allow us to fund investments in growth. Looking ahead, we see a clear path to unlock the organization's full growth potential, win in our key digital battlegrounds, and return Cognizant to its historical position of being the bellwether of the IT services industry," said Brian Humphries, CEO, Cognizant.

Cognizant will also exit its content moderation business for clients such as Facebook, which will impact around 6,000 employees. "Exiting this area will impact an additional approximately 6,000 roles worldwide, though the company intends to work with its partners to explore ways to transition the roles to alternative vendors, thereby reducing the impact on associates," the IT firm said.

The exit from content moderation business would result in an annualised revenue loss of $240-$270 million for the company and impact its communication & media vertical.

However, Cognizant noted that all these business realignment moves would lead to significant cost savings for the firm next year. "The optimization of our cost structure is expected to be substantially complete by the end of 2020 and result in total charges of approximately $150-200 million primarily related to severance and facility exit costs," the company said. "This is expected to result in an annualized gross savings run rate of around $500-550 million in 2021."

In the September quarter, operating margin of the IT services firm expanded by 80 basis points in sequential term to 15.7 per cent. However, margin declined by 270 basis points on YoY basis.

Among business verticals, Cognizant reported a 1.9 per cent YoY growth in its financial services segment, which accounted for more than 35 per cent of its revenues. Revenue from healthcare, another key vertical, dropped 0.9 per cent during this period. Communications, media & technology vertical contributing 14.5 per cent of the company’s total revenues grew 10.6 per cent in constant currency on YoY basis.

In the just ended quarter, Cognizant’s employee attrition rate stood at 24 per cent, a rise of 100 basis points over the last quarter and 200 basis points over the same period of last year. Total headcount of the company rose 1,700 on net basis and stood at 289,900 by the end of September quarter.

Yes Bank receives $1.2 billion binding offer from global investor

India's private sector lender Yes Bank Ltd said on Thursday it has received a binding offer from a global investor for an investment of $1.2 billion via fresh issue of shares.

The bank said it was in advanced talks with other investors.

Yes Bank gets $1.2-bn binding offer from global investor; shares zoom 35%

Private lender YES Bank on Thursday said it has received a binding offer from a global investor for an investment of $1.2 billion through fresh issuance of equity shares.

Following the announcement, the shares of YES Bank went up as much as 35 per cent in intraday trading at the time of writing this report.

“The Bank would like to inform that it has now received a binding offer from a global investor for an investment of $1.2 billion in the bank through fresh issuance of equity shares, subject to regulatory approvals as well as bank's board and shareholders approvals”, said the lender in an exchange filing.

“The Bank also continues to be in advanced discussions with other global and domestic investors”, the lender added.

The bank, last month, had said that it had received strong interest from multiple foreign as well as domestic private equity and strategic investors for capital raising, and remains firmly on course to raising growth capital subject to the necessary approvals.

The bank was said to have been in talks with global technology companies to become a strategic investor in the bank.

In August this year, the lender had raised Rs 1,930 crore via qualified institutional placement.

Initially, YES Bank had plans to raise $1 billion. However, that could have entailed a much higher dilution, given the weakness in the lender’s stock price. Shares of the bank are down nearly 80 per cent from their level of nearly Rs 400 a year ago.

YES Bank needs funds to meet Basel-III capital requirements norms, to ensure adequate capital to support growth and expansion. Currently, the bank is just around the minimum regulatory threshold and is in need to replenish. The minimum regulatory requirement is 7.375 per cent till March 2019 and 8 per cent till March 2020.

The bank has seen turbulent times in the past few months and is in the process of cleaning up its books. The private lender reported a huge decline in its June quarter net profit to Rs 114 crore compared to Rs 1,109 crore in the same period last financial year. In the preceding quarter, the bank had a posted a loss of Rs 1,507 crore.

The bank’s growth as well as its Tier-1 capital has been suffering because of higher provisions. The bank provided Rs 3,661 crore in March quarter and Rs 1,784 crore in the June quarter of FY20. The lender is also seeing its slippages rise. The bank has considerable exposure to the struggling NBFC sector and to the Anil Dhirubhai Ambani Group.