OPINION, P6 COMPANIES, P5 $6.95/mmBtu FROM $8.25 Unless rural demand revived, GDP will take a big hit in FY18 Gadkari has added to the considerable uncertainty in the auto sector WHAT’S COOKING! India renegotiates LNG deal with Australia; to save `10,000 crore EDITORIAL INTERNATIONAL, P4 New Apple phone to be called ‘iPhone X’, code leaks show NEW DELHI, MONDAY, SEPTEMBER 11, 2017 FOLLOW US ON TWITTER & FACEBOOK. APP AVAILABLE ON APP STORE & PLAYSTORE WWW.FINANCIALEXPRESS.COM READ TO LEAD VOLUME XLIII NO. 165, 18 PAGES, `5.00 (PATNA `6.00, RAIPUR `7.00) P U B L I S H E D F R O M : A H M E D A B A D , B E N G A L U 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 , K O C H I , K O L K ATA , L U C K N O W, M U M B A I , N E W D E L H I , P U N E RBI POLL Rural woes see consumer confidence at 3-year low Bigger fall in rural... 12 105 9 6 70 ...as agri GVA slows sharply Consumer sentiment At current prices; % chg, y-o-y 25.0 102 20.0 99 15.0 96 10.0 93 3 35 0 PFCE (RHS) GVA (at constant prices) Sept 2013 June 2017 0 90 5.0 Feb 9 Mar 11 Apr 10 May 10 2017 India Source: RBI, CSO INDIA-BELARUS 11.4 Rural Jun 9 Jul 9 Women at work 0.3 0.0 Urban Q1FY13 Q1FY18 Source: BSE-CMIE, HSBC Source: CSO Defence minister Nirmala Sitharaman flagging off INSV Tarini in presence of Goa chief minister Manohar Parrikar, in Goa on Sunday. In a first for the country, an all-women team of the Indian Navy will embark on the expedition to circumnavigate the globe PTI India’s consumption story in trouble with the fall in farm prices hurting the rural sentiment and urban consumers already dispirited SHOBHANA SUBRAMANIAN New Delhi, September 10 CONSUMER CONFIDENCE HAS fallen to levels seen three years ago,just before the Modi government came to power, according to the latest Reserve Bank of India (RBI) survey.The Current Situation Index fell to 96.8 in June from 100 in May, slipping into the pessimistic zone with sentiment showing deterioration across all parameters. While the sentiment in urban India has been subdued for some time now,the mood in the economy is doing relatively better.However,sentiment is starting to weaken as real indebtedness has risen leading to a clamour for loan waivers.“Some of this distress is likely to have been triggered by the large fall in food prices and the consequent shifting of the terms-oftrade against rural India,” says Pranjul Bhandari, chief economist at HSBC. Even without the rural distress, the rise in consumption had been tapering off. As interest rates on savings accounts plummet, one can look at NPS Tier II and liquid funds of mutual funds to park idle cash and earn higher returns with easy liquidity ■ Personal Finance, P9 QuickPicks Sebi mulls lifting decade-old ban on tur and urad futures THE SEBI is considering lifting a decade-old ban on the futures trading of two pulse varieties, tur and urad, sources told FE, reports Banikinkar Pattanayak in New Delhi. With fears of inflationary pressure in pulses having abated due to a bumper harvest in 2016-17 and the government inventory brimming with around two million tonnes of pulses stocks, the regulator is weighing the possibility of lifting the ban, said the sources. PAGE 2 AI defers induction of A320 neo plane on CFM engine issues AIR INDIA has deferred the induction of at least one A320 neo aircraft due to issues with the CFMmanufactured engine, sources said, reports PTI. The development also comes at a time when no-frills carriers IndiGo and GoAir have grounded at least 11 A320 neos due to issues in their Pratt and Whitney engines. Airbus 320 neo — the new engine option — is more fuel-efficient, and Indian carriers have placed orders for over 500 such planes. PAGE 3 P-Notes investment hits 5-year low to `1.35 lakh cr in July-end INVESTMENTS IN the domestic capital market through participatory notes (P-Notes) slumped to a five-year low of `1.35 lakh crore in July-end amid stringent norms put in place by Sebi, reports PTI. This was the lowest since July 2012 when the cumulative value of such investments stood at `1,29,586 crore. The total value of P-Notes investments in Indian markets —equity, debt and derivatives — stood at `1,65,241 crore at the end of June. ROUHAN SHARMA Mumbai, September 10 TRAFFIC ON MUMBAI'S BANDRA-WORLI sea link (BWSL) is picking up gradually but the business reported a 26% dip in profits in 2016-17. Although the average number of vehicles that use the sea link every day has inched up to 37,336 from 34,202 vehicles in 2015-16, this is just about a third of the original estimate of around one lakh.An upward revision in the toll rate by15-18% next year, combined with an increase in traffic of 6-7% in the next couple of years, should boost revenues. While profits in 2015-16 stood at `15.82 crore — post payments to MSRDC of `76 crore — in FY17, they dipped to `11.74 crore,as operationswere disrupted by demonetisation, Jayant Mhaiskar,VC & MD, MEP Infrastructure,told FE. FY15 FY16 FY17 FY15 FY16 FY17 FY15 11.74 (` cr) 15.82 FY profit/ loss*(` cr) 6.21 (daily avg) Toll collection ` 111.96 Traffic Construction picks up pace but behind targets FY16 FY17 *FY profit/loss data available from FY15 only, post listing Losses up at `75k cr despite big jump in budget support A STUDY IN CONTRAST (` crore) Continued on Page 2 Construction & awards (Apr-Aug) 2016 (in km) 2017 19.85 Mhaiskar added the compensation from the government is expected soon. MEP Infra is the toll collecting entity for the sea link. Maharashtra State Road Development Corporation (MSRDC) which spent `1,702 crore building the sea link has so far recovered `511.16 crore as its share of the toll. STATE PSUs IN FY16 SURYA SARATHI RAY New Delhi, September 10 2,604 How to calculate indexation benefit on debt funds On average, 37,336 vehicles use the sea link every day, up from 34,202 in 2015-16, a third of the original estimate 113.75 The production methods deployed at the Siemens digital factory in Thane can set a benchmark for small and medium enterprises and give a boost to the country’s Make-in-India goals ■ EFE, P8 Slow traffic takes toll on profits 89.72 Make in India: Learning from the Siemens digital factory ● HIGHWAYS THE PACE OF building highways accelerated to 20.80 km a day in the April-August period of 2017-18 from 7.36 km a day in the same period last fiscal, but fell short of 22.3 km per day achieved in 2016-17. The marginal slowing of construction is partly attributable to the onset of monsoon, officials said, adding a definite acceleration would be visible from October. Of course, the ambitious target of constructing highways at a pace of 41 km/day continues to be ungettable. With a solid portfolio of awarded projects, the NHAI has put the brakes on new awards which shrank 41% year-onyear to 1,662 km during the April-August period. Continued on Page 2 BANDRA SEA LINK Special Features 37,336 THE INCREASED GST cess on mid-sized, luxury and SUV cars will come into effect from Monday, reports PTI. The smaller farm incomes, experts say, could dampen the mood in the hinterland even as sowing for the kharif crop this time around, at 1,028.14 lakh hectares, is slightly lower than last year’s levels. Economists predict a growth in agriculture this year of 3% at best on the high base of 4.9% in 2016-17. To be sure, real rural wages have been rising and post the good monsoon in 2016, unemployment has been falling.Also, the non-farm segment, which economists say accounts for about 30-35% of the rural 34,202 GST cess hike in cars from today hinterland too is beginning to turn somewhat sour. The sharp fall in food prices has lowered nominal realisations for farmers leading to a smaller rise in nominal incomes. This is reflected in the collapse of the growth in nominal agri GVA to 0.3% year-onyear in Q1FY18,compared with 7.9% in Q4FY17. “The adverse impact of lower food prices on rural incomes is weighing on growth — agriculture value addition and rural consumption,says SonalVarma, chief economist at Nomura. 32,086 A RED initiative appears in today’s edition of Financial Express. This page is an initiative of the marketing solutions team of The Indian Express Group and contains content paid for by advertisers. The page should be read as an advertisement. While several reasons have been put forward for the slow rise in traffic, the creation of alternate avenues across Mumbai — from central Mumbai towards the southern parts of the city —,is believed to be a key factor. These roads have diverted traffic away from the sea link. Construction Change (%) 1,662 % chg; y-o-y Index, Nov 7=100 105 2,827 Current situation Future expectation Index (RBI Consumer 140 Confidence Survey) 3,121 Sentiment plummets 41 Awards Construction (km) 2013-14 4,260 2014-15 4,410 2015-16 2016-17 2017-18# 6,062 8,142 15,000 Target; Source: MoRTH # Continued on Page 2 State PSUs FY15 Losses Change (%) FY16 66,137 74,724 Budget support 13 1,40,424 1,99,886 42 7,79,234 8,50,146 Turnover 10,31,869 12,56,951 Cumulative investments 3,88,875 4,30,487 Accumulated losses 9 22 11 #There were 994 PSUs in 26 states in FY16 for which data was captured; nearly 400 of these were in the red Central PSUs (` lakh cr) 19.95 FY15 18.55^ FY16 Gross turnover 1.03 1.16 Net profit ^244 PSUs including 165 profit-making PRASANTA SAHU New Delhi, September 10 STATE GOVERNMENTSOWNED companies,a perennial drain on the exchequer, have plunged to new depths, even as their central-sector counterparts are raking in profits. A review of the balance sheets of 994 state PSUs by FE revealed that their combined annual losses increased 13% to a whopping `74,724 crore in the financial year ended March 2016 (FY16),even as the cumulative investments in these firms from taxpayers’ money jumped 22% year-on-year to `12.57 lakh crore. The budget support to these under-performing firms in FY16, incidentally, stood at close to `2 lakh crore, a huge 42% higher than the previous year’s outlay.Clearly,with accu- mulated losses to the tune of `4.3 lakh crore, even if they miraculously turn around now, it will take several years for them to wipe out the humungous losses. The aggregate turnover of these PSUs in 26 states in FY16 was 48% lower than the investments since inception. For perspective,the turnover of all 244 central public sector enterprises (CPSEs) in FY16 was `18.67 lakh crore, 58% more than the total investments in them over the years. Despite constant reminders by the Centre, most state governments are reluctant to restructure these assets — which obviouslywould necessitate closure of most of these companies and large-scale retrenchment. Continued on Page 2 HOME SALES Post RERA & DeMo, it’s going to be a dull Diwali for property players PRIYANKA GHOSH Mumbai, September 10 IT’S GOING TO be another dull Diwali for real estate players, the third in a row. Launches of new properties, which have been trending down for about a year now—thedropinH1of2017was 40%to62,738units—couldwell drop further at a time when the economy is slowing and consumerconfidence is low. WhileSandeepRunwal,director,Runwal Group,is hopeful the pace of project launches will pick up closer to the festival, Ambar Maheswari,CEO,IndiabullsAIF,is doubtful of it. Maheshwari believes launches will come off in linewiththetrendinthepastseveral quarters. “Developers will work to offload units in ongoing projects rather than launch new ones,” he said. That does not seem unlikely given unsold inventory remains high — sales volumes are down 12% since December last year. That means builders will look to providing buyers with ready-tomove-in apartments,which typically fetch premium pricing. In any case,with RERA regulations now in force across several states, fresh launches, which earlier fetcheddevelopers’cashupfront, are no longera possibility. That the festive season is setting in earlierthan usual thisyear Unit launches 42,025 Jan-Mar 2016 34,585 April-June 2016 Source: JLL India 22,877 Oct-Dec 2016 doesn’t make it easier. Several states are yet to operationalise RERA and this has delayed regis- 25,569 Jan-March 2017 19,456 April-June 2017 trationsofprojects.Largemarkets such as Bengaluru and Haryana are expected to conclude the process only by end-September, Abhishek Anand,who tracks realtyat JM Financial,points out. The good news for buyers is that even if they don’t have too many new properties to choose from, they’re likely to be able to buy homes at rates that are more affordable.As Amit Bhagat, CEO and MD, ASK Property InvestmentAdvisors,pointedout,apartments right now need to be affordable,whichever the segment, to tempt the buyers. “Builders need to run schemes because that’stheonlywaytheycanexpect to convert fence-sitters,” he said. Virtuallynomarkethasseena price rise over the last six months while in the past year, no micro market in any of the top 8 cities has seen a price increase in excess of 3%, according to a survey by Knight Frank India. In some places prices have come off by about2%orso,likePanvelinNavi Mumbai or northern suburbs such as Goregaon and Dahisar. While companies such as Godrej Properties, Tata Housing, Lodha Developers and Sunteck Realty have been marketing subvention schemes, so that home buyers need pay just 10% of the cost of the house upfront and sparethemselvesanyliabilitiesfor twotothreeyears,thesehavebeen limited to the Mumbai market. Continued on Page 2
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