Finmin Jingle: Taste the New Thunder Soon in FDI

NEW GOVT MEANS BUSINESS Modi Sarkar hits the ground running with finmin conjuring up a variety of measures to juice up the inert economy and light a fire in the market's belly Proposes at least 49% foreign investment in all sectors, barring a few strategic ones

The finance ministry is scripting a liberal foreign investment policy framework that will allow at least 49% investment in all sectors, barring a few strategic ones, as part of plans to stimulate overseas interest and help lift the economy out of a prolonged slump.

Moreover, the ministry will propose that the minimum 49% investment is allowed through the automatic route, without requiring time-consuming government approval, based on the argument that Indian-owned and controlled companies should not face undue scrutiny.

“If ownership and control rests in Indian hands, sectoral caps can be set at 49% as a default barring a few sectors,“ said a finance ministry official, justifying the liberal threshold in the policy paper the ministry has prepared for the incoming Modi government, which sees kickstarting growth as a priority. The official did not elaborate on the sectors but it is expected that defence, railways, e-commerce and media will be significant beneficiaries in this round of liberalisation. The proposal could also offer a way to settle the issue over FDI in multi-brand retail. The BJP, in its manifesto, opposed allowing entry to foreign retailers.
Scaling back FDI in the sector to 49% could be a compromise solution. But the final call will be a political one.

Arun Jaitley , who's the minister for finance and defence, has already indicated that he will look into the issue of FDI in defence. The ministry will also propose a simplification of policy that will end the differentiation among various forms of overseas investment through a composite cap structure. The sectoral 49% cap will cover FDI, foreign portfolio investment as also non-resident Indian investment (FDI+FPI+NRI).

Any investment over 49%, except when 100% has been permitted through the automatic route, will have to be approved by the Foreign Investment Promotion Board (FIPB), which will end all confusion over what requires clearance.

A composite cap formulation could be acceptable for the insurance and pension sectors as well, where the change would have to be carried out through legislation. The policy paper will focus on industrial sectors as captured in the National Industrial Code to give better clarity to foreign investors. It would spell out clearly the regime applicable for each industrial sector. “The idea is to devise a framework that would make it easier for the country to attract foreign capital,“ the official said. A company that is owned and controlled by an Indian should be treated differently than a company owned or controlled by foreigners.

A stringent definition of `control' that's already in place will ensure that managements don't enter into agreements with foreign investors that will mean surrendering control. The last round of liberalisation carried out by the UPA in September 2012 was based on recommendations made in a report by the economic affairs secretary .

Department of Disinvestment suggests strategic sale for non-core PSUs

The new government could look at the possibility of strategic sale of state-owned enterprises in the non-core sectors like steel and cement, the disinvestment department said in its presentation to the Cabinet Secretary. 

The move to divest entire stake in the non-strategic PSUs, the official said, will also help in meeting the ambitious disinvestment target of Rs 51,925 crore this fiscal. 

Alternatively, the official suggested, the government could follow the existing practice of piecemeal stake sale in state- owned companies. 

The strategic sale, however, could be a better option as it would help the government in realising the true value of the investments made in setting up of the PSU. 

These views formed part of the suggestions made by the disinvestment department to Cabinet Secretary Ajit Seth, who is collecting inputs from various ministries for the new government which will assume office on May 26. 

The official said non-strategic PSUs from which the government could easily exit relate to sectors like cement, steel, textiles, fertiliser, petrochemical and transport equipments. 

The government, the official added, could keep its control over sectors like petroleum, heavy engineeringBSE 5.73 %, power. 

As per the interim budget presented in February, the UPA government proposed to mobilise Rs 15,000 crore from the stake sale in HZL and Balco. Further, it hopes to garner Rs 36,925 crore from disinvestment in different PSUs in 2014-15. 

The government expects to sell its remaining stake in Hindustan ZincBSE 3.66 % (HZL) and Balco in 2014-15. It sold majority stakes in the two companies to the Vedanta Group during 2001-2003 and now holds 29.54 per cent in HZL and 49 per cent in Bharat Aluminium Company (Balco). 

The government also holds some stake in Larsen & Toubro, Axis BankBSE 1.43 % and ITCBSE 0.79 % through SUUTI. 

Imported Solar Cells to get Costlier

Govt may impose duty in range of 50-60% on gear from the US, 100-110% from China

Government is likely to impose a steep dumping duty on solar gear imports, a move that could deal a massive blow to solar power producers in India. The commerce ministry has identified a dumping margin range of 50-60% from the United States and 100110% from China, which is the largest exporter of solar cells worldwide. The ministry has identified 58 manufacturers, mostly from China, followed by Taiwan, Malaysia and the US as the subject countries involved in the case of dumping filed by a group of domestic manufacturers two years ago.

“The dumped imports of the subject goods from the subject countries have increased in absolute terms as also in relation to production and consumption of the subject goods in India. The imports of the subject goods from the subject countries are undercutting the prices of domestic industry . Further, the dumped imports have caused price underselling, price suppression as well as price depression effects,“ the ministry said in a statement. However, the domestic manufacturers are looking forward to a level playing field following the imposition of duty .

“Revival of manufacturing in India is vital to meeting the new government's objectives around development. Here is an opportunity to send out a strong message by revitalising Indian solar manufacturing,“ said Vivek Chaturvedi, chief marketing officer, Moser Baer Solar.

The commerce department has determined a dumping margin of 60-70% for sampled manufacturers from China and 100-110% for nonsampled, indicating an unorganised market of imports flowing in from China into India. The dumping margin for First Solar, a USbased solar cell manufacturer, has been kept at 5-15% and for all other exporters at 40-50%. For Malaysia and Taiwan, the ministry determined the margin at 70% and 90%, respectively .

For FIIs, India is the best in EM basket

That "the darkest hour of all is the hour before the dawn" is an old Irish saying, meant to inspire hope under adverse circumstances. The proverb fits the trajectory of Indian markets and foreigner investors' attitude towards the country over the past year. Around a year ago, when the rupee began to depreciate in May 2013 amidst poor macroeconomic fundamentals and monetary tapering by the US Federal Reserve, it seemed that India had lost the economic plot and risked becoming an untouchable among emerging markets (EM) peers.

Fast forward to 2014 and the gloom and doom scenarios of 2013 seem a distant memory. The rupee is up nearly 10 per cent from the lows of October 2013 and foreigners are queuing to grab a bigger pie of the India growth story.

Foreign institutional investors have pumped nearly $5 billion in Indian equity market since the beginning of the year, on top of the $24.5 billion invested in the 2013 calendar year. In comparison, until the first week of the new quarter (January-March, 2014) EMs collectively had 22 weeks of consecutive outflows from EM funds, according to data from funds tracking agency EPFR. According to various estimates, India has absorbed nearly 60 per cent of all equity inflows into EMs in the current year so far.

MNCs meanwhile continue to scale-up their presence in India, either through projects or mergers & acquisitions.

Experts are not surprised. "Unlike domestic investors, MNCs were always convinced about the medium and long-term growth prospects of the Indian economy. Their faith has been reinforced by recent improvement in macroeconomic indicators and they are positioning themselves to make the most of the next wave of growth in India," says U R Bhat, managing director Dalton Capital Advisors.

For others, emerging markets are now a value buy, given the valuation differential with the developed markets. "All the talk of an emerging market crisis has continued to open up the valuation differential in favour of the former. We see EMs as cheap in absolute terms relative to both itself and against developed markets," writes Markus Rosgen of Citi Group.

The optimism is visible in macroeconomic indicators. India's current account deficit more than halved to two per cent of gross domestic product in the 2013 calendar year from a record high of 4.7 per cent in the previous year, according to figures by International Monetary Fund . In comparison, countries such as Turkey, Brazil and South Africa continue to struggle with high CAD putting their currencies and sovereign ratings under pressure

The difference has been the way the Indian economy and business reacted to currency depreciation. India's merchandise exports grew 5.3 per cent (in dollar terms) in 2013 against two per cent decline in the previous year. Exports including IT services did even better. For example, Tata Consultancy Services revenues were up 16.2 per cent year-on-year in dollar terms in FY14, while Infosys' revenue growth was 11.2 per cent. Import decline was partly due to higher import duty and curbs on gold imports but anecdotal evidence suggests companies and consumers substituting expensive imports with relatively cheaper domestic alternatives.

The adjustment is taking much longer in other EMs. For example Brazil, Indonesia, South Africa and Turkey reported a higher CAD in 2013 than the previous year. The main reason has been their import stickiness and slow moving exports. In all the four countries, imports grew faster (or fell less than) exports in 2013, despite double-digit currency depreciation (see chart on currencies).

"Investors should be very selective about countries, focusing on those that have reduced external vulnerabilities by addressing current account deficits, growth has stabilized and political and policy reform is high on the agenda. We continue to like Indonesia and India on these metrics (though both are obviously now more expensive) where all three components of GDP growth - consumption, investments and net exports set to improve in the short term," says Nick Paulson, head emerging markets, at Espirito Santo Investment Bank.

Then there is the "Modi rally" with investors expecting the BJP-led alliance to form the next government which they believe will be more market and business friendly. "Inflows from NRIs have increased significantly in last few months in the expectation of faster growth and currency appreciation post elections," says Rajesh Saluja, CEO and MD, ASK Wealth Advisors.

Everyone, however, is not buying the turnaround story. With public debt to GDP ratio of around 67 per cent in 2013, India is one of the most indebted countries among its peers. So is the case with consumer inflation in India.

"Don't bet on a quick recovery as yet. The moment the next government removes restrictions on gold imports, ratios will reverse and you could see large outflows," says the CFO of a leading company.

‘Sensex will hit 60,000 over next four years’

How do you interpret the present rally with the market hitting all-time highs? Does it represent a bubble waiting to burst?

We have a significant risk now on this score.

But post-elections, if we have a stable Government, particularly a BJP-led Government, there is a possibility that a new rally in the market will start. In my view, the Indian market in terms of the Sensex has to go to 60,000 levels over the next four years to deliver globally historical returns. If I say this openly people will beat me up but if it doesn’t happen it will prove the 150-year-old recorded history of stock markets in the world is wrong.

Do you think that while expectations have been priced in, the risks have not been?

Yes, I agree. May 14, 2004, was the first major crash in the market in the last 50 years when Manmohan Singh became PM with the support of the Left parties.

On the day of the results, the market went down 15 per cent as it was expecting the continuation of a Vajpayee-led Government. Similarly this time, if the BJP does not form the Government there will be a crash but not necessarily by 15 per cent.

What would be your advice to retail investors?

The market is at a unique low point of a six-year bad phase, and that cycle is perhaps at its bottom. In 2008 it was at 21,000-22,000 level and from that point onwards every year it should have given 15 per cent returns but it didn’t happen. However, once the market revives, it will eventually give that kind of returns. There is no relevance to the view that the market is high and has already gone up, since in real terms the market has not gone up. So, people should take risks and invest their savings in instalments and not miss this opportunity. They should now divert at least 25 per cent of their savings to the equity market.

What changes are taking place in the brokerage business?

Broking firms would have to undergo a structural change in the manner in which they operate because of technology.

Till 2007-08, which was the last bull market, technology was not significantly used. But, today’s generation doesn’t want to call a broker over the phone; they want to trade over the mobile and Internet. Hence, the execution part will completely shift to a technology-driven platform. And since a large number of brokers will not be able to invest in technology that involves huge investment, they will face the issue of survival. They would have to shift from execution to advisory, financial planning or wealth management platform. This has already started happening.

What are the challenges faced by the traditional brokers apart from rising costs and falling revenues?

They face two challenges. They have not been investing in technology, in knowledgeable and well-qualified people to service new-age clients in a complex market. Today, the Indian broking industry is yet to equip itself to give investors advice on when to invest and where to invest. The next generation brokers will make money by acquiring new expertise and skill-sets required to answer these two key questions and help service the new generation of investors.

What are your future plans to grow the business?

We are investing significantly on our mobile trading platform than opening new branches. Over five years, mobile, including tabs and iPads, would be 50 per cent of the market. So, in the next phase, you will not see an increase in the number of branches of broking houses, but a lot of people getting hooked to the advisory platform wherein they will give advice to clients and clients will trade on their own.

Now,IMD Arm Warns of Poor Rains this Year

April-June to be wetter and July drier,says Regional Climate Centre 

India should brace for a weak monsoon season as El Nino conditions are likely to develop,but before rains dry up,the ongoing wet spell will continue until June,weather scientists have forecast,casting a shadow on the rabi harvest and the planting of summer crops such as paddy.

This is not the official monsoon forecast of India Meteorological Department (IMD),but the outlook prepared by the Pune-based Regional Climate Centre,which is a part of IMD.Forecasters from Australia,China,Korea and the US have issued El Nino warnings,but so far the Indian weather office has rubbished the concerns as western propaganda to rattle Indian markets.Monsoon outlook is indeed sensitive for the economy and the market.Although the country has sufficient stock of foodgrain,a negative monsoon adversely affects the entire economy.

In 2009,when an El Nino severely disrupted monsoon rains,India saw a sudden burst of food inflation,which continued relentlessly for years,forcing the Reserve Bank of India to keep interest rates high despite persistent protests by industry.

Temasek Backs StarAgri with 240-cr Investment

Indias largest post-harvest agri solutions provider had earlier raised.150 cr from IDFC PE 

Singapore state-owned investment company Temasek Holdings is investing.240 crore for a significant minority stake in Star Agriwarehousing and Collateral Management Limited,one of the countrys fastest growing agrisolutions companies.Started by four former franchisees of rural lending products from Rajasthan in 2006 with deep family roots in commodity trading, StarAgri has emerged as one of the countrys largest post harvest agri-solutions provider offering modern and mechanised rural supply-chain infrastructure like farm procurement,logistics services,warehouses,labs and collateral finance.Known in the commodity trade as a company started by 1 Suresh and 3 Amits,StarAgri currently has a pan-India footprint of over 700 warehouses across 16 states and over 1.5 million tonnes of warehousing capacity.

It caters to customers ranging from banks to international bulk commodity buyers like Cargill,Bungee and food and FMCG companies like Britannia and commodity exchanges.While Suresh Goyal is the chairman and managing director of the firm,Amit Mundawala is in charge of operations with an eye on creating rural finance networks.Amith Aggarwal looks after finance and HR;with Amit Khandelwal is in charge of business development.When contacted,Amith Agarwal,co-founder and executive director of StarAgri,refused to comment on the issue.Mails sent to Temasek did not get a response till the time of going to press.

The investment reflects Temaseks growing interests in agrisolutions businesses and assets as rising populations and emerging middle class boost food demand worldwide.

Last year,Temasek made its boldest bet in the space in India when it pumped in.572 crore for a 19.9% stake in Godrej Agrovet,a diversified agribusiness company of the eponymous group,furthering its partnership with the conglomerate.Last month,a unit of Temasek offered to buy Olam among the worlds top three coffee and rice traders in a $4.2-billion cash deal.

Sources aware of the developments said the fund from Temasek will be used to create further infrastructure,better technologies and private mandis with a special focus on states like Madhya Pradesh,Rajasthan,Gujarat and Maharastra.Such one-stop solutions are aimed at reducing crop wastage and build efficiency in the agrisupply chain

.These mandis marry the efficiencies of a physical marketplace with international price discovery mechanism benefiting farmers as well as buyers like millers and agro-processors.Temasek will provide second round of funding to the company,reinforcing large-scale institutional backing at a time when the entire commodity trade has been much maligned due to empty godowns and fake NSEL trades.In 2011-12,IDFCs private equity fund had invested.150 crore for another large chunk in the company.

The two funds put together will own a significant minority shareholding in the company.Sources add that IDFC PEs investment has already trebled in just two years.Given the exceptionally high amount of food wastage in India,global PE investors are showing interest in agri-logistics,drawing high valuations for their scalable and high growth businesses.

According to Venture Intelligence,PE firms have invested about.940 crore in 11 companies in the sector in the past three years.Analysts say,agri-warehousing accounted for approximately 15% of the warehousing market in India which is worth.8,500 crore.

BJP-led Govt May Not Push PSU Stake Sale,Says Shourie

A Narendra Modi-led government is unlikely to undertake any big-ticket asset sales,at least early in its term,as the Gujarat chief minister has faith in the ability of the public sector to turn around and he wouldnt want to fritter away political goodwill,said Arun Shourie,who was disinvestment minister in the Bharatiya Janata Party led National Democratic Alliance government.This will mean that Indias record on privatisation is unlikely to improve in the near future.The incumbent Congress-led United Progressive Alliance government has fallen woefully short of its disinvestment target.

During his tenure,Shourie oversaw the sale of government stakes in companies such as Videsh Sanchar Nigam,Maruti Suzuki and Hindustan Zinc.Modi believes that PSUs (public sector units) can be turned around, Shourie said in an ET Now interview.

He has done it in Gujarat State Electricity Board and so on,so his preliminary thing would be not to do anything on this matter (privatisation ) and secondly it is not something on which he will expend political capital in the beginning. Modi will focus on unshackling the economy,implementing policy,simplifying procedures and setting up large infrastructure projects,Shourie said.

His forte is implementation,so he will focus on that.For instance,which are the bottlenecks coal production,coal transportation,we do that.Okay,instead of iron ore or bauxite exports,we should have value addition in India.What is holding it up,he would do that, Shourie said.He is very firm on... ease of doing business. 

Modi will also be keen on large infrastructure projects and will be impatient with hurdles in the way of such development.For instance, infrastructure in the north east is certainly something all of us would urge.It is neglected... and therefore he would not let environment and other ministries come in the way, Shourie said,particularly since this also relates to border security.

For instance,if the Border Roads Organisation is unable to get roads completed to a certain standard and on time,he would ask for a company like Larsen & Toubro to be roped in,the former minister said.When it comes to manufacturing,Modi would also want to open up certain closed sectors to the private sector.

For instance,defence production.We know that engineering and technical capability has been built up outside the governmental structure,which can help in the security of the country that has not been used,and when it is used,good results follow, Shourie said.

HSBC settles actors plaint over MF losses

Mumbai: Four months after market regulator Sebi issued HSBC a show-cause notice on why it should not be barred from accessing the securities market for fraudulent churning on a complaint from actor Suchitra Krishnamoorthi,the bank has settled her losses.While the amount cant be disclosed due to a non-disclosure clause,the actor said her losses have been amicably settled and reimbursed.

She had deposited Rs 3.6 crore in mutual funds at the bank and the settlement would have covered that and more.The actor had been fighting a four-year-long battle with the global banking major after she deposited the amount in her HSBC account for investment in an MF portfolio.

The assured profits and growth of my money never happened, she said when she complained to Sebi in January,2013 against the bank for cheating and misrepresentation.

She said she had been assured of a 24% return if she appointed the bank as her portfolio manager.However,she said in her complaint to Sebi that with four different relationship managers in five years she made no profits only losses.

The economic offences wing had dismissed my case without any explanation.I was shocked but appealed to Sebi.The officials at Sebi were supportive and firm and spent a year on my case.It was the show-cause notice they issued in November that was the scale tipper.Even RBI originally dismissed my claim and I had to reopen it, the actor told TOI on Tuesday.

She added,Everyone kept telling me it was an impossible fight but we forget that even corporations are made of people and somewhere everybody has a heart.I would not have fought so hard if I didnt absolutely believe I was right. 

An HSBC spokesperson declined to comment.

The Sebi probe had found excessive churning and that the money was invested in 38 different funds but not in line with her risk profiling.Sebis notice to HSBC said,The only plausible reason for this churning could be to earn more commissions.

Most China Stocks Fall as Investors Assess NPC, Chaori

Most Chinese stocks fell as investors weighed reform prospects at a legislative meeting and the Wall Street Journal reported Shanghai Chaori Solar Energy Science & Technology Co. failed to make a bond interest payment.

Poly Real Estate Group Co. slid 1.6 percent to drag down a gauge of property developers. Haitong Securities Co. paced losses for brokerages after profit dropped last month. Xiamen Tungsten Co. surged 9 percent to lead gains for material producers. China Petroleum & Chemical Corp. (386), the refiner known as Sinopec, jumped 3.1 percent after Premier Li Keqiang reiterated this week at the National People’s Congress that China would allow non-state capital in oil and power projects.

The Shanghai Composite Index (SHCOMP) fell 0.1 percent to 2,058.23 at 1:02 p.m., as three stocks slid for every one that rose. Investors are anticipating policies to help the economy move toward services and consumer spending, and away from the credit-driven construction that spurred growth in the past decade.

“There isn’t any exceeding of expectations from what has been announced at the meetings and the positives have been priced in the past few days,” Zhang Haidong, an analyst at Tebon Securities Co., said in Shanghai.“Investors are returning their focus to economic growth and the outlook for IPOs after the meeting.”

The Shanghai Composite has climbed 0.1 percent this week, poised for the first advance in three weeks. It has dropped 2.7 percent this year amid concern the resumption of new share offerings will divert funds and economic expansion will ease as banks tame lending.

The CSI 300 Index lost 0.3 percent today, while the Hang Seng China Enterprises Index (HSCEI) advanced 0.6 percent. The Bloomberg China-US Equity Index jumped 1.4 percent yesterday.

Debt Concerns

President Xi Jinping, who took office a year ago, pledged the broadest expansion of economic freedoms since at least the 1990s in November. Policy makers may unveil more details before the legislative meeting ends on March 13.

China set a 7.5 percent target for GDP growth for 2014, the same as last year, on the first day of the NPC. Finance Minister Lou Jiweisaid yesterday growth as low as 7.2 percent would meet this year’s target of “about” 7.5 percent as he tried to moderate expectations for an economy at risk from swelling debt.

The Wall Street Journal cited Board Secretary Liu Tielong as saying Chaori has failed to make the payment. The company was due to make a payment of 89.8 million yuan ($14.7 million) today. Calls byBloomberg News to the company’s investor-relations department weren’t returned.

Bond Defaults

The maker of energy cells to convert sunlight’s failure to pay would make it the first company to default on a bond in China’s onshore market, according to Guotai Junan Securities Co., the nation’s second-biggest brokerage. There haven’t been any defaults in the nation’s publicly traded domestic debt market since the central bank started regulating it in 1997, according to Moody’s Investors Service.

The number of Chinese companies with debt double equity has surged since the global financial crisis, suggesting the first onshore bond default by Shanghai Chaori won’t be the last.

Publicly traded non-financial companies with debt-to-equity ratios exceeding 200 percent have jumped 57 percent to 256 from 163 in 2007, according to data compiled by Bloomberg on 4,111 corporates. The yield on five-year AA- notes leapt eight basis points to 7.77 percent on March 5, the most in almost four months, after Shanghai Chaori said it won’t be able to fully pay a coupon due today on its March 2017 bonds.

“After the first one, there may be more defaults,” said Zhang Yingjie, Beijing-based deputy general manager in the research department of China Chengxin International Credit Rating Co., Moody’s Investors Service’s joint venture in China. “The domestic economy is slowing, liquidity is tightening globally and more bonds are maturing this year with greater refinancing pressure, so there may be more defaults.”

The Shanghai index is valued at 7.8 times 12-month projected earnings, compared with the five-year average multiple of 12.2, according to data compiled by Bloomberg. Trading volumes in the measure were 1.1 percent above the 30-day average for this time of day, according to data compiled by Bloomberg.

Political opportunism remains bane of sugar sector

Officials say Brazil sugar-cane body UNICA hasn't considered the damage on our sugar economy by imports of 3.1 mt, raw and white combined

UNICA, the Brazilian sugar-cane sector association, has come down hard on India for extending support to our producers to export four million tonnes (mt) of sugar through the next two years. Considering the distressing state of the world sugar market, which has seen a sharp fall in prices of late, and the Brazilian sector's paramount dependence on exports, the fact the UNICA has decried the export push is understandable.

Brazil, the world's largest producer and exporter, accounts for half the global trade. Whatever UNICA may have against India exporting to the world market, deluged by supplies from other sources, it is only after considerable deliberation that New Delhi has decided to extend a subsidy of Rs 3,500 a tonne for raw sugar exports. This is despite our mills geared to make white sugar. The primary concern of all three senior ministers was to ensure the subsidy was in line with the World Trade Organization norms. To be able to participate in exports, our shore-based factories will have to make suitable changes in the manufacturing system for the raw commodity. The subsidy of Rs 1,400 crore will be borne by the Sugar Development Fund and the exchequer. Agriculture Minister Sharad Pawar reckons the subsidy will not fully cover the premium the Indian material enjoys here over world prices.

Officials from the sector said what UNICA hadn't conveniently taken into account was the damage inflicted on our sugar economy by imports of 3.1 mt, raw and white combined, during the season ended September. Imports were mostly from Brazil. Such large imports come at a time when India has had four consecutive bumper production years, including the current season. No one will contest the compulsion of our port-based refineries to import raws for processing and then export as white. The problem arises because the much-proven grain-to-grain import-export practice has ceased to be in vogue. More, exports of foreign-origin raws processed into white should happen much ahead of the now-allowed 18-month period. When factories have to contend with overflowing stocks, circulation of any amount of foreign sugar could further damage the weak market sentiment.

"Export subsidy should be read as government acknowledgement of the deluge of stocks and the consequent low prices have led to the sector having its back to the wall. As exports of four mt of raws will aid the sector in a major way, imports need to be discouraged by raising duty from 15 per cent to at least 40 per cent. Is there any rationale of supporting growers in other countries when cane bill payment dues of factories here have crossed Rs 10,000 crore, including dues from the last season?" asks Om Prakash Dhanuka, former president of the Indian Sugar Mills Association (Isma).

To enable factories to clear cane bills, in December, the government asked banks to extend interest-free loans of Rs 6,600 crore. But as a whole, the sector has become so financially weak that most of its constituents do not stand a chance to get loans under the mandated conditions. The package will remain a non-starter unless conditions are relaxed. Hopefully, the urgency to settle bills will lead the government to consider Isma suggestions on the modification of terms. Director-General Abinash Verma says in case the new line of credit remains in limbo, factories could run up bills of up to Rs 18,000 crore by March-end. Earlier, M Srinivasan, ex-president, said if sugar prices didn't improve, dues would be Rs 20,000 crore by April-end. This is a recipe for an outburst in the growing regions. The unrest is building when the country is getting ready for elections. About 50 million grow cane.

Why has the non-payment of bills become a regular feature with our sector, unlike in Brazil, Thailand and Australia? According to Srinivasan, all these are spared the pains felt by India because they opted for a linkage between cane and sugar prices. Not only has the formula benefited growers and factories in equal measure, it is also the reason for varietal improvement in cane through tissue culture and a rise in sugar recovery from cane.

Here, in spite of the Rangarajan committee saying value-sharing of sugar and by-products such as bagasse and press mud in 75:25 between farmers and factories will usher "stability in the payment of dues", New Delhi is yet to implement it.

The Centre has taken the stand linkage formula introduction will have to await a consensus among growing states. Unfortunately, Uttar Pradesh and Punjab, which have made it a habit to load big premia on centrally-decided 'fair and remunerative' prices to please farmers, are wary on value-sharing. But as mounting bills will show, farmers are paying a heavy price for the injudiciousness of states.

Bond yields to soften as borrowings tamed

Rupee seen appreciating with CAD at $45 bn for FY14

Government bond yields could fall further as its market borrowing announced in the vote-on-account was in line with market expectations. The rupee, on the other hand, is seen range-bound, as the current account deficit (CAD) is seen narrowing. The yield on the 10-year benchmark bond could even fall to 8.70 per cent before the financial year ends while the rupee can appreciate to 61.50 to a dollar.

In the interim Budget announced on Monday, Finance Minister P Chidambaram said the fiscal deficit would be contained at 4.6 per cent of the gross domestic product (GDP). Chidambaram also announced that gross market borrowing would be Rs 5.97 lakh crore, while the net figure will be Rs 4.57 lakh crore for FY15. Besides, Chidambaram said CAD was seen at $45 billion for FY14. The projection is well below the record high level of 2012-13. In the first half (April-September) of 2013-14, CAD narrowed to $26.9 billion (3.1 per cent of the GDP) from $37.9 billion (4.5 per cent of the GDP) in the first half of 2012-13.

Earlier, the fiscal deficit was pegged at 4.8 per cent of the GDP for the current financial year. For the current one, the gross and net market borrowing was revised to Rs 5.63 lakh crore and Rs 4.68 lakh crore, respectively. Moses Harding, group chief executive officer (liability and treasury management) and chief economist at Srei Infrastructure Finance, said: “The rupee value of around 62 takes into account the switch of dynamics in twin deficits in favour of the rupee. The concerns from adequate flow of quality capital flows, conflicts in growth-inflation dynamics and political risk factors continue to retain the structural imbalance in demand-supply in the system. Taking all cues together, the risk of emergence of bunched up dollar demand is the worry point to put the rupee under pressure, while bunched dollar supplies will be absorbed by the Reserve Bank of India and importers.” According to Harding, the trading range will be 61.50-63.50 to a dollar till the Parliamentary election results are out.

The yield on the 10-year benchmark bond 8.83 per cent 2023 ended at 8.81 per cent, unchanged from the previous close. Said Brijen Puri, executive director and head of markets at JP Morgan: “The interim Budget was pretty much at expectations. The only thing is that the assumptions on the subsidies and tax collections are a bit aggressive. We had a similar situation in the last Budget as well. The yields are expected to be range-bound for the remaining part of this fiscal (FY14). The yield on the 10-year benchmark bond 8.83 per cent 2023 is seen trading between 8.70 per cent and 8.90 per cent.”

According to Puri, the central bank has been looking at reducing the volatility in the rupee. “The rupee may trade in the range of 61.50-63.50 till elections, barring a very large move in the global emerging market universe.”

NSEL e-series investors may now be able to recover investments

More than 30,000 small and medium-sized investors who purchased gold and silver contracts of small denominations on defunct bourse National Spot Exchange (NSEL) might now be able to redeem metal worth a cumulative Rs 500-600 crore that's stuck on the crisis-hit bourse.

Findings of a forensic audit - an accountancy exercise that determines the veracity and accuracy of financial statements — of the so-called e-series bullion contracts traded on NSEL has "broadly indicated" that the metals backing the contracts were intact and the funds used to purchase them did not belong to investors who pumped thousands of crores into paired contracts - contracts that involved a simultaneous purchase and sale of other commodities — said two persons aware of the development.< .. 

"The audit findings broadly indicate that money invested into the paired contracts was not used to purchase gold and silver backing the e-series contracts and importantly metal backing those contracts exists. These findings could, subject to legal decision, enable the exchange to complete settlement of the e-series contracts to small investors," one of the persons cited above said.

NSEL went bust in July last year after two dozen counterparties declared their inability to settle payments amounting to Rs 5,600 crore to more than 13,000 investors.

The exchange suspended the paired contracts but continued settlement of the e-series contracts. However, the settlement to e-series investors also was put on hold after two investors, who moved the Bombay High Court, alleged that money invested into paired contracts was used to purchase metal backing the e-series contract .. 

FMC selected Chokshi & Chokshi to conduct the audit. ET has learnt that the CA firm was due to submit the report to FMC on Thursday or Friday. While Mitil Chokshi, partner, Chokshi & Chokshi declined to confirm the submission date, FMC chairman Ramesh Abhishek was unavailable for comment.

Brokers said that any likely settlement of the eseries contracts could come as a major relief for investors of middle-class background who purchased small denominations of gold and silver on NSEL and whose deliveries were not affected after the NSEL crisis broke out. 

"Most e-series investors are of middle and lower middle class background. It's needless to say any settlement will come as a major relief for them," said Harish Galipelli, head of research JRG Wealth Management, who in his earlier stint with brokerage Karvy dealt with e-series investors.

Investors were able to purchase smaller denominations of gold and silver through the e-series contracts. Money invested by them was used by the bourse to purchase gold and silver from domestic bullion refiners, which they could hold in demat form with NSDL and CDSL. While intra-day trading wasallowed, outstanding positions at the end of the day resulted in delivery. 

RBI hikes repo rate by 25 bps, CRR unchanged

The Reserve Bank of India (RBI) hiked the repo rate by 25 bps in the third-quarter review of the monetary policy to 8%.

Consequently, the reverse repo rate under the Liquidity Adjustment Facility (LAF) stands adjusted at 7%, and the marginal standing facility (MSF) rate and the bank rate at 9%.

The Cash Reserve Ratio (CRR) was kept unchanged at 4% of Net Demand and Time Liabilities (NDTL).

A month after touching a record high, CPI inflation came down to a three-month low of 9.87% in December compared with 11.16% a month ago. While the Wholesale Price Index (WPI) inflation was at five-month low in December at 6.16% compared with 7.52% the previous month.

The yield on the 10-year benchmark government bond shot to 8.80% compared with previous close of 8.77%. Just before the policy announcement it was trading at 8.71%.

Why Peso and ICBC may Matter More Than Modi

Two events in the financial world which happened last week did not generate much debate among Indian investors.But they may do so in the next few months as they may overshadow the optimism over Narendra Modi getting a chance to change the fortunes of the nation as its prime minister.

The first was the Industrial & Commercial Bank of China (ICBC) refusing to bail out investors in one of the investment trusts backed by it after investors lost money.The amount involved was a tiny $496 million.But the bank has since agreed to a backdoor bailout,an admission that a failure to do so could lead to withdrawals from other such funds leading to a contagion.The second one was the devaluation of Argentinas peso.That has opened the debate about the strength of emerging market currencies after discounting tapering by the US Federal Reserve for the past three months.

The South African rand the Indonesian rupiah have slid as well.Why should Indian investors bother about what is happening to investment trusts in China,or the currency of a remote South American nation They need not.But global investors who have poured in $147 billion into India,and nearly $45 billion since 2012,are worried.So,Indians have to worry,too.The new year brought in new hopes for average investors,but two eminent men in the world of investing,were not so sanguine. Larry Fink,the founder chairman of worlds biggest money manager Blackrock Inc,warned that investors are way too optimistic about the prospects for global markets.George Soros,the renowned hedge fund manager who wrecked currencies of the UK and Malaysia,is warning that Chinas debt market has eerie resemblances to what was prior to 2008 global financial crisis.In the financial world,it is not the big event such as Lehman Brothers collapse that mark the beginning of the melt down,but they just accelerate.

Small blow ups keep happening before they culminate in events such as Lehman,or Merrill Lynchs demise.Events such as Swiss bank UBS shutting down its fund,or Bear Stearns winding up two funds,or for that matter BNP Paribas halting withdrawals from funds happened at least 12 months prior to Lehmans bankruptcy in September 2008.Does that mean the world financial markets are headed for the next crisis like the one in 2008 Certainly not,given the buffers that have been built since the credit crisis.

But ICBC and Peso events indicate that all is not well.Emerging markets which have remained the darlings of international investors for more than 15 years are losing their appeal.At the turn of the century,poor returns in developed markets and high growth rates of emerging markets coincided to make India,Brazil,China and Russia the most sought after markets.Nearly,two decades later things seem to be changing.Returns from Japan and the US were far higher in 2012 than most emerging markets.The forecast growth of 3% in the US,and prime minister Shinzo Abes three arrows of economic revival plan working in Japan,investors may choose to own more of home markets than an unknown,risky emerging market.India is better positioned that what it was in May.It is richer by more than $30 billion.Current account deficit,the excess of spending overseas than earnings,blamed for the rupee crash is on the mend,albeit artificially by suppressing gold demand.

The government is shaking off its inertia with decisions to clear stalled projects and working overtime to keep its word on limiting the fiscal deficit at 4.8% of the gross domestic product.But these are the building blocks for the next bull run,probably after Modi is elected as opinion polls suggest.But investors may have to weather a financial storm before that.

Ramesh Damani : Profiting from the Indian media boom

The single biggest change that television is seeing in a couple of decades, digitization, is at a head.

In a freewheeling interview with Vanita Kohli-Khandekar, media specialist and contributing editor for Business Standard, and Salil Pitale, Executive Director - Investment Banking, Axis Capital, renowned investor Ramesh Damani, for his special CNBC-TV18 show RD360, discussed the scope of the Indian media business.

Both believe the ongoing digitization wave is going to be a game-changer for Indian media companies.

“The single biggest change that television is seeing in a couple of decades is at a head,” said Khandekar.

Pitale said that average revenue per user (ARPU), which has been stuck at around Rs 150 for over two decades since the launch of cable TV is set to go up drastically. “It could go up to Rs 500 in five years.”

This, he said, will increase profitability of all three players in the game: broadcasters, distributors and content owners.

The duo also discussed opportunities in the online and the print media spaces.

Below is the transcript of the interview.

Q: Last year, you wrote a column [for Business Standard] titled ‘Good news on TV’. What is the good news?

Khandekar: The good news is: the single biggest change that television is seeing in a couple of decades is at a head -- digitisation is moving on schedule.

If I go by the ministry of information and broadcasting’s numbers -- and they are quite alright -- three metros are fully digital [in phase 1], while phase ii is almost complete with 38 towns, except for know-your-customer forms that have to be filled up.

This means three things. It increases bandwidth -- the pipe that takes a TV signal to your house, its capacity increases. Once that happens, cost goes down because your tariff fees get eliminated, a whole lot of the junk is eliminated. So that is a little more money into the broadcasters’ kitty.

Second, your pay revenues go up. For the broadcaster and for the trade itself because transparency goes up. I think the only person who will protest is the last-mile cable operator but even he will also realize as time goes up and average revenue per user (ARPUs) go up, he will also earn more money.

Lastly and most importantly, variety goes up because now the game changes from being a distribution game to a game of getting people to pay with their money to watch and subscribe to a channel.

The moment that choice comes into a play, it is no longer just sell-in-bundles, and you have to create content for which people are willing to pay extra money.

Q: That happened in multiplex, isn’t it?

Pitale: It happened in a big way. Seven-eight years back, the multiplex business was nascent, or really did not exist at all. Your subscription price points, the ticket prices in the entire exhibition chain was so abysmally low, they used to be at Rs 30-40, that was a price of a ticket to watch a movie.

I remember, we did the initial public offering (IPO) for a company called Fame in 2005. They were planning to price tickets at Rs 100 and we were all palpitating over why anybody will pay Rs 100. Today, in 2014, you realize that ticket prices have gone higher.

It is because of the fact that you got a quality entertainment destination, which is the analogy here: that a quality pipe in a digital format, which is available to consumer today, is able to fulfill the requirements and content across board.

Q: People will pay if there is a value proposition?

Pitale: Definitely. I think so.

Q: What is the ARPU now stuck at?

Pitale: The ARPU has been stuck at a number between Rs 150 and Rs 200 forever. When cable TV started in India in 1991, people were paying Rs 150. Today, the average ARPU is Rs 170.

We watched five channels then at that ARPU. Today we are watching 600 channels. We are spending two and a half hours in front of a television everyday and we are still at the same ARPU today.

So yes, in terms of the math, with 150 million homes, at that ARPU level, it is a Rs 30,000 crore business.

Q: And it will grow you think?

Pitale: Definitely, it will grow.

Q: Does the 10+2 ad cap (12 minutes of ads per hour allowed) kill the profitability of broadcasters?

Khandekar: I think most broadcasters are all right now with the 10+2 except certain segments of the broadcast industry.

I have always maintained in my writings that 10+2 is premature. We should have waited for full digitisation to rule out and then once pay revenues are on par with advertising revenues, then put in the 10+2.

10+2 is a normal in most countries. So there is nothing wrong with 10+2 but this is a wrong time to implement it.

Q: But ad rates will go up in 10+2, won’t they?

Khandekar: In any case, the rates are high for the leaders and some of the top channels don’t go beyond 14 or 16 minutes.

It is the genres like music or news where it has gone to 24-25 minutes. That is the place where inventory buying happens by the kilo. That is where you might see a lot of shutting down of channels, you might see a lot of consolidation happening there because of the 10+2.

Q: It is good thing, you don’t want 500 channels.

Khandekar: But they have the right to compete in a fully-structured market. Let them shut down because consumers don’t want them not because advertisers don’t want them.

Q: In this brave new world we are talking about where ARPUs will be Rs 300 per day, who will make money? Is it going to be the broadcasters, the content owners or distributors? Is it going to be the local cable operator? How does this pie break down?

Pitale: The entire chain becomes wealthier. The Rs 30,000 crore size of the chain is going to grow in a multiple and not in percentage terms.

Q: Five years from now?

Pitale: I do not think we should be surprised that we are looking at Rs 500 ARPUs. I guess we will have the benefit of hindsight then.

Khandekar: If you think of the market as a pyramid there are clusters which are willing to, able to and wanting to pay Rs 500-1,000. You will be able to capture those clusters.

Q: At Rs 500 ARPU, who makes the money?

Pitale: What has happened is out of the three categories of players, the local cable operators (LCOs) were retaining a large chunk of the subscription revenue. The multiple-system operators (MSOs) were getting 15-20 percent share of the same, which had to be shared with the broadcaster and the broadcaster community is also paying carriage, so it was a very difficult situation.

The LCO as a community was making a lot of money, but it was fragmented, it was shared between some 60,000-80,000 cable operators. There were leakages because the entertainment tax, service tax impact of the same was not necessarily captured over there.

What will happen is that from a fragmented ownership of consumers, we move towards a more consolidated ownership of consumers. It has already happened in DTH: 40-45 million whatever is the number on DTH is really captured between six players.

On the cable side, post phase I and phase II, we are already seeing that the large MSOs at least have a clear presence in subscribers which run into 5 million, 6 million, 7 million and so on.

There is a challenge that they have not yet completed the last issue on KYC, but the moment that happens, we will have consolidated ownership of the cable business. We already have consolidated ownership of the DTH business.

The LCO as a segment is still important because it is required for fulfillment as last mile access in fulfillment. It does not disappear. It gets its share of the space.

Today from Rs 200 that the consumer pays, the MSO plus the broadcaster probably gets about Rs 70-80 out of it and the LCO community retains Rs 120.

From Rs 200 going to Rs 500, you could get into a situation that the LCO could still retain a 40-45 percent and that community also benefits and the balance certainly benefits as a chain -- both the broadcaster and the MSOs.

Khandekar: Maybe three-four-five years later, just the sheer 100 percent transparency will help.

Like with theatres, it is not as if the numbers of screens went up drastically, we have increased by about 2,000 screens or something in the country, but the 100 percent transparency in billing and collection resulted in a couple of billion dollars impact on revenue.

We are talking about Rs 8,000-10,000 crore coming in only because that Rs 200 is coming back into the system, because it was not coming back, it was leaking out.

Q: In this new food chain that you talk about, both the content guys win? Isn't that way you place your bets?

Khandekar: Absolutely. Across the board, if you look at TAM data on what is happening in digital homes, regional content is taking off in North India. Tamil and Telugu content in Delhi, for example, is shooting through the roof, English content is shooting through the roof in metros.

You have day-date release for shows like Castle, Sherlock etc. These shows would not have come to India for a year otherwise.

Q: In a very interesting column, you said billionaires love newspapers. It applies to the West, but explain yourself.

Khandekar: Billionaires have always subsidised newspapers. News is one of the toughest businesses to make money in. It is impossible to make money on news unless you are bundling it with entertainment, advertising. And the dis-aggregation that online has done, you are seeing the impact of that in the west.

Q: But there is a difference between what is happening in the west and what is happening in India. In India, print media is still growing.

Khandekar: It is growing hugely. There are three reasons. One, penetration is humongously low in India.

We are talking about 340-350 million people reading newspapers in a country with 70 percent literacy. So if you have a potential market of 700 million people, even if 500 million can actually read, others can just sign their name, you have an upside of 100-150 million.

Two, aspirationally, newspapers carry huge value in India which we keep forgetting. You go to Kanpur, Lucknow. These are not small towns. They are big towns, but newspaper is the written word, it holds for India. It is completely different to what it holds for completely literate for centuries in the western world.

Thirdly, I think language newspapers is the big story in India frankly as far as growth goes.

Q: Doesn't the smart phone and tablet put those great franchises that we have at risk?

Khandekar: Of course, it puts it at risk, but right now video is driving smartphone and tablet usage, not newspaper readership. If I look at Indian Readership Survey (IRS) and Audit Bureau of Circulation (ABC) numbers, you look at any trend, I would say they should start preparing for it.

English newspapers are already seeing it. Last IRS, we have not seen one 1 percent growth for English newspapers. So you are looking at trouble coming up very quickly and I have been saying this year after year, start putting your blueprints in play. Even Punit Goenka [of Zee, which partly owns DNA] said this recently: in online, you will do 10 things, one might work, not work, but just start the process.

Q: In direct-to-home (DTH) vs cable: who wins in that race?

Pitale: I do not think there is going to be an either-or winner in this. Both the DTH players and the large MSOs will grow. The challenge that the large MSOs face is that getting the KYCs right, getting the gross billings right, getting the billings done by themselves rather than LCOs.

Q: When will that happen? When will the billing start happening from cable operator?

Pitale: Right now, the billings are still being done. The bill is sent by an MSO to the LCO and the LCO supposedly distributes it. Clearly that is not the endgame. People are working towards it with varying degrees of success, but we are in midst of that change.

Q: Is it possible that internet cuts the legs of DTH and cable?

Khandekar: On the point about newspapers, this applies equally. I have been voraciously following online in the last few years, and it is going through the roof. 220-230 million people are online across devices in India right now, and it’s a huge number.

But monetisation is pathetic so far because cost-per impressions (CPI) are terrible in India as well as the world over.

For a reader who reads the New York Times online, there is a 1:14 difference in what the advertiser pays. The physical advertiser will pay Rs 14 to reach you, but will pay Rs 1 to reach you if you are online.

A lot of people are moving online, but revenues are not moving online. That is the problem.

Q: Does internet poses the risk to the basic broadcasting model of watching television?

Khandekar: Not at all, you can straddle it. I think Indian broadcasters and foreign broadcasters in India have been very proactive -- far better than newspapers -- on quickly seeing the challenges and moving on.

Everybody is on YouTube. 59 million people in India were watching video in September last year. It is a huge number.

But what will it be a proportion of TV audience? It is less than 10 percent of proportion of people watching TV but the fact is it is a significant number. But you will never get the same revenues that just one show on Star Plus gets.

Pitale: The other point on that is bandwidth. For better and better quality content and more HD channels, you need fat pipes. Which means that you have to put in the investment. With 3G networks still being rolled out and 4G yet to happen, the cost of that, to set up an extensive network to carry such large fat pipes will be very different, and we will need a lot more telecom towers and high density.

So the whole cost economics will come into play and therefore it is not that the traditional DTH-cable is going to get impacted so quickly because it has got a big lead. I think things will change over a period of time, but the traditional DTH cable will have a very long way to go in this space.

Q: You are an investment banker. I know your clients ask you: where do I make money? So if you are going to tell them over the next three-five years one or two bright spots where you think a lot of money would be made, what names would you name?

Pitale: The whole distribution chain is just waiting to unleash big value creation. DTH players as a whole, cable and large players as a whole.

Even within cables, the guys who are implementing it beautifully are the guys who will really make the money.

Most of the names you can see around the place today. All the key MSOs, key DTH guys should do very well and they should really thrive in this particular space.

The DTH guys will keep getting the benefit of ARPU increases in a big way, the cable guys will get the benefit of customer ownership as well as the monetisation through broadband and so on. The ARPU is growing in any case.

Q: So the basic names: DEN, Hathway Cable, Siti Cable?

Pitale: Within all of this, one should look at individual managements and take bets around the same. But I would say that the segment really is waiting to happen.

Q: Who wins in the content race? Is it the general entertainment channels (GECs) or the niche channels?

Khandekar: 70 percent of India's TV audience is shared by five networks. They have got niche channels, GECs, they are in every genre possible and then you have smaller networks.

So you will have a Discovery or a Times Television, which are smaller networks, but you have Star, Zee , Sony, Sun and Network18 and between them, they have 70 percent of the audience.

Except for Zee and Network 18, nobody is listed. I think there is a lot of value left there waiting to be unlocked. I had also heard about Star and Sony long back that they want to raise money, but I do not think that happened.

These guys played the game right: they launched the news channels two years before digitisation took off.

Q: How about the pathetic news broadcasters?

Khandekar: They are not so pathetic. The problem with news broadcasting is that there may be like 10 serious channels and the rest is all junk.

Q: And advertising price is too small.

Khandekar: You have 135 news channels for a Rs 1,800-2,000 crore business. It is the largest number of news channels anywhere in the world. Today, I saw a poster of some real estate guy launching another news channel and I thought why are they doing this?

They have spoiled the market for the guys who want to make money.

Q: Do you think with the digitisation that might change, because no one pays for it, no one will watch it?

Khandekar: More than digitisation, you had asked me something about trends in 2000, I think media ownership is going to be a big issue, especially on news, not on entertainment.

Q: Corporates will own media houses?

Khandekar: Corporates already own media houses.

Q: It is an acceptable practice in the West. Would it come here too?

Khandekar: It is perfectly fine as long as everything is transparent. The only thing is news media ownership is the one where there are reasons for concern and every time I speak to Telecom Regulatory Authority of India (TRAI) I suggest norms which insist on transparency.

Who owns you? What is your shareholding? What is your revenue? What are your losses? Where is your money coming from? Where is it going? What happened to Tehelka was the owner was involved in something, but the financial inclusion would have happened one day or the other, because that company had lost Rs 40 crore in three years. Some investor has spent that money.

Look at all these news channels. 40-50 percent of news channels in this country are owned by politicians and real estate owners.

Pitale: Commoditised business as news, but as digitisation happens it is easy to get data points to say who is really doing better. The other benefit is carriage -- which has been a big cost element for news -- starts to come down.

Clearly, they get the benefit of the same and this digital data tells who is better than the other. It will ensure that at least the leaders will get their fair due.

Q: Will the ad rates go up sometime, because they are really at the bottom of the basement for the news channel?

Pitale: Yes, it should. The leaders will get the benefits. The three-four-five brands will get the benefit.

Khandekar: Definitely they should?

Q: Exciting space to be in media, because the stocks are under-owned, under-loved, under-appreciated?

Khandekar: Lot of them have not yet come into the market. I would say the best stocks have not yet come into the market.

Pitale: It is a good time for people to look at this space from all angles. As I said, the whole industry has been playing advertising

Today, you can play advertising-plus-subscription. And subscription is traditionally more than advertising.