MARKETS, P6 COMPANIES, P4 INTERNATIONAL, P7 GREEN CREDIT ON THE RISE DRIVEN MAINLY BY INFRA SEGMENT ABUSIVE APP STORE RULES Banks’ exposure to non-renewable sector declines Adani Group’s Ebitda is expected to cross $9.5 billion in FY24 Apple hit with €1.8-bn EU fine in Spotify case BENGALURU, TUESDAY, MARCH 5, 2024 FOLLOW US ON TWITTER & FACEBOOK. APP AVAILABLE ON APP STORE & PLAYSTORE WWW.FINANCIALEXPRESS.COM READ TO LEAD VOL NO. XXXVI 276, 18 PAGES, `12.00 P U B L I S H E D F R O M : A H M E D A B A D , B E N G A L U R U , C H A N D I G A R H , C H E N N A I , H Y D E R A B A D , K O C H I , K O L K ATA , L U C K N O W, M U M B A I , N E W D E L H I , P U N E SENSEX: 73,872.29 ▲ 66.14 NIFTY: 22,405.60 ▲ 27.20 NIKKEI 225: 40,109.23 ▲ 198.41 HANG SENG: 16,595.97 ▲ 6.53 `/$: 82.89 ▲ 0.01 `/€: 89.93 ▼ 0.25 BRENT: $83.29 ▼ $0.26 GOLD: `63,289 ▲ `847 IN THE NEWS GOVT MAY DEFER PAYMENT RULE FOR SMALL FIRMS THE CENTRE WILL likely put in abeyance implementation of the 45-day rule that mandates payments to small firms within 45 days, reports Prasanta Sahu. The rule seeks to ensure timely payments to small units by linking it to tax relief. ■ PAGE 2 ADVENT, MULTIPLES TO INVEST `1,930 CR IN SVATANTRA MFI IN THE LARGEST private equity investment in the microfinance sector, Advent International and Mutliples PE will invest `1,930 crore in Ananya Birla-promoted Svatantra Microfin, reports fe Bureau. ■ PAGE 6 CPI INFLATION MAY EASE TO 4.3-4.4% IN FY25, PEGS CMIE INDIA’S RETAIL INFLATION, measured by the consumer price index), will likely fall to 4.3-4.4% in FY25 from an estimated 5.4% in the current fiscal year, the Centre for Monitoring Indian Economy said in an article, reports Priyansh Verma. ■ PAGE 2 NOTWORRIED ABOUT HIGHER OIL PRICES: PURI SERIOUS DEVIATIONS FOUND RBI bans fresh gold loans by IIFL Finance AJAY RAMANATHAN Mumbai, March 4 THE RESERVE BANK of India (RBI) on MondaybarredIIFLFinancefromsanctioningand disbursing any fresh gold loans with immediate effect.Thedirective comesaftertheregulatorobserved certain material supervisory concerns in the company's gold loan portfolio,said an RBI notification. The concerns include serious deviations in assaying and certifying purity and net weight of the gold at the time of sanction of loansand atthe time of auction upon default, breaches in loan-to-value ratio, significant disbursal and collection of loan amount in cash far in excess of the statutory limit,nonadherence to the standard auction process, and lack of transparency in charges being leviedtocustomeraccounts.“Thesepractices, apart from regulatory violations,also significantly and adversely impact the interest of the customers,”RBI said in the notification. The companycan no longersanction,disburse,assign,securitise or sell any gold loan product.However,IIFLFinance can continue to service its existing gold loan portfolio through usual collection and recovery processes, the notification added. The notification added thatwhile RBI has been engagingwith seniormanagement and statutory auditors of the company on these deficiencies in recent months, no meaningful corrective action has been evidenced so far.“This has necessitated the imposition of business restrictions with immediate effect, in the overall interest of customers,”it added. These supervisory restrictions will be reviewed upon completion of a special audit THE DIKTAT IIFL Finance's portfolio as on Dec 31 `24,692 crore ■ IIFL Finance is among the second- biggest NBFC in the gold loan segment ■ Apart from ■ Non-adherence to the standard auction process regulatory violations, RBI finds breaches in loan-tovalue ratio ■ Lack of transparency ■ Significant ■ Can continue to disbursal and collection of loan amount far in excess in charges levied to customer accounts service existing gold loan portfolio via usual collection and recovery processes to be instituted bythe RBI and afterrectification bythe companyof the special audit findingsandthefindingsofinspection,to the satisfaction of RBI,the notification added.“This business restriction is without prejudice to any other regulatory or supervisory action, that may be initiated by the RBI against the company,”it said. Continued on Page 10 OIL MINISTER HS Puri on Monday said India is not worried about the rising oil prices after the OPEC’s decision to extend output cuts till Q2 of 2024, reports Arunima Bharadwaj. He added that currently more countries are coming up with growth in their domestic oil production. ■ PAGE 3 Moody’s raises India’s GDP forecast sharply ED QUESTIONS HIRANANDANI IN FEMA PROBE INDIA’S GROSS DOMESTIC product (GDP) is expected to grow 6.8% in 2024, up from 6.1% projected earlier, in the backdrop of pick up in private investments, Moody’s Investor Service said in a report.In 2023,the GDP expanded 7.7%. “Capital spending bythe government and strong manufacturing activity have meaningfully contributed to the robust growth outcomes in 2023,” Moody’s said. In FY25, too,capitalexpenditure bytheCentre is likely to support growth,the agency said. The interim Budget has pegged the Centre’s expenditure allocation at `11.1 trillion or 3.4% of GDP in 2024-25,which is 16.9% above the 2023-24 revised estimates. “Weexpectpolicycontinuityafterthegeneral election and continued focus on infrastructure development.While private industrial capital spending has been slow, it is expectedtopickupwithongoingsupplychain diversificationbenefitsandinvestors'response tothegovernment'sproduction-linkedincentive (PLI) scheme to boost keytargeted manufacturing industries,”Moody’s said. AccordingtotheRBI,thetotalcostofprivate corporate projects sanctioned by major banks THE ED HAS questioned Hiranandani Group promoter Niranjan Hiranandani in a foreign exchange violation case, official sources said on Monday, reports PTI. He is understood to have also submitted some documents to the probe agency. ■ PAGE 17 FE S P E C I A L S Outlook positive for HDFC Bank Reduced loan growth can protect the bank’s profitability ■ INVESTOR, P9 Regulatory sandbox: New RBI norms The revised framework will boost innovation in the fintech space while ensuring data protection ■ EXPLAINER, P9 FE BUREAU New Delhi, March 4 Tata Motors to split CV, PV units into 2 listed entities SWARAJ BAGGONKAR Mumbai, March 4 FY23 REPORT CARD TATA MOTORS, THE country’s biggest automaker,onMondayannouncedplansto demerge its businesses into two separate listedentities–commercialvehicle(CV)and passenger vehicle (PV) businesses.The PV unit will include electric vehicles (EVs), JaguarLandRoverandrelatedinvestments. In a BSE filing, the automaker said that the board has approved the demerger proposal.Itaddedthatthedemergerisalogical progression of the subsidiarisation of PV andEVbusinessesdoneearlierin2022,and shall further empower the respective businesses to pursue theirrespective strategies to deliver higher growths with greater agilitywhile reinforcing accountability. N Chandrasekaran, chairman, Tata Motors, said,“Tata Motors has scripted a strong turnaround in the last few years. The three automotive business units are nowoperatingindependentlyanddelivering consistent performance. This demerger will help them better capitalise on the opportunities provided bythe market by enhancing their focus and agility.” The automaker’s CV segment is its second-largest business unit in terms of revenue generation.Tata Motors is alreadythe marketleaderintheCVsegmentwitha40% share as of December-end. While Tata Electoral bonds info: SBI asks SC for time till June 30 ANANTHAKRISHNAN G New Delhi, March 4 and financial institutions was up 23% comparedwiththesameperiodayearago,suggesting that the private capex cycle is “gaining steam”,itsaid.“Additionally,risingcapacityutilisation,robust credit growth and upbeat business sentimentpoint to an improving outlook forprivate investment,” Moody’s added. CALLING IT A “time-consuming exercise”, State Bank of India (SBI) has approached the Supreme Court seekingextensiontillJune30tosubmit details of purchase of electoral bondstotheElectionCommissionof India(ECI).Thestate-runlendercited “certain practical difficulties with the decoding exercise due to the stringent measures undertaken to ensurethattheidentityofthedonors was kept anonymous”. Inanapplicationtothetopcourt, which had directed it to furnish the details to ECI by March 6,SBI said it “intends to comply in full,with the directions issued” by the SC in its judgment striking down the Electoral Bonds Scheme. SBI is the only bank authorised to sell the bonds. The banksaid“aspertheGazette Notification” of January 2, 2018, “whereby the central government framed the Electoral Bond Scheme 2018, it was categorically provided under Clause 7 (4)” that “the information furnished bythe buyershall be treated confidential by the authorised bank and shall not be disclosed to any authority for any purpose,exceptwhendemandedby a competent court orupon registration of criminal case by any law enforcement agency”. Continued on Page 10 Continued on Page 10 ROBUST 2024 OUTLOOK ■ India is poised ■ Growth outlook for 2024 has been revised from 6.1% to to maintain its position as the fastest-growing economy among G-20 nations ■ The economy recorded its swiftest expansion in ■ It says the economy eighteen months in the has demonstrated better-than-anticipated last quarter of data in 2023 2023 6.8% Revenue* Revenue (% share) `3.46 `37,011 trillion 64.4 JLR Ebitda CVs crore PVs 20.5 13.8 *Consolidated Ebitda (% share) 69.5 JLR CVs PVs MotorsisatthethirdpositioninthePVsegment,it is the largest playerin the EVspace. “The demerger will be implemented through an NCLT scheme of arrangement and all shareholders of Tata Motors shall continue to have the identical shareholding in both the listed entities,” the company said in a statement. Thecompany’s share price hasdoubled in the last one year — from `428 to `987 on Monday. After the resignation of Guenter Butschek as managing director in mid-2021, Tata Motors decided to create CEO positionsforeach entity,except JLR,which had 14.2 8.3 its own CEO reporting to the chairman. While Shailesh Chandra is the managing director of the PV and EV companies, GirishWagh is the head of the CVbusiness unit.AdrianMardellwasappointedCEO of JLR in 2023. “While there are limited synergies between CV and PV businesses, there are considerable synergies to be harnessed across PV, EV and JLR, particularly in the areas of EVs, autonomous vehicles and vehicle software,which the demerger will help secure,”a company statement said. Continued on Page 10 AI order for social media firms only JATIN GROVER New Delhi, March 4 framework but an advisory to test the model before launching. Earlier in the day, Rajeev Chandrasekhar, THE GOVERNMENT'S ADVISORY to inter- ministerofstateforelectronicsandIT,alsoclarmediaries for seeking its permission before ified that the advisorywill onlybe applicableto launching AI models will only be applicable largeplatformsandnottostartups.“Theprocess to social media platforms, communications of seeking permission, labelling and consentand IT minister Ashwini Vaishnaw said on based disclosure to users about untested platMonday. The advisory is not for the plat- forms is an insurance policy to platforms who forms working in the healthcare or agricul- can otherwise be sued by consumers,” Chanture sectors, he said. drasekharsaid. The minister's comThe statements from ASHWINI VAISHNAW, ments come after startups the ministers come after COMMUNICATIONS AND expressedtheirdispleasure founders of startups IT MINISTER with this kind of screening expressed grave concerns of large language models, over the move. Aravind "SOME PEOPLE SAID terming the move as Srinivas,CEO of Perplexity regressive and something AI, termed the advisory as SORRY FOR NOT that will throttle innova“bad move by India”. TESTING THE MODEL tion. However, Vaishnaw Similarly, Pratik Desai, ENOUGH. SOCIAL MEDIA founderofKissanAI,which defended the move stating thatpropertrainingofsuch has built Dhenu, an LLM PLATFORMS HAVE TO models was important to for agriculture, said,“I was TAKE RESPONSIBILITY OF such a fool thinking I will ensure safety of citizens WHATTHEYARE DOING." work bringing GenAI to and democracy. “Whether an AI model Indian agriculture from has been tested ornot,proSan Francisco. We were per training has happened training a multi-modal or not, is important to low-cost pest and disease ensure for the safety of citmodel, and was so excited izens and democracy. aboutit.Thisisterribleand That’swhythe advisoryhas demotivating after workbeen brought,” he said. ing four years full time “Some people said sorry bringing AI to this domain that we didn’t test the in India,”Desai said. model enough. That is not Continued on right. Social media platPage 10 forms have to take responsibility for INSIDE what theyare doing,” he added. IT firms roll out Vaishnaw also responsible AI clarified that the solutions missivewasnota ■ PAGE 5 regulatory A GLOBAL OFF-ROADING SENSATION, THE BRAND HAS FAILED TO REV UP IN INDIA Maruti to double down on Jimny’s off-road prowess SWARAJ BAGGONKAR Mumbai, March 4 THE TAGLINE OF a popular television commercial of MarutiSuzuki’s Jimny says,“There are places in the world only the Jimny can go.” But nine months after its launch in the country, the Jimny, touted as a global off-roading sensation, finds itself at a crossroads in the country. Atjust370units,theaveragewholesale volume per month in the last couple of months is, in fact, onesixth the sales target of 2,0002,500 units. Shashank Srivastava, senior executive officer, marketing and sales,Maruti Suzuki India,doesn’t mince words. “India is not a market which is ready (for Jimny kind IN THE SLOW LANE 4,500 units 370average wholesale units Jimny's retail volumes in December due to price knock-off of `1-2 lakh volume a month in the last two months 16,400 units sold till Jan-end 2,000-2,500 `12.74 lakh, At the Jimny is much smaller than Mahindra's Scorpio N in the same price bracket units original monthly volume target from the vehicle of vehicle) and so we have to work on developing it. We erroneously made the assumption that the market is ripe and waiting for such vehicles. This game will be a little ■ Jimny is also priced longer to establish.” So on the anvil is a plan to bring in a 4X4 off-roading culture,which is missing in India. The company plans to resume outdoor drive events where the Jimny will be driven in varied terrains to display its off-roadprowessandbuilditsbrand as an all-weather rugged SUV. Such campaigns are unusual for a prod- much higher than Mahindra Thar's `10 lakh ■ It saw 32,000 bookings before the June 2023 launch ■ Large-scale cancellations happened after prices were announced uct that is less than 10 months old, butthenMarutiSuzukihasveryfew options left. Struggling sales meant over stocking of the Jimny leading to heavy price discounts around the festive season last year. Maruti Suzuki even launched a limited edition of the model in Decemberwith a price knock-off of `1-2 lakh to boost volumes.The limited edition model was withdrawn soon after. While the pricing action did the trick during December, with retail volumes of the car rising to 4,500 units,withdrawalofdiscountsinJanuarybrought down demand again. As a result, the company now finds itself in a catch-22 situation: Repeated discountingwill generate volumes butwill erode thevehicle’s brand value and launching a stripped-down version of it will dilute its brand positioning. Continued on Page 10 BENGALURU