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Fundamental problem is lack of money: Raymond CMD

The downturn in the auto sector could have a multiplier effect on other sectors of the economy, says Gautam Hari Singhania, CMD, Raymond in an interview. Excerpts:

What is the state of the economy?

The economy is a little tough now. There is no liquidity. Banks do have the money but they are not lending. You were travelling at 300 km per hour and suddenly, somebody slammed the brakes. So, there is going to be discomfort till the car stops and starts again. These are tough times but Raymond always embraces such times.

How is the retail sector doing?

Auto sector is in a terrible condition. NBFCs are in a bad state. The fundamental problem is lack of money. But if you are a good company and have good products with value for money, at best you will be flat or have little growth. That is a good thing because others will be negative.

The pain in the auto sector is huge. The multiplier effect of that is going to be over the whole industry because auto sector does not stop at cars. If you take unemployment in auto companies, ancillaries and dealerships, it would be lakhs of people. It even affects industries like steel, tyre, engine, component manufactures and leather manufacturers.

Every manufacturer has a [trickle] down effect on employment. If one sector affects 20 other sectors, then those 20 will affect 20 other sectors. Today, we see auto getting the highest pain.

One can deal with 5-10% up or down in sensitivity index but when you see 40%, it is a systemic change. We need to react to this quickly. We need to correct it quickly. Whatever needs to be done, let’s get it done and let’s move on. Is there a problem? The answer is yes.

How is Raymond doing in this environment?

With the slowdown, everybody has been impacted. But we are doing better than other companies because eventually Raymond sells value-for-money products. We are not overleveraged; we continuously do product innovation. I am worried for the overall sentiment. There will be collateral damage on everybody.

Do your store expansion plans remain?

We are continuously opening new stores. Today, we have 1,406 stores in India across 600 towns and 52 stores in nine other countries. We will continuously be aggressive not only in Raymond shops but in different formats and new formats. Our next big penetration will be via another company that has presence in 375 towns and that will go on expanding. Today, there are people in Central India who have never been to Mumbai. I remember, once a 50-year-old Punjabi man came for a product launch, he said he had never seen the sea before and he thanked me for showing him the sea [from the terrace of Raymond flagship store at Breach Candy].

When I asked what he meant, he said he had never left Punjab. What you and me take for granted, in India you have to go to the markets [to understand trends].

Recently, Raymond forayed into real estate. What are your overall plans?

Raymond has historical land. The company’s policy is to monetise the asset. We have multiple plans. Currently, we are developing the first phase of 20 acres. In the wisdom of the company and the directors, it s the correct way to optimise shareholder value. Construction has started. The response has been very good. We are doing 2BHK compact homes.

Your comment on the differences between you and your father [former Raymond chairman Vijaypat Singhania]?

It is what it is. He wants me to do things which are against corporate governance norms of the company. All that he asked for was put forward to the board, to shareholders and it has been rejected. There is nothing I can do. He does not want to understand that. At the end of the day, I am a professional running a professional firm and am trying to set the highest standards of corporate governance.

‘e-Assessment to bring about efficiency by eliminating human interface’

Ajay Bhushan Pandey

Revenue Secretary Ajay Bhushan Pandey has launched the faceless assessment system in the Income Tax department and also inaugurated the National e-Assessment Centre, promises that Finance Minister Nirmala Sitharaman had made in her Budget speech.

“The e-Assessment Scheme introduces the concept of team-based assessment with dynamic jurisdiction which would bring about transparency, efficiency and standardisation of procedures by eliminating human interface between the taxpayer and the Income Tax department,” the government said in a release.

The launch of the e-Assessment system comes days after the Central Board of Direct Taxes (CBDT) launched a system wherein all notices and communication sent by the I-T department would come with a computer-generated documentation identification number (DIN). Notices without this DIN will be considered non est or non-existent under the law. “E-assessment is a welcome step in making assessment proceedings efficient and speedy,” said Homi Mistry, partner, Deloitte India.

Save time

“Online submissions will save time and effort involved in visiting tax offices for face-to-face proceedings. Faceless assessments will make the process objective and hassle-free.”

The nodal National e-Assessment Centre (NeAC) will be located in Delhi and headed by the Principal Chief Commissioner of Income Tax. The eight Regional e-Assessment Centres will be located in Delhi, Mumbai, Chennai, Kolkata, Ahmedabad, Pune, Bengaluru, and Hyderabad.

“Cases for the specified work shall be assigned by the NeAC to different units by way of automated allocation systems,” the release added. “In view of the dynamic and all-India jurisdiction of all officers of NeAC and ReAC, this kind of connective and collaborative effort of officers is likely to lead to better quality of assessments.”

Current upper limit has outlived its utility, says SBI report

Amid the crisis in Punjab & Maharashtra Co-operative Bank that had created panic among a section of depositors, a report by the State Bank of India (SBI) has called for a re-look at the deposit insurance scheme.

“The current upper limit of ₹1 lakh per depositor, we believe, has outlived its shelf life and there is a need to revisit it,” SBI said in a report.

The report suggested a two-tier system of deposit insurance — one for savings account deposit and the other for fixed deposits.

At present, deposits of up to ₹1 lakh are insured by the Deposit Insurance and Credit Guarantee Corporation.

“The DICGC coverage should be revised and bi-furcated into two categories: 1) desirable coverage of at least ₹1 lakh for SB deposits (around 90% of the total SB accounts) and 2) desirable coverage of at least ₹2 lakh for term deposits (around 70% of the total TD accounts),” the report said.

Senior citizens

The report also suggested a separate provision for senior citizens. “This revision in DICGC coverage becomes all the more desirable in the Indian context, where senior citizens/retired people have no social security in place and mostly keep fixed deposits for earning interest income,” it said.

The report suggested depositors get an incentive to spare a part of their total deposits to buy bank bonds that provide guaranteed coupon rates on a half-yearly basis and are tax-free.

Nation seeing unprecedented change, difficult to estimate demand: MD Acharya

Srinivas Acharya

Sundaram Home Finance (SHF) may revise its fund-raising plans downwards by 10% if demand buoyancy does not return to the home loan market in the second half of this fiscal.

“We were looking to raise ₹4,000 crore this year, but given the flattish disbursement growth that the company is seeing we may end up raising ₹3,600 crore,” said the company’s MD, Srinivas Acharya.

He explained that the loan disbursement target may also come down to ₹2,450 crore from the originally intended ₹2,600 crore.

He noted that in anticipation of demand, builders had built a ‘huge’ inventory of homes. “But demand estimation was flawed. The scenario is now changing. The younger generation has become location agnostic and they no more want to be hooked to a single location. Our economy has to adjust to this new outlook of the younger generation.”

Ageing inventory

He also had a word of caution on the ageing inventory of unsold houses. “Previously, 30% of homebuyers were from the IT sector; NRIs constituted another 30%. These two categories have seen a big dip in recent times. Demand buoyancy is not there currently. A large inventory of unsold new apartments may have buyers thinking twice and they may be reluctant to buy an apartment that has remained unsold for 2-3 years.”

Mr. Acharya also dwelt on the fact that the current slowdown in economic growth is unlike any other that India has faced. “We are currently going through a significant phase in our history — that of transformative change. There are cultural, societal, financial and environment shifts happening all at the same time.”

“Cultural preferences are changing. The demand–supply equation is changing. There was a time when there were severe supply constraints and there were challenges meeting the demand.

‘No supply problems’

“In both housing and manufacturing, there are now no supply side constraints. The current slowdown is a result of issues on the demand side. With enormous shifts happening on multiple fronts, it is becoming difficult to estimate (demand numbers) easily.”

Asked about SHF’s own plans in the changing scenario, he said, “We have to capitalise ourselves carefully. If we over-capitalise, shareholders may not get the desired returns. Given the current scenario in real estate, even shrinking of business is fine as long as profits are there. Focus will be on going after good and profitable business.”

‘Quick release of refunds will help’

The textile industry has sought immediate release of refunds under various government schemes to ease the liquidity crunch faced by manufacturers and exporters.

In a joint memorandum presented by seven national-level textile associations and major export promotion councils to the Union Government, the industry said that since the units are facing acute liquidity issues, the government should take steps to release the refund arrears under programmes such as ROSL/ROSCTL, Duty Drawback scheme, GST refunds, and Technology Upgradation Fund scheme.

The Confederation of Indian Textile Industry (CITI) held meetings with the textile associations across the country and facilitated the formation of a national committee for textiles and clothing representing the entire textile value chain.

The committee has short-listed measures that the Centre must take to revive the industry. T. Rajkumar, chairman, CITI, said the associations had submitted their demands to the Textile Minister and that it hopes to meet the Finance and Commerce Ministers soon.

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