Indian supermarket chains to go on expansion spree

Source: ETRetail.com, Jan 15, 2021

New Delhi: More Retail is scouting for space in several cities as it aims to open 300 supermarkets and hypermarkets over the next three years, while Reliance Retail is looking for hundreds of properties for its Reliance Smart Point supermarket format, multiple real estate agents said.

Riding on a sharp recovery from pandemic-led blows, supermarket chains are aggressively looking to expand nationwide in the coming years, according to retail real estate companies.

The big box retailers are betting on India’s long-term potential for organised food and grocery business, an estimated market of more than $500 billion.

While India is the world’s third largest food and grocery market, the sector is dominated by mom-and-pop stores which number around 12 million. So, there is great room for modern retailers to grow in that space.

An India Ratings & Research report from the Fitch Group said food and grocery retailers saw “meaningful recoveries” in October and November from the impact earlier in the year, with many breaking even. According to it, most retailers had over 90% of their stores operational heading into the quarter, compared with 70% at the start of the September quarter.

“More is aggressively looking for 300 properties all over the country,” said the head of a prominent real estate consultancy. “It is an open mandate for various real estate firms.”

More Retail chief executive Mohit Kampani did not respond to calls and text messages. Reliance Retail did not respond to an email seeking comment till press time Thursday.

The store expansions will add heft to the companies’ omni-channel strategies, as they plan to use their outlets either as last-mile delivery points or to act as feeders to kiranas.

“Every supermarket operator is expanding, including Reliance, More, DMart…,” said Shubranshu Pani, managing director of retail services at consultancy firm JLL.

Pani said cash flow is currently tight for most of the other retailers including in fashion and lifestyle, as they are still reeling from the shocks of the pandemic.

“Sales are happening for fashion retailers since August and they had a good Diwali, but they are still not out of the woods,” he said.

Meanwhile, DMart is looking for properties in Delhi NCR, said real estate consultants.

“Delhi is underserved for DMart. That is why they are looking at several locations,” said Shriram PM Monga, principal consultant at F&B and retail real estate advisory SRED.

A WhatsApp message to Neville Noronha, managing director at Avenue Supermarts that operates DMart, did not elicit any response till press time Thursday.

In 2018, More Retail was acquired by Samara Capital through Witzig Advisory Services from the Aditya Birla Group for about Rs 4,200 crore. Subsequently Amazon acquired a 49% stake in Witzig Advisory with 17% stake purchased through Class A shares which have voting rights and the rest 32% through Class B shares which have no voting rights. The deal was structured this way to make it compliant with the foreign direct investment rules in ecommerce whereby More can remain a seller on Amazon India’s marketplace.

Automobile sales register 14 per cent growth in December

Source: The Hindu Business Line, Jan 14, 2021

New Delhi: In December, the domestic passenger car sales grew by more than eight per cent year-on-year (YoY) to 1,46,864 units compared with 1,35,531 units in December 2019.

The utility vehicle sales also grew by around 20 per cent YoY to 94,787 units during the month as against 79,153 units in corresponding month previous year, the latest report shared by Society of Indian Automobile Manufacturers (SIAM) said on Thursday.

This has led to the overall growth of around 14 per cent in the passenger vehicle segment to 2,52,998 units during the month as compared with 2,22,728 units in December 2019.

In the two-wheeler segment, the sales grew by a little more than seven per cent YoY to 11,27,917 units in December as compared with 10,50,038 units in December 2019.

The motorcycle sales grew by around seven per cent to 7,44,237 units during the month as compared with 6,97,819 units in the corresponding month previous year.

Similarly, scooter sales grew by around six per cent YoY to 3,23,696 units compared with 3,06,550 units in December 2019.

“Indian automobile industry appreciates the government’s efforts to balance the safety of people and the revival of the economy from the negative effects of the pandemic. Initiatives such as the announcement of PLI scheme, keeping interest rates very low, targeted spending in rural areas and continued focus on building road infrastructure, will help in our recovery process,” Kenichi Ayukawa, President, SIAM said.

He also said that the market situation is dynamic and uncertain. The industry is facing a shortage of semiconductors, steel and shipping containers.

“There is also an impact of the price increase of steel, logistics and other raw materials. The industry is working hard to get back to better volumes and better business health while ensuring the safety and well-being of people across the whole value chain,” he added.

Car wholesales

Meanwhile, SIAM also reported wholesale numbers of the last nine months (April-December), in which it had reported a decline of 16 per cent in total passenger vehicle sales to 1,777,874 units as compared to 2,117,920 units in corresponding period previous year.

Hit by the lockdown and no sales for more than a month during the pandemic, the passenger car wholesales declined by more than 20 per cent YoY to 1,028,101 units during April-December 2020, as compared with 1,291,234 units in same period in 2019.

Two-wheeler sales also had declined by around 23 per cent YoY during the period to 1,07,65,788 units during the period, as compared with 1,39,13,795 units in corresponding period previous year.

The commercial sales were also hit the most and declined by more than 37 per cent YoY during the April-December period to 3,58,203 units as compared with 5,70,694 units in the same period 2019. “If we look at the cumulative numbers of the nine-month period from April to December 2020, it shows that sales of all segments are still behind by many years. Passenger vehicle sales are behind by nearly a decade, while two-wheeler sales are behind by seven years,” Ayukawa added.

Covid push: Pharma exports surge 16%, defy broader gloom

Source: Financial Express, Jan 15, 2021

India’s pharmaceutical exports grew an impressive 16% year-on-year in the first eight months of this fiscal, defying an almost 18% contraction in the overall mechandise exports, as the Covid-19 pandemic caused a spurt in demand for medicines, especially from the largest market — the US.

The rise is remarkable, especially in the light of initial Covid-induced disruptions in the supply chain and the temporary restrictions on the exports of 26 drug formulations and active pharma ingredients (APIs) — including paracetamol, tinidazole and metronidazole — to keep domestic supplies steady.

Exports of the pharmaceutical products — comprising drug formulations and biologicals, bulk drugs and drug intermediates — hit $15.3 billion between April and November, against $13.2 billion a year ago, showed the commerce ministry data. The data don’t include exports of certain fine chemicals.

Excluding the outbound shipments of pharmaceuticals, overall goods exports would have shrunk at a faster pace of almost 20% until November this fiscal, against 18%. The US, which was hit the hardest by the pandemic, typically makes up for about 30% of India’s exports.

The commerce ministry data showed that while exports of drug formulations and biologicals jumped by close to 18% to $12.4 billion, those of bulk drugs and intermediates rose by just over 10% to $2.9 billion.

Meanwhile, imports of these pharmaceutical products rose by close to 9% on year in the April-November period to $4.2 billion. The Indian pharmaceutical industry is both an exporter to as well as importer of bulk drugs (APIs and intermediates that give medicines their therapeutic value) from China, the epicentre of the Covid-19. As much as 65-70% of these raw materials are imported from China. The increase in exports suggests raw material imports from China have largely stabilised now. A rise in India’s pharmaceutical exports also propped its outbound shipments of the borader chemicals segment and reversed a potential fall. Exports of chemicals and related products rose to $30.7 billion until November, up 2.4% from a year earlier.

Sri Lanka revives port deal with India and Japan for sea terminal

Source: Business Standard, Jan 15, 2021

Sri Lanka’s President Gotabaya Rajapaksa on Wednesday announced the revival of an Indian and Japanese investment project to develop a deep-sea terminal in Colombo harbour, next to a controversial $500-million Chinese-run container jetty.

A tripartite deal by Sri Lanka’s previous government had been on hold amid trade union resistance, but Rajapaksa said the East Container Terminal (ECT) would proceed. Approval came after reviewing “regional geo-political concerns,” Rajapaksa’s office said, a reference to India’s suspicion of China’s role at the same port. The terminal will be developed with 51 percent ownership by Sri Lanka’s government and the remaining 49 percent as an investment by Adani Group and other stakeholders including Japan, officials said.

India’s December wholesale inflation slows to 1.22% as food prices ease

Source: Business Standard, Jan 14, 2021

New Delhi: The wholesale price-based inflation slowed to 1.22 per cent in December on easing food prices, as per government data released on Thursday.

The inflation based on Wholesale Price Index (WPI) was 1.55 per cent in November 2020, and 2.76 per cent in December 2019.

The rate of inflation based on WPI Food Index decreased from 4.27 per cent in November 2020, to 0.92 per cent in December 2020, as per the data released by the Department for Promotion of Industry and Internal Trade. It is to be noted here that retail inflation had also dropped sharply to 4.59 per cent in December, mainly due to declining food prices.

Company incorporations grow 20% year-on-year during April-December 2020: MCA

Source: The Economic Times, Jan 14, 2021

In a sure sign of a revival in business sentiment, company incorporations grew by 20% in the April-December period of FY21 compared to the corresponding period last year.

Data from the ministry of corporate affairs (MCA) showed that 1.13 lakh companies were incorporated during the first nine months of the ongoing fiscal compared to 93,758 incorporations till December in FY20.

The reason behind the sharp growth was the progression of smaller firms and LLPs towards forming companies as growth picked up along with improved facilitation through digital services, a senior government official said.

“As businesses grow, they graduate from a proprietorship or partnership, to an LLP and some of them go on to form a company. The figures are a sign of the inherent strength in the economy and better facilitation,” they said.

After hitting a seven-year-high in July at 16,487, company incorporations stayed elevated above the 16,000-mark consistently till October, before declining to 13,453 in November, the MCA data showed.

The recovery was significant considering the figure had dropped to as low as 3,209 in April last year, the first full month after the lockdown started on March 25.
The pickup began as the unlock phase commenced with incorporations jumping to 10,954 in June 2020 from 4,835 a month earlier.

As part of its continued efforts towards improving the ease of doing business, the MCA was also working to get Delhi and West Bengal onboard to register professional tax through the MCA21 portal, the official said.

Currently the platform offers these services for the states of Karnataka and Maharashtra.

Apart from company incorporation, the MCA21 portal facilitates a range of services from opening of bank accounts, to the application of goods and services tax identification number, Employees State Insurance Corporation registration, among others.

Sports apparel and footwear companies outrun fast-fashion and lifestyle rivals since the onset of Covid-19

Source: ETRetail.com, Jan 14, 2021

Sports apparel and footwear companies have outrun fast-fashion and lifestyle rivals since the onset of Covid-19 as sales of sportswear have continued to grow during the pandemic, driven by increasing appetite for fitness in the country and increasing adoption of sporting disciplines other than cricket.

Companies such as Decathlon, Asics, Puma, Skechers and Reebok grew 7-24% in the year ended December 2020, significantly outpacing apparel retailers Zara, Benetton, Marks & Spencer, Levi’s and Lifestyle, which either declined or expanded in low single-digits during the year, according to regulatory filings.

“There is an increasing number of people who are getting inclined toward health and fitness, and more people going to the gyms, where young consumers don’t just want to be fit but also want to look good. So athleisure products have a blend of performance and looking good,” said Rajat Khurana, managing director at Asics India and South Asia. “The market dynamics is working in our favour and we grew 30% last calendar year.”

India has seen increasing interest in sports such as kabaddi, soccer, volleyball, hockey and badminton. It now hosts professional leagues in most of these sporting disciplines, drawing participants from across the globe

According to data insights firm AltInfo, French sporting goods retailer Decathlon grew 24% in the year ended march 2020 to Rs 2,231 crore, nearly doubling sales over the past two years while Reebok grew 7% to Rs 428 crore. German brand Puma saw sales increase 22% to Rs 1,413 crore during the year ended December 2019.

Unlike most apparel companies, which saw slow growth due to store closures from March and apprehension among customers regarding stepping out even after the easing of lockdown, sportswear sales continued to increase.

Sportswear companies which had long relied on bricks-and-mortar retail also benefited from boosting their online platforms.

Puma India managing director Abhishek Ganguly said consumers have been adopting sports and fitness wear due to higher awareness of health and well-being. “This is a trend which is pronounced since the last two-three years and has been revalidated and become more pronounced since the unlock. Consumers are now much more focused on health than ever before and the market has expanded during Covid when the overall apparel segment is seeing headwinds,” he said.

As per industry estimates, the sportswear market grew 8-10% year-on-year in the July-December 2020 period as consumers wore such dresses for both fitness and as work-from-home attire or video meetings.

Walmart-owned Flipkart said it saw a surge in demand for T-shirts, track pants, running shoes, walking shoes and women’s tights. Sports shoes grew in popularity even in tier-3 markets, said a Flipkart spokesperson. “Fitness as a category has been consistently growing year-on-year, and during the evolution of the pandemic we have noticed the trend of consumer searches increasing for fitness wear and gear on Flipkart as they continue to explore different fitness routines,” said the spokesperson.

Amazon India said the demand has been high for sportswear and comfort wear apart from work from home essentials like open footwear. During the festive season last year, we observed a strong customer interest in sportswear with 1.2 times higher demand year-on-year with consistent strong demand for running shoes, especially 1.6 times growth in women running shoes, the spokesperson said.

With a population of 1.3 billion people, India is one of the fastest-growing and largest international markets for footwear companies. Brands such as Reebok, Adidas, Nike and Puma have been around for more than two decades in India and have grown by virtue of pushing their wares partnering cricket and other sporting activities. Newer players, however, have been positioning themselves as comfortable lifestyle and regular athletic wear brands.

In an earnings call last year, David Weinberg, chief operating officer at Skechers USA, said prospects for the brand in India were extraordinarily bright, especially over the long term. “We have seen incredible traction for the brand. For the full year, the growth rate was near 50% and it’s starting to become a very meaningful contributor to the overall economics of our international subsidiary business,” he had said.

Boost to production and pvt investment as mining reforms get green signal

Source: Business Standard, Jan 14, 2021

New Delhi: The Union Cabinet is learnt to have approved a reform package for the mineral mining sector which would entail amendments to three existing laws, pricing formula for minerals, exploration of mines and several taxes and duties levied on mining.

Officials said this is expected to boost production and private investment in the sector.

The Centre has removed the distinction between captive (self-use) and merchant (commercial sale) mines. The Centre would amend the Mines and Minerals (Development and Regulation) Act, 1957 (MMDRA) to enforce the reforms.

Senior officials said the amended MMDRA would be placed in Parliament in the upcoming session.

Under the proposed reforms, captive mines would be allowed to sell 50 per cent of the minerals excavated in a year. The Centre has also proposed to give 50 per cent rebate in the quoted revenue share, for the quantity of mineral produced and dispatched earlier than scheduled date of production

The Centre has proposed to amend the section 10A(2)(b) & 10A(2)(c) of the MMDRA in order to unlock more mines for auctioning. This would entail Centre auctioning the pending mining leases as well. Section 10A(2)(b) pertains to the leases where reconnaissance permit (RP) or prospecting licence (PL) were granted and 10A(2)(c) relates to grant of mining leases (ML).

The Centre plans to compensate for the mineral concessions which would get cancelled under this amendment. The compensation would come from the National Mineral Exploration Trust (NMET). NMET receives Rs 800 crore annually via the royalty paid by mineral mine owners. The Centre has also proposed to make NMET an autonomous body in order to boost exploration.

The move comes after auction of coal mines to private companies for commercial mining and sale was successful with the Centre awarding 19 mines to varied set of companies.

With this, the monopoly of state-owned Coal India Limited (CIL) ended, 42 years after coal mining was nationalised.

The Centre amended the Coal Mines (Special Provisions) Act, 2015, in May 2020 to open the coal auction for non-mining, MSMEs and foreign companies. This paper reported recently, the Centre would announce opening up of mineral mining sector similarly and amend the MMDRA for the same.

“We have brought reforms in the coal sector and we want to bring them in mining as well. But implementation and auction of non-coal mines is with the states. In 40-45 days, we will come out with other mineral reforms,” Union Minister of Coal, Mines and Parliamentary Affairs Pralhad Joshi had told the paper in November.

Federation of Indian Mineral Industries (FIMI) in a recent note, however, had asked the government to review the auction strategy for mineral mining. “Auction has neither served public good nor led to fair allocation of resources. The sole focus to maximize revenues for the States has adversely affected long-term mineral development in the country and socio-economic benefits in mining areas,” R K Sharma, Secretary General, FIMI said.

As part of the mining reforms, the Centre will also amend the Indian Stamp Act, 1899, in order to bring uniformity across the States in calculation of stamp duty. “Effective tax rate (ETR) on mining in India is 64 per cent which is highest in the world where in other countries it ranges between 34-38 per cent. One such tax is stamp duty which is computed in different ways in different states. We will simplify it,” said an official. A committee would also be set up to resolve the “double taxation” issue in the mining sector.

The MEMC Rules (Minerals (Evidence of Mineral Contents) Rules, 2015) will be amended for inclusion of the globally accepted classification standards like CRIRSCO, JORC, etc. and latest UNFC classification.

The Centre has also proposed to reallocate non-producing blocks of the public sector utilities (PSUs) so as to increase number of mines into production. There will also be charges levied on extension of mining leases of PSUs. But, there will not be any charges on transfer of mineral concessions for non-auctioned captive mines. It is learnt that the Centre would also ask PSUs to facilitate production from those mines which were auctioned in March 2020 but have started production even after transfer of valid rights, clearances, etc.

Non-life insurers see around 12% growth in December premiums

Source: Business Standard, Jan 13, 2021

Mumbai: Non-life insurers have recorded around 12 per cent year-on-year (YoY) growth in gross premiums underwritten in December. This comes after low single-digit growth in November and contraction in September and October.

In December, non-life insurers — that include general insurers, standalone health insurers and specialised PSU insurers — reported gross premium underwritten to the tune of Rs 17,935.97 crore, compared to Rs 16,048.86 crore in the same period last year. In November, they had reported a 2.7 per cent growth in premium, while in October and September, premiums earned declined 0.41 per cent and 4.41 per cent, respectively.

While general insurers, 25 in total, collected Rs 15,491.12 crore premium in December this year, up 10.59 per cent YoY, the standalone health insurer’s premium went up more than 5 per cent in the same period over last year.

In December, among state-owned insurers, New India Assurance and National Insurance Company were in the green with 16.02 per cent and 42.10 per cent premium growth, respectively, over last year. Among private insurers, Bajaj Allianz general insurance reported a 22.73 per cent growth in premiums, HDFC Ergo a little over 40 per cent growth, ICICI Lombard saw a 10.52 per cent rise and IFFCO Tokio recorded a 14 per cent growth.

Furthermore, in the April-December period of FY21, the general insurers’ premium totalled Rs 1.25 trillion, up 1.14 per cent over last year. Apart from New India Assurance, all the other three state-owned gene­ral insurance firms were in the red during this period.

As far as private insurers are concerned, apart from HDFC Ergo, which reported a 26 per cent growth, all the other private insurers, with sizeable market share have reported low single-digit growth in premiums. Standalone health insurers, on the other hand, reported a 7 per cent rise in premiums in April–December of FY21, with growth being driven by the retail health segment.

Government schemes and overseas health insurance (travel) proved to be the dampener.

On an industry level, the first nine months of FY21 has seen non-life industry premiums grow by 2.53 per cent to Rs 1.45 trillion, compared to Rs 1.42 trillion in the same period of last financial year. Growth in the non-life industry has been primarily driven by health, followed by the fire segment. With gradual opening of the economy, motor insurance segment has picked up but without a hike in third party premium rates, the growth is muted. Crop insurance, on the other hand, remains a challenge for the industry, going forward.

Economic activity continues on normalisation, FY21 GDP to contract 6.7%

Source: Business Standard, Jan 13, 2021

Mumbai: Economic activity continued with its pace of normalisation and the festivities helped narrow the deficits as compared to the year-ago period in December, a Japanese brokerage said on Wednesday.

Based on data shown by its proprietary models, Nomura also revised up wits FY21 GDP forecast to a contraction of 6.7 per cent, as against the official estimate of a 7.7 per cent contraction in the pandemic-impacted fiscal year.

The Nomura India Monthly Activity Indicatorrose to-2.3 per cent in December provisionally when compared to the year-ago period’s performance, and was much better than the -7.7 per cent year-on-year witnessed in November and -13.3 per cent in September, it said.

The brokerage said this suggests a strong recovery in Q4. The pandemic situation did not substantially deteriorate in the festive season in December quarter, clearing the decks for a faster pace of economic normalisation, it said.

“We expect GDP growth of-6.7 per cent y-o-y in FY21, before rising to 13.5 per cent in FY22, above consensus (10 per cent). Along with the moderation in inflation in the short term due to lower food prices, we believe the economy is entering a Goldilocks period,” it said.

It can be noted that earlier in the day, analysts at its American peer Bofa Securities also pegged the GDP to close FY21 with a contraction of 6.7 per cent.

The Japanese brokerage said an index which it uses as a proxy for the extent of normalisation across the economy suggests economic activity continued to improve during December.

At the end of the festive season, the overall normalisation index for consumption improved to 88.3 per cent in December as against 87 per cent in November and 85 per cent in October, it said.

For passenger cars, two-wheelers and tractors, the normalisation index readings are higher than their respective pre-pandemic levels while on the investment front, the index is trending at 93 per cent, which is 3 percentage points below pre-pandemic levels, it said. Similarly, indicators on external sector and aggregate supply also showed improvements, it said.