EFE, P10 BACK PAGE, P20 INTERNATIONAL, P5 Big pharma firms ride the GCC wave in India MapmyIndia charts a B2B plan for growth Harris & Trump remain within margin of error MUMBAI, MONDAY, NOVEMBER 4, 2024 FOLLOW US ON TWITTER & FACEBOOK. APP AVAILABLE ON APP STORE & PLAYSTORE WWW.FINANCIALEXPRESS.COM READ TO LEAD VOL LXIV NO. 262, 26 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 TWO YEARS OF 5G: ADANI GROUP YET TO START SERVICE IT'S BEEN TWO years since the launch of 5G services, but Adani Group's Adani Data Networks is still struggling to start the service for captive networks in the absence of use cases, reports Jatin Grover. Sources said the group is also evaluating options to surrender the spectrum. ■ PAGE 4 PVT BANKS RAISING PROVISIONING DUE TO MFI STRESS PRIVATE BANKS HAVE sharply increased provisions for loans sanctioned to microfinance institutions (MFIs) owing to the rising stress in the sector, reports Anupreksha Jain. This is in line with the Reserve Bank of India’s directions to banks and NBFCs involved in microfinance lending. ■ PAGE 6 INDIA GAINS SHARE IN EXPORTS OF SELECT PRODUCTS INDIA HAS INCREASED its share in global trade of key manufactured products such as petroleum, gems and jewellery, insecticides, tyres and even semiconductors between 2018 and 2023 on the back of rising competitiveness, according to an analysis by the ministry of commerce and industry, reports fe Bureau. ■ PAGE 2 FE S P E C I A L S UP plans to turn up the heat on ICE vehicles Move to help state offset revenue losses due to fee waiver for hybrid cars GREEN MOBILITY SWARAJ BAGGONKAR Mumbai, November 3 ■ Hybrid vehicles became cheaper by `1.8-3 lakh after road tax waiver THE UTTAR PRADESH government is contemplating hiking registration tax for internal combustion engine (ICE) vehicles, after waiving the levy for hybrid and electricvehicles. Sources said the objectives behind the move are twofold: to make up forthe lost revenue and todissuadepeoplefrombuyingICE vehicles and instead opt for environmentfriendly hybrids or EVs. The state government had waived registration tax forhybridvehicles in July. Electric models have been enjoying this waiver since before as part of the state’s EV policy. The removal of registration tax made hybrid vehicles cheaper by around `1.8-3 lakh, which has led to a surge in demand for them making Uttar Pradesh the top market forstrong hybrid cars in the country. A hybrid car is battery-assisted partiallyelectricwith a majorityof its driving range powered by a petrol or diesel engine. Post the cut, the sale of such hybrid cars has zoomed more than three times (nearly 1,400 units) compared to their earlier average monthlyvolumes (300-400 units).However, there has been revenue loss to the state government.“The UPgovernment is mulling raising road tax on other (ICE) vehicles to compensate for (losses due to) the hybrid Home-grown sneaker brands are giving global players a run for their money BRANDWAGON, P9 Navigate volatility with flexi-cap funds These are suitable for both growth-oriented and conservative investors ■ PERSONAL FINANCE, P7 hybrids and EVs down to under fuelled demand, making Uttar Pradesh the top market for strong hybrid cars 2,419 units in first half of FY25, compared to over 10,800 units in the same period of FY24 vehicle incentive. The government should realisethatthisisagrossmiscalculation,”said a source privy to the matter. An email sent to the transport commissionerof the UttarPradeshwas not answered till the time of going to the press. Continued on Page 5 Public investors turn angels for startups S SHANTHI & AYANTI BERA Bengaluru, November 3 Kicking up a storm ■ Gap between ■ Move also LISTING GAINS ■ FirstCry operator SEVERAL STARTUPS OPTING for public listing are grabbing higher valuations in public marketsthantheirprivatefundraisingrounds. With stronger fundamentals and a clear path to profitability, startups today are sustaining the attention of retail investors,sayanalysts. BrainbeesSolutions,whichoperatesbabycare retailer FirstCry, saw its valuation jump 44% on the listing dayto `32,783 crore from its last-known valuation of $2.7 billion or `22,698 crore in early2023.Thevaluation of co-working and managed offices provider Awfis jumped 53% to `2,909 crore on the listing day in May from $226 million or `1,900crore inSeptember2023,when ithad raised its last priced round.As of November1, 2024, its valuation has improved further to `4,828 crore,more than 2.5 times its last privatevaluation.Among the more recent IPOs, SoftBank-backed Unicommerce listedwith a market cap of `2,152 crore,reflecting a market cap-to-sales ratio of 20.7. Companies with established revenue streams have always commanded highervaluations during IPOs and startups are no exception, say experts.“Many of these startups have demonstrated robust business models and revenue growth, which signifi- Brainbees Solutions' valuation jumped 44% to `32,783 crore ■ Awfis' valuation rose 53% to `2,909 crore on listing day on listing day ■ Experts say increasing gains from IPO reflect retail investors’ confidence in startups cantly bolstered investor confidence,” Somdutta Singh, an angel investor and founderCEO of Assiduus, told FE. A more favourable regulatory environment for IPOs has also contributed to this trend. Continued on Page 5 INDIA INC WILL HAVE TO BRACE FOR EVEN LOWER PROFITABILITY Urban slowdown more than cyclical Jan ‘24 1.3 1.5 1.6 Urban wages Mar ‘24 Apr ‘24 Real salary expenditure growth of non-financial corporates (%, y-o-y) 15 10 0.1 5 0 -0.9 -0.8 -0.5 -0.2 -0.8 0.1 -1.3 0.2 -0.02 Feb ‘24 Rural wagesnon-agri 1.5 Rural wageagri 0.8 (Real, % y-o-y) 0.7 0.7 THE SLOWDOWN IN urban consumption demand being witnessed now may largelybe cyclical,but could also be reflective to an extent of deeper structural issues, economists feel. They suggested urgentstepsto enhancelabourproductivity and address the sagging wage growth. Corporate India,they said,would have to prepare to live with lower profitability intheneartermtoboostdemand.Itwould also have to adapt to the new realities of changing consumption pattern, particularlytheshiftawayfromtraditionaltotangible and intangible digital products.Else, most companies would find themselves out of price points,theywarned. Many of the economists FE spoke to, however, believed that the “baseline growth is still strong” and has the potential to revive consumption going forward. “As of now, the urban demand slowdowniscyclical.Ifthiscontinuesforacouple of quarters, and deepens, then it will become structural,” said DK Pant, chief WAGE GROWTH WEAKENING -0.1 PRIYANSH VERMA New Delhi, November 3 May ‘24 June ‘24 Source: Ind-Ra economist at India Ratings and Research. “Aslongasrealwagegrowthstayspositive, and inflation continues to fall (on an annual basis), the (urban) slowdown will not become structural,”he said. MKSaggar,professor-IIMKozhikodeand formermemberofthemonetarypolicycommittee,saideventhoughthebaselinegrowth lookedstrong,downsideriskswerebuilding up.“From a monetarypolicyviewpoint,it is -5 -10 Sept 2012 Sept 2024 Source: Nomura Global Economics important to gauge the turning point early andallowlagsinpolicytransmissiontowork in time if aggregate demand is turning weak,”he said.“The cyclical slowdown can deepen if otherparts of the global economy slow down. Spillovers can then shape up throughtrade,financialchannelsand,more importantly,confidencechannels,”hesaid. Continued on Page 5 Small packs are giving a big headache to FMCG firms Input cost increase prompts companies to review entry packs RAGHAVAGGARWAL & VIVEAT SUSAN PINTO New Delhi/Mumbai, November 3 WEIGHED DOWN BY higher input costs and food inflation, fast-moving consumer goods (FMCG) companies are reviewing their entry price points of `5 and `10. Those who don’t want to vacate the low-priced packs segment are considering a grammage reduction due to rise in prices of commodity inputs such as palm oil, coffee and cocoa by up to 50-60% in the last one year. “`20 is becoming the new `10,” said Krishnarao Buddha, senior category head, Parle Products, a leading biscuit maker. “`20 price point contributes about 12-14% to food companies right now. This will go up to about 25% in the next 3-4 years as companies look to grow this price point,” he said. CHANGING DYNAMICS How price points stack up in FMCG (%) 2024 2028* 32 20 `5 23 25 `10 25 `20 31-33 NEWS REGISTRATION TAX HIKE IN THE OFFING 12-14 IN THE 30 Others Source: Kantar Worldpanel/Industry *Estimate However, he said that `5 and `10 price points are “sacrosanct”.“We may reduce grammage, but will not vacate these price points,” he said. According to data by Kantar Worldpanel, sourced from the industry, `5 price point currently delivers volumes of around 32% to FMCG companies. Packs of `10 deliver volumes of around 23% and that of `20 account for around 12-14% respectively. Industry executives say that the share of `5 is reducing in the FMCG basket. It was 35% two years ago, and will go down further in the future. They suggest that the `10 price point is slated to grow and will touch 25% in terms of FMCG volumes, but will remain stagnant thereafter as the attention shifts to the `20 price point. Continued on Page 5 Insurance Bill likely FPIs turn net sellers Tribals will be kept of G-Secs in Oct in winter session out of UCC: Shah THE CENTRE IS likely to introduce a Bill to push big-ticket reforms in insurancelaws in the upcomingwintersessionofParliament, to further liberalise the sector, reports Prasanta Sahu. The plan is to increasetheforeigndirectinvestment(FDI) limit to 100% from 74%, and introduce composite licensing of life and non-life insurance, sources said. In 2021, the FDI limitwasraisedfrom49%to74%.TheFDI cap was 26% when the sector was opened up forprivate players in 2000. ■ PAGE 2 FOREIGN PORTFOLIO INVESTORS (FPIs) remained net sellers of government securities under fully accessible route (FAR) in October,making it the month of first net outflows since April, reports Anupreksha Jain. According to data from the Clearing Corporation of India (CCIL), FPI investment in government securities under FAR route reduced to `2.48 lakh crore as on October 31 as compared to `2.50 lakh crore on October 1. ■ PAGE 13 UNION HOME MINISTER AmitShahonSundaysaidthe Centre would exempt tribals from the Uniform Civil Code (UCC) wherever it is implemented in India and added that there was “no confusion about it”, reports Abhishek Angad. He was speaking at an event in Ranchi where he released the BJP’s Jharkhandelectionmanifesto.Shahalsotargeted the JMM-led state government,accusing it of“patronising Bangladeshi infiltrators for vote bank politics”. ■ PAGE 17