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APP AVAILABLE ON APP STORE & PLAYSTORE WWW.FINANCIALEXPRESS.COM READ TO LEAD VOL 33 NO. 190, 22 PAGES, `12.00 (NORTH EAST STATES & ANDAMAN `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: 76,606.56 ▲ 149.97 NIFTY: 23,322.95 ▲ 58.10 NIKKEI 225: 38,876.71 ▼ 258.08 HANG SENG: 17,937.84 ▼ 238.50 `/$: 83.54 ▲ 0.03 `/€: 89.84 ▲ 0.02 BRENT: $83.14 ▲ $1.22 GOLD: `71,318 ▲ `154 Banks for status quo N E W S FM hints at more reforms, on project finance steps for ‘ease of living’ provisioning norms IN THE BUDGET LIKELY IN THE WEEK STARTING JULY 15 MORGAN STANLEY FOR INVESTMENT-LED GROWTH IN INDIA GLOBAL BROKERAGE FIRM Morgan Stanley has made a strong case for policy continuity in India despite the unexpected election outcome, reports Akshata Gorde. It also expects the BJP-led coalition government to continue prioritising investment-led reforms, disregarding potential pressures of redistributive policies. ■ PAGE 6 NEW INCENTIVE SCHEME FOR TOY MANUFACTURING THE GOVERNMENT IS considering launching an incentive scheme to boost domestic manufacturing of toys, keeping in view the high employment potential of the sector, reports Mukesh Jagota. LIFE INSURERS TO PROVIDE LOAN AGAINST POLICY REGULATOR IRDAI ON Wednesday said the facility of policy loan is now mandatory in all life insurance savings products, enabling policyholders to meet liquidity requirements. In a master circular, it also said the free look period, which provides time to review the policy terms and conditions, is 30 days against 15 days earlier. ■ PAGE 6 GO FIRST GETS 60-DAY EXTENSION FROM NCLT THE NATIONAL COMPANY Law Tribunal (NCLT) on Wednesday extended the corporate insolvency resolution process of grounded airline Go First by 60 days, at the request of the lenders. ■ PAGE 4 NESTLE INDIATO PAY ROYALTYTO PARENT AT CURRENT RATE NESTLE INDIA ON Wednesday said it would pay royalty to parent Société des Produits Nestlé SA at current rate of 4.5%, reports Viveat Susan Pinto. Last month, over 57% shareholders rejected the company's proposal to hike the royalty rate. ■ PAGE 10 Policies to reflect Viksit Bharat vision SACHIN KUMAR Mumbai, June 12 PRASANTA SAHU New Delhi, June 12 THE NATIONAL DEMOCRATIC Alliance (NDA) government, in its third term, will take more steps to ensure “ease of living” and undertake various reforms to support macroeconomic stability and faster economic growth, finance minister Nirmala Sitharaman said on Wednesday after assuming charge. The finance ministry also quoted the minister as saying that the economic outlook for the coming years is“optimistic”. Sources said the full Budget for FY25 would include a directional road map for thenextfiveyears.Policieswouldbealigned withthevisionofmakingIndiaadeveloped country (Viksit Bharat) by 2047,the centenaryyear of Independence. The Budget may also revamp some of the existing schemes, including those meant for welfare and investment promotion. Some of these may be extended Nirmala Sitharaman assumes charge as the finance minister for the second consecutive term, in New Delhi on Wednesday beyond the current end dates. The Budget is likely to be presented in Parliament in the week of July 15-21. According to the ministry, the FM stressed that reforms undertaken since 2014 would continue, while highlighting the country's“commendable growth story” (% change, y-o-y) 12 10 8 6 CPI CPI core CPI food cautious for now, and not deliver a rate cut before October.“Given the growth momentum, the RBI has space to keep rates tighter for longer,” said Sakshi Gupta,principaleconomist,HDFCBank. Core inflation eased to a series-low of 3.1% in May from 3.2% in April, with housing inflation plunging to the lowest level in a decade. However, according to economists, core inflation — most amenable to monetary action — is expectedtobottomoutaroundmid-year. —fe Bureau THECONSTRUCTIONOF30millionhouses inbothruralandurbanareasunderthePradhan Mantri Awas Yojana (PMAY) is likely to cost the Central exchequer about `4 trillion, while the state governments will have to spendanother`2.7trillion,accordingtoofficialsources.“Theseareroughestimates,based on initialcalculations,” a source said. The moneywould be spent overa period of 4-5 years. So far,the PMAY,launched in 2015,has enabled construction of as manyas 26 million houses. OnMonday,theUnionCabinetapproved the construction of 20 million more houses under PMAY-Gramin,and 10 million under PMAY-Urban.The details of the assistance and the timeline for the scheme’s implementation have notyet been made public. As such, under the PMAY scheme, the cost of unit assistance is to be shared betweentheCentralandstategovernments in the ratio 6:4 in plain areas, and 9:1 for North-Eastern and hilly states. FEhadearlierreportedthatthesehouses will be builtin the nextfiveyears.Anofficial had earliertold FE thatunderthe revamped PMAY-G, the cash support will likely be enhanced toaround `2.3-2.4lakh/housing unit from `1.2-1.3 lakh in the previous scheme,due to cost escalation. For urban households, the Centre may unveil a new `60,000-crore interest subsidy scheme for the urban poor and the middle class forfiveyears.Itwill offerinterest subvention of 3-6% per annum on home loan amounts up to `5 million. ■ PAGE 2 8.69 4.75 4 2 0 2.91 May 2023 IIP 3.1 May 2024 Nov 2023 (% change, y-o-y) 2.5 FE S P E C I A L S Dec 4.4 Jan 2024 Source: MoSPI 4.2 Feb Mar Apr Continued on Page 10 PRIYANSH VERMA New Delhi, June 12 4.25 5 in recent years amid global challenges. Another source said rural demand may get a fillip from the Budget measures.However,thegovernmentislikelytorefrainfrom announcing anynewlarge-scale handouts. Centre likely to spend `4 trn on extension of PM Awas Yojana Macro picture bright: Inflation eases, IIP firm INDIA'S GROWTH/INFLATION dynamics remain favourable.CPI inflation came in at 4.75% in May, compared with 4.83% in April, undershooting expectations.The IIP growth of 5% inApril came in a tad higherthan predictions. Food inflation, surprisingly,was flat in May at 8.69%,and the trajectory may continue in the near term,owing to above normal monsoon. This is even as prolonged heatwaves could inflate vegetable prices in the next couple of weeks. EconomistsexpecttheRBItoremain 5.6 5.4 5.0 Continued on Page 10 Asus eyes bigger OLED display The brand aims to build a strong line-up for gamers and creators ■ eFE, P9 Why foreign airlines want to quit India Since last year, they have been getting notices from the Directorate General of GST Intelligence over alleged tax evasion ■ EXPLAINER, P9 PTI RAISING CONCERNS THE INDIAN BANKS' Association (IBA) will request the Reserve Bank of India (RBI) to maintain status quo on the provisioning required under the new project finance guidelines,and keep it unchanged at 0.4%. In a meeting held on Tuesday,bankers have stressed that raising provisioning would deterlendersfromextendingloansatatime when the government has set significantly high targets for investment in the infrastructure sector. “Banks believe that the 5% provisioning requirementundertheproposed guidelines is very high,and if implemented in the current form, will result in lower returns for lenders in project finance,”a bankertold FE, adding: “It will increase the incremental credit costs for banks and will make project financing unattractive.” The IBA meeting was held to discuss the implications of the RBI’s proposed guidelines on project finance.The apex bank has set June 15 as the deadline for stakeholders to submit feedback on the draft project financing rules. In addition, bankers said the changes, if any,should applyonlyto newloans,and not retrospectively. Currently, banks have cumulative exposure of `14.6 trillion to the infrastructure and construction sectors. ■ Banks believe the 5% ■ May result in lower returns for lenders if implemented in current form provisioning requirement under proposed guidelines ‘very high’ ■ Say changes, if any, should apply only to new loans, and not retrospectively These numbers have grown by 30% in the past five years. However, besides the provisioning norms, bankers also feel that some of the other clauses,such as the provision for land requirement of minimum 50% in infra public private partnerships (PPP) for financial closure,could be a deterrent. Continued on Page 10 Haldiram’s weighs IPO as sale talks stall ON THE PLATE BAIJU KALESH, SAIKAT DAS & PREETI SINGH June 12 ■ Got bids in May from THE OWNERS OF Haldiram Snacks are exploring a possible initial public offering (IPO) for the food producer and restaurant operator as plans to sell it to foreign investors have stalled,people familiar with the matter said. TheAgarwalfamilyisconsideringa listing as bids in the region of $8 billion to $8.5 billion didn’t meet itsvaluation expectations of about $12 billion, according to the people, who asked not to be identified. The company, known as Haldiram’s, received bids in May from a Blackstone-led consortium featuring Abu Dhabi Investment Authority and GIC Pte, as well as one led byBain & Co andTemasek Holdings Pte, according to media reports. IPO considerations are preliminary and Blackstone-led consortium and one led by Bain & Co and Temasek Holdings ■ Bids said to be in the region of $8 billion$8.5 billion ■ Owners' valuation expectations are around $12 billion thecontrollingshareholdersmaystilldecide to lowertheirasking price and proceedwith a sale,the people said. Continued on Page 10 NIFTY SOARS TO RECORD HIGH BENCHMARK INDICES ENDED higher on Wednesday,with the Nifty hitting its freshrecordclosinglevel.The index went up by 0.76% to hit its new all-time intra-day high of 23,441.95 and also ended at a fresh closing peak of 23,322.95. The Sensex climbed149.98pointstosettleat76,606.57.—feBureau High: 23,441.95 NIFTY June 11 (close) 23,264.85 58.1 points (0.25%) June 12 (close) 23,322.95 COMPETITION, HIGH BASE WEIGH DESPITE TRAVEL MARKET BOOM Branded luggage companies feel the squeeze as sales slow VIVEAT SUSAN PINTO Mumbai, June 12 INTENSIFYING COMPETITION FROM onlineplayers,asteadyinflux of new brands,as well as a high base effect, have slowed the pace of growthoforganisedluggagemajors such as Samsonite, VIP Industries and Safari, which together control 90% of the branded segment. The challenges being faced by these companies came to the fore once again when VIP Industries founder-chairman Dilip Piramal, while commenting on the resignation of Nisa Godrej as an independent director from the company board, said that growth rates have slowed and that the March quarterwas bad. “The March quarter (of FY24) was not good at all for us. We widened our net loss during the quarter.While the sales growth rate improved sequentially during the quarter (to 14% from 4% in the Decemberquarter),itwas stilllower than the year-ago period (26%),” Piramal told FE. While he added that the organised luggage market in India will bounce back as the travel market continues to boom, a look at the overall numbers suggests that this could take some time. From the levels of 26-108% in terms of sales growth for Q4FY23, the topline growth of Samsonite, VIP Industries and Safari fell to 1021% in Q4FY24. The three players are ranked No. 1, 2 and 3 in the `15,000-crore organised luggage market in the country. Samsonite, which is a global major, does not give a detailed break-up ofits Indiafinancial numbers. Safari Industries, also a listed HOWTHEY STACK UP (Q4FY24) Net sales (` cr) 516 VIP Industries* Net profit (` cr) 365 -24 14 Safari Industries 21 43.2 NA 13.4 Growth, % y-o-y *VIP Industries reported a net loss of `4 crore in Q4FY23; Samonite does give a brea-kup of India numbers; Source: Company results player like VIP Industries, saw its Q4FY24 net profit grow 13.41% year-on-year to `43.19 crore. But in its March (2024) quarter earnings statement, Samsonite indicated that there was a slowdown in the Indian luggage market. “After three years of explosive growth in India, during which net sales nearly doubled from the first quarter of 2019 to the first quarter of 2023, India’s first quarter 2024 net sales decreased (by10%) as customer traffic began to moderate,” the company said. “What we are seeing in India is a lotofpromotionalactivity.Ourcompetitorsarealsodiscounting.There’s a lot of high inventory positions as well. And so, the overall market in India,there’salotofbags,”Samsonite management told analysts. VIP Industries, on the other hand, has faced significant challenges in recent quarters,including a shift in consumer preferences from soft luggage to hard luggage and management issues within the company. Experts say that the online segment has democratised price points with luggage brands available at affordablepricepointsandanumber ofdirect-to-consumerplayerssuchas Mokobara,Nasher Miles and Uppercasedisruptingthemarketwithnew styles,designs and innovations. “Thepost-Covidluggagemarket has evolved as consumers increasingly travel and demand more affordable,innovative and fashionable products,” said Harminder Sahni, founder and MD at Gurugram-based retail consultancy WazirAdvisors. To increase consumer excitement, companies such as Samsonite have amplified theirmarketing efforts over the last few years, tying up with both brand ambassadors (such as Virat Kohli for American Tourister) and also using influencer marketing aggressively on digital media. Continued on Page 10 Kolkata