COMPANIES, P4 BACK PAGE, P16 INTERNATIONAL, P12 E-2Ws: Legacy brands take startups head-on Shift to multi-brand retail model could hurt Ola ECB set to deepen global easing with a rate cut CHENNAI/KOCHI, MONDAY, OCTOBER 14, 2024 FOLLOW US ON TWITTER & FACEBOOK. APP AVAILABLE ON APP STORE & PLAYSTORE WWW.FINANCIALEXPRESS.COM READ TO LEAD VOL NO. XLV 136, 14 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 IN THE NEWS CCPA DIRECTS OLA TO OFFER CHOICE OF REFUND MODE THE CENTRAL CONSUMER Protection Authority (CCPA) on Sunday directed ride-hailing service provider Ola Cabs to provide a clear choice to consumers to opt between a bank account transfer or a coupon when they seek a refund during the grievance redressal process, reports Sandip Das. ■ PAGE 4 INVESTIGATIONS INTO PRE-GSTTAX EVASION COMPLETE THE DIRECTORATE GENERAL of GST Intelligence (DGGI) has nearly completed investigation of all the pre-GST tax evasion cases pertaining to the erstwhile service tax and central excise, and is likely to disband a dedicated unit established for the purpose soon, sources told Priyansh Verma. ■ PAGE 2 OMCs MAY REPORT WEAK Q2 ON LOWER MARGINS INDIAN OIL MARKETING companies are likely to report a muted Q2FY25 compared with last year owing to lower gross refining margins, according to analysts, reports Arunima Bharadwaj. However, the sequential earnings trend shows a marginal improvement. ■ PAGE 2 AFTER A SLOW START, HOPES HIGH FOR DIWALI It’s a dull Dussehra for retail & cinema chains Sales growth slow for MUTED FESTIVITIES consumer durables; no box-office fireworks ■ Alia THE CRUCIAL DUSSEHRA period of the ongoing festive season has been sluggish for durable retailers, with chains seeing year-on-yearsales growth of around 6-7% this weekend. This is lower than the 1015% growth levels seen during the same period lastyear. INSIDE From the Dussehra period AVG AIRFARES AROUND DIWALI till around Diwali, shopping is expeDROP 20-25% cted to be at its ■ PAGE 4 peak. While the Dussehra period hasbegunslowlythisyear,retailershopefor signs of improvement closerto Diwali. “Therehavebeenfootfallsinstoresinthe run-up to Dussehra,which has led to sales conversions,” said Nilesh Gupta,director of consumerdurablesretailerVijaySales.“This Dussehraweekend,salesgrowthhasbeen67% versus last year. For the upcoming Diwaliseason,wearehopingfora10%y-oysales growth,” he added. ■ Consumer durable chains see y-o-y sales growth of 6-7% this Dussehra against 10-15% last year 7-8% FE S P E C I A L S double-digit sales growth around Diwali hopeful of big crowds by month end ficult first half this financial year. Some apparelretailerssaytheyareseeingdoubledigitgrowthofaround13-14%,ledbypentupdemandandtheupcomingweddingseason,which kicks off afterDiwali. “Apparelsaleshavebeenbetterthanlast year,which is a relief. Overall sales growth has been in double digits, led by pent-up demandandtheneedtoshopforthefestive andweddingseason,”DevarajanIyer,executive director & CEO at department store chain Lifestyle India,said. Continued on Page 5 Family offices up the stakes in consumer startups ● A FIRST-CLASS CATCH AYANTI BERA Bengaluru, October 13 BANKS ARE LIKELY to report a modest earnings growth in the second quarter, driven by a slower credit growth and a moderate decline in net interest margins (NIMs), reports Sachin Kumar. Lenders are expected to see 5-10-bps compression in NIMs due to rise in cost of funds, say experts. ■ PAGE 6 FORMER RAJYA SABHA member Sambhaji Chhatrapati on Sunday said their ‘third front’ will contest the upcoming Assembly polls in Maharashtra, reports PTI. The descendant of Chhatrapati Shivaji Maharaj said his Swarajya Party has joined hands with Bachchu Kadu of Prahar Janshakti Paksh, Raju Shetti of Swabhimani Sanghatana and Rajratna Ambedkar, the great-grandnephew of Dr Babasaheb Ambedkar. ■ Retailers expect ■ Film exhibitors Brands such as Panasonic, Haier and Godrej Appliances,however,claim that the salesgrowthhasbeenaround20-30%duringtheNavratri-Dussehraperiodversuslast year,led bypremium products. Meanwhile,Dussehrareleases,including Alia Bhatt’s Jigra, failed to light up the box office this weekend, though Rajinikanth’s Vettaiyan,also starring Amitabh Bachchan and released in regional and Hindi languages,has donewell in southern markets. Apparelsales,meanwhile,clockeday-oygrowthofaround7-8%duringtheNavratri-Dussehraperiod,whichcameafteradif- SpaceX mega rocket Starship lifts off from Starbase for a fifth test flight, in Texas on Sunday. It successfully returned the rocket's towering first stage booster back to its launch pad for the first time after catching it using giant mechanical arms, achieving another novel engineering feat AP Satcom spectrum Fall in states' spend allocation: Jio seeks raises concerns minister’s help over public capex RELIANCEJIO HAS urged communications minister Jyotiraditya Scindia to direct the Telecom Regulatory Authority of India (Trai) to issue a fresh consultation on the satellite spectrum allocation,considering the option of auction also as part of the discussions. The telco has also demanded an evaluation of technical and economicfeasibilityofspectrumauctions for satellite services. ■ Page 5 STATE GOVERNMENTS’ CAPEX likely fell on a year-onyear basis in the first five months of the current financial year, reports Prasanta Sahu.A review of the finances of 18 states by FE showed that their capex in April-August of FY25 declined 6% on-year to `1.67 lakh crore compared with `1.78 lakh crore (annual growth of 40% on a favourable base) in the year-ago period. ■ Page 2 MAKING IN INDIA ■ The current import management scheme was earlier scheduled to end on Sept 30, but was extended JATIN GROVER New Delhi, October 13 Apparel sales better, see y-o-y growth of BANKS MAY SEE NIM COMPRESSION IN SECOND QUARTER ‘THIRD FRONT’ TO CONTEST MAHA ASSEMBLY POLLS Current import management system ends on December 31 Bhatt's Jigra, others fail to light up the box office VIVEAT SUSAN PINTO Mumbai, October 13 Consultations soon to draw roadmap for laptop import policy SINGLE-FAMILY OFFICES (SFOs), which have a team of professionals managing the wealth and investments of a single high net-worth family, are increasingly showing a preference for consumer startups, a sector that has seen a correction in valuations during the last two years following the 2021 boom. SFOs have invested in at least 22 consumer startups so far this year, most of them in collaboration with venture capital (VC) funds, Tracxn data showed. During the same period last year, the number was at 15. Generally, family offices co-invest with VCs where they are existing limited partners and which have the insights to choose companies they prefer. In comparison, investments in other sectors have remained at similar levels. So far this year, SFOs have invested in nine fintechs, while last year they had invested in seven. As for startups in the sustainabilitysector,eight have attracted investments from SFOs this year, compared to six companies lastyear.In health tech, five startups have attracted investments from SFOsvs three lastyearand 17 startups in the enterprise application and high-tech segment received investments from SFOs this yearvs 15 in 2023. Among the consumer startups, jewelry brand Giva raised `100 crore in an extended Series B round in September from Premji Invest, the family office of tech titan and former Wipro chairman Azim Premji. Continued on Page 5 THE MINISTRY OF electronics and IT (MeitY) willsoonstartconsultationswiththeindustry tofinalisethecontoursoftheguidelinesforthe import management system for laptops and otherIThardware products,which needs to be put in place from January,officials said. The government has extended the ongoing import management scheme till December 31,which was earlier scheduled to end on September 30. The current regime requires IT hardware companies such as Lenovo,HP,Dell,Acer,etc,toonlyregisterwith the government and declare the value and quantity of imports to get a permit. Officialssaidtheaimistopromotedomestic manufacturing of IThardware such as laptops. So far, the regime did not restrict the importsandbasedonthedataofimports,further course of action will be decided. Thegovernment’planistocomeupwithan importauthorisationmechanismandbasedon the local manufacturing of IT hardware by the firms,theywill be allowed to import further. This could be a kind of credit-based system,wherein manufacturers will be assessed on three criteria: their past year’s imports, progress on domestic manufacturing of IT hardware products, and exports from India. Based on their performance on these parameters,thegovernmentmayallotthemcredit points which can be used to import laptops and other IT hardware products. InFY24,IThardwareimportsstoodat$8.4 billion against the authorisation of about ■ The regime requires IT hardware firms such as Lenovo, HP, Dell, Acer, to only register with govt and declare value and quantity of imports to get a permit ■ Govt's plan is to come up with an import authorisation mechanism ■ The aim is to promote domestic manufacturing of IT hardware such as laptops $9.5 billion. Most of the imports were from China. India's laptop and personal computer imports between April and July stood at $1.7 billion,according to government data. In August last year, the government had announcedimmediatecurbsontheimportsof laptops, tablets, and personal computers and notified that the companies will be able to import such products onlywith avalid licence. Continued on Page 5 NHAI plans nationwide optical fibre network Likely to cost over `35,000 cr, move to help ease tolling MUKESH JAGOTA New Delhi, October 13 THENATIONALHIGHWAYSAuthorityofIndia (NHAI) is planning to lay down its own optical fibrecable(OFC)networkalongthemajorhighways under the public-private partnership (PPP) model,according to official sources.The move is aimed at building the infrastructure for barrier-free tolling and smart highways, besidesenablingleasingoutofexcessnetwork capacityforcommercial uses. With its expansive 146,000-km of highway network, NHAI’s OFC infrastructure would beat similar networks built by RailTel and PowerGrid Corporation (PGCIL) in terms of length and breadth, and help handle the country’s surging data volumes. Though the exact cost of the planned OFC networkwillhavetobedetermined,iftheentire existingNHAInetworkistobeconvertedtodigitalways,thetotalinvestmentsneededcouldbe over`35,000 crore. Toll collections on Indian highways have seenasteadyriseinrecentyears,withrevenues jumping from less than `23,000 crore in FY18 to nearly`55,000crore in FY24. The scope forincreasing toll receipts is estimated to be high,and robust collections are an imperative for finding more non-debt capital forhighwaydevelopment. THE ROAD AHEAD Toll collection on highways (` crore) 22,664 25,145 27,645 27,923 33,907 48,028 54,811 2017-18 2018-19 2019-20 2020-21 2021-22 2022-23 2023-24 NHAI's debt servicing cost is estimated to rise to nearly`50,000crore byFY28. RailTel has used the track network of railways to lay 62,000-route-km OFC duct,while PGCIL arm Powergrid Teleservices owns and manages a network under the brand name, PowerTel.PGCILhasanoverheadopticfibrenetwork using optic ground wire on power transmissionlinesandisofferingtransmissiontowers formobile communications. Continued on Page 5 NEW GUIDELINES TO BE IMPLEMENTED IN PHASES FROM NOV 20 Experts explain why brands must learn to roll with the punches ■ EXPLAINER, P6 What inclusion in FTSE Russell means FTSE Russell will include India’s sovereign bonds in its emerging markets government Bond Index next year All eyes on Sebi norms as STT hike fails to deter F&O traders AKSHATA GORDE Mumbai, October 13 THE GOVERNMENT'S ATTEMPT to curb retail enthusiasm in the derivatives market by increasing the securities transaction tax (STT) from October 1 — a decision announced in the Union Budget — seems to have had no impact, the volumes data in the two weeks of trading show. In fact,there has been around a 10% increase in the volumes from the three-month dailyaverage volume of `511 lakh crore to `562 lakh crore in October. Even on a month-on-month basis, it is higher from `537 lakh crore in September. The daily average volumes include the numbers of both the National Stock Exchange and the BSE. Analysts believe the increase in STT alone isn't enough to deter traders from F&O investments. “The advantages of the derivatives market continue to outweigh the increased costs,”saidAnand James, chief market strategist at Geojit Financial Services,adding that the current tax hikes haven't discouraged traders from the derivatives market, but that could shift with additional regulations. F&O traders are generallymotivated to trade in options, as they provide a good leverage and more volatility compared to the underlying stock, said analysts. In the Union Budget, the government increased STT to 0.1% from 0.0625% for options and to 0.02% from 0.0125% for futures, effective October 1. “This move, combined with changes in trans- NO SLOWING DOWN Monthly avg turnover** (` lakh cr) Jan Feb Mar Apr May Jun Jul Aug Sep Oct* 2024 ■ BRANDWAGON, P9 Don’t shoot the messenger 460.2 483.2 459.9 445.3 432 497.3 496.5 501.4 537.3 562 *Until Oct 11, **NSE, BSE combined action charges by brokerage houses, there is an increase of `2,303 per crore of premium on the selling side on the NSE and `2,050 per crore on the BSE for options,” Nithin Kamath, founder and CEO of Zerodha, had said. Similarly, there will be a net increase of `735 per crore of futures turnover on the selling side. While traders have so far brushed off the STT increase, analysts caution that Sebi’s upcoming tighter F&O regulations — set to take effect from November 20 — could lead to a more significant impact on trading volumes. These include higher contract sizes, a rationalisation of weekly expiries, and a 2% increase in loss margins on short options contracts. Market participants anticipate that these, coupled with the STT increase, could dampen trading enthusiasm and liquidity in the F&O space. “There is a potential for all things coming together and probably bringing in a case of illiquidity or a case of traders not being as comfortable as earlier to come in and out, which would have been a reason for volumes earlier,” James said. “So, that sweet spot may be slowly easing, going forward,” he said. Sebi as well as other regulators, including the Reserve Bank of India (RBI) and the finance minister, have earlier raised concerns about the risks of losing household savings by taking punts in the equity derivatives segment. A recent study by the markets regulator showed that retail traders continued to lose moneyin the high risk-reward market, with 93% of them incurring an average loss of `2 lakh during the last three financial years. The combination of higher STT, tighter norms, and rising costs may soon force traders to rethink their strategies. CHENNAI/KOCHI