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Market breadth improves

The market ended with gains in a highly volatile trading session, with the Nifty settling above the 10,900-mark. The BSE Sensex rose 113.31 points or 0.31 per cent to close at 36,582.74. However there was selling in broad market, as the BSE Mid-Cap index fell 0.82 per cent and the BSE Small-Cap index plunged 1.17 per cent.

The market breadth of the market was weak as 781 shares rose and 1,776 shares fell. Among the major Sensex gainers were Reliance Industries (up 3.52 per cent), TCS (up 0.81 per cent) and HDFC (up 0.87 per cent) and Bajaj Auto (up 1.67 per cent).

Technical view

Sameet Chavan, ch­i­ef analyst-technical & de­rivatives, Angel Br­o­k­i­ng, said: “We had a gap down opening to kick off the new trading week af­t­er Friday’s volatile sess­i­on. During the first half, the broader market rem­a­ined under; however, the latter half turned out to be an excellent one for the bulls. The market br­e­adth improved tremend­ously and in the pr­o­c­e­ss, Nifty managed to surp­ass the 10,900-mark on a closing basis. The he­a­v­yweight banking space, which has been under pe­rforming for the last co­uple of days, became the charioteer of this splendid recovery.

“We believe that the st­age is very much set for our benchmark in­d­ex to go beyond recent hurdles. The last two da­ys’ up-move has laid the foundation and furt­h­er impetus may probab­ly be provided by the RBI monetary policy. Fr­i­day’s low of 10,800 pl­a­y­ed a sheet anchor role and going ahead, 10,987 are not too far now. A move beyond 10,987 would unfold the next leg of the rally.

Market view

Jayant Manglik, presid­e­nt, Religare Broking, sa­id: Markets traded vo­l­a­t­ile on expected lines and settled marginally higher, tracking mixed cues. Investors were in cautious mood from the be­ginning, citing weak gl­obal cues and not so encouraging earnings an­nouncements over the weekend. Mixed tr­e­nd was witnessed on se­c­toral front while press­u­re continued on broader front. We­­’re seeing ma­yhem on the stock-sp­ecific front and the cu­r­rent positioning of the Nifty is not reflecting the ac­tual underlying sentim­ent. We strongly advise tr­aders to avoid averagi­ng long making positions and preferring options instead of naked futures for short term trading.

—Ashwin Punnen

Market breadth improves

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RCom dives 35%; other group shares sink too


Shares of Reliance Communications fell sharply on Monday and ended nearly 35 per cent lower after the company decided to opt for insolvency proceedings following its failure to sell assets for paying back its lenders.

RCom shares plummeted 34.91 per cent to close at Rs 7.55 on BSE. Intra-day, it nose dived 48.27 per cent to Rs 6 — its record low. At NSE, shares tumbled 34.91 per cent to close at Rs 7.55.

The company’s market valuation plunged Rs 1,120.02 crore to Rs 2,087.98 crore on BSE. On the traded volume front, 425.09 lakh shares changed hands at BSE and over 37 crore shares on NSE.

Heavy selling was also seen in other group shares, with Reliance Power tumbling 35.10 per cent, Reliance Capital 19.80 per cent, Reliance Infrastructure 14.87 per cent and Reliance Naval and Engineering 14.72 per cent on BSE.

The combined market valuation of five of these group firms tumbled Rs 5,830.72 crore on the BSE.

“RCom board of directors decides upon implementation of debt resolution plans through NCLT framework,” the company said in a statement on Friday.

It is estimated that RCom has been reeling under debt of over Rs 46,000 crore. The board on Friday reviewed the progress of debt resolution plans since the invocation of strategic debt resolution on June 2, 2017.

The board noted that despite the passage of over 18 months, lenders have received zero proceeds from the proposed asset monetisation plans, and the overall debt resolution process is yet to make any headway, the statement said.

“Accordingly, the board decided that the company will seek fast-track resolution through NCLT, Mumbai. The board believes this course of action will be in the best interests of all stakeholders, ensuring comprehensive debt resolution in a final, transparent and time bound manner within the prescribed 270 days,” the statement said.  

RCom on Sunday said it will propose a similar debt resolution plan to the National Company Law Tribunal that it had been pursuing outside the court.

RCom dives 35%; other group shares sink too

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Karnataka to host a jumbo trade body meet in Bangalore


The tech capital Bangalore will host the first edition of the ASEAN Chamber of Commerce and Industry Business Meet between February 25th and 27th, in association with the Federation of Karnataka Chambers of Commerce & Industry (FKCCI) and the government of Karnataka. The Business Meet is expected to direct investments to the tune of Rs 2,000 crore to state from over 23 participating countries.

The 3-day summit will bring together the Chambers of Commerce, Exporters and Importers of ASEAN, ASEAN Plus countries along with some special invitee countries, high-profile conference delegates from India & Overseas, C level and top management of leading corporates and industry, bureaucrats, policy makers and heads of PSUs and members of national and state industry associations on a single platform to promote trade, business and investments for mutual benefit of both the host country as well as the participating countries.

The Business Meet aims to create a high-level networking ground for people to explore new collaborations and showcase new products to stakeholders. It can also help trade bodies of all partner countries to enhance trade & business of these countries and also of their members with each other.

Announcing the event to the media here on Monday, Karnataka chief minister HD Kumaraswamy said, “We are excited to host this mega event and provide a unique platform to bring together business leaders, policy makers and innovators from across ASEAN countries. Karnataka, with its rich heritage and immense human capital has contributed towards the development of the country. The state has been recognized the world over as one of the most progressive and business friendly state. This event will help showcase our strengths and explore and attract mutually beneficial partnerships globally.”

Speaking on the occasion, K J George, state minister for large & medium scale industries and sugar said, “The event will showcase Karnataka to the ASEAN plus and special invitee countries and also make trade & industry of Karnataka aware of the opportunities for trade and investment in ASEAN plus and special invitee countries. Our endeavor is to bring together the chambers of commerce, business persons, exporters and importers of ASEAN countries along with some special invitee countries on one platform to promote trade, business and investment.”

Sa Ra Mahesh, minister for tourism, government of Karnataka said, “The aim of the meet, along with promotion, identification of mutual business development, is also to provide a platform to share the best practices in the business. With the ASEAN countries participating and getting the best of their trade applications on the same table with a purpose to strengthen the commerce and investment opportunities. Karnataka is a state of immense capabilities and we believe that opening the gates for better business prospects will help us build a better and more stable commercial/trade industry. We look forward to hosting the countries and having an eventful three days, with maximum exchange of the best business ideas.”

Principal secretary, department of commerce & industries and department of IT, BT and science & technology, Mr. Gaurav Gupta, said, “ASEAN as an economic bloc is becoming an increasingly important driver of global growth.

Karnataka to host a jumbo trade body meet in Bangalore

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No incidents of security breach reported, says SBI chief


In a strong rebuttal, State Bank of India (SBI) has on Monday said there was no data breach or incident of it failing to safeguard the financial records of its customers.

Responding to media queries on recent reports of data leakage involving the bank, SBI chairman Rajnish Kumar said, “Customer data security is top most priority for us. None of our customers lost data, there was a gap in the process that caused the error, but no incident of customer data loss was reported. Also, no customer-identifiable information, username or passwords of any account holder, was kept on the system.”

Kumar further added, “We are reviewing the entire systems. We have been examining the issue in totality to ensure complete safety and security of data and storage.”

It may be recalled that an online publication recently reported that a security breach had exposed financial information of SBI customers through an unprotected server. SBI is the country’s largest bank with a customer base of 43 crore people and a network of 22,500 branches.

On the bank’s digital push, the chairman said, some 85 per cent of its entire transactions take place outside branches, ATMs account for 35 per cent of transactions while 50 per cent of the transactions are done online.

Commenting on priority sector lending, Kumar said, agriculture, MSME and affordable housing etc continue to be focus areas for the bank.

“We are in the last leg of loan waivers, we are moving towards direct transactions, so that we can do away with waiver systems.”

Prices of agriculture produce have fallen while cost production has gone up. Vagaries of nature have also added to farmers’ distress, he added.

No incidents of security breach reported, says SBI chief

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Consultations begin on drafting e-comm policy


The newly renamed department of promotion of industry and internal trade has started consulting various stakeholders on drafting an e-commerce policy.

The department has started consulting e-commerce companies, IT industry body, payment companies and other tech companies as part of the exercise, sources said. But some of the e-commerce players said that they were still waiting for the meeting with the department officials. It has not consulted retail entities or retail industry bodies either.

“Setting up a regulator for the e-commerce sector is one of the topics the department is seeking opinion of the industry. The new FDI rules also will be incorporated in the policy. It will also look into payment and logistics related matters concerning the e-commerce industry,’ said an industry insider.

The e-commerce companies had earlier complained that they were not consulted before the government issued clarification of its FDI policy for e-commerce. Even after issuing the press note 2, the companies have been trying to communicate with the government about the “possible disruption’ that could occur due to the new norms. They also have been trying to get some clarity on a few points.

However, some in the industry have been presuming that government is now finding that it not necessary to set up a separate regulator for the sector after renaming the department to include internal trade. Having included internal trade under its purview, trade bodies hope that they too would be consulted on matters relating to retail trade.

“The government has recognised internal trade and we hope it will consult trade bodies before finalising on the policy,” said Kumar Rajagopalan, CEO, Retailers Association of India.

Sangeetha G.
Consultations begin on drafting e-comm policy

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Ranveer raps his way to the runway @ LFW Summer/Resort 2019

Ranveer Singh turned the ramp into a 'desi' underground hip hop jam session as walked the runway with "Gully Boy" team and city-based rappers on the final day of Lakme Fashion Week Summer/Resort 2019.

The 33-year-old actor wore a monochrome athleisure attire from the new collection of fashion brand Love Gen, the label started by Bhavana Pandey, Dolly Sidhwani and Nandita Mahtani.

Ranveer, along with rapper Naezy and co-actor Siddhant Chaturvedi, performed on the songs "Apna time aayega" and "Asli hip hop" from Zoya Akhtar's upcoming directorial.

"It was a very unique show. Our film is all about music and music was at the heart of our show. There were great performances, live music and the entire gang has authentic rappers. They contributed to every bit of the film," Ranveer said.

The actor said he loved the limited edition 'GullyGen' collection, which includes jackets, hoodies, track pants and T-shirts.

"I loved it. It is the first time that any of movies had merchandise, turned right," he added. - PTI

Ranveer raps his way to the runway @ LFW Summer/Resort 2019

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Striking a Fine Balance between Populism and Fiscal Prudence

India’s government announced an interim budget on February 1st. Although conventionally an interim budget is supposed to be a statement of accounts, it was different this year, as it included significant policy announcements. Against the backdrop of upcoming general elections, somewhat slowing economic activity, and food inflation at historic lows, the budget made several announcements including a flagship program for income support to farmers, and income tax benefits for the salaried class.

The reported fiscal deficit for FY19 did not deviate meaningfully from the target, with the shortfall in GST being offset by higher direct taxes, and lower transfers to states.

Despite being an election year, the budget does not envisage any additional stimulus, with the fiscal deficit in FY20 targeted to be flat at 3.4% of GDP (compared to FY19), but ~0.4 pp higher than the Fiscal Responsibility and Budget Management (FRBM) target of 3%. This is the third consecutive year of deviation from the FRBM targets. Net market borrowings are projected to increase significantly in FY20, and might exert pressure on yields going forward.

We believe that the revised estimates for FY19 and the targets for FY20 are still ambitious, and would require intensified tax collection efforts, particularly on GST.

While equity markets rallied, 10-year bond yields increased, and INR weakened following the budget announcement.

FY19 Budget Math

In the interim budget for FY20, the Indian government announced a revised fiscal deficit estimate for FY19 of 3.37% of GDP (~3.4% of GDP announced by the Finance Minister), compared to the budget estimate of 3.33% of GDP. GST tax collections are estimated to be short of the original estimate by 0.5% of GDP (~ 1 trn INR) by the end of FY19. This may be a conservative estimate of the shortfall – limiting the gap to 1 trn INR would require an average collection of INR 768 bn per month during the last quarter of the fiscal year, compared to the run rate of INR 455 bn so far.

The deficit in GST collections is expected to be offset in three ways. First, the revised estimates assume an overshoot of direct taxes, particularly of corporate taxes. Overall, direct taxes have performed well. They grew 16% year-on-year during April-November, compared to 14% in the budget, and an average of 11% over the previous four years. The FY19 revised estimates, however, assume a significant pick up in tax collection efforts in the last quarter, and a full year growth of 20%, in order to be able increase direct taxes by INR 500 bn relative to the budget estimate. This may be possible to achieve following the strong performance last year, but nonetheless appears to be ambitious compared to historical averages. Second, customs revenues are assumed to outperform relative to what was budgeted. We believe this to be realistic, as the current run rate is in line with the new assumption. Third, while gross tax revenues are estimated to fall short of the budget target by 0.2% of GDP, net tax revenues are expected to be exactly in line with what was targeted. This effectively implies a decline in the share of states in gross tax revenues by an equivalent magnitude, than what was originally budgeted. The FY19 RE estimates assume that the states would receive ~INR 270 bn less than what was assumed originally.

Non-tax revenues as well as disinvestment receipts are estimated to hit the budget target in FY19. There is variation, however, across different categories of non-tax revenues, with an increase in dividends from RBI and the other state-owned banks (SoB), balanced against lower dividends from PSUs and telecom receipts. Out of a total of ~INR 741 bn budgeted for RBI and Sob dividends in the revised estimates for FY19, INR 400 bn has already been received by the government. The rest, comprised mainly of dividends from the RBI, are expected by the end of the fiscal year.

No fiscal stimulus in the FY20 budget

Contrary to our expectations, the government did not stick to the path of fiscal consolidation recommended by the Fiscal Responsibility and Budget Management Committee. That said, despite being an election year, the budget does not envisage any additional stimulus through the reported fiscal deficit figures, with the FY20 targeted fiscal deficit flat at 3.35% of GDP, compared to 3.37% of GDP estimated for FY19, but ~0.4 pp higher than the FRBM target of 3%. The Finance Minister, in his speech, did note the government’s commitment towards fiscal and debt consolidation, with the goal to reduce the center’s fiscal deficit to 3% in FY21, and debt to 40% by FY25. This is the third consecutive year, however, of deviation from FRBM targets.

On the tax side, GST, corporate and income taxes are projected to increase, partly offset by lower excises taxes on items not under GST, e.g. oil. Income taxes are assumed to increase by 0.14% of GDP, a less ambitious growth rate of 17% compared to an estimated 23% in FY19. The lower growth rate in income taxes is likely due to key policy changes introduced in the budget: (i) an increase in the tax exemption limit from INR 200,000 to INR 250,000, with a tax rebate for those up to an income of INR 300,000 (ii) a reduction in tax rate from 10% to 5% for the tax slab of INR 250,000-500,000, and (iii) higher deductions – increase in deduction on savings, and on interest for self-occupied houses. Our estimates suggest a loss of ~0.2% of GDP from these measures. GST revenues are assumed to increase from 3.4% to 3.6% of GDP, and a growth of 18% which might appear realistic, but would still require about 40% increase in the average run rate per month (from INR 455 bn per month in FY19 so far to INR 633 bn). Overall, the budgeted nominal GDP growth of 11.5%, and an assumed tax buoyancy of 1.2 appears reasonable, but would still require intensified tax collection efforts, particularly on GST.

Importantly, expenditures are forecasted to match higher revenues, such that the budget is fiscally neutral. Revenues expenditures are projected to increase by 0.3 pp of GDP, largely explained by the flagship “PM-Kisan” program announced in the budget. Under this program, INR 6000 per year would be transferred in three equal installments to all landholding farmers, having cultivable land of up to 2 hectares, with the first installment to be transferred to the farmers by March 31st 2019. This program is estimated to cost INR 200 bn (0.11% of GDP) and 750 bn (0.36% of GDP) in FY19 and FY20 respectively. Strikingly, despite higher spending on the PM-Kisan program, the overall spending in the FY19 RE estimates remained unchanged vis-à-vis the budget. This is due to offsets in spending on other items, particularly, transfers to the GST compensation fund, which are likely to underspend, as compensation to states is projected to be lower given better run rates on states’ collection.

On subsidies, while food and fertilizer are projected to decline slightly, petroleum subsidies are forecasted to increase in FY20, such that the overall outlays on subsidies remain changed at 1.4% of GDP. The increase in budgeted petroleum subsidies is surprising, given that oil prices are broadly projected to fall between FY19 and FY20. We conjecture that this increase might reflect some deferring of subsidy payments in a cash accounting framework, given that the government has already spent more than what was budgeted.

While revenue spending is projected to increase, capital spending is assumed to decline by ~0.1% of GDP, making the budget increasingly skewed towards current spending, which may not augur well for a pick up in overall investment and growth. To the extent that there is scope to increase the quality and efficiency of the spending within the budget, or some of the spending happens through public enterprises as off budget allocations, it may reduce some of the concerns.

Net market borrowing projected to pick up

For FY19, the net market borrowing is projected to be lower than was initially budgeted by INR 393 bn. This is mainly due to a shift from market loans to increased borrowings from the National Small Savings Fund (NSSF). Net market borrowing is projected to increase by another INR 500 bn in FY20 to reach INR 4,731 bn (US$66bn). Gross market borrowing is pegged substantially higher, at INR 7,100 bn, driven by repayments of INR 2,369 bn.

Market reaction to the budget differed across equities and bonds

Bond markets had already started reconciling themselves for some fiscal slippage, driving a meaningful increase in yields on 10 year bonds (~7.5% just before the budget announcement from a low of 7.2% in December). Bond yields increased further following the budget announcement, reporting an increase of 13 bp on the day. The INR weakened by 0.64%, coincident with net debt outflows. Equity markets, on the other hand, rallied, with the benchmark equity market index reporting an increase of 0.6%, and FII equity inflows post Budget.

Striking a Fine Balance between Populism and Fiscal Prudence

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Trump says US military intervention in Venezuela 'an option;' Russia objects

US President Donald Trump said military intervention in Venezuela was “an option” as Western nations boost pressure on socialist leader Nicolas Maduro to step down, while the troubled OPEC nation’s ally Russia warned against “destructive meddling.”

The United States, Canada and several Latin American countries have disavowed Maduro over his disputed re-election last year and recognized self-proclaimed President Juan Guaido as the country’s rightful leader.

Trump said US military intervention was under consideration in an interview with CBS aired on Sunday. “Certainly, it’s something that’s on the - it’s an option,” Trump said, adding that Maduro requested a meeting months ago.

“I’ve turned it down because we’re very far along in the process,” he said in a “Face the Nation” interview. “So, I think the process is playing out.”

The Trump administration last week issued crippling sanctions on Venezuelan state-owned oil firm PDVSA, a key source of revenue for the country, which is experiencing medicine shortages and malnutrition.

Maduro, who has overseen an economic collapse and the exodus of millions of Venezuelans, maintains the backing of Russia, China and Turkey, and the critical support of the military.

Russia, a major creditor to Venezuela in recent years, urged restraint.

“The international community’s goal should be to help (Venezuela), without destructive meddling from beyond its borders,” Alexander Shchetinin, head of the Latin America department at Russia’s Foreign Ministry, told Interfax.

France and Austria said they would recognize Guaido if Maduro did not respond to the European Union’s call for a free and fair presidential election by Sunday night.

“We don’t accept ultimatums from anyone,” Maduro said in a defiant interview with Spanish television channel Antena 3 carried out last week and broadcast on Sunday.

“I refuse to call for elections now - there will be elections in 2024. We don’t care what Europe says.”



The 35-year-old Guaido, head of the country’s National Assembly, has breathed new life into a previously fractured and weary opposition. Tens of thousands of people thronged the streets of various Venezuelan cities on Saturday to protest Maduro’s government.

Guaido allies plan to take a large quantity of food and medicine donated by the United States, multilateral organizations and non-profit groups across the Colombian border into the Venezuelan state of Tachira this week, according to a person directly involved in the effort.


The group has not yet determined which border point it will cross, said the person, who asked not to be identified because he is not authorized to speak publicly about the issue.

It is unclear whether Maduro’s government, which denies the country is suffering a humanitarian crisis, will let any foreign aid through.

The embattled president on Sunday promised peace for Venezuela without specifically responding to Trump.

“In Venezuela, there will be peace, and we will guarantee this peace with the civil military union,” he told state television, in the company of khaki and black-clad soldiers who were earlier shown carrying guns and jumping from helicopters into the sea.

Maduro has overseen several such military drills since Guaido declared himself president to display he has the backing of the military, and that Venezuela’s armed forces are ready to defend the country.

Air Force General Francisco Yanez disavowed Maduro in a video this weekend, calling on members of the military to defect. But there were no signs the armed forces were turning against Maduro.

Venezuela has as many as 2,000 generals, according to unofficial estimates, many of whom do not command troops and whose defection would not necessarily weaken the ruling socialists.

The police have also fallen in line with Maduro.

A special forces unit called FAES led home raids following unrest associated with opposition protests in January, killing as many as 10 people in a single operation in a hillside slum of Caracas.

Venezuela’s ambassador to Iraq, Jonathan Velasco, became the latest official to recognize opposition leader Guaido this weekend.

Trump says US military intervention in Venezuela 'an option;' Russia objects

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Ericsson asked to file objection by Friday


The National Company Law Appellate Tribunal (NCLAT) on Monday allowed telecom gear maker Ericsson India to file its objection by February 8 over the plea of Reliance Communications (RCom) to proceed with the insolvency process.

On February 1, RCom had said in a statement that it decided to opt for the insolvency proceedings following its failure to sell assets for paying back its lenders. RCom even failed to sell spectrum to Mukesh Ambani-led Reliance Jio —a deal that was expected to bring some relief to the cash-strapped company.

A two-member bench headed by chairman Justice SJ Mukhopadhaya also said that until further orders of the NCLAT or the Supreme Court, no one can sell, alienate, or create third party rights over RCom’s assets.

“Until further orders, the Appellants, corporate debtor (RCom), Respondent (Ericsson India), guarantors or any third party will not sell, transfer or alienate any moveable or immoveable property of RCom nor invoke any guarantee or mortgage or any other instrument without prior permission of this appellate tribunal or Supreme Court,” the NCLAT said.

The appellate tribunal has directed to list the matter on February 12 for orders. During the proceedings, senior advocate Dushyant Dave appearing for Ericsson opposed the withdrawal of petitions filed by three Reliance Group employees against an NCLT order.

NCLAT, however, said, “Taking into consideration the nature of the case, we allow the Respondents (Ericsson India) to file their short reply affidavit by February 8.”

The NCLAT’s order came on Monday over the urgent mentioning made by three Reliance Group employees — Satish Seth, Punit Garg and Suresh Madihally Rangachar — seeking withdrawal of their appeals against the orders of the Mumbai bench of the National Company Law Tribunal (NCLT).

On May 15, 2018 the Mumbai bench of the NCLT had admitted an insolvency petition filed by Ericsson against Reliance Communications and two of its subsidiaries seeking to recover unpaid dues.

However, on May 30 NCLAT granted a conditional stay on insolvency proceedings against RCom and its subsidiaries--Reliance Infratel and Reliance Telecom.

The tribunal had directed RCom and its subsidiaries to pay Rs 550 crore to Ericsson India in 120 days, failing which it will direct insolvency proceedings against the company.

Meanwhile, telecom tribunal TDSAT has quashed a government decision to charge for additional spectrum allocated to RCom and asked the Telecom Department to return Rs 2,000 crore to the company, the Anil Ambani-led firm said on Monday.

"TDSAT held that any telecom operator's spectrum holdings of upto 5 MHz in the CDMA band and upto 6.2 MHz in the GSM band were exempt from any OTSC levies. TDSAT hence set aside the levy of OTSC (one-time spectrum charge) on Rcom's said spectrum," RCom said in a statement.

Ericsson asked to file objection by Friday

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Governance standards improving in corporate India

Among the BSE 100 firms, institutionally owned and widely held companies tend to have better governance scores. PSUs continue to fare poorly

Slowly, Indian companies are showing an improvement in their corporate governance standards, with the good companies bettering their governance score.

Proxy advisory firm Institutional Investor Advisory Services (IiAS), in its corporate governance scorecard for 2018, says, “There are five companies in the “Leadership” category against three last year, and the maximum score has increased to 76 this year from 73 last year.”

According to the proxy advisor, “Most of the top 20 companies evaluated last year have displayed an improvement in their overall score or maintained their score despite adoption of a more stringent standard of scoring. Disclosure and transparency levels too have improved, with companies scoring as high as 87 per cent in the category,” according to the IiAS study.

The top five companies with governance score of more than 70 are Hindustan Unilever, HDFC, Infosys, Marico and Wipro.

While the other five in the top ten companies list are Bharti Airtel, Crompton Greaves CE, HDFC Bank, Mahindra Finance and Tata Motors.

“Infosys and Wipro, which were in the ‘Leadership’ category even in the earlier exercise, remained in this category. Two new entrants, HDFC and Tata Motors, made it into the top 10 list this time. Only seven companies in the list are part of the Sensex, suggesting that size is not a necessary determinant of good corporate governance practices,” IiAS said.

However, the median score of the BSE 100 companies has dipped, driven by the banking sector that has undergone a difficult 18-month period, and public-sector enterprises that have had slower progress on the governance agenda, IiAS said.

Attendance at board meetings, which continues to plague some companies, has improved at an aggregate level. Overall stakeholder management by companies has also improved, sending a stronger signal of increased engagement between investors and companies.

“Investors engagement has reached a new high for Indian companies. Mutual funds are taking a position on issues and voting their shares. Insurance companies, under the diktat of the Insurance Regulatory and Development Authority, are voting their shares too and are getting ready to have a structured engagement process with companies. The pension regulator too has asked its funds to vote and develop a stewardship code. But corporate India still needs to focus on conflict of interest,” the report said.

“These issues have plagued several of the large listed companies over the past 12 months, some of these being triggered by whistle-blowers,” IiAS said, adding“Related party transactions continue to be central to this discourse, despite stronger regulation being brought in.”

Among the BSE 100 firms, institutionally owned and widely held companies tend to have better governance scores. PSUs continue to fare poorly. This year, the median score for PSUs decreased to 51 from 54 due to inadequate independent representation on the board and lack of transparency on critical issues like related party transactions, board evaluation and stakeholder management policies, the report said.

Among 50 recently listed companies through initial public offerings on the BSE between April 2015 and March 2017 with a two or three-year track record of being listed five companies with highest corporate governance score were Avenue Supermarts, Equitas, ICICI Prudential Life Insurance, RBL Bank and Ujjivan Financial.

Among BSE 100 constituents only 12 didn’t have at least one non-promoter woman director according to IiAS study, a boost to gender diversity on the company boards.

“That corporate India resorted to appointing promoter family members to fill the mandatory requirement of one woman director is a myth: 88 of the BSE 100 companies have at least one non-promoter woman director. Further, 37 of the 50 IPO companies had constituted a board with a non-promoter woman director.”

“The median scores of recently listed companies were lower than those of the BSE 100, validating that investor engagement has a significant role to play in a company’s journey towards better corporate governance. The market brings its own discipline.”, said Amit Tandon, managing director, IiAS.

Ashishkumar Chauhan, MD & CEO, BSE, which also participated in the study, said,“We at BSE believe in encouraging the listed corporates of our capital market ecosystem in navigating efforts to achieve business leadership not just in numbers but also by channelizing commitment for excellent governance practices. It is hearting to know that our listed corporates are indeed mounting efforts to embrace an approach much beyond compliance ensuring the best interest of all stakeholders.”

Governance standards improving in corporate India

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