The Nifty and the Sensex opened the day on a flat note with financials being hit by significant selling.
Join us as we follow the top business news through the day.
Companies in India likely to give 7.3% average increment this year: Survey
A forecast on salary raises this year.
PTI reports: “Companies in India are expected to dole out an average increment of 7.3 per cent to employees this year amid faster-than-expected economic recovery and revival in business and consumer confidence, according to a survey.
The first phase of the 2021 Workforce and Increment Trends Survey by Deloitte Touche Tohmatsu India LLP (DTTILLP) also said the average increment this year will be higher than 4.4 per cent seen in 2020 but lower than 8.6 per cent given by companies in 2019.
As many as 92 per cent companies that participated in the survey plan to give an increment in 2021 compared to only 60 per cent last year.
The survey, launched in December 2020 as a B2B India-specific survey, covered around 400 organisations spread across seven sectors and 25 sub-sectors.
“Average increment for companies in India is expected to go up to 7.3 per cent from 4.4 per cent in 2020. This 7.3 per cent projected increment is lower than the 8.6 per cent average increment in 2019.
“The increase in increment budgets is in line with the faster-than-expected economic recovery, revival in business and consumer confidence, and early signs of improving corporate profitability,” it said.
As per the findings, 20 per cent companies plan to give a double-digit increment this year compared to only 12 per cent in 2020.
Out of the 60 per cent companies that gave an increment in 2020, a third of them did that through off-cycle increments.
Among the companies that did not give an increment in 2020, “only about 30 per cent plan to compensate employees for the previous year through higher increments and/or bonuses,” it added.
The survey further said the life sciences and information technology (IT) sectors are expected to give the highest increments whereas the manufacturing and services sectors continue to offer relatively lower salary increases.
“Life sciences is the only sector that will be able to match its 2019 increment levels. For others, average increment in 2021 is expected to be lower than 2019.
“Only digital and e-commerce companies are expected to offer double-digit average increments in 2021. Increments are likely to be the lowest in hospitality, real estate, infrastructure, and renewable energy companies,” it added.
Anandorup Ghose, partner at DTTILLP, said COVID-19 has made year-on-year analysis tricky as 2020 has been an anomaly, making 2019 a better year for comparison.
Average India 2021 increment of 7.3 per cent is still considerably lower than 8.6 per cent in 2019. While business activity is rebounding quickly, organisations are managing compensation budgets responsibly considering their affordability and sustainability of fixed cost increases, Ghose noted.
According to him, post March 2020, most companies decided either not to offer increments or defer them until they get more clarity and around 25 per cent companies even extended a pay cut to their senior management.
“… at an all-India level, voluntary attrition reduced from 14.4 per cent in 2019 to 12.1 per cent in 2020, involuntary attrition (layoffs, restructuring, etc.) increased from 3.1 per cent in 2019 to about 4 per cent in 2020. Involuntary attrition increased the most in the IT and services sectors, whereas voluntary attrition reduced across sectors,” it added.
Among priorities for 2021, most organisations identified greater adoption of technology in HR, employee wellness, and continued investment in learning and development as the top three focus areas.”
Jaguar Land Rover to cut 2,000 jobs globally
Jaguar Land Rover said on Wednesday it would cut 2,000 jobs from its global salaried workforce, just days after announcing its luxury Jaguar brand will be entirely electric by 2025 and e-models of its entire line-up will be launched by 2030.
“The full review of the Jaguar Land Rover organisation is already underway,” the company said in an emailed statement.
“We anticipate a net reduction of around 2,000 people from our global salaried workforce in the next financial year,” it said.
However, it added that the organisational review did not impact hourly paid, manufacturing employees.
JLR, owned by India’s Tata Motors, said earlier that its Land Rover brand will launch six fully electric models over the next five years, with the first in 2024.
Indian shares subdued as some banks fall after run-up
A slow start to the day for stocks.
Reuters reports: “Indian shares were little changed on Thursday, as investors sold off recent winners including ICICI Bank and Kotak Mahindra Bank while state-run lenders extended their meaty gains.
Domestic stock benchmarks have climbed 12% this month in a rally driven by strong corporate earnings, a well-received federal budget and healthy foreign fund inflows, prompting investors to take profits from some high-flying stocks.
The NSE Nifty 50 index was up 0.11% at 15,225.45 by 0450 GMT, while the S&P BSE Sensex was 0.05% higher at 51,730.49.
Private-sector lenders ICICI, Kotak Mahindra and HDFC were the biggest drags on the Nifty 50, falling more than 1% each, having added 15%-20% this month.
Market sentiment overall remains positive on the back of encouraging corporate earnings reports, analysts have said.
“There is a sense that the earnings recovery is going to become more broad-based,” said Harendra Kumar, managing director for institutional equities at Elara Capital in Mumbai. “Markets seem to have taken a call that at least for the next 18 months, there will be no major hiccups.”
Energy stocks rose 1.65% and were among the top sectoral gainers. India on Wednesday unveiled plans to spend 7.5 trillion rupees ($103 billion) on oil and gas infrastructure and committed to bring natural gas under the goods and services tax.
A red-hot rally in state-run banks continued and the Nifty PSU banks index that tracks them rose as much as 4% to a more than one-year high.
The index is now up 11.6% in the past three sessions. Reuters reported earlier this week that India had shortlisted four state-run lenders for possible privatisation.
Elsewhere in Asia, Chinese shares rose but other markets were hit by profit-taking after a recent run-up.”
Bharti Airtel to buy out Warburg in DTH arm
Bharti Airtel on Wednesday said it would acquire 20% stake in Bharti Telemedia, its DTH arm, from an affiliate of Warburg Pincus for ₹3,126 crore. The amount will be discharged via issuance of about 36.47 million equity shares of Bharti Airtel at a price of ₹600 per share and up to ₹1,037.80 crore in cash, the company said in a statement.
In a separate communique to stock exchanges, Bharti Airtel said its board, at a meeting held on Wednesday, had constituted a ‘Special Committee of Directors’ to consider and evaluate in detail ‘various options for re-organisation of businesses and shareholding structure of the company’ for possible ‘unlocking of value for shareholders’.
A Warburg Pincus affiliate had, in December 2017, agreed to acquire a 20% equity stake in Bharti Telemedia.
Indian retailer group calls for ban on Amazon in country after Reuters report
The battle between Amazon and Future heats up further.
Reuters reports: “A leading group of Indian retailers on Wednesday urged the government to ban the local operations of Amazon.com Inc, after Reuters reported the U.S. e-commerce giant has for years given preferential treatment to a small group of sellers on its India platform and used them to circumvent the country’s strict foreign investment regulations.
The Reuters report https://www.reuters.com/investigates/special-report/amazon-india-operation, based on internal Amazon documents dated between 2012 and 2019, provided an inside look at the cat-and-mouse game Amazon has played with India’s government, adjusting its corporate structures each time the government imposed new restrictions aimed at protecting small traders.
In a statement, the Confederation of All India Traders (CAIT), which says it represents 80 million retail stores in India, said “the shocking revelations” in the Reuters story are “sufficient enough to immediately ban operations of Amazon in India.”
The group called on Commerce Minister Piyush Goyal to take immediate note of this “important and burning issue and order for a ban on operations of Amazon in India.”
Amazon did not respond to a request for comment on the trader group’s statement. But shortly after CAIT issued its call for the ban, Amazon retweeted the Reuters report, criticizing it as “unsubstantiated, incomplete, factually incorrect,” without going into specifics. It added that “Amazon remains compliant with Indian laws.”
“In last several years, there have been (a) number of changes in regulations; Amazon has on each occasion taken rapid action to ensure compliance. The story therefore seems to have outdated information and doesn’t show any non-compliance,” Amazon said on its Amazon India News Twitter account.
A spokesman for India’s Ministry of Commerce and Industry did not respond when contacted outside regular business hours.
To read the full Reuters report on the Amazon strategy, click https://www.reuters.com/investigates/special-report/amazon-india-operation/
The Amazon documents revealed the e-commerce company helped a small number of sellers in India prosper, gave them discounts on fees, and helped one cut special deals with big tech manufacturers such as Apple Inc. The company exercised significant control over the inventory of some of the biggest sellers on Amazon.in, the documents showed. Government rules announced in 2016 required that an e-commerce platform should “not exercise ownership” over sellers’ inventory. Amazon pledges that all sellers operate independently on its platform.
Amazon has been facing increasing scrutiny by Indian regulators, and the detailed look inside its strategy could deepen the risks for the company in one of its key growth markets. Indian retailers, who are a crucial part of Prime Minister Narendra Modi’s support base, have long alleged that Amazon’s platform largely benefits a few big sellers and that the e-commerce company engages in predatory pricing that harms their businesses.
In a written response to the Reuters story which was published on Wednesday, Amazon said it “does not give preferential treatment to any seller on its marketplace,” and that it “treats all sellers in a fair, transparent, and non-discriminatory manner, with each seller responsible for independently determining prices and managing their inventory.”
The Indian retailer group on Wednesday said the Reuters report “vindicates the stand and arguments” it made in recent years. “The CAIT will raise this issue in a bigger way,” the group said.”
Amazon documents reveal secret strategy to dodge India’s regulators
It was early 2019, and senior Amazon.com Inc executive Jay Carney was preparing for an important meeting. The former press secretary to U.S. President Barack Obama, Mr. Carney was scheduled to talk with India’s ambassador to the United States in Washington, D.C. In Delhi, the government had just announced foreign direct investment regulations that threatened to disrupt Amazon’s business in the world’s second most populous country.
Before the meeting, Amazon employees prepared a draft note for Mr. Carney. The note, reviewed by Reuters, advised Mr. Carney what to say — and what not to say.
He should highlight the fact that Amazon had committed more than $5.5 billion in investment in India and how it provided an online platform for 4,00,000-plus Indian sellers. But he was cautioned not to divulge that some 33 Amazon sellers accounted for about a third of the value of all goods sold on the company’s website. That information, the note advised, was “Sensitive/not for disclosure.”