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PwC India will be a billion dollar plus firm by 2027: Sanjeev Krishan

PwC India will generate more than a billion dollars a year in revenues by 2027, buoyed by investments that the firm will make over the next five years, Sanjeev Krishan, chairman of the firm, told ET.

PwC will invest more than Rs 1,600 crore and hire over 10,000 professionals in its India practice over the next five years to implement a new growth strategy.

“There are so many growth themes going on simultaneously in India that we have decided to double down on our India practice investments,” said Krishan.

The ground-up strategy was formulated after 4-5 months of intense discussions in which feedback from clients and experts was also sought.

The firm felt that its strategy needed a refresh to help deal with the emerging business landscape and cater to the fast changing client needs and priorities.

“We are calling the strategy ‘The New Equation’ as it addresses what the firm’s clients expect from the firm—build trust and deliver sustained outcomes,” said Krishan.

Trust businesses in the firm include assurance, some parts of tax and a bit of regulatory oversight business, while transactions, consulting and technology are the outcome based service lines.

He said by the end of 2027, PwC aims to have over 25,000 people in its India practice serving clients. This workforce is exclusive of the headcount at backend centres.

Krishan added that while the PwC’s brand was built on trust businesses, the outcome businesses would outgrow it in the next few years in revenue terms.

PwC India’s partnership will fund the entire investment by reinvesting some of its profits each year.

“We are a fairly young partnership and the young partners are of the view that we will get challenged in the marketplace soon if we don’t invest aggressively in our businesses,” said Krishan.

The firm’s new go-to-market strategy will rest on four platforms—ESG, deals, risk and regulatory and transformation.

PwC is also setting up a PwC Research Institute to enable the platforms and help the service line leaders with fresh ideas and inject new innovations while delivering client solutions.

“The idea is to have a composite view of a customer and offer him a cutting edge solution that has various services embedded in it,” said Krishan.

To drive the strategy, the firm is also making some changes in roles and responsibilities of its service line leadership.

The leaders of its go-long sectors— consulting, deals, digital, cloud, cyber, analytics and emerging technologies—will be a part of its ‘markets’ team and won’t have any service line responsibilities. They will specifically focus on developing cross-competency solutions for the clients.

Also, the accountability and investments in the platforms will be centrally driven so that it doesn’t affect P&Ls of inpidual service lines.

Given that transitioning to a new strategy takes time, the firm is looking at one plus five year timeframe for full rollout and implementation.

“We will put all the enablers in the next 6-7 months, and by FY 2022, we should be ready for a full rollout. I am hoping to get all preparations done by Dec 2021 and then test out the new mechanisms for the next three months. By April 2022, we should be on,” said Krishan.

Experts say that the biggest problem with Big Four strategy exercises is that after a while they all end up mirroring each other due to competitive pressures in the marketplace.

So how will Krishan make sure that PwC stays the course?

“We are publicly committing to it, something that no competitor has done. We also believe we have an edge in technology over others and even the market acknowledges that. We will use that strength in technology in creating solutions that are best of breed—and help our clients win,” said Krishan.

Gold prices unchanged, set for second straight weekly fall

Gold prices were flat in early Asian trade on Friday, as a firm


offset ease in early-tapering bets, although the precious metal was headed for a second consecutive weekly decline.

Spot gold was unchanged at $1,752.78 per ounce by 0101 GMT. It is down 0.5% so far for the week.

US gold futures were up 0.2% to $1,754.40.

The dollar held firm near a more than four-month high, hit earlier this week, underpinned by data showing US producer prices posted their largest annual increase in more than a decade.

Meanwhile, Americans filing claims for unemployment benefits fell again last week as the economic recovery continues to be bumpy, a separate Labor Department report showed on Thursday.

Wednesday’s US consumer price report hinted that inflation may have peaked, reassuring investors that the Fed will not feel obligated to hasten plans to rein in emergency-level support of the economy, but they remained worried that rising prices could continue to weigh on everything from bond prices to corporate margins.

Gold is seen as a hedge against inflation, but a Fed rate hike will increase the opportunity cost of holding non-yielding bullion while boosting the dollar.

Silver rose 0.2% to $23.19 per ounce.


fell 0.2% to $1,015.90 and palladium eased 0.3% to $2,616.80.

Gold steadies near one-month high buoyed by softer dollar, yields

Gold prices hovered near a one-month peak on Thursday as the


and longer-dated Treasury yields retreated from recent highs following hotter-than-expected U.S. inflation data.


* Spot gold was little changed at $1,793.72 per ounce by 0100 GMT. Prices hit their highest level since Sept. 16 at $1,795.81 on Wednesday.

* U.S. gold futures slipped 0.1% to $1,792.20.

* Making the precious metal cheaper for holders of other currencies, the dollar index fell 0.5% overnight, retreating from a more than one-year high.

* Benchmark U.S. 10-year Treasury yields pulled back from a more than four-month high, reducing the opportunity cost of holding non-interest bearing gold.

* U.S. consumer prices increased solidly in September as Americans paid more for food, rent and a range of other goods, putting pressure on the Biden administration to urgently resolve strained supply chains, which are hampering economic growth.

* Minutes from the Federal Reserve’s September meeting showed the central banks could start reducing its crisis-era support for the U.S. economy by mid-November, but policymakers remained split over how big of a threat high inflation represents and how soon they may need to raise rates in response.

* A group of banks that partnered with the London Metal Exchange to launch gold and silver futures in 2017 is preparing to abandon the project after hoped-for volumes did not materialise, three sources with direct knowledge of the matter said.

* Holdings of SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, fell 0.2% to 982.72 tonnes on Wednesday from 985.05 tonnes on Tuesday.

* Spot silver rose 0.1% to $23.09 per ounce, having hit a near one-month high in the previous session.

* Platinum was flat at $1,019.68 and palladium eased 0.1% to $2,103.81, having jumped as much as 5.2% on Wednesday. DATA/EVENTS (GMT) 0130 China PPI, CPI YY Sept 1230 US Initial Jobless Clm Weekly

Asian shares steady, dollar weak as traders await earnings

HONG KONG: Asian shares started steady on Monday ahead of a week packed with major quarterly earnings announcements, while the


hovered near October lows after three weeks of risk-friendly sentiment hurt safe-haven currencies.

HSBC and Facebook will both publish quarterly results on Monday, in Asian trading and late U.S. hours respectively.

Later in the week will be the turn of other benchmark heavyweights including tech giants Microsoft , Apple and Alphabet, and European and Asian financial behemoths from Deutsche Bank and Lloyds to China Construction Bank and Nomura.

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“This week earnings take centre stage,” said Chris Weston, head of research at brokerage Pepperstone in Melbourne, in a morning note.

The results will be closely watched after a strong start to the U.S. earnings season for many companies, especially financials, helped both the Dow Jones Industrial Average and the S&P 500 touch record highs last week, though the Nasdaq fell on Friday after Snap and Intel Corp’s quarterly results disappointed.

MSCI’s broadest index of Asia-Pacific shares outside Japan has also posted gains in the past three weeks, which if it can hold onto them this week, would make October the benchmark’s best month of 2022.

On Monday morning, the regional benchmark was flat with a 0.5% gain in Australia balanced by a 0.6% fall in Korea.

Japan’s Nikkei lost 1% and U.S. S&P 500 futures shed 0.18%.

Asian shares have largely lagged their U.S. and European counterparts in recent months mainly due to regulatory ructions and fears of slowing growth in China.

In the latest announcement to worry some investors, the top decision-making body of the Chinese parliament said on Saturday it will roll out a pilot real estate tax in some regions.

Analysts at Citi summed up the announcement as an “earlier than expected trial but later than expected national rollout; no devastating impact.”

However, the risk friendlier mood that supported equities has weighed on safe-haven currencies, as have rising energy prices which supported currencies like the Aussie and Canadian dollars.

The dollar index was last at 93.667, hovering near its month low of 93.455 hit last week, and well off mid-October’s 12-month high.

However, analysts at CBA said it was more likely the dollar would rise than fall from here.

“Dollar risks remain skewed to the upside,” they wrote in a note citing rising expectations of inflation from markets, consumers and policy makers, meaning markets are pricing a more aggressive programme of interest rate hikes, which would support the dollar.

Markets are still trying to position themselves for a widely expected tapering of the U.S. stimulus programme this year, and the possibility of rate hikes late in 2022

Federal Reserve Chair Jerome Powell on Friday said the U.S. central bank should start the process of reducing its support of the economy by cutting back on its asset purchases, but should not yet touch interest rates.

As tapering looms, U.S. benchmark yields have been rising and yields on 10-year Treasury notes hit a five-month high of 1.7064% last week. In early Asia they were last 1.6465%.

Oil prices stayed elevated but just off recent multi-year peaks. Brent crude >LCOc1> rose 0.13% to $85.65 a barrel, while U.S. crude rose 0.38% to $84.08 a barrel.

Spot gold rose 0.06% to $1793.4 an ounce after posting gains for the past two weeks on rising inflation concerns.

Bitcoin another asset oft-described as an inflation hedge was last at $61,080 after a turbulent week when it hit a new high of $67,016.

Gold nudges higher as weaker dollar lends support

Gold prices inched up on Thursday, extending gains into a third session as a softer


made the metal cheaper for buyers holding other currencies.


* Spot gold rose 0.2% to $1,784.96 per ounce by 0146 GMT. U.S. gold futures were little changed at $1,784.60.

* Bullion prices have traded between $1,759 and $1,788 this week. A weaker dollar on Thursday kept the metal close to the higher end of this range.

* Two U.S. Federal Reserve officials said on Wednesday while the central bank should begin winding down its stimulus measures, it was too soon for interest rate hikes.

* The Bank of England will be the first major central bank to raise interest rates in the post-pandemic cycle but economists polled by Reuters think the first hike will not come until early next year, later than markets are pricing in.

* Gold is often considered an inflation hedge, though reduced stimulus and interest rate hikes push government bond yields up, translating into a higher opportunity cost for holding bullion which pays no interest.

* Russia’s gold reserves stood at 73.9 million troy ounces as of the start of October, the central bank said on Wednesday.

* Spot silver rose 0.3% to $24.33 an ounce, while platinum gained 0.1% to $1,051.12 and palladium fell 0.3% to $2,066.53.

* Russia’s Nornickel, the world’s largest palladium producer, said its palladium production in the third quarter increased 9% to 598,000 troy ounces, while platinum output increased 8% to 145,000 troy ounces.

DATA/EVENTS (GMT) 1230 US Initial Jobless Claims Weekly 1230 US Philly Fed Business Indx Oct 1400 EU Consumer Confidence Flash Oct 1400 US Existing Home Sales Sept

Why we need to pray for $5 crude price dip

(This story originally appeared in on Sep 12, 2018)

Crude oil prices need to drop by $5 a barrel for petrol and diesel prices to revert to the August 1 level as the rupee exchange rate is expected to hover around the current level of 72 against the greenback, oil company executives and forex dealers said.

The rupee’s fall against the US


since August 1 accounts for about Rs 2.50 of the rise in pump prices of petrol and diesel, oil company executives said. At the same time, forex dealers said they did not expect the rupee to bounce back in a major way.

Since the government has ruled out a reduction in excise duty, the only way pump prices can revert to the August 1 level is for crude to fall or states to cut VAT by Rs 2.50 or so to negate the impact of a weaker rupee.

“Weakening of the rupee has built in about Rs 2.50 into the (fuel) prices. Crude prices have been range-bound, swinging up and down by $1-3 since August 1. Going by the forex market outlook, the only way fuel prices can return to their August 1 level is for crude prices to fall by $5 a barrel or so at current exchange rate,” an executive handling global trading for an oil company told TOI requesting anonymity.

The build-up due to the weakening of the rupee roughly accounts for 56% and 50% of the increase in petrol and diesel prices, respectively, since August 1. In dollar terms, while the Indian basket has become costlier by 3%, the price of imports has appreciated three times in rupee terms in the last 40 days or so.

This has been reflected in pump prices, which had been moving in a narrow band but has been rising continuously since August 16, testing new peaks in step with the rupee’s fall. Petrol and diesel prices hit fresh highs on Tuesday as rupee plunged to a new low before closing at 72.69 to a dollar, making imports costlier. In Delhi, petrol price climbed to a record high of Rs 80.87 a litre, while diesel scaled to a fresh high of Rs 72.97 a litre.

On Monday, a top government official had virtually ruled out any excise duty cut, saying the exchequer would not be able to stomach the revenue loss from such a move at this juncture. He said reducing excise duty by Re 1 would bring down the Centre’s revenue by approximately Rs 14,000 crore.

policy | Banks move to alert ED on exporters whose payments have been delayed

MUMBAI: In the past few days, banks have shared with the Enforcement Directorate the names of thousands of exporters who have not received payments against shipment of goods. However, bankers fear the harsh move, though aimed at bringing back dollars parked abroad and curbing money laundering via under-invoicing of exports, may hit business sentiment.

RBI had set September 30 as the deadline for banks to reconcile data on exports above $25,000 with corresponding payment records by obtaining documents from companies. Clients who were unable to provide documents or failed to explain why payments for goods sold abroad were pending for two years or more could be “caution listed” if RBI does not soften its stand, senior bank officials told ET.

“We understand that the timing may not be appropriate given the fall in rupee and market volatility. But we have to report these names in the absence of a fresh directive from the regulator. We have had several meetings with RBI officials and they were very serious,” said a banker.


“We wrote many letters to these exporters, warning them about the consequences. Some are non-co-operative, some cannot be contacted, and some have genuine problems. What are we supposed to do? If we don’t act, we could be penalised by RBI,” said another banker.

The banker quoted earlier said RBI has shared with large banks data on over 91,000 exporters who have not brought back export receipts. It is unclear how banks would deal with large companies with whom they share business relationships.

A company which figures in the caution list would be unable to trade in the absence of a letter of credit (LC) arrangement, which would push up costs and could even sour its relationship with overseas buyers.

“A large number of exporters trade on open account and do not insist on LC (or guarantees) from overseas clients whom they have known for years. These exporters now fear that demanding LCs could put off their clients and even cause loss of business. It’s possible that RBI may give exporters more time given the pressure on rupee and large current account deficit, but no such directive came till Thursday evening,” said another banker.

RBI did not disclose the total unreconciled export amount, and has not commented on its decision to caution-list exporters. ET’s email to the RBI spokesperson went unanswered till the time of going to press. Thanks to digitisation of trade data (such as shipping bill number, cargo description, value, port of loading, destination port, and bank handling the transaction) which customs authorities share with RBI, any bank is able to access information on the trades in which it is involved.

A bank receiving payment reconciles the trade with the foreign currency inflow by matching the shipping bill number. In some cases reconciliation is difficult due to lost records and a lack of discipline among exporters in filing documents. “Often an exporter named bank A in the shipping document but eventually received money from bank B which might have offered a better exchange rate.

“There are instances where the exporter may have received an advance from the overseas buyer and this was never recorded with the bank which handled the final trade payment. RBI is fine as long as exporters bring in funds within nine months. But these are cases where payment is pending for years and we don’t know whether some of these can ever be reconciled,” said a trade consultant.

debt markets | SBI’s bond plan eyed by India firms mulling offshore return

By Anurag Joshi

A planned bond sale by

State Bank of India

may help the nation’s borrowers decide whether the timing is right to return to the offshore market, which they’ve been shut out of amid an emerging-market rout.

India’s largest lender, which is seen by international investors as a proxy for the sovereign, started a roadshow on July 9 for a dollar-denominated green bond. No Indian company sold offshore notes last quarter, the first time that happened since 2009, as a selloff in emerging-market assets following rate increases from the U.S. Federal Reserve damped investor appetite.

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The going won’t be easy for Indian issuers. Yield premiums have jumped for their debt, and SBI itself has seen the spread on its 3.25 percent


bonds due 2022 climb 36 basis points so far this year, according to Bloomberg prices. Market sentiment toward Indian firms is weak even though the nation’s economy is doing well: it’s the fastest growing among the world’s major countries and Moody’s Investors Service upgraded the sovereign rating in November.

“The dollar bond market is quite vitiated, with credits looking to be sold off,” said Ajay Marwaha, director for investments at Sun Global Investments in London. “Global sentiment isn’t conducive for risks at the moment.”

The dearth of foreign-currency bond sales this year comes after such issuance jumped to a three-year high of $15.6 billion in 2017, according to data compiled by Bloomberg.

Some analysts question whether SBI’s bond sale will revive offshore issuance even if its deal is successful.

“SBI is considered a semi-sovereign, which may help this issue to sail through,” according to A.S. Thiyaga Rajan, a senior managing director at Aquarius Investment Advisors Pte in Singapore. SBI’s attempts are supported by lack of other issuers tapping the offshore markets, and that may also boost the chance of its success, he said.

Separately, SBI signed a $750 million three-year term loan with nine lenders, with no banks joining in the general syndication of the facility, according to people familiar with the matter.

debt markets | Explainer: What rising bond yields mean for markets

NEW YORK: Yields on US Treasuries have surged to their highest level in more than a year from record lows hit in 2020, as Federal Reserve commitments to hold rates near zero for years to come encouraged investors to bet economic growth and inflation will heat up.

Though yields remain low by historical standards, a rapid rise can ripple through to affect assets ranging from equities and commodities to housing prices.

Here’s what’s happening:

  1. Why are yields rising?
    In recent months, breakthroughs in developing COVID-19 vaccines and fiscal stimulus have raised expectations the economy will bounce back. Improving risk appetite has encouraged investors to buy riskier assets such as stocks rather than bonds. Expectations of inflation have also jumped, driving bond prices lower and yields higher. Weaker demand for debt was evident in last month’s disappointing auction of seven-year US Treasury notes that helped push up yields.
  2. Where do investors think yields will go next?
    Investors generally believe yields will climb more in 2021, though some think the Fed could move to cap a rise in yields that it views as extreme enough to threaten the economic recovery. Some analysts think this could happen if 10-year Treasury yields rise much above 2% without substantial economic improvement.
  3. What does the rise in yields mean for other assets?
    Higher Treasury yields have made the US


    more attractive to income-seeking investors, boosting it from three-year lows reached in January.On the other hand, the spot price for non-yielding gold is down this year after outperforming nearly all other assets last year.For stocks, rising yields are a mixed bag, slowing a rally in technology and other growth stocks as investors worry about erosion of long-cash flows for these companies. But higher yields have also lifted financial stocks and accelerated a rotation into other beaten-down sectors.

  4. How could higher Treasury yields affect inpiduals?
    Effects on inpidual pocketbooks can be seen most directly in the housing market. The interest rates charged on fixed-rate mortgages tend to shadow moves in Treasury yields and have already begun moving higher.Savers could start to see rates increase in high yield savings accounts again.

debt markets | Saudi Aramco plans debt market comeback with multi-tranche bond deal

DUBAI:Saudi Aramco said on Monday it had hired banks for a multi-tranche U.S. dollar-denominated bond issuance, as the world’s largest oil company seeks cash amid lower oil prices.

Gulf issuers have show no sign of slowing this year’s blitz of issues on international debt markets as they work to plug finances hit by weaker oil prices and the coronavirus crisis.

Issuances from the region so far this year have already shot through 2019’s record, again surpassing $100 billion.

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Goldman Sachs, Citi, HSBC, JPMorgan , Morgan Stanley and NCB Capital were hired to arrange investor calls starting on Monday before the planned transaction, Aramco said in a bourse filing.

Other banks involved in the deal include BNP Paribas , BOC International, BofA Securities , Credit Agricole, First Abu Dhabi Bank , Mizuho, MUFG, SMBC Nikko and Societe Generale, a document issued by one of the banks on the deal showed.

The oil giant, which made its debut in the international debt markets last year by raising $12 billion after receiving more than $100 billion in orders, did not detail the size of the latest proposed issuance.

It planned a benchmark multi-tranche offering consisting of tranches for three, five, 10, 30 and/or 50 years, subject to market conditions, the document said. Benchmark bonds are generally at least $500 million per tranche.

“The backdrop is supportive,” said a debt banker on the deal, citing a $1 billion Islamic bond issuance last week from Dubai Islamic Bank, which achieved record low yields.

Aramco needs cash to pay $37.5 billion in pidends for the second half of 2020 and to fund its $69.1 billion acquisition of 70% of Saudi Basic Industries (SABIC), paid by installments until 2028. It raised a $10 billion loan this year.

“In a world searching for yield there should be no shortage of demand. But persistent low oil prices and the threat that poses to long-term cash generation should be reflected in pricing,” said Hasnain Malik, head of equity strategy at Tellimer.

Ratings agency Fitch revised its outlook last week on Aramco to negative from stable, a day after similar action on the sovereign of Saudi Arabia, which holds a controlling stake in the oil giant. The government’s finances are heavily reliant on the hydrocarbon industry.

“This reflects the influence the state exerts on the company through strategic direction, taxation and pidends, as well as regulating the level of production in line with OPEC commitments,” Fitch said.

Aramco’s outstanding U.S. dollar-denominated bonds due in 2029 were trading at 2.05% on Monday, a slightly higher yield than Saudi government paper with a similar maturity, Refinitiv data showed.

A bond prospectus, seen by Reuters, detailed risks for investors, including the COVID-19 virus and the Saudi government’s decisions on oil production and spare capacity.

“Saudi Aramco’s costs of complying with such decisions, may not maximise returns for Saudi Aramco,” the prospectus said, citing possible restrictions on its oil output.

Aramco reported a 44.6% drop in third-quarter net profit this month as the pandemic continued to choke demand and weigh on crude prices.