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29.5.21 Business standard news

With thanks to original sources


Zerodha's Kamath brothers, Seema Patil to get up to Rs 100 cr salary each

Neha Alawadhi | 29/05/2021 |

Nithin and Nikhil Kamath, the brothers who founded what is now India's largest stock brokerage firm Zerodha, and Seema Patil, Nithin’s wife who has been promoted to whole-time director, can take home a salary of up to Rs 100 crore each, according to a special resolution passed by the company’s board.

The company will also run a buyback this year, similar to what it did the previous year, but at double the valuation -- at $2 billion. "Everyone holds ESOPs & continuously get new options, too. We ran a buyback last year at $1-billion valuation & we will this year do it at $2 billion. Maybe conservative valuations, but our business risks are high. Personally, the proudest moment in this journey," Nithin tweeted on Friday.

Zerodha, a bootstrapped start-up, made over Rs 1,000 crore in revenue and Rs 442 crore profit in FY20 -- a rare feat in the start-up world where many companies are loss-making.

Its board passed a special resolution, according to which, the three -- Nithin, Nikhil and Seema -- will get a basic salary of Rs 4.17 crore per month each, along with allowances, which add up to Rs 300 crore per year.

Though not strictly comparable, their salaries would exceed that of Infosys CEO Salil Parekh's annual pay package of Rs 49.68 crore in 2020-21, which has over half the amount coming from exercise of stock options.

Later speaking with Business Standard, Nithin said Zerodha wasn't looking to go public because that means “either you want funding or because you want to give an exit to some of the investors. We have neither pressure.” ALSO READ: Banks to sell Mallya's UBL shares worth Rs 5,500 cr after PMLA court nod

In April, Nithin had tweeted explaining why the company hasn't raised funds. "We are profitable, have zero debt. And we don’t spend on marketing and advertising which is probably the single biggest reason for folks raising money... We want to build things around our core competency, do it well."

On Friday, he reiterated these beliefs in a series of tweets. "As a promoter/founder, you pay almost 250 per cent more as taxes if you were taking out money from the business as salary/dividends, compared to, say, paying capital gains when selling your stake to an investor (fundraising route)," Nithin said.

The firm competes with stockbroking firms, banks, and companies like Upstox, Groww, Paytm (Money).

Being profitable in the start-up ecosystem is not an oft-heard concept. "The reason for our higher profitability is also that we don't spend any money on acquiring customers," said Nithin, alluding to its competitors which are mostly externally funded; some of them spend a huge amount on advertising and customer acquisition.

The Kamath brothers have been praised for their razor-sharp focus and for building a profitable business without external funds. Nithin is, however, practical about their success. "Our performance is directly proportional to what's happening to the underlying stock markets, and right now the market in India is doing pretty okay," he said.

In January, Zerodha said it will invest $100 million as grants and equity investments, to fight climate change.

🛑GST Council meet: Govt to borrow Rs 1.58 trn for compensation shortfall

Dilasha Seth | 29/05/2021 | 5 hours ago

The Centre on Friday proposed market borrowing to the tune of Rs 1.58 trillion to compensate states for the goods and services tax shortfall through back-to-back loans, like last year. But several states expressed discontent, calling it “gross underestimation” of projected revenue losses.

States’ demand for the extension of the compensation period beyond June 2022 will be taken up in a separate meeting.

The Centre has pegged the GST compensation requirement at Rs 2.7 trillion for FY22, of which Rs 1.1 trillion is expected to be met through cess collection. Like last year, revenue growth of 7 per cent has been assumed to forecast the shortfall and borrowing requirement.

The cess collection is expected to be inadequate in FY22 with the Covid-19 pandemic disrupting the economy for the second year.

“The assumption of 7 per cent growth in revenues is itself wrong. Last year, 10 months saw growth of -3 per cent, instead of 7 per cent, on the basis of which Rs 1.1. trillion borrowing was done. The government must compensate us for that, too,” said a key state finance minister


The Centre is expecting GST collection to fall to below the Rs 1-trillion mark in June, as indicated by the slowdown in e-Way bill generation in May.

States were promised compensation for five years after GST implementation in July 2017 for revenue shortfall, assuming 14 per cent annual growth, since states lost autonomy over indirect taxes. Compensation levied on a few items in the 28 per cent GST slab, such as automobiles, cigarettes, and aerated drinks.

Punjab Finance Minister Manpreet Singh Badal pointed out: “We need to calculate compensation in the manner prescribed in Section 7 of the GST compensation Act. Anything done otherwise is arbitrary. We cannot apply 7 per cent compounding on an already arbitrary rate of growth of the previous year to calculate the actual revenue.”

While the Budget 2021-22 has estimated GST revenues to grow 17 per cent over last year, the target appears challenging given how localised lockdowns across the country have impacted supplies.

Chhattisgarh Health Minister T S Singh Deo, who represents the state in the Council, said that most states were unhappy with the compensation projection this year. “How can 7 per cent become a precedent, every time there is a shortfall?”

Last year, the Centre had estimated a cess shortfall of Rs 2.35 trillion for 2020-21, of which Rs 1.1 trillion attributed to GST implementation was met by borrowing. Another Rs 70,000 crore came via cess collection, leaving a gap of around Rs 50,000 crore (attributed to Covid-19), which will be paid to the states in due course. Rs 1.1 trillion was borrowed by the Centre and passed on to the states as back to back loans.

The Centre had proposed two options to the states to address the compensation cess shortfall. First, borrowing Rs 1.1 trillion where the interest cost will be paid off through the extended cess period, or borrowing full Rs 2.35 trillion where cess will be used for paying only the principal, not the interest. Under the first option, the states were additionally allowed to borrow by 0.5 per cent of their respective economic size from markets.

🛑DRDO develops near-isothermal forging technology for aero-engines

Ajai Shukla | 28/05/2021 | 7 hours ago

The Defence Research and Development Organisation (DRDO) has announced a modest step towards achieving the ultimate aeronautical challenge, one that even resource-rich China is struggling to achieve: Developing a jet engine with the thrust to power a fighter in combat.

“The DRDO established the near-isothermal forging technology to produce all the five stages of high-pressure compressor (HPC) discs out of difficult-to-deform, titanium alloy, using its unique 2000 MT (metric tonne) isothermal forge press,” announced the Ministry of Defence (MoD) on Friday.

This technological breakthrough, which involves developing complex titanium and nickel-based alloys that can withstand temperatures of more than 1,000 degrees Celsius, was achieved by the DRDO’s premier metallurgical laboratory, the Hyderabad-based Defence Metallurgical Research Laboratory (DMRL).

“With this development, India has joined the league of limited global engine developers to have the manufacturing capabilities of such critical aero-engine components,” said the MoD.

A fighter jet engine functions by sucking in a large volume of air, compressing it rapidly in several stages, injecting aviation fuel into the air and then setting it alight to create a high-pressure, high-temperature gaseous mix. That is expelled backward through the exhaust, its reaction propelling the aircraft forward.

To achieve this, jet engines have seven modules, which from front to rear are: the input fan, low pressure and high pressure compressors, the combustion chamber, high pressure and low pressure turbines and the exhaust.

An aero-engine requires finely tuned design and manufacture. For over three decades the DRDO’s Gas Turbine and Research Establishment (GTRE) has spearheaded a multi-laboratory effort to design the so-called Kaveri engine, but with only limited success.

“The (Kaveri) project was sanctioned in March 1989 at an estimated cost of Rs 382.81 crore and Probable Date of Completion (PDC) of December 1996. The PDC was extended to December 2009 and cost was revised and enhanced to Rs 2,839 crore,” Defence Minister AK Antony told Parliament on December 10, 2012

Even so, the Kaveri’s has achieved a thrust of just about 65 Kilo Newtons (KN), well short of the 95 KN that its premier rivals, the Eurojet EJ200 and the General Electric GE-F414 develop. The DRDO is now exploring the possibility of using the Kaveri as a marine propulsion turbine for warships.

DMRL, which developed the technology to produce the five-stage HPC discs, is a laboratory without the facilities for bulk production. To manufacture the discs in the volumes required, DMRL has transferred technology to defence public sector undertaking (DPSU) MIDHANI through a licensing agreement for technology transfer (LAToT).

“Using the isothermal forge press facility available at DMRL, Hyderabad, DMRL & MIDHANI have jointly produced 200 HPC disc forgings pertaining to various compressor stages. These have been supplied to HAL’s Engine Division in Bengaluru for fitting into the Adour 804/811 and 871 engines that power the Indian Air Force’s (IAF’s) Jaguar/Hawk Aircrafts.

The Adour engine is overhauled by HAL, Bengaluru under a licensed manufacturing agreement with Rolls-Royce, the original equipment manufacturer (OEM). With the HPC Drum assembly required to be replaced at regular intervals, their annual requirements is large, warranting indigenisation for larger export earnings.

The HPC Discs produced by HAL have met all the requirements stipulated by airworthiness agencies. Accordingly, the technology has been type certified and a letter of technical approval (LoTA) accorded.

🛑DoT allocates spectrum for 5G trials to telecom service providers

Megha Manchanda | 28/05/2021 | 8 hours ago

The Union government has begun the process of conducting 5G trials in the country by allotting airwaves to telecom service providers.

It is learnt that the Department of Telecom (DoT) has allocated spectrum to telecom operators to start 5G trials at locations including Delhi, Mumbai, Kolkata, Bengaluru, and Hyderabad, according to industry sources. The operators have been allocated spectrum in the 700 MHz, 3.3-3.6 GHz, and 24.25-28.5 GHz bands in various locations.

It is learnt that the telcos have been allocated 100 units in the 3.5 GHz band, 800 units in the 26 MHz millimetre wave, and 10 units in the premium 700 MHz band.

Chinese telecom gear makers have been kept out of the 5G trial list. After completing the trials, preparation for 5G spectrum auctions will begin.

According to sources, the telecom service providers can use their existing 4G spectrum for trials in the 900 MHz, 1800 MHz, and 2300 MHz bands. The six-month period for conducting trials starts on the date of allotting the spectrum, i.e. May 27, 2021. “Usually after the trials get over, the data is submitted to the government and experts and soon after the vetting process ends, work on conducting the spectrum auctions begins,” Cellular Operators’ Associ­ation of India (COAI) Director General S P Kochhar said.

On May 4, the DoT had approved applications from Reliance Jio, Bharti Airtel, Vodafone Idea, and MTNL for conducting 5G trials without using technologies from Chinese firms.

The department had approved trials of 5G with Ericsson, Nokia, Samsung, and C-DoT. In addition, Reliance Jio Infocomm will be doing trials using its own indigenous technology. The government said 5G technology is expected to deliver 10 times better download speed than 4G and up to three times greater spectrum efficiency.

During the trials, the application of 5G in Indian settings will get tested. This includes tele-medicine, tele-education, and drone-based agriculture monitoring. Telecom operators will be able to test various 5G devices on their network. The duration of the trials, at present, is six months. This includes two months for procuring and setting up the equipment.

The permission letters specify that each telecom service provider will have to conduct trials in rural and semi-urban settings in addition to urban settings so that the benefit of 5G technology spreads through the country and is not confined only to urban areas.

Airwaves in the E&V band have also been allocated for conducting trials. Spectrum in the E&V band can be utilised for both high-capacity access spectrum for voice and data services as well as backhaul link spectrum.

These spectrum bands are mostly used as backhaul, which means they connect the core of a telecom network to the towers to transmit data.

The industry has been pitching for auctioning these waves because both these airwaves will go hand-in-hand in ensuring a seamless 5G experience.

Meanwhile, according to reports, the much-awaited 5G spectrum auctions may be pushed to the next financial year, due to the ongoing second wave of Covid-19.

The process was earlier expected by the end of the current fiscal year. The 5G auctions may see some sort of rationalisation in the base price of airwaves to be offered, including the premium 700 MHz band, which went unsold again in the recently concluded auctions, after a price reduction of nearly 40 per cent from the previous auctions.

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