BENGALURU: Amazon has intensified its legal battle against Future Group and its promoter -Kishore Biyani-with a new case in the Delhi high court to enforce the Singapore arbitration ruling in India, which had stayed the Rs 24,731 crore Reliance-Future deal. The Singapore International Arbitration Centre (SIAC) in October granted an interim relief to Amazon by asking Future to put on hold its merger with Reliance. Amazon’s petition in the court, reviewed by TOI, said Biyani-led Future Group ‘deliberately and maliciously’ disobeyed the international arbitration ruling from SIAC. The filing showed it also sought detention of Biyani in a ‘civil prison’ and attaching his assets to the case. In its bid to block the completion of Reliance-Future deal, the petition has sought an injunction from the court to direct Future Group from taking any steps to complete the disputed transaction with any entities that are part of the Reliance Group. This includes any ‘direct or indirect transfer’ of Future Group assets to Reliance, according to Amazon’s plea to the court. Future Retail, in a filing to the BSE on Monday evening, said Amazon’s lawyers have informed the company of the case and it will defend the case. An Amazon India spokesperson declined to comment on the matter. Amazon’s latest move underscores the importance of the Indian market where it is fighting a bigger battle with Reliance Industries chairman Mukesh Ambani, who is scaling up the new commerce venture with JioMart. The global e-commerce major has also sought directions from the court to restrict Future Group from relying on any regulatory or local agency approval to go ahead with the merger. Last week, market regulator Sebi gave a conditional nod to the Reliance-Future deal while antitrust regulator Competition Commission of India (CCI) gave its approval in November. Prior to this, Future in its case against Amazon had asked the court to restrict the latter from ‘interfering’ in the deal completion process by writing to the regulators. The court did not grant this to Future among its other observations. Separately, Amazon has filed an application to review this ruling from the court as well.
NEW DELHI: Country’s largest software exporter Tata Consultancy Services (TCS) on Monday surpassed Reliance Industries Ltd to become the country’s most valued firm by market capitalisation. In another milestone, TCS also emerged as the most valued IT company in the world as its market valuation went past that of Accenture. During the close of trade, the market valuation of TCS was at Rs 12,34,609.62 crore while that of Reliance Industries Ltd (RIL) stood at Rs 12,29,661.32 crore on the BSE. TCS dipped 0.40 per cent to close at Rs 3,290.20 after gaining 1.26 per cent to its one-year high of Rs 3,345.25 during the day. Shares of RIL declined 5.36 per cent to close at Rs 1,939.70 on the BSE after its earnings failed to cheer investors. In March last year also, TCS had reclaimed the status of the country’s most valued firm by market valuation. So far this month, TCS shares have gained nearly 13 per cent on the BSE. Multinational tech firm Accenture’s market capitalisation was at $168.44 billion as of Friday close on the NYSE. As of Monday, TCS valuation in dollar terms was at $169.26 billion. Tech giant SAP’s market valuation was at $155.50 billion and that of IBM was at $105.69 billion. Market capitalisation of companies changes daily with movement in their stock prices.
MUMBAI: The Reserve Bank of India (RBI) on Monday refuted reports of withdrawal of old series of Rs 100, Rs 10 and Rs 5 currency notes. “With regard to reports in certain sections of media on withdrawal of old series of Rs 100, Rs 10 & Rs 5 banknotes from circulation in near future, it is clarified that such reports are incorrect,” the RBI said in a tweet. While announcing the issuance of new Rs 100 denomination banknotes with base colour lavender in July 2018, RBI had said banknotes in the denomination of Rs 100 issued by it in the earlier series will continue to be legal tender.
NEW DELHI: Google employees from across the globe are forming a union alliance, weeks after more than 200 workers at the search engine giant and other units of parent company Alphabet Inc formed a labor union for US and Canadian offices. Alpha Global was formed in coordination with UNI Global Union, a union federation that represents about 20 million workers globally, and includes unions from countries such as the United States, Germany, Switzerland, Sweden, and the UK, UNI Global Union said. “The problems at Alphabet – and created by Alphabet – are not limited to any one country, and must be addressed on a global level,” UNI’s general secretary Christy Hoffman said. Alphabet was not immediately available to comment.
NEW DELHI: Equity indices plunged on Monday with the benchmark BSE sensex falling over 500 points dragged by losses in IT and FMCG stocks. The 30-share BSE index fell 531 points or 1.09 per cent to finish at 48,348; while the broader NSE Nifty settled 133 points or 0.93 per cent lower at 14,239. Reliance, IndusInd Bank, HCL Tech, Asian Paints, Ultra Cemco and PowerGrid were the top losers in the sensex pack falling as much as 5.36 per cent. While Axis Bank, Sun Pharma, Bajaj Auto, Bajaj FinServ, HDFC Bank and Dr Reddy were the top gainers rising up to 2.19 per cent. On the NSE platform, sub-indices Nifty IT, Realty and FMCG fell as much as 1.70 per cent. Shares of Reliance Industries fell after the company reported a near 30 per cent decline in revenue at its oil-to-chemical business for the December quarter. Analysts are of the view that markets may remain volatile in this holiday-shortened week amid monthly derivatives expiry, quarterly earnings and the upcoming Union Budget. “Today is a day of volatility after the correction on Friday … It remains a buy on dip market,” Samrat Dasgupta, chief executive officer at Esquire Capital Investment Advisors told news agency Reuters. Meanwhile, foreign institutional investors (FIIs) offloaded Indian equities worth Rs 635.69 crore on a net basis on Friday. (With inputs from agencies)
NEW DELHI: India’s economy showed signs a recovery is taking root as waning virus cases and a vaccine roll-out supported sentiment and as focus turns to further stimulus possible in the upcoming Union Budget 2021-22. The needle on a dial measuring overall economic activity was unchanged at 5 last month, indicating the economy was coasting along in the fast lane. Although seven of the eight high-frequency indicators tracked by Bloomberg News held steady and one deteriorated, the gauge uses the three-month weighted average to smooth out volatility in the single-month readings.
With new infections dipping sharply over the last few months and a nationwide vaccine roll-out put in place this month, consumer confidence and demand look set to grow further. The recovery might get a boost from fresh stimulus in the upcoming budget, which Finance Minister Nirmala Sitharaman will present Feb. 1, one of the most high-profile and highly anticipated events on the government’s calendar. Business activity Activity in India’s dominant services sector expanded for a third straight month in December, although at a slower pace. The Markit India Services Purchasing Managers’ Index came in at 52.3 in December from 53.7 a month earlier, with a reading above 50 indicating expansion. Hiring activity, however, suffered due to liquidity concerns and labor shortages, among other issues. Coronavirus outbreak: Live updates Manufacturing activity continued to strengthen in December, with businesses stepping up production amid efforts to rebuild inventories. The seasonally adjusted manufacturing Purchasing Managers’ Index was at 56.4, a tick higher than November’s 56.3. Input price pressures were witnessed broadly across both sectors, a factor that is likely to prevent headline inflation from easing sharply in the coming months. Exports Exports regained some ground last month backed by healthy performance of sectors such as iron ore, electronic goods, drugs and pharmaceuticals.
“While intermittent hiccups may persist, we are hopeful that the performance of exports will strengthen in the coming months, as the Covid-19 vaccine roll-out gathers speed in the major trading partners,” said Aditi Nayar, principal economist at ICRA Ltd, in New Delhi. With activity in the economy normalizing, imports also picked up last month and the trade gap expanded. Consumer activity Passenger vehicle sales, a key indicator of demand, rose nearly 14% in December from a year ago, with two-wheeler sales witnessing robust growth. The Reserve Bank of India said in its latest monthly bulletin that the employment situation would brighten in the coming months and that could give a boost to consumer confidence, setting the economy up for a V-shaped recovery.
Demand for loans picked up from lows seen in October. Central bank data showed credit grew at more than 6% as of end-December from a year earlier — higher than the 5.1% growth seen in the second half of October. Liquidity conditions were tighter amid advance tax outflows last month. Industrial activity Industrial production shrank 1.9% in November from a year earlier. Production of capital goods declined 7.1%, although infrastructure and construction goods showed a slight expansion of 0.7% from a year ago. Output at infrastructure industries contracted 2.6% in November from a year ago. The sector, which makes up 40% of the industrial production index, had contracted by a record 37.9% in April. Both data are published with a one-month lag.
NEW DELHI: Finance minister Nirmala Sitharaman faces a huge challenge this year. The Covid pandemic raged through 2020, roiling economies and ruining many lives. The government’s revenues are down but expenditure commitments are up (think of the free vaccines promised). What path should the finance minister now take? Should she try and balance the books by levying additional taxes? Say, introduce a temporary Covid-19 cess at the highest income-tax slab, or maybe reintroduce the wealth tax? Or, should she focus on maintaining tax stability while stepping up expenditure for economic revival? To understand how both scenarios could play out, let’s first look at what impact moderate tax rates have on the tax-GDP ratio and how this compares with a high-tax regime. Union Budget 2021-22: Complete coverage EY’s analysis of the historical tax rates in India shows that we have come a long way in achieving the objective of a rational and moderate tax rate regime. For instance, in 1971, the personal tax system had as many as 12 tax brackets, with tax rates ranging from zero to 85%. With surcharge, the highest tax rate worked out to a staggering 93.5%. The effective burden of personal taxes was reduced in successive years as governments recognised that moderate rates, a wider base and higher compliance made for a better tax policy as opposed to high rates. In 1992-93, the tax rates were considerably simplified: only four tax brackets, with the peak rate at 40%. The 1997-98 ‘Dream Budget’ — presented by P Chidamabaram — cut the peak personal income-tax rate from 40% to 30% and the corporate income-tax rates from 40% to 35% for domestic firms. This announcement set the new peak tax rate for personal income-tax which continues until today, although with additional surcharges the highest tax burden is now 42.7%. The immediate impact of the Dream Budget was a sharp fall in the tax-GDP ratio. But, soon after, moderate rates led to better compliance. The government also took measures to broaden the tax base. So, eventually, the tax-GDP ratio got much better. Consider the numbers. After the 1997-98 Budget, personal tax collections fell by 6%. However, in the next five years (FY1999 to FY2003), the average personal tax-GDP ratio jumped to 1.4% as against 1.2% in the previous five years (FY1993 to FY1997). A similar effect was observed in the corporate tax collections too, where the average CIT-GDP ratio increased from 1.4% in the previous five years (FY1993 to FY1997) to 1.6% in the next five years (FY1999 to FY2003). This sustained increase in the tax-GDP ratio was achieved despite India facing global economic headwinds and a three-year growth slowdown between FY2000 and FY2002. The data suggests that stability and a gradual moderation of tax rates resulted in a positive behavioural response with better compliance, leading to an increase in the direct taxes-to-GDP ratio in the long run. Compared to other developing countries, India’s peak individual effective tax rate is still on the higher side: India’s peak effective tax rate (after including surcharge and cess) hovered between 30% and 35.9% till last year. The hike in surcharge rate by the Finance Act, 2020 catapulted the peak rate to the present level. The Prime Minister has launched the initiative of ‘Honouring the Honest’. In keeping with this spirit, in times of crisis, the focus may need to be on stability, encouraging compliance, broadening the tax base and boosting consumption to improve tax collections. To this effect, certain measures have already been announced and it is expected that Budget 2021 will be constructed around these themes. In the circumstances, any additional burden on existing taxpayers or any new taxes like wealth tax/estate duty, which were discontinued earlier for reasons of high administrative costs and low revenue yield, may not be in sync. The mantra for the FM in Budget 2021 should be ‘No New Tax’. – By Anish Thacker & Shalini Mathur (Thacker is tax partner, and Mathur, director, tax & economic policy, EY India. The views expressed are personal)
BENGALURU: Since the first quarter of 2019-20, Infosys has been, once again, the growth leader among the big Indian IT services companies. CEO Salil Parekh, who completed three years at the helm this month, looks to have transformed the company that had been roiled by the controversies under his predecessor, Vishal Sikka. He’s ensured stability. And under him, Infosys has won several massive deals, from the likes of Verizon, Vanguard and Daimler. In an exclusive interaction with TOI, Parekh talks about what has changed. Excerpts: You took over three years ago during a turbulent phase at Infosys. Today Infosys is the fastest growing among the large IT services companies. How did you accomplish this turnaround? It’s multiple things. Our focus on clients, employee reskilling, the One Infosys concept. Large enterprises globally are strongly driving digital and cloud transformations. And we have built tremendous capability in that area over the last few years. That’s giving us a nice runway for growth. For employees, we put in place a huge reskilling programme some years ago. So many have now been reskilled to support this digital and cloud approach. We have also put in place a comprehensive change of every element within Infosys. Everything that employees touch and feel, every way that we interact, our internal architecture, infrastructure, is based on digital. So anyone who interacts with us, sees a digital Infosys. And then there are some things that are a little softer. A colleague of mine was sharing this with me last week that Infosys is working as one team. All of us are united in focusing on clients, in focusing on employees. And the power of that is phenomenal. Finally, there’s tremendous support coming from our chairman Nandan (Nilekani), and the entire board. That makes a huge difference.
You’ve revved up the large deals’ portfolio. Mohit Joshi (president) was instrumental in the Vanguard deal, Jasmeet Singh (EVP and global head of manufacturing) in Daimler. Did you structurally change things that enabled you to win these bigger deals, become more aggressive? These building blocks I just described have come together. What tends to happen is, when a large global enterprise is going through a transformation, someone like a Daimler or Vanguard, we are working with them, giving them ideas and bringing together the teams. Our intense focus on clients and capability-building to ensure that clients don’t just see it as words, but it’s backed up by action, whether it’s the work we have done or with the employees and their skills, that is what is allowing this to happen. The One Infosys approach where when a client transformation idea or opportunity is identified, everyone in the company is rallying to support how to make that possible given our skill sets and capabilities. In that sense, the structure of the company is the same. We haven’t had a reorganisation. It’s really the focus on people working together, that’s one of the main drivers. Nandan Nilekani and you are seen to be working together as a great team, going after large deals, building a disciplined strategy around it. Nilekani is said to be meeting chairmen of the boards of prospective customers. Nandan’s vision as to how the industry works or shapes the technology ideas are remarkable. Being a cofounder with a great value both within the company and to the outside world, that support and guidance makes a huge difference. Do you think (US president Joe) Biden will give you some breathing space? The approach we have taken is to drive localisation, where we build digital skill sets and recruit in the US, Europe and Australia. That has helped us build a business model which is more resilient for the future. And of course, with the new administration, whichever policy and direction they take, we will support them. What’s the trend in client IT budgets, are they growing? There’s a huge focus on automation and cost efficiency. It was happening pre-Covid, it got a little accelerated during Covid. The second trend is investing in digital and cloud transformation. This latter is not just for process improvement or cost saving, but for them to increase their connect with the end customer, with their own employees, and improve their supply chains with their partners. So IT has become a business driver, not just a cost budget. This is part of the reason why our digital business grew 30%, and digital is now 50% of our business. So imagine, half our company is growing by 30% because of this investment approach that clients are taking.
Infosys is said to have an internal blueprint with a 25/25 goal – to achieve $25 billion in revenue by 2025. I have no such number to share with you. Genuinely, our focus is much more on things that are relevant to our clients, helping them navigate the next. The numbers will follow. As we have seen in the past three years, our focus was doing what’s relevant to the clients and fortunately the growth has come and margins have, and the company is doing well. How do you see margins going forward? In large deals, you seem to have taken a forward call on margins – accepting lower margins initially, but hoping to improve it later through efficiencies. In the last few quarters, we have had very strong margin performance. In the last quarter, it was 25.4% and in the results discussion, we have shared that some travel and some spending which had been cutback will start to come back over the next few quarters. We have also had a salary increase that came into effect on January 1. Equally, there are several strategic levers we had identified – such as reducing the usage of subcontractors – that would help us be more efficient. Our ambition for margins continue to remain high. The digital disruption has accelerated the collective ability to create the next new normal. What will the next unfold? For Infosys, my objective is to continue to remain relevant to our clients and be their journey of digital and cloud transformation. That area has a huge opportunity for the future. What we are seeing in cloud and data analytics and cybersecurity is, there is a huge amount of work that our clients are looking for. What that will translate to if you remain true to that focus will be good growth, good careers for employees and a good future for Infosys. What is the contribution of Infosys’s subsidiaries? While BPM has done well, the products business hasn’t taken off as expected. Will you take a hard call on some of the businesses that aren’t performing well? Many of those businesses are doing very well. BPM has done well and it’s the leading BPM business in the industry today in the way it has driven growth and also the way it has integrated with all of the work we do on technology. If you look at the other businesses, Finacle is a leading player in terms of core banking solutions, and it has seen phenomenal growth and a very good profile in terms of its margins. And we are transforming Finacle to be cloud-first and digital, and we are working with digital-only banks. Like these, many of the businesses working within the Infosys family are transforming themselves to be ready for the new world and they are at different stages in their transformation journey. How are you benefitting from the growth of hyperscalers? There the focus has been Infosys Cobalt, which is really all the work that we do in the cloud. It has about 200 industry templates and has 14,000 cloud assets that any client who is leveraging the cloud can use to grow faster and to reduce their risks on how they leverage the cloud. We have built capabilities in the private cloud and that’s become a value to others where they build a hybrid solution between a public cloud and private cloud. You said Infosys internally is now a lot more digital. Can you give some examples of what you have done? Everything within the company is agile. We have a variety of apps for services that employees use. The way we do sharing across the entire company is in a new distributed infrastructure that we have built. We are reimagining everything that works internally. How will the delivery structure evolve with UB Pravin Rao retiring this year? It’s still one year away. One of the core strengths of Infosys is delivery. This is something that Infosys has built over so many years that the large enterprises have a tremendous trust in Infosys. Delivery is core to Infosys and it starts from the training and paying attention to everyone involved in the loop. It’s also got to do with a stable structure that is not changing every day. There is a tremendous amount of capability in experiential knowledge, tools, templates and methodologies that exist within the company. We are the best in the industry in delivery and that’s very difficult for anyone to replicate. Is the hybrid work model the new reality? Our clients have appreciated our ability to deliver exceptionally while working remotely. That’s a paradigm shift in the way we think about how work will be delivered and that gives us the confidence for a hybrid model. What we are very clear about is there is a need to build social capital and do some work which is more joined up – in-person and being in a colocation environment. We feel social capital is going to be important as we come out of Covid. When all of this is behind us, we have to rebuild social capital and come to a natural balance and then we will find what the true percentage is. Apple has linked executive bonus to ESG (environmental, social and governance) goals. Infosys has turned carbon neutral. Do you think you will tweak bonus payouts to link it to ESG goals? We have rolled out a comprehensive ESG approach for 2030. We are extremely delighted that we have become carbon neutral last year which is several years ahead of global guidelines. ESG is one part of what senior executives will look at among many other things and it will certainly be one part of how we look at the future of the company.
BENGALURU/ NEW DELHI: Around half-a-dozen companies — including Paytm and EtechAces Marketing and Consulting, which houses both PolicyBazaar and PaisaBazaar — are considering an international listing but are awaiting detailed guidelines from the corporate affairs ministry and the revenue department. While legal amendments for a global IPO have been undertaken, guidelines on where they can list as well as the tax regime are yet to be thrashed out and companies are expecting that it will be clearer in the Budget. EtechAces Marketing and Consulting, which has kick-started the internal process for an IPO, is looking at a timeline of around October to be ready for the issue, two persons aware of the matter told TOI. The company, which was last valued at around $1.5 billion, recently saw a Dubai-based fund buying into the company through a secondary share sale, another person confirmed. Last July, SoftBank had picked up an additional stake by investing $130 million in a secondary share sale of the company.
Paytm too has started internal discussions on the matter, including a potential overseas listing. “There is no timeline yet for the Paytm IPO. But it is definitely working on the path and is tracking changes in listing rules closely,” a person aware of the company’s plans said. Paytm is the most valued Indian startup at $16 billion since it closed a $1 billion fund-raise in 2019. SoftBank’s Vision Fund is an investor in both Paytm and EtechAces. When contacted, Policy-Bazaar co-founder and director Alok Bansal said the company is inclined towards a domestic IPO but it will take the final call, whether to list in India or abroad, based on final listing guidelines, by this financial year. Though the company has been carrying out small-sized secondary transactions, it is expected to go for sizeable pre-IPO fund-raise this year. A Paytm spokesperson declined to comment. Over the next two years, multiple local startups are expected to launch their IPOs including the likes of online food delivery platform Zomato, logistics firm Delhivery, and online beauty store Nykaa. This would pave the way for these firms to provide an exit to venture capital funds, who have invested in these startups over the years. The corporate affairs ministry has identified seven to eight international markets where Indian companies could list, including the US, the UK and Japan, apart from GIFT City in Gujarat.
NEW DELHI: The railway ministry has proposed to step up its capital expenditure by 13% next year as it seeks to ramp up and modernise its operations with the roads and highways ministry too seeking a 10% increase in its allocation. Railways has proposed that its capex budget be enhanced from this year’s Rs 1.6 lakh crore to over Rs 1.8 lakh crore, higher than the business-as-usual growth of around 10%. This includes nearly Rs 80,000 crore as gross budgetary support from the last budget’s allocation of Rs 70,000 crore, sources told TOI. The government’s largest departmental enterprise has argued that over the last few years, there has been a significant focus on augmenting capacity and modernising creaky infrastructure, resulting in the allocation often becoming a stumbling block. This is despite attempts to get greater private participation. For instance this year, it is expected to spend around Rs 1.55 lakh crore of the capex budget despite several projects coming to a standstill during the lockdown period. Yet, sources said, during the lockdown considrable amount of work could be accomplished as passenger trains were stopped, allowing focused attention on revamping tracks and other works. In several cases special permission was taken from local authorities to hire manpower with some workers reallocated to these “focus projects”. Similarly, the road transport and highways ministry has asked the finance ministry to increase the fund allocation by around 10% given that major projects have been lined up including expressways. Last year, the government had allocated nearly Rs 92,000 crore to the ministry, with a bulk of the funding coming through a cess on petrol and diesel. In fact, during lockdown, the government had increased the levy to ensure that infrastructure projects do not suffer for want of funds. Higher capital spending by key infrastructure ministries and public sector companies has been a major focus for the finance ministry given that it also generates demand for steel, cement and other inputs apart from creating jobs. Roads and railways are the two biggest elements of the government’s Rs 180 lakh crore infrastructure pipeline with the former accounting for over a third of the over 7,400 projects.