AIR SURCHARGE OF RS 4.00 FOR AGARTALA, RS 6.00 FOR PORT BLAIR & SILCHAR AND RS 5.00 FOR GUWAHATI & IMPHAL KOLKATA l FRIDAY l FEBRUARY 17 l 2017 VOL XXVI NO 93 I 16 PAGES I Rs 5.00 READ TO LEAD TCS board to meet next week to consider share buyback Board meeting to be the last for N Chandrasekaran as CEO Page 6 FinancialExpress.com Closing Up/down ▲145.71 CNX Nifty ▲ 53.30 8,778.00 India slips in eco freedom index India ranked a dismal 143 in an annual index of economic freedom by a top US thinktank, behind its several South Asian neighbours including Pakistan, as progress on market-oriented reforms has been “uneven”, reports PTI. The Heritage Foundation, in its Index of Economic Freedom report, said despite India sustaining an average annual growth of about 7% over the past five years, growth is not deeply rooted in policies that preserve economic freedom. S&P on Tata Steel’s Europe operations RESTRUCTURING of Tata Steel’s European operations is crucial for the company’s consolidated financial health, S&P Global Ratings said on Thursday, reports PTI. This is given the company’s large debt, low margins and volatile profitability, especially in the UK. BULLION Last 7 Days Silver R/kg 42,740 29,900 200 43,200 29,700 Gold R/10 grams 9 75 10 11 13 14 15 16 Feb FE Specials Edit PAGE 8 GETTING A HANDLE ON WATER The focus of the government has to be on expanding microirrigation coverage AshokGulati& GayathriMohan Prasanta Sahu New Delhi, Feb 16 TWO DAYS OF FAME? Edappadi K Palaniswami is sworn in as Tamil Nadu chief minister by governor C Vidyasagar Rao at Raj Bhavan in Chennai on Thursday. Palaniswami faces a vote of confidence as early as Saturday PTI SBI’s Bhattacharya sees no problem in merging arms... 45th fe Bureau Mumbai, Feb 16 T HE mergerof fiveassociate banks with State Bank of India (SBI) will result in the capital adequacy ratio of the merged entity falling by about 54 basis points (bps) to 13.19% from 13.73%, chairman Arundhati BhattacharyasaidonThursday . “Wewillstillbeveryclose to 14% and, therefore, it is not a really major worry for us,” she said, explaining that 79 bps of capital from the fourth-quarter infusion of funds by the government and profit had not been takenintoaccount. The new entity’s gross non-performingasset(NPA) ratio will rise by 147 bps to rankinginthe worldinterms ofadvances Gapbetween numberoneand twowidens—HDFC Bank—intermsof advancesby R2,48,849crore Totalno. ofbranches Gross advances Deposits Balance sheet Badloans 23,889 D FY 17 (April – Dec) (R crore) Change (%) Ebitdar 2,133 11,795 3,412 59.96 Ebitda 1,174 2,160 2.85 Ebit loss -543.59 -161.51 As presented to the oversight committee 8.70% R32,18,498cr cember period they declined 9.2% y-o-y to R4.56. Domestic passenger revenues decreased by 3.7% y-oy while the same on the international network grew by 6.4% y-o-y . Other airlines too have seen yields falling in recent months. The average yields at IndiGo, for instance, fell 13% in the December 2016 quarter although volumes rose 38% y-o-y The manage. ment attributed the drop in yields to the competitive environment as also the impact of demonetisation. At SpiceJet, the fall in yields during the December 2016 quarter was a much lower 3% y-o-y while volumes rose 39% y-o-y . The country’s airline capacity in 2016 was 112 million askm (available seat km) compared with 92 million askm in 2015 across seven major airlines. ■ Continued on Page 2 Air India financials Passenger revenue R26,04,473cr R18,76,727cr 8.7%. Bhattacharya said the gross NPA ratio would not go up too much as the bank has been working to ensure ESPITE an increase in passenger revenues of just 2.85% year-on-year, Air India has reported a jump of 60% y-o-y rise in EBITDAR (earnings before interest, tax, depreciation, amortisation and rentals) to R3,412 crore for the nine months to December. In 2015-16, the airline reported a loss of R2,636 crore, primarily because of the high outgo on interest of close to R4,500 crore. While the price of aviation turbine fuel has risen by about 12% in the last six months to R52,540 per kilolitre, the national carrier has managed to rein in other costs such as expenses on maintenance. Air India’s domestic yields have been under pressure — in the April to De- FY16 (April – Dec) 2.71lakh Shareratios 1.SBofMysore(listed)— 10sharestofetch22SBIshares 2.SBBJ(listed)—10sharestofetch28SBIshares 3.SBofTravancore(listed)— 10sharestofetch22SBIshares 4.SBofHyderabad (fullyownedunlistedsubsidiary) 5.SBofPatiala(fullyownedunlistedsubsidiary) Malyaban Ghosh New Delhi, Feb 16 ...but arms fear loss of clients and stature Employees AI revenue taxies, earnings take off Exclusive PAGE 16 The battle for consumers’ attention FinancialExpress/Apps Centre’sallowancebill* (R crore) A 11,468 WINNER TAKES ALL: MONETISING EYEBALLS facebook.com/TheFinancialExpress ■ HRA may be kept at 30% of basic pay in metros Airtel logs highest 4G data speed speed in January INDIA’S largest telecom operator Bharti Airtel has clocked the highest average 4G data speed among telecom operators in the country during January at 11.862 megabits per second (Mbps), capturing the top spot four times since September 2016, reports fe Bureau in New Delhi. Bharti had lost the top spot only once, in December, to Reliance Jio Infocomm. twitter.com/FinancialXpress Central staff to get new payout soon In the news S&P BSE Sensex 28,301.27 Companies, Page 6 International, Page 16 P U B L I S H E D F R O M : A H M E DA B A D, B E N G A LU R U, C H A N D I G A R H , C H E N N A I , H Y D E R A B A D, KO C H I , KO L K ATA , LU C K N OW, M U M B A I , N E W D E L H I , P U N E INDICES RELIANCE RETAIL SHUTS MORE THAN 60 STORES EVAN SPIEGEL-LED SNAP VALUES ITSELF AT UP TO $22 BN 83.99 -70.29 SBI (Intra-day on BSE) Feb 16 280 276.50 277 270.40 274 271 268 Prev close: 268.65 Open Close that provisioning levels of the associate banks were raisedtoSBI’sstandards. ■ Continued on Page 2 C ONCERNS that the five associate banks of State Bank of India (SBI) will lose loyal customers who swear by their regional identities once merged with the nation’s largest lender and whether their employees be treated as second-rate staff by SBI’s current workforce just because they have been working with subsidiaries much smaller in size and standing are some of the concerns the government must see addressed for a seamless integration after the Cabinet approval for the merger, according to officials with at least two subsidiaries, reports Banikinkar Pattanayak in New Delhi. year after implementationof thenewpayand pension-related recommendations of the Seventh Central Pay Commission (CPC), the government is likely to approve the revised allowances proposed by it for central government staff after the ongoing state elections are over, by March 15. The reworked allowances are likely to be effective from April 1 and at least in the case of the employees in metro cities, the house rent allowances (HRA) could be a little more generous than the CPC’s award, sourcestoldFE. Taking note of employees’ representations, a finance secretary-led panel is looking at HRA of 30% of basic pay for those in cities with a population of over 5 million, against 24% recommended by CPC, the sources said. In the Sixth CPC award period (2006-2015), HRA was 30% for these cities. AdraftCabinetnoteforimplementation of the revised allowances would be circulated soon, the sources said. HRA accounts for about 60% of the totalallowancesbill. The financial implication of revised allowances would be broadly in line with the CPC’s estimate of around R29,300 crore (including for the railways) in the first year. The secretaries’ panel is reviewing the commission’s recommendations pertaining to allowances including rationalisation of some 196 existing benefits. The pay panel has suggested the aboli- Note ban took a heavy toll on collections T OLL collections onIndia’smajorroads fellbyasharp20%year-on-yearinthe threemonthstoDecember2016,hitbythe acutescarcityofcash,reports Shubhra Tandon in Mumbai.Collectionsforaclutchof19 roadscameinatR644crore,downfrom R804croreinOctober-December2015,hurtingtheprofitsofseveralcompanies. Managementssaidcollectionswerenot possiblefornearly25daysduetotheshortageofcash.Haditnotbeenforthisdisruption,collectionswouldhavebeenbettergivenwholesalepriceinflation—towhichtoll ratesarebenchmarked—wasat5.25%on January31,2017,thehighestin30months. ■ Continued on Page 2 Toll collections on major Indian roads (R crore) Q3FY16 Q3FY17 Bijapur Hungund 27.9 17.8 Surat-Dahisar 9.5 14.2 22 6 4.5 804.1 28.71 Q3FY17 643.7 33.1 Indore-Edalabad Pune-Solapur Q3FY16 36.2 156 111.4 HyderabadYadgiri Total % change 25.0 30 26.67 19.95 Toll collections of 19 major road projects 82,560 FY16 64,677 Pay slip FY17 (RE) 69,222 FY18 (BE) *Excluding armed forces; allowances in FY17 lower than FY16 as DA was merged with basic pay R1.02 lakh crore R29,300 crore Full-year impact of CPC on Centre's pay, allowances and pension bill; however, only pay and pension hikes were implemented in FY17 tion of 52 benefits and merger of 36withexistingonestoend their separate identities. With just R4,500 crore additionalallocationintheBudget (factoring in business-as-usual growth) for allowances and assuming R7,600 crore expenditure would be borne by the railways, the additional allocation required from the general Budget could be around R17,000crore,sourcessaid. This, they added, could be managed without much stress on other expenditure heads, provided the budgeted Estimated outgo on allowances (including R7,600 cr for the railways), bulk of which is HRA revenue receipts hold good. Given that currency notes extinguished (reported estimates vary from R30,000 crore toR1.5lakhcrore)aswellasextra taxes to be paid by people under the two income disclosure schemes (IDS and PMGKY),thegovernmenthas enough cushion next year, the sourcessaid,evenasmanyanalysts reckon that the Budget assumptions were based on optimistic estimates of nominal GDP growth for FY17 and henceFY18. ■ Continued on Page 2 Payments to govt to be MDR-free fe Bureau Mumbai, Feb 16 T RBIrelief HE Reserve Bank of India (RBI) on Thursday said it will reimburse banks the merchant discount rate (MDR) charges in debit card transactions for tax and non-tax dues to the government with effect from January 1. A senior banker at a large public sector bank said that at present the number of debit card transactions for payment of government dues is minuscule as very few have point-of-sale (PoS) terminals. “The government has decided to absorb the Merchant Discount Rate (MDR) charges in respect of debit card transactions while making payments to GoI,” the RBI notification said. It ■ RBI says will reimburse banks MDR charges on debit card transactions for tax, non-tax dues to govt from January 1 ■ The claims should certify that MDR charges for transaction amounts up to R1 lakh have not been collected from the payer ■ The first such claim can be made by April 30, 2017 for the quarter ending March 31, 2017 also advised agency banks to forward their claims for reimbursement along with auditor’s certificate on a quarterly basis to RBI’s central account section in Nagpur. ■ Continued on Page 2 QUICKPICKS DRL gets unfavourable ruling in US court ‘El Nino could return in second half of 2017’ MFs can now invest in REITs, InvITs: Sebi Saras aircraft to be revived: Harsh Vardhan DRUG firm Dr Reddy’s Laboratories (DRL) has received an unfavorable ruling in a US court over Switzerland’s Helsinn Healthcare for a patent infringement case over anti-nausea injection Aloxi, reports fe Bureau in Hyderabad. The injection is used to help prevent nausea and vomiting due to chemotherapy. However, after the verdict the company now planning to go in appeal. ■ P6 EL Nino weather conditions could return to heat up the planet later this year, although neutral conditions are slightly more likely, the UN’s World Meteorological Organisation (WMO) said in a statement on Thursday, reports Reuters. Climate models surveyed by the WMO suggested a 50% chance of neutral conditions continuing in the second half of 2017, with a 35-40% chance of El Nino developing, and only a slight chance of La Nina. TO make real estate and infrastructure investment trusts R more attractive for investors, regulator Sebi has notified norms allowing mutual funds (MFs) to invest their money in such entities, reports PTI. The move comes after Sebi, at its board meeting last month, permitted mutual funds to invest in real estate investment trusts (REITs) and infrastructure investment trusts (InvITs). ■ P11 SARAS, a 14-seater passenger aircraft of the National Aerospace Laboratories (NAL), is being revived and the flight test will take place in the next one and a half months, Union minister Harsh Vardhan said on Thursday, reports PTI. While a 19-seater will be developed in the days to come, plans are also on to give a thrust to a 70-seater plane, he said, adding permission had been given for carrying out flight testing and evaluation of the Saras PT1N.
The Financial Express (FE) is a business paper that’s closest to the people who are in the business of business. From business policies to market trends to new developments, The Financial Express comes packed with incisive news on every relevant issue.