Tariffs very low, pricing revival critical: Birla

NEW DELHI: Telecom tariffs are “still very low” and pricing revival is critical for the long-term growth of the sector, Vodafone Idea chairman Kumar Mangalam Birla said on Wednesday.
Addressing Vodafone Idea Ltd (VIL) shareholders at the company’s Annual General Meeting, Birla said the telecom industry had witnessed the first round of tariff hikes by all operators in December 2019.
“However, tariffs are still very low and therefore pricing revival is critical for the long-term growth of the sector,” he said.
The Average Revenue Per User (ARPUs) in the Indian market continue to remain the lowest in the world, while data consumption is among the highest globally.
“The verdict on the long-pending industry issue of Adjusted Gross Revenue or AGR also added to the financial woes of telecom operators… Efforts from the Government of India to soften the financial burden by recommending payment through instalments has now been upheld by the Supreme Court,” Birla said.
In a stock exchange filing, Vodafone Idea said multiple items – including resolutions seeking approval of borrowing powers of the company, alteration of Articles of Association, nod of issuance of securities of up to Rs 15,000 crore – as set out in its September 4 notice, were transacted at the AGM.
The results of the voting will be intimated separately, the filing said.
Earlier this month, the board of Vodafone Idea approved fund-raising plans of up to Rs 25,000 crore through a combination of equity and debt instruments, subject to shareholders’ nod.
The board’s move had come just days after Supreme Court directed telecom operators to pay 10 per cent of total Adjusted Gross Revenue-related dues this year, and rest of the payments in 10 instalments starting from next fiscal year.
The ambitious fund raising plans promise to throw a lifeline to cash-strapped Vodafone Idea, which has suffered massive losses, has been losing subscribers and ARPUs, and faces outstanding statutory dues of about Rs 50,000 crore.

Silver Lake to put Rs 1,875cr in Reliance Retail

NEW DELHI: US-based private equity firm Silver Lake’s co-investors will put an additional Rs 1,875 crore into Reliance Retail Ventures Limited (RRVL). RRVL is a subsidiary of Reliance Industries (RIL) which is controlled by Asia’s richest person Mukesh Ambani.
The fresh investment brings the aggregate net by Silver Lake and its co-investors in RRVL to Rs 9,375 crore that will translate into a 2.13% equity stake in RRVL on a fully diluted basis.
This latest investment values Reliance Retail at a pre-money equity value of Rs 4.285 lakh crore, RIL said.
Mukesh Ambani, chairperson and managing director of RIL, said, “Silver Lake and its co-investors are valued partners on our journey to transform Indian Retail for the benefit of all Indians. We are pleased to have their confidence and support, as well as the benefit of their leadership in global technology investing and their valued network of relationships for the Retail revolution in India. Silver Lake’s additional investment is a strong endorsement of the tremendous potential of Indian Retail and the capabilities of Reliance Retail.”
The transaction is subject to regulatory and other customary approvals.
Egon Durban, co-CEO and MD of Silver Lake, said, “We are delighted to increase our exposure and bring more of our co-investors into this unmatched opportunity. The continued investment momentum over the last few weeks is proof of the compelling vision and business model of Reliance Retail – and underscores the tremendous potential of the transformative New Commerce initiative.”

Int’l flights to remain suspended till October 31

NEW DELHI: The government on Wednesday extended the suspension of scheduled commercial international flight operations to and from India till October 31.
“This restriction shall not apply to international all-cargo operations and flights specifically approved by the Directorate General of Civil Aviation (DGCA),” an official statement said.
“However, international scheduled flights may be allowed on selected routes by the competent authority on a case to case basis,” it added.
Passenger air services were suspended on March 25 due to the nationwide lockdown to check the spread of Covid-19. Domestic flight services, however, resumed from May 25.

In Video:Covid-19: International flights to remain suspended till October 31

‘Pandemic to leave up to 3.7% of loans as NPAs’

MUMBAI: Rating agency ICRA on Wednesday revised down its credit growth outlook for banks to 2-3 per cent for the current fiscal, and said the coronavirus pandemic-driven stress may leave 3.1-3.7 per cent of assets into bad loan list by March.
Earlier, it had forecast credit growth for banks at 6-7 per cent.
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The agency also expects GDP to contract by 11 per cent this fiscal from its earlier forecast of 9.5 per cent, as there is no let-up in the pandemic nor any glimmer on a vaccine to prevent it. These are the mains reason for halving of credit demand to 2-3 per cent from 6-7 per cent earlier, it said in a report.
The lower capital allocation to banks is due to the massive revenue decline the government faces due to the lockdowns.
The agency expects fresh slippages of 3.1-3.7 per cent for 2020-21, which will largely come from SMA1 and SMA2 accounts identified in March 2020, when it stood at 6 per cent.
Fresh slippages for all banks in the first quarter of 2020-21 stood at Rs 23,000 crore, while annualised gross slippage generation rate stood at 1 per cent.
At the system level, slippages stood at Rs 3.7 lakh crore in 2019-20 and Rs 3.2 lakh crore in 2018-19. Fresh non-performing asset (NPA) generation in 2019-20 stood at 4.2 per cent, against 4.1 per cent in 2018-19 and 7.3 per cent in 2017-18.
GNPAs may rise to 11.1-11.4 per cent for public sector banks in March 2021 as against 10.7 per cent in March 2020, whereas it will stand at 5.7-6.4 per cent for private sector banks, up from 4.2 per cent, the report said.
This will rise to 11.9-12 per cent for state-owned banks in 2021-22 and to 7.7-8.6 per cent for private sector lenders.
It said net NPAs are likely to rise to 4.2-4.3 per cent for public sector banks by March 2021 from 3.3 per cent in March 2020, and 1.7-1.9 per cent for private sector lenders by March 2021 from 1.2 per cent in March 2020.
Net NPAs will rise to 3.5-3.6 per cent for public sector lenders in 2021-22 and will marginally improve to 1.4-1.7 per cent for private sector banks.
Expect credit provisions of 2.4-3 per cent of advances this fiscal for all banks.
Given the poor credit demand, banks especially the state-owned ones do not need any additional capital from the government, while the private ones are already well-capitalised.
Describing the new loan restructuring norms as much stricter and with less loopholes, the agency expects 5-8 per cent of outstanding loans to be restructured. It also expects loan restructuring to be invoked by this December and implemented till June 2021.
However, it said the actual gravity of the stress among borrowers will only be visible from the third quarter of 2020-21 results and more pronounced by first and second quarters of 2021-22.
On loan moratorium, it expects only 10-15 per cent borrowers to avail of complete moratorium after September, which was earlier more than 35 per cent.
On NBFCs and HFCs, collection since April, when it had slipped to a low of 38 per cent for NBFCs and around 55 per cent for HFCs, the same has improved to 70 per cent for the shadow banks and 81 per cent for mortgage players, indicating home loan companies are better at collections.
While 27 per cent of NBFC loans are under full moratorium, it is only 17 per cent for HFCs and 16 per cent for microfinance institutions.

‘Hospitality industry may take 2-3 yrs to recover’

MUMBAI: The Indian hospitality industry recovery to pre-Covid level will take two to three years, said credit rating agency Icra adding that its the industry worst hit by the pandemic.
The pan India lockdowns led to mass closure of hotels across the country, it said, adding that ‘revenue per available room’ in the premium hotel category fell by over 80-90% in the first quarter with largely equal fall in occupancy and average room rates.
Companies reported an 86% decline in revenues, deep operating and net losses during the first quarter of FY2021 as demand petered off to below sustenance levels, limited to government-mandated quarantine traveler, medics and some business-continuity workers.
Pavithra Ponniah of Icra said: “Occupancies in the premium hotel category fell by 30-40% to about 8-12% in first quarter FY2021 while average room rates fell by 30-50% across various markets.”
Though the central government allowed hotels to be reopened in June with considerable restrictions and safety checks, hotels opened up only in a staggered manner as the state governments took further time to formulate their SOPs.
“Several states have eased inter-state travel requirements like e-passes, mandatory quarantine and Covid tests. Consequently, occupancies inched up to about 20% in July and August 20 with some demand also originating from drive-to leisure,” said the company adding that it expects pan India occupancies for FY2021 to hit 30-35% and the average room rates to correct by about 20%. But even post the initial phase, the unfolding economic crisis is likely to keep discretionary travel low for an extended period because of which `Revenue per available room’ recovery to pre- Covid levels is expected to take 2-3 years, it added.

Capgemini offers another ESOP to most employees

BENGALURU: French IT services firm Capgemini, which has 1.2 lakh of its 2 lakh employees in India, is rolling out a new ESOP (employee stock ownership plan) that covers 96% of employees. This is its seventh employee ownership plan and is aligned to development and performance goals.
The subscription price of the new shares will be set on November 5 and the entire process will be completed on December 17. Last year, Capgemini rolled out its sixth employee share ownership plan, which was offered to approximately 98% of the employees. The latest pool will comprise a maximum of 30 lakh shares.
“Employees who have, as on November 12, 2020, completed 3 months’ tenure with the organisation and will continue to be part of Capgemini for at least one day during November 10-12, 2020 (both days inclusive) are eligible to subscribe for ESOPs,” said Pallavi Tyagi, CHRO for India in Capgemini.
The 4% who are excluded from this ESOP programme are in geographies where the scheme cannot be implemented due to legal and tax boundaries of those countries. In India, all employees are eligible to participate.
The ESOP will have a lock in of five years. The subscription will be in euros.
Employees will be able to subscribe to Capgemini shares using the company defined formulas that will allow employees to benefit from a guarantee on the amount invested into this plan.
Other firms have given ESOPs too. Infosys is learnt to have created Rs 20,000 millionaires and 500-dollar millionaires in the 1990s and 2000s. It had at one point stopped stock options. It revived the programme last year allocating 50 million shares to employees based on performance and shareholder value creation.

Wipro to give promotions to high performers

BENGALURU: Wipro is rolling out promotions to high performers in December, a move that is expected to boost employee morale at a time when the pandemic has made the general environment difficult.
Promotions will be given to those up to the B3 band. This comprises 80% of its 1.8 lakh employees. “Our employees have shown remarkable resolve and resilience in ensuring seamless business continuity and maintaining high standards of service in these challenging times. Wipro will roll out promotions for high performers in bands up to B3 effective December 1, 2020,” a Wipro spokesperson told TOI. Wipro has five bands based on experience and seniority. The promotions are expected to come with salary increases.
Wipro said the company will hire from campuses this year, but declined to give a figure. It has honoured all the offers made last year, but the onboarding was staggered. Wipro, in January, had said it will hire 12,000 from Indian campuses this fiscal, but given the tumultuous situation now, the numbers will depend on deals and project visibility. The campus hires, called Team-Rainbow, will receive confirmatory hikes effective December 1, Wipro said.
Wipro has initiated a series of actions including lowering subcontracting expenses, reduced hiring and shutting down some global offices to help improve the operating margin.
CEO Thierry Delaporte recently told TOI that less than 3% of the employees work from its offices. “Nevertheless, our adaptive and boundary-less operating model coupled with our ‘no-shore’ approach has ensured that we continue to deliver critical processes, large transitions and transformation projects seamlessly,” he said.

General Atlantic to invest Rs 3,675cr in Reliance Retail

NEW DELHI: Reliance Industries Limited (RIL) on Wednesday announced that New York-based General Atlantic will invest Rs 3,675 crore for a 0.84 per cent stake in its retail arm — Reliance Retail Ventures Limited (RRVL) — making it the latest in a series of investments at the oil-to-telecoms conglomerate.
In a regulatory filing to the bourses, the company said that the investment values Reliance Retail at a pre-money equity value of Rs 4.285 lakh crore. General Atlantic’s investment will translate into a 0.84 per cent equity stake in on a fully diluted basis.
“Reliance Retail’s vision is to galvanize the Indian retail sector through an inclusive strategy serving millions of customers by empowering millions of farmers and micro, small and medium enterprises (MSMEs) and working closely with global and domestic companies as a preferred partner, to deliver immense benefits to Indian society, while protecting and generating employment for millions of Indians,” the company said.
This is second investment by General Altantic in a subsidiary of RIL. The company had earlier invested Rs 6,598 crore into RIL’s telecom business Jio Platforms.
Extending its relationship with General Atlantic, chairman and managing director of RIL Mukesh Ambani said: “We look forward to leveraging General Atlantic’s extensive expertise at the intersection of technology and consumer businesses, and two decades of experience investing in India, as we create a disruptive New Commerce platform to redefine retail in the country.”
Reliance is India’s biggest retailer with roughly 12,000 stores and has been looking to expand its new e-commerce venture as it vies for market share in India’s growing retail space.
The company’s retail arm has already raised around $1.8 billion from KKR & Co and Silver Lake Partners.
(With agency inputs)

India’s super-rich see wealth grow 20% during Covid

NEW DELHI/BENGALURU: India’s super-rich have grown their wealth by 20% during Covid, which is twice as fast as the growth in the net market capitalisation of all listed companies. Also, the number of people having more than Rs 1,000 crore in the IIFL Wealth Hurun Rich List has increased by 94 in 2020 to 828.
Mukesh Ambani, chairman of India’s most valued company Reliance Industries, continues to top the list with a wealth of Rs 6.6 lakh crore. His total wealth increased by 73% in the last 12 months, making him the richest Asian and the fourth-richest in the world.
The cumulative value of the 828 individuals on the list stood at $821 billion (Rs 60,59,500 crore), an increase of $140 billion (Rs 10,29,400 crore) over the 2019 count, a large part of which was due to the rise in share price of Reliance Industries.
Among the startups, with a wealth of Rs 13,100 crore each, Amod Malviya, Sujeet Kumar and Vaibhav Gupta — former Flipkart executives — had their wealth increase by 274% on account of strong investor interest in their new venture Udaan, a B2B e-commerce portal, and topped the list of biggest gainers for the second consecutive year. The valuation of Udaan increased from Rs 20,000 crore in October 2019 to Rs 52,500 crore in February 2020.

Interestingly, many professionals were featured too. These included Thomas Kurian of Google Cloud who, with a wealth of Rs 1,300 crore, topped this list. Others of Indian origin include Ajaypal Singh Banga of Mastercard (Rs 7,200 crore), Nikesh Arora of Palo Alto Networks (Rs 6,500 crore), Satya Nadella of Microsoft (Rs 5,900 crore), Sundar Pichai of Alphabet (Rs 5,900 crore), and Indra Nooyi formerly of PepsiCo (Rs 3,500 crore). With Rs 3,200 crore, Ignatius Navil Noronha of Avenue Supermarts is the richest CEO based in India.
The cut-off for the top 10 rose by 6% to Rs 76,000 crore this year. Top 100 individuals in the list account for nearly 64% wealth of the latest edition of the rich list for 2020.
The ninth edition of the IIFL Wealth Hurun India Rich List 2020 compiled the richest individuals having a wealth of Rs 1,000 crore or more as on August 31, 2020. However, Hurun India MD and chief researcher Anas Rahman Junaid felt that this was not an exhaustive list. He said, “Assuming that for every one Hurun rich lister we have found, we have probably missed two, it is likely that India today has 3,000 individuals with Rs 1,000 crore”.
Among the sectors, pharmaceuticals, with 122 super-rich individuals on the list, leads the pack, followed by chemicals & petrochemicals with 55 individuals and software & services with 50 individuals. Automobile & auto components, food & beverages, manufacturing, construction & engineering, etc, are some of the other significant contributors to the IIFL Wealth Hurun India Rich List 2020. Interestingly, this time the super-rich came from 111 cities of the country.

Poor services due to delay in spectrum sale: Jio

NEW DELHI: Reliance Jio, the country’s largest telecom operator, has written to the Prime Minister’s Office (PMO) and the telecom ministry, alleging that “vested interests” are holding back spectrum sale worth nearly Rs 4 lakh crore, which is leading to poor services for the consumers and depriving the exchequer of much-needed cash.
Immediate auctions can generate revenues of around Rs 25,000 crore for the government as upfront payment before December this year, it said, adding that there has been an exponential increase in both data and voice consumption during the Covid period. The capacity crunch requires spectrum auctions to be held “without any delay”, and in line with recommendations made by regulator Trai and inter-ministerial digital communications commission (DCC).
“Some operators are merely interested in perpetuating their 2G technologies and monetise old equipment as much as possible. We submit that the nation-building policies should not be kept hostage to vested interests of such a few,” Jio said, refusing to name any company. Industry analysts, however, said the company is taking potshots at rivals Bharti Airtel and Vodafone Idea, who have large numbers of 2G customers in their kitty.