NDA out-numbers UPA, but can it morph into vote number? Will US jury go soft on Indian software giant? ‘Get-well-soon’ steroid for a Maharaja. & more, in today’s de-smudged shot of headline news.
NDA BETTER THAN UPA, SAYS REVISED GDP DATA
The Government of India has issued revised GDP growth data for the period between 2005 and 2012, that effectively lowers growth numbers during the UPA era. This is in marked contrast to the recalculated numbers released in August and could therefore lead to a major political slugfest in the months leading up to the General Elections. The back series takes FY’12 as the new base year, and shows that GDP growth under the present NDA government was better than that achieved in the UPA years. The peak of 10.3% in FY’11 has been brought down to 8.5%. When data was revised in August, it showed four years of over 9% growth, while the latest data does not have a number above 9%. Average growth from FY’06 to FY’12 has been brought down to 6.82% from 7.75% previously, as compared to 7.35% for the present government. Former Finance Minister P. Chidambaram called the revised numbers a ‘hatchet job’ by the NITI Aayog and demanded that the organisation be ‘wounded up’.
It may be noted that the August numbers brought out by the Sudipto Mundle Committee set up by the National Statistics Commission had led to a similar war of words. These had actually pushed up growth projections during the UPA years based on the ‘production-shift’ method.
TCS BEATS RIL IN INDIA…
Tata Consultancy Services wrested the top position from Reliance Industries Ltd (RIL) in terms of market capitalisation due to a steep rise in its share price on Wednesday. By the end of trading on November 28, TCS had a market capitalisation of Rs 7,41,677.60 crore, compared to RIL’s Rs 7,26,553.27 crore. The share price of TCS had grown by 4.67% to reach Rs 1,976.55 at close on the BSE. Correspondingly RIL’s share price grew by 1.66% to reach Rs 1,146.25. During the day, it also witnessed a growth of 2.67% to Rs 1,157.70. The software giant and the oil-to-telecom conglomerate have been jousting it out for the number 1 position on the bourses over the past few months. Previously RIL had overtaken TCS on the basis of m-cap on November 16.
RIL’s market capitalisation had reached Rs 7,14,573.46 crore during afternoon trade compared to Rs 7,03,891.09 crore for TCS. Again on August 31, TCS had taken the lead vs RIL on m-cap.
… BUT CAN TCS TRUMP LITIGATION IN US?
While India’s stock markets have given a thumbs up to TCS, the company faces a possible adverse situation in the US, where it is on the wrong end of a class action lawsuit for discriminatory employment policies. A week-long trial in the class action lawsuit being held in Oakland, California, ended on Tuesday and is the first such case against an Indian IT company to go to a jury. The law firm Kotchen & Low that has filed the case against TCS, also has Infosys, HCL Technologies, Cognizant and Wipro on its radar. The law firm alleges that TCS discriminates against local Americans in its hire and fire policies. It cites data which shows that the software giant fired 78% of its benched local (American) employees between 2011 and 2014, while the corresponding figure for benched South Asians was just 22%. Moreover, South Asians account for half the firm’s workforce in US.
TCS has argued that their local hiring has been on the rise, but the fact that the jury only constitutes local Americans could go against them. This case also has wider ramifications for Indian IT players; if this verdict goes against TCS, more lawsuits could be filed against them.
INDIAN FIRMS TWICE AS GOOD AS US IN FRAUD DETECTION
TransUnion Cibil Fraud trend 2018 report is based on an online survey of financial services and insurance firms in India, Canada and US. It is conducted by Forrester Research on behalf of TransUnion Cibil. The survey reveals that Indian financial services firms are twice as likely to detect a significant increase in identity theft over the past 12 months. On the flip side, 62% of Indian firms also reveal that most solutions to prevent and detect frauds are not flexible enough on a real time basis. The report also reveals that Indian firms have difficulties in end-user authentication, which affects customer experience. This is cause for concern, as the survey reveals that around 75% of financial services firms consider improved customer experience as the key metric to determine the ROI of their fraud detection and verification solutions.
“Customers are demanding exceptional experiences throughout the insurance process. This means that false alerts, detection, prevention procedures and the investigations that go with it can negatively impact their customer experience,” comments Satish Pillai, MD & CEO, TransUnion Cibil.
MOODY’S, ICRA DOWNGRADES YES BANK
The spate of resignations from the Board of Yes Bank, along with the RBI’s directive to limit the term of MD and CEO Mr Rana Kapoor till January 31, 2019, have led to a severe backlash from ratings agencies as well as investors. On November 28, Moody’s Investor Services changed the outlook on lender’s foreign currency issuer ratings to negative. This led to a massive drop in the share price by 11.71% to Rs 161.7, which is the lowest closing price for the bank since March 17, 2016. Moody’s also states that the bank’s aggressive growth strategy has given rise to significant credit risks and the pending results from the RBI’s risk-based supervision report could be ‘credit negative’. ICRA has also downgraded YES Bank’s bonds of Rs 33,000 crore in local debt, due to the corporate governance flashpoints.
The downgrade also includes Basel compliant and infrastructure bonds. ICRA said that it “will continue to monitor the progress made by the bank on the appointment of a new MD & CEO, outcomes of the risk supervision audit by the regulator, capital raising to improve the capital cushion, & any further developments which may impact the credit profile”. Amid the ownership dispute between Rana Kapoor and Madhu Kapur, media reports also reveal that Rana Kapoor is looking at the position of non-executive chairman once his term as CEO ends on January 31, 2019.
RS 2,000 CRORE SAVINGS TARGET FOR AIR INDIA
The Government of India has set a financial improvement target of Rs 2,000 crore for Air India, which has been approved by the alternate mechanism for Air India, according to aviation secretary R N Choubey. This financial improvement has to come from both savings and increase in revenue. The alternate mechanism is chaired by Finance Minister Mr Arun Jaitley and has Minister of Commerce and Civil Aviation Mr Suresh Prabhu as a member. Additionally, around Rs 29,000 crore of Air India’s debt will be transferred to a special purpose vehicle (SPV) that will be owned by the government. As reported yesterday, the proceeds of the planned sale of 100% of Air India Air Transport Services will be used by the Government to clear part of this debt. Mr Prabhu stated that they are requesting the Finance Ministry for more money, while asserting that the civil aviation and finance ministries are on the same page, “There is no conflict… the question is that debt (pertains to Air India’s debt of around Rs 50,000 crore) is so large and we have to work out something large.”
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