New Delhi, May 28
Food retailers have incurred losses to the tune of Rs 13,000 crore in the last fiscal, an analysis by Crisil Ratings of the top 10 food retailers showed.

These retailers accounted for 40% of segment revenues of around Rs 23,500 crore last fiscal. The losses were caused by large-scale expansions even as business models were being fine-tuned. The report said to reduce the bleeding, retailers have undertaken several initiatives, but these will yield results only gradually.

According to a report, while losses will mount by about 30% in the medium term, they are likely to peak in 2017. “What keeps them going is the backing of intrepid promoters who foresee immense potential in India,” the report added.

Ramraj Pai, president, Crisil Ratings, said: “These losses reflect the challenges in the food and grocery retailing vertical. Compared with other formats, food retailing is a local business where optimal supply chains are critical to lower costs. The business also has the lowest gross margins in retailing, which leads to longer gestation periods. Players, therefore, need a lot of time and investment to perfect the model and positioning (such as the location, store size, choice of products and development of private labels), and to scale up to achieve critical mass.”

Crisil said food retailing is appealing because despite constituting more than two-thirds of a total Rs 25.3 trillion of sales in India, its penetration is a minuscule 2.3% — the lowest among all formats. Also, it is difficult to be a leading player in organised retail in India without being present in food. Globally, food and grocery contribute to over 50% of topline for the likes of Walmart Stores Inc and Tesco Plc.

With losses higher and time to break-even well beyond initial estimates, retailers are under pressure to streamline operating models. Anuj Sethi, director, Crisil Ratings, said: “Retailers are now moving away from large-scale expansions and streamlining models to achieve faster break-evens. Exits from unprofitable categories, rightsizing of stores, closure of unviable and non-performing stores, focused and calibrated expansion and a renewed focus on private labels are some of the initiatives which the analysed retailers are undertaking to achieve faster break-even.” 

Crisil analysis

* Crisil Ratings analysed the data of top 10 food retailers

* These retailers accounted for 40% of segment revenues of around Rs 23,500 cr last fiscal

* Despite constituting more than two-thirds of Rs 25.3 trillion of sales in India, the penetration of food retailing is minuscule at 2.3%

* Globally, food and grocery contribute to over 50% of topline for the likes of Walmart Stores and Tesco

New Delhi, May 28
The new government seems to have the implementation of the Goods and Services Tax (GST) reforms high on its agenda as Finance Minister Arun Jaitley today expressed his keenness to hold a meeting with state finance ministers.

The issue came up during a presentation by the Revenue Department to the Finance Minister. This was the second presentation after the Economic Affairis Department’s presentation yesterday.

Jaitley has asked for a separate presentation on the GST Bill, including the contours of the reforms, the benefits and features. The Direct Tax Code (DTC) Bill also came for discussion during the meeting.

The Finance Minister expressed his desire to hold an early meeting with the state finance ministers on the GST issue.

During a presentation by Revenue Secretary Rajiv Takru to the new Finance Minister, the officials apprised him of the problems and challenges being faced on the revenue front. Jaitley, according to sources, expressed keenness to meet state finance ministers on the GST, the new indirect taxes regime which will subsume various levies such as excise, service and local taxes.

The UPA government in 2011 introduced a Constitution Amendment Bill in the Lok Sabha to pave the way for the GST regime, which aims at subsuming most of the indirect taxes at the Central and the state levels. The ruling party BJP in its manifesto has committed to bring on board all state governments in adopting GST and addressing all their concerns.

Besides GST, Jaitley also inquired from the revenue officials the reasons for failure in achieving the tax collection target. The officials, according to sources, attributed the shortfall in revenue collection to moderation in industrial activity and slowdown in imports. The Index of Industrial Production (IIP) remained almost flat during the 2013-14, recording a marginal decline of 0.1%.

Implementation of the GST has been a key reform step suggested by the industry for boosting growth. It is estimated that GST can add 1.5% to the country’s GDP straight away through increased efficiency.

New Delhi, May 28
Delays in execution of central infrastructure projects have resulted in cost overruns of more than Rs 1 lakh crore, an Assocham paper has said.

Till March 2013, the cost overruns had been worked out at Rs 94,800 crore in about 285 central projects. Assuming about 8-10% annual accretion, the overruns would have crossed Rs 1 lakh crore by March 2014.

While the original costs were worked out at Rs 4.75 lakh crore for these projects; they had overshot to Rs 5.69 lakh crore in 2013.

"We would urge Prime Minister Narendra Modi to personally take note of such projects and the PMO should regularly monitor them. As there is a demand slowdown in the economy, revival in the investment cycle should be led by the Central sector projects," Assocham president Rana Kapoor said.

The cost overruns due to delay in execution of central projects in the infrastructure sector are maximum in the Railways, amounting to Rs 45,600 crore.

"The new Railway Minister must look at these projects and put them back on track. A clear-cut roadmap for their revival and execution should be unveiled in the Budget," Kapoor said.

In the power sector, the cost overruns are in excess of Rs 15,000 crore as the costs of projects went up from the original estimates of Rs 1.35 lakh crore to Rs 1.50 lakh crore.

The cost overruns due to delays in the petroleum and steel sectors are over Rs 10,000 crore and Rs 620 crore respectively, according to the study conducted by the apex industry chamber. — PTI 

Cost overruns

* Till March 2013, the cost overruns had been worked out at ~94,800 crore in about 285 Central projects

* While the original costs were worked out at ~4.75 lakh crore for these projects; they had overshot to ~5.69 lakh crore in 2013

* The cost overruns in the infrastructure sector are maximum in the Railways, amounting to ~45,600 crore

* In the power sector, the cost overruns are in excess of ~15,000 crore

New Delhi, May 28
After ensuring minimum 25% public shareholding at private sector listed companies, market regulator SEBI is contemplating similar norms for PSUs, but a final decision would be taken as per views of the new government at the Centre.

There are close to 30 listed PSUs where public investors hold less than 25% stake, while the existing norms require a minimum public holding of only 10% for them.

The SEBI, which regulates all listed companies, has suggested to the Finance Ministry an increase in minimum public shareholding in listed PSUs as part of its efforts to deepen the markets and increase public float, sources said.

However, a final decision in this regard can be taken only after getting the views of new Finance Minister Arun Jaitley, who took charge of his office yesterday.

The major PSUs where government holding currently stands at more than 75% include Coal India, SAIL, MMTC, NHPC, NMDC and SJVN.

The market watchdog is of the view that the PSUs can be given a three-year time period for meeting the new limits, sources said, adding that the move would also help in promoting wider participation from investors and boost government's plan of raising funds through disinvestment.

A similar time frame was given to private sector companies in 2010 to achieve minimum 25% public holding, while PSUs were also given three years in the same year to increase their public shareholding to at least 10%. — PTI

Shareholding norms

* There are nearly 30 listed PSUs where public investors hold less than 25% stake

* Existing guidelines require a minimum public holding of only 10% in PSUs

* The SEBI’s move is part of its efforts to deepen the markets and increase public float

Bangalore, May 28
Infosys Board member and president BG Srinivas, considered a front-runner for the CEO position, has quit. The resignation of Srinivas will be effective June 10.

This is the 10th top-level exit from the company since the return of co-founder NR Narayana Murthy at the helm of affairs in June last year.

Srinivas and UB Pravin Rao, both presidents and Board Members, were considered to be among the top contenders for the top job when CEO Shibhulal retires by January 9, 2015. He was elevated to the post of president earlier this year in January. — PTI

New Delhi, May 28
The Supreme Court today allowed the plea of Reliance Industries Ltd (RIL) seeking arbitration in London over its dispute with the Centre on the Panna, Mukta and Tapti oil and gas fields.

A Bench of justices SS Nijjar and AK Sikri set aside the Delhi High Court order by which it had agreed to hear the government's plea against the arbitration proceedings in London.

It said the high court committed a "jurisdictional error" in agreeing to hear the government’s plea.

The court said in the production-sharing contract, RIL and the Ministry of Petroleum and Natural Gas had "consciously agreed" for arbitration in London in case of any dispute.

Tapti, Panna and Mukta fields were awarded to a joint unincorporated venture of Reliance Industries and Enron Oil and Gas India Ltd in 1994 after biddings.

In 2002, BG Exploration and Production India Ltd acquired the share capital of Enron Oil and Gas India Ltd.

The production-sharing contract was to be operative for a period of 25 years expiring in 2019. In December 2010, differences arose on issues of payment and reimbursement of royalties and audit by the CAG, following which RIL invoked foreign arbitration clause. — PTI

BRIEFLY

Jet Airways posts huge loss, shares drop 8.5% 
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Philips re-enters Indian mobile handset market
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India to have 3rd largest Twitter population by Dec
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