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Indian real estate market faces a tremendous shortage of quality product, said Anand Piramal, executive director of the Piramal Group.Piramal on Tuesday (15 September) launched a new residential project in Mumbai’s Thane suburb spread over 32 acres (or 3 million square feet) designed by Chicago-based architects HOK. About 16 acres has been reserved for greenery, including 6,000 existing trees. The company is offering a safety net to buyers through a buyback plan anytime from the date of booking to before possession at 95 percent of the market value to demonstrate its assurance to buyers. Piramal Realty is also building residential projects in Byculla, Worli Sea Face, Mulund, and an office complex in Kurla. Anand Piramal was hopeful of a pickup in demand for office space in Mumbai too as the country’s economic growth picks up. We see positively on the real estate, he replied cautiously. The company has a strong balance sheet, he said. He declined to share details or make predictions since the unlisted company has Rs 2,700 crore investment by Goldman Sachs and Warburg Pincus. The investors require the company to avoid sharing too many details, he said.
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Prime Minister Narendra Modi on Monday (14 September) met the top brass of power utilities, particularly electricity distribution companies (discoms), to review their performance and discuss the issue of their burgeoning debt. The combined debt of power distribution companies (discoms) stands at over Rs 3 lakh crore. Faced with acute financial stress, many of these are unable to buy power. According to several reports, the National Democratic Alliance (NDA) government is working out a bailout package for the debt-ridden discoms so that the government can achieve the goal of providing power to all. Modi earned praise for fixing the power sector in Gujarat when he was Chief Minister. A national solution would polish his image after a series of setbacks to his agenda of economic reform in recent months. In 2014, Gujarat achieved round-the-clock three-phase power supply to its 18,000 villages and 9,700 hamlets. When Modi took the reins in 2001, Gujarat’s electricity supply was as primitive as the rest of India’s. Gujarat had a 500 megawatt demand-supply shortfall, with revenues of $1.1 billion and losses of $393 million. Ten years later, it boasted a power capacity surplus of more than 2,000 megawatts, which it now exports to other states. It made $93 million in annual profit from $3.8 billion in revenues. How did Modi accomplish this? Experts say the power sector reforms undertaken by the Narendra Modi-led BJP government catapulted Gujarat into a power surplus state. The Jyoti Gram Yojana, controlling theft and losses and unbundling of distribution companies into multiple entities became the pillars of the State's success. Modi also gave top priority to the resolution of power woes and dealt with issues such as power theft in agriculture with strict enforcement. Another key reform was the separation of the feeder line that supplied power to the rural areas into two: one to supply power for agricultural needs and other for household and other needs. Since the tariff for power used for agricultural purposes was much lower, many used this subsidised supply for their household needs as well, resulting in huge losses for Gujarat State Electricity Board. The Gujarat experience clearly demonstrated what strong political will to reform the electricity sector can achieve. Of the many innovations Gujarat tried, the separation of feeders was a master stroke. It not only helped farmers get quality power at fixed time but also ensured that leakages were curtailed. The BJP government began plugging the leakages in distribution. Power thefts in Gujarat then ranged between 20 per cent in urban areas and 70 per cent in rural regions. It passed a law against power thefts and set up five police stations across the state, solely to nab such thieves. Stringent action began against those who ran up large power bill arrears, including disconnecting their supply. The Modi government took care to ensure that the state electricity regulator - unlike in most states - remains truly independent of political pressures. India has doubled energy generation capacity in the last decade, helping to more than halve its peak power deficit, but transmission and distribution have remained largely unreformed, leading to regular blackouts across large swathes of the country and debts that threaten the health of the banking system. Getting Indians to pay more for their power is not easy. Across the country around a fifth of power goes unpaid for and many still believe free power is a right rather than privilege.. The performance of Gujarat in turning around the GSEB is noteworthy. Timely tariff revisions have made the sector viable enabling the state to set up adequate generation capacity. With more revenue, the state was able to invest in a more reliable grid, so that Gujarat is today the only state in India to supply 24/7 three-phase power to all of its villages. Gujarat's transformation from a power deficit to a power surplus state in just one decade is a marvel that happened because Modi took tough decisions.
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Prime Minister Narendra Modi’s home state Gujarat ranks at the top of an assessment of state implementation of business reforms sponsored by the department of industrial policy and promotion (DIPP). Andhra Pradesh, Jharkhand, Chhattisgarh and Madhya Pradesh are the remaining states in the top five. While Andhra Pradesh is an NDA ally, other states are all ruled by BJP governments. Incidentally, the sixth spot has gone to Rajasthan, another BJP-ruled state. Poll-bound Bihar is placed 21st while Arunachal Pradesh came last with a rank of 32. Aiming to enhance the country's image as a friendly investment destination, the government along with World Bank has released a state-wise report on the ease of doing business. The report titled “Assessment of State Implementation of Business Reforms” was released on Monday (14 September). This report captures the findings of an assessment of reform implementation by states, conducted jointly by the Department of Industrial Policy and Promotion (DIPP), Ministry of Commerce & Industry, Government of India, the World Bank Group and KPMG as the knowledge partner, the Confederation of Indian Industry (CII) and the Federation of Indian Chambers of Commerce and Industry (Ficci). “What this report does very well is to provide a roadmap for states serious about improving their business environment and creating jobs. This has an inclusive objective as it is the small and medium enterprises which will gain the most from these reforms,” said Onno Ruhl, World Bank Country Director in India. “The World Bank stands ready to assist state governments in this important agenda,” he added. “This report is the result of joint efforts by central government, state governments, the private sector, consultants and international agencies. This is a unique work which will spur states to become champions of change,” said Chandrajit Banerjee, Director General, CII.According to the assessment, Andhra Pradesh, Chhattisgarh, Gujarat, Jharkhand, Madhya Pradesh, Odisha and Rajasthan have implemented over 50 per cent of the 98 point action plan business reforms studied in the assessment. Karnataka, Maharashtra and Uttar Pradesh are also among the top 10 states in the assessment. No state has implemented 75 per cent or more of the proposed reforms. However, the report also flags a multitude of reforms that still need to be implemented effectively by most states. A majority of states are yet to begin implementing electronic courts to resolve commercial disputes, i.e. infrastructure to allow for e-filing of disputes, issuance of e-summons, online payments, e-cause lists and digitally signed court orders. Twenty six states are yet to introduce reforms along a wide range of labor inspections under various acts, or on inspections related to building permits. About 25 states lack online availability of information on land banks, and use of GIS systems to track industrial land parcels. Gujarat has topped the list with a score of 71.14 per cent. Andhra Pradesh was at the second place with 70.12 per cent. Jharkhand is third with 63.09 per cent; Chhattisgarh fourth with 62.45 per cent and Madhya Pradesh is fifth with 62.00 per cent scrore. The report assesses implementation status of 98-point reform measures across the following eight areas: Setting up a business, Allotment of land and obtaining construction permit, Complying with environment procedures, Complying with labour regulations, Obtaining infrastructure related utilities, Registering and complying with tax procedures, Carrying out inspections and Enforcing contracts. The move is expected to encourage states to carry out reforms in areas such as land acquisition and labour laws, where the Modi-led central government is finding it difficult to make legislative headway.
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With its larger rivals either launching or lining up 4G offerings, the country's third-largest telecom player Idea Cellular has said it is well-placed to compete in the segment. The telecom company is all set to launch its 4G service in 10 circles in the coming January to March quarter. Quoting sources, CNBC-TV18 has reported that the Aditya Birla Group company is working with a deadline of January-end. The proliferation of cheap smartphones has boosted the demand for mobile data as subscribers seek faster downloads and use their handsets to access the Internet. The 4G network is considered superior for data services, which as a segment is proving to be a money spinner for telecom players. Analysts said the next phase of growth for operators would come from mobile data, which was increasingly replacing voice as the main growth driver. In July, the telecom company reported a better-than-expected 28 per cent rise in quarterly profit, helped by higher data revenue. Idea Cellular has a capital expenditure (capex) of Rs 6,300 crore, of which majority will be spent on 4G roll out in the current year itself. The company is also upgrading up to 80 per cent of its 2G sites to handle 3G services as well. At present, 3G services cover 275 million people and may potentially expand to 750 million in a few years, with the expansion in 3G and launch of 4G services. Mobile operators are bracing for even more competition in an already cutthroat market as Reliance Jio, the telecom unit of conglomerate Reliance Industries, plans to launch 4G broadband services by December. Experts believe that Idea Cellular will be forced to step up capital expenditure, which could hurt profits in coming quarters as well. Idea Cellular has bagged 4G licences in 11 circles, including Maharashtra and Goa, Madhya Pradesh, Chhattisgarh, Punjab, Mumbai, Andhra, Karnataka, Kerala, the North-East, Gujarat and Haryana. Idea, part of the Aditya Birla conglomerate and also nearly a fifth owned by Malaysia's Axiata, spent close to $5 billion in a government airwaves auction in March, betting big on the India's significant mobile data potential. Data services, such as Internet use, live streaming of TV and online gaming usually give an operator more profits than voice services, where profits have been squeezed by intense competition. The number of mobile Web users in the country is expected to grow around 28 per cent annually between 2013 and 2017 and reach 314 million by the end of 2017, according to a report by the Internet and Mobile Association of India and KPMG. Last month, Bharti Airtel, India’s largest telecom group by sales, became the first company to roll out superfast 4G mobile data packages across India, offering its service in about 300 cities and towns. The second-largest telecom operator Vodafone has said it would launch 4G services in Calcutta, Mumbai and Delhi by December - setting the stage for a battle royale in this high-speed segment with Reliance Jio and Airtel. The launch will make the Vodafone the third telco to launch 4G services after Bharti Airtel Ltd and Aircel Ltd. Vodafone has 4G services in 18 countries with over 20 million customers.
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While the states have been blowing their own trumpet on how investor friendly their regimes are, the results will be out this week through a World Bank study on how the states rank on the ease of doing business. Commerce and Industry Minister Nirmala Sitharaman has said most of the states have taken a number of steps to remove red-tape and improve business environment. The minister expressed hope that India was likely to be ranked "better" in the World Bank's next report on the ease of doing business following the steps taken by the Narendra Modi-led National Democratic Alliance (NDA) government. Red tape and bureaucracy stand at the top of investor complaints about India, which was ranked 142 out of 189 in the World Bank's report on the ease of doing business. It is bad enough that it takes 27 days to start a business in India, as against 5-10 days in many other countries. The next World Bank Doing Business report is scheduled to be released in October. The Modi government, elected on a business-friendly ticket, has vowed to tackle the issue and aims to get within the top 50 countries. It has promised, for example, to speed up regulatory clearances across the board. During April-June period of this fiscal, foreign direct investment (FDI) in the country grew by 31 per cent to $9.50 billion, as compared to $7.23 billion in the same period last year. Experts are of the view that India needs to improve its ranking and make a place among the top 50 nations. Improved ranking will help in attracting both domestic and foreign investments. The Centre should take many steps, such as convert from manual to online process, prepare timeline to give clearances and punish delays, and eliminate unnecessary steps and requirements and so on. Earlier, the Department of Industrial Policy and Promotion (DIPP) finalised eight areas in which states will be ranked: setting up a business, allotment of land and obtaining construction permit, complying with environmental procedures, complying with labour regulations, obtaining infrastructure-related utilities, registering and complying with tax procedures, carrying out inspections and enforcing contracts. The idea behind the move was to encourage states to carry out reforms such as in land acquisition and labour laws, which the centre was finding it difficult to push through due to lack of enough strength in the upper house of Parliament. Investors will get a fair idea about the best and worst performing states in the selected areas and base their investment decisions accordingly. Quite a few columnists and media commentators are of the view that Prime Minister Modi has directed his administration to improve India's ranking, but many of the measurement parameters — registering a business, getting electricity, paying taxes, enforcing contracts — rest with the states. Although the global economic environment may be uncertain, Modi believes that the current turmoil, triggered by a slowdown in China's growth, actually offers India an opportunity to catalyse domestic growth and employment creation. Business barons, on the other hand, wants the Centre to move first on removing what it sees as the key roadblocks to further investment and growth - the unaffordable cost of capital and poor demand, both linked to the current high interest rate regime; and stalled reforms, particularly relating to the Goods and Services Tax and land acquisition. India's labour laws, principally the Industrial Disputes Act, Factories Act and Contract Labour Act, have given rise to macroeconomic distortions. First, they have disincentivised units from expanding and reaping economies of scale. Second, large units prefer to substitute capital for labour, which explains the phenomenon of 'jobless growth' in recent years. The employment intensity of organised Indian manufacturing is lower than in China and Vietnam, according to an article in The Hindu BusinessLine. Of late, some of the small steps Modi has taken are practical: a new centralized Web portal lets companies apply for permissions, file tax returns and pay processing fees. Non-hazardous businesses no longer need government certification. Modi and the NDA won with a large majority and they can do a lot more to fix the economy. And the first step is to get legislation through Parliament. That is what the economy really needs at present. There is one school of thought that believes that Modi's intent of making India rise up the ranks in the 'ease of doing business' list has translated into some action but the regulatory undergrowth is so dense that cleaning it up will not be a cakewalk.
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Akhilesh Yadav-led government of Uttar Pradesh on Thursday (10 September) signed investment intentions worth Rs 33,000 crore from more than top 40 companies in India’s financial capital Mumbai. Among the companies that signed up with the state government include ITC, Reliance Jio, Idea Cellular, Toshiba Power, LG Electronics, Indo-Gulf Fertilizer, Amulya Sanchay, Godrej Agrovet, Kanodia Group, among others. The investments have a potential of generating almost 150,000 jobs in the state. The largest interest worth Rs 13,405 crores came from infrastructure, followed by Rs 6,630 crore from food and agro processing sector, manufacturing Rs 6,150 crore, power Rs 3,400 crore and electronics Rs 1,578 crore. The state plans to build another IT Park in Lucknow, and is keen to attract investment to manufacturing, solar power, IT, electronics, road projects and biomass. At a conference organised in Mumbai to attract investment for the state, chief minister Akhilesh Yadav said the state was keen to convert 14 cities as smart cities. It was also building metro rail services in capital Lucknow, besides Allahabad, Varanasi, Meerut, Agra, Kanpur, Ghaziabad, Noida, among others. Besides top industrialists, Hindi movie producer Boney Kapoor, director Anurag Kashyap, Muzzaffer Ali, Sanjay Khan were among the scores of Bollywood personalities who vowed to use Uttar Pradesh facilities for their future ventures. The state is also likely to announce a film subsidy scheme under which the state will give a support of up to Rs 3 crore to producers shooting a film in the state. The state provided easy acquisition policy of land and this could be highlighted by the sanctioning of 326 km expressway between Agra and Lucknow and quick acquisition of land. The state acquired about 16 lakh HP laptops, which is a high in the country. It also helped open the maximum number of bank accounts for the impoverished. The state is the largest producer of wheat, milk, sugar, potato among scores of others and provides a ready market for daily consumption of 2 crore eggs, he said. It is the second largest producer of rice, bajra and vegetables. Uttar Pradesh has the country’s third largest economy after Maharashtra and Tamil Nadu, and is a market for 15 percent of India’s food and non-food produce. Over the past couple of years, states including Madhya Pradesh, Gujarat, West Bengal and Tamil Nadu have held similar efforts to attract investment to their respective states.
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The move to come out with a “brand new” Gold Monetisation Scheme – or a new deposit-like offering – may prove to be a non-starter. While operational guidelines on the revised scheme is yet to be announced by the Reserve Bank of India, if the past is anything to go by, it will be a damp squib. Even under the existing gold deposit scheme, you and I can monetise physical gold, jewels or gold coins – deposit it in a bank and earn return in grammage on them. But its success has been limited due to high melting costs (and low caratage) and very high ticket sizes. The Report of the Working Group to Study `Issues Related to Gold and Gold Loans NBFCs in India (January 2013; chairman: K U B Rao) also noted that as the schemes are based on the gold content of the jewelleries, the customer will not get back the jewelleries in its original form but only the gold. “… this type of scheme was met with limited acceptability in the Indian context, as people have emotional and sentimental attachments with their gold jewels which are lying with them for generations”, it said. A case has been made for tax incentives on such schemes, including on gold bonds – which was also announced by Union Finance minister, Arun Jaitley, on Wedneday along with the gold deposit scheme. But the percentage of the population above the minimum limit chargeable to tax under Income Tax Act is in single digits. With a majority of gold buyers hail from the rural, some or many of them may not be subject to income tax; fiscal incentive route will not attract them. Of course, a case exists to offer such incentives to high net-worth individuals who may hold idle gold to diversify their portfolios.
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A day after virtually conceding that GST will miss the April 1, 2016 roll-out deadline after the Narendra Modi government abandoned the idea of convening a special session of Parliament, the Centre wanted to keep alive the hope, saying that it will try to prepone the Winter Session of Parliament. Businessworld.in had broken both the stories – that the Modi government was contemplating a special two-day session on GST; and that its special session efforts would yield nothing as the Congress remained unrelenting. The Congress refused to come on board, as a result why the government had to abandon the special session plans. On Thursday, Spetember 10, however, Union Parliamentary Affairs Minister M Venkaiah Naidu sought to keep alive the GST hopes by saying that it would be his government’s endeavour to advance the Winter session of Parliament, after the Bihar elections. The Bihar elections are going to be one of the most bitterly-fought elections ever, and much of the posturing in the just-concluded Parliament’s Monsoon session was related to that. The ruling alliance feels that after the state elections temperatures will cool, and the main Opposition party will see reason. It hopes that immediately after the Bihar elections, the two main parties would make up, pass the legislation in the Rajya Sabha with a two-thirds majority, and immediately ask their respective state governments to follow suit, so that 50 per cent of the states pass it too. The NDA ruled 10 states and the Congress nine. It’s, however, easier said than done. As if to drive home the point, Congress president Sonia Gandhi on Thursday (10 September) again sought to remind the government of the supposed impropriety cases involving Sushma Swaraj, Vasundhara Raje and Shivraj Singh Chouhan, indicating that the bitterness between the two parties remained deep-rooted. Another Congress leader, Anand Sharma, sought to turn the mirror to the NDA saying that GST, originally, was a Congress legislation, and that the BJP had done a lot to delay it, with Modi as Gujarat CM being its staunch critic. The Modi government may have missed the bus as far as GST roll-out date is concerned but what it also apparent is that the government’s parliamentary strategy and statecraft left much to be desired in this entire episode.
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If you're a mobile phone user in the country, especially in a congested metro like Delhi or Mumbai, chances are you know what a call drop is, a little too well. The call drop menace became so serious that even Prime Minister Narendra Modi had to intervene and demand urgent corrective actions. Plagued by the vexed problem of call drops, the Union government has warned telecom companies to get their act right on the issue or face action, while the regulator Trai gave them 15 days' time to address the problem. The Telecom Regulatory Authority of India (Trai) has found a two-fold jump in call drops on 2G networks and by 65 per cent on 3G networks in the first quarter of 2015. Industry average of call drops at the end of the January-March 2015 period was 12.5 per cent compared with 6 per cent at the end of March 2014 on 2G networks. On 3G network, the call drop average across networks was 15.96 per cent during the three-month period ended March 31, 2015, compared with 9.68 per cent a year ago. A recent survey by the Trai has also found that India has one of the worst call drop ratios in the world-around 12 per cent, four times the globally acceptable 3 per cent. At present, the Trai levies penalty on telecom operators for failing to meet service quality benchmarks. According to the rule, call drops should not be more than 2 per cent of all calls made on a network in a service area. The regulator proposed that any call that gets dropped within five seconds would not be charged, and in case a call gets dropped any time after five seconds, the last pulse of the call would not be charged. The problem of frequent call drops has worsened in the recent months. Operators have cited shutting down of towers, radiation fears and the lack of spectrum as the major reasons behind call drops. The operators have said about 7,000-10,000 sites have been locked or shut down across major cities and have sought a uniform national policy for the installation of towers. Experts believe that the Department of Telecom (DoT) should invoke Section 7 of the Indian Telegraph Act to formulate clear and uniform rules for installation of towers which would have to be mandatorily followed all over the country. The moot question is: do companies benefit from engineering phone calls to drop midway? It depends on the tariff plan. If it's measured in seconds, the telecom company gains nothing - no matter how many times the connection breaks, billing resumes at the same rate. But if it is measured in minutes, or if the plan contains features such as a certain number of free calls in every billing cycle, call drops hurt the consumer. However, telecom companies claim 95 per cent of tariff plans involve billing in seconds. Call drops occur because of inadequate coverage, weak signals from cell towers and congestion. Mobile phones work using radio waves in the frequency range of 300 MHz and 3,000 MHz. But the entire range is not available for use. Critically, the lower the number, the better the quality of transmission. "Call drops are rising in India due to overloaded spectrum networks since we have the lowest quantum of radiowaves available per million. The 3G rollout has been patchy. So, customers continue to use 2G for voice as well as data, causing more congestion. The radiation norms also limit the number of cell towers that can be placed within an area," Hemant Joshi, partner at Deloitte Haskins & Sells, told The Telegraph. A telco with less spectrum per subscriber will need more towers to alleviate the congestion in a network. And spectrum is a scarce resource in India, which has the second-largest mobile phone user base in the world with more than 975 million users. Fear of radiation from cell phone towers is often cited as a key reason why the telecom companies are unable to improve their network. Cancer-causing radiation concerns are largely unfounded, however. India has the most stringent norms for radiation from telecom towers, set at one-tenth the limit set in most other countries. Union telecom minister Ravi Shankar Prasad has said such campaigns against mobile phone towers are basically wrong. The World Health Organisation (WHO) has conducted deep study on the issue and has declared that the notion of radiation harm by mobile towers is wrong. Even studies by independent agencies have indicated that inadequate towers and spectrum cannot be solely blamed for the poor service quality. PhiMetrics Technologies, a company specialising in telecom audits and analytics, recently came out with a report on service quality in Delhi and said that lack of cell sites and spectrum do not adequately explain at least 30-40 per cent customer issues related to calls, according to a report in The Times of India.
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Despite all the talk of e-tailers and e-commerce, pricing out High Street stores and brick and mortar (B&M) chains, the data seems to be pointing to consumers continuing to rely on the ‘touch and feel’ experience. High Street chains have not only continued to get loyal footfalls, but have also recorded brisk growth figures. Brick and mortar chains have also changed strategy by combining high street sales with digital marketing, known as the ‘omni’ channel route. An analysis by CRISIL of the performance of 24 large organised brick & mortar (B&M) retailers shows that in the last five fiscals, their revenue has risen at a strong 24 per cent compounded annual growth rate (CAGR) to about Rs 70,000 crore, while profitability metrics too have improved steadily. This is not to say the High Street sales are at the expense of e-tailers, whose gross merchandise value (GMV) surged at a dizzying 60 per cent to about Rs 40,000 crore. The e-tail segment has been driven by aggressive promotions and increasing trust in – and convenience of – online shopping; but according to CRISIL revenues of organised B&M retailers too rising at a respectable 13-15 per cent over the medium term. A CRISIL press release said “the resilience of large, organised B&M retailers will depend on their presence across product categories. Those in the standard format – selling books, music and consumer durables – will be impacted considerably more, so their like-to-like growth will be significantly moderated. On the other hand, those into apparel and food & grocery -- where the product is either a high involvement purchase or requires substantial investment in supply chain -- are expected to be more resilient. As a business, the food & grocery segment offers ample opportunity given its massive size (64 per cent of overall retail market) and extremely low penetration of organised retail (2.6 percent). Anuj Sethi, Director, CRISIL Ratings, said, “Organised B&M retailers have been countering the online onslaught of the last five years by repurposing themselves using a four-pronged strategy: by going for an ‘omni-channel’ model (offering an online experience to complement physical stores), expanding away from metros and Tier I to Tier II and III cities (to tap an expanding middle class and rising purchasing power), pushing private labels (to meet consumer demand for affordable products and to protect margins) and through consolidation (which has afforded scale, geographical reach and efficiencies).” Sethi said what is significant is that these retailers have been able to improve the quality of their private labels by investing in building design capabilities. Today, private labels contribute almost 20 per cent to total revenues, in the last five years. Amit Bhave, Director, CRISIL Ratings, said, “Focus on initiatives such as reorienting store profiles and well-thought out expansions have enabled organised B&M retailers to reduce gestation losses and generate store-level profits faster. As for credit profiles, CRISIL Ratings said High Street chains, after their debt-funded expansion phase ended in fiscal 2012, had focused on profitability, which has led to a sustainable improvement in their credit quality. This is reflected in the rating actions for CRISIL’s retail portfolio, where upgrades have outnumbered downgrades for the past three years.
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