OPINION, P2 MIND & GAMES The real world beckons the PM IDEA EXCHANGE REBUTTING NOTIONS OF RACE Navjot Singh Sidhu Researchers pinpoint eight genetic variants in four regions of the human genome that strongly influence pigmentation Page 10 ACROSS THE AISLE , P CHIDAMBARAM Vol XVI No 51 Follow us on Twitter & Facebook. App available on App Store & Play Store ‘Look at GST, it’s chaos... the BJP is floundering There’s a turnaround. You can smell it in the air’ Page 9 WWW.FINANCIALEXPRESS.COM LEISURE MELODY FOR TWO NEW DELHI SUNDAY, OCTOBER 15, 2017 14 Pages, `8 (Patna `11, Raipur `10) FINANCIAL EXPRESS ON SUNDAY A vinyl collector and a musician-activist show how music can have many facets Page 8 READ TO LEAD PUBLISHED FROM:AHMEDABAD, BENGALURU, CHANDIGARH, CHENNAI, HYDERABAD, KOCHI, KOLKATA, LUCKNOW, MUMBAI, NEW DELHI, PUNE LARGEST MFI DEAL IndusInd to buy Bharat Financial ● Transaction is expected to be completed in 10 months GIFTING GUIDE 50 GIFTING IDEAS FOR DIWALI Opt for eco-friendly products, junk the junk food for healthy treats, gift the latest tech and give tradition a twist — all in our curated selection of Diwali gifts Pages 4-7 FE BUREAU Mumbai, October 14 ALMOST A MONTH after entering into an exclusivity agreement, IndusInd Bank and the country’s second-largest microfinance player, Bharat Financial Inclusion (BFIL),on Saturdayannounced theirmerger,whichwill be effected through an all-stock transaction. The deal—whichwould mark the largest merger and acquisition in the microfinance space— is expected to be completed in the next nine to 10 months. IndusInd Bank’s managing director Romesh Sobti said BFIL's shareholders will receive 639 shares of IndusInd forevery 1,000 shares of the microfinance major, implying a premium of 12.6% to BFIL over two-week volume weighted price. The merger will be effected through an all-stock transaction of BFIL into IndusInd through a composite scheme of arrangement.The scheme contemplates merger of BFIL with IndusInd and simultaneous transfer of BFIL's business correspondent operations into a wholly-owned subsidiary of IndusInd, which would be incorporated after receipt of requisite regulatory approvals.All the assets and liablities originated by the wholly-owned subsidiarywill be booked in the balancesheet of IndusInd. The scheme is subject to the approval of the Reserve Bank of India,the Competition Commis- QuickPicks ‘Must go for methanol as fuel’ UNION MINISTER for road transport, highways and shipping Nitin Gadkari has said India must use pollution-free methanol as a fuel, like Sweden, which is switching over to it from diesel. He said in a bid to reduce pollution at sea, the Centre has initiated talks with engine manufacturers to make bio-fuel compliant engines for ships. PAGE 3 ODD & EVEN ROHNIT PHORE Former President of India Pranab Mukherjee with Vandita Mishra and Seema Chishti of The Indian Express, at the Express Adda in New Delhi on Saturday NEERAJ PRIYADARSHI IndusInd Bank MD Romesh Sobti BFIL's shareholders will receive 639 shares of IndusInd for every 1,000 shares of the microfinance major sion of India, the Securities and Exchange Board of India,among others. The appointed date for the composite scheme is January 1,2018. “The mergeris expected to be value accretive from inception given IndusInd Bank's lowercost of funds, ability to monetise excess prioritysectorlending qualifying assets, efficient capital utilisation and optimal resource utilisation,” Sobti said, adding that the merger would bring down the cost of funds by 3-4% forthe combined entity.With regard to the workforce,he said all the employees of BFIL will become part of the bank's family JANAK RATHOD and not a single employeewould be replaced. The merger will not only expand the balancesheet size of the bank, but also increase the network of outlets.Post-merger,the new entity will have over 3,600 branches and outlets and over 16 million customers. The deal will also lead to an increase in the priority sector lending book. IndusInd Bank's current priority sector lending stands at 42% — above the regulatory requirement of 40% — and post the merger, this will cross 50%. "Thiswill lead to an opportunity to earn a fee income in the PSLC market to the tune of 1.52%," Sobti said. The bank's microfinance portfolio, which currently stands close to 3%, will increase to nearly 5-6% post this merger. Continued on Page 11 IMFhas 3-pronged plan forreforms in India PRESS TRUST OF INDIA Washington, October 14 THE INTERNATIONAL MONETORY Fund (IMF) has suggested a three-pronged approach for structural reforms in India that includes reducing the numberof labour laws, improving infrastructure and closing the gender gap,among others. Kenneth Kang,deputy director of Asia-Pacific department, IMF,said the favourable outlook forAsiawas an important opportunity for India to push forward with difficult reforms. "As such, there should be three policypriorities in the area Proposal includes reducing the number of labour laws, improving infrastructure and closing the gender gap of structural reforms,"Kang told reporters in Washington."First priority is to address the corporate and banking sector weaknesses by accelerating the resolution of non-performing loans, rebuilding the capital buffers for the public sector banks and enhancing banks' debt recovery mechanisms,”he said. Secondly, Kang said India should continue with the fiscal consolidation through revenue measures, as well as further reductions in subsidies. “And lastly, it’s to maintain the strong momentum forstructural reforms in addressing the infrastructure gaps, improving the efficiencyof labourand product markets,aswell as furthering agricultural reforms,"he said. Responding to a question on labour market reforms, Kang suggested reforming the market regulations in order to create a more favourable environment forinvestment and employment. PRESS TRUST OF INDIA Patna, October 14 LAMENTING THAT NO Indian universityfigures among the top 500 globally, Prime Minister Narendra Modi on Saturdaysaid the government intends to unshackle these institutions and provide `10,000 crore to 20 universities to ensure that they are counted among the best in the world. Speaking at the centenary celebrations of Patna University, Modi said measures like grant of central status were “a thing of the past” and his government has taken “a step forward" towards making 10 private universities and 10 government ones world-class. “Mygovernment took an important step towards unshackling the IIMs,freeing them from the clutches of restrictions and regulations set by the government.We intend to do the same for our universities and ensure that our centres of higher learning figure among the best 500 in the world,”Modi said. In his speech that lasted a little over 30 minutes, the Prime Ministerstressed on the need for universities to lay more emphasis on“learning and innovation” and give up old teaching methods which focused on “cramming students’ minds with information”. The Prime Minister also Prime Minister Narendra Modi with Bihar chief minister Nitish Kumar in Patna on Saturday PTI replied in his characteristic style to a fervent plea by Bihar chief minister Nitish Kumar, who in his welcome address had urged Modi that central status be granted to Patna University. “I would like to say something about a demand that was raised here and met with loud cheers by the young crowd at- Finance minister Arun Jaitley PRESS TRUST OF INDIA Washington, October 14 tending this ceremony. Issues like grant of central status have become a thing of the past. We are taking a step forward.Wewill provide an assistance of `10,000 crore to 10 private universities and an equal numberof government ones for a period of five years. All these universities have to do is to demonstrate their potential to become world class,”he said. The universities will not be selected by the PM or a chief minister or any other political figure, he said, adding that their potential will be assessed by a professional,third-partyagency. “I exhort Patna University to seize this opportunity,”he said in the presence of a host of dignitaries, which included Kumar and his deputy Sushil Kumar Modi. INDIAHASTHE potentialtogrow at a reasonably high level in the nextdecadeortwo,owingtosome structuralchangesbythegovernment and a turnaround in the global economy,finance minister Arun Jaitley has said in Washington. The whole environment of doing business has changed in a matter of months, Jaitley told a Washington audience at an event organised bythe US-India Strategic and Partnership Forum. “India has the potential to growat a reasonablyhigh level in the next one-two decades.This is mainly because of the series of structural reforms being carried out by the government, turnaround in the global economy, and the massive investment opportunitythat the infrastructure sector offers,”said Jaitley. “I am certain that now that the growth is returning back to the world, the future holds an important direction as far as India is concerned. The sheer size of the country and economy would offer huge opportunity for investment in India in the next few years,”he said. Continued on Page 11 Continued on Page 11 Continued on Page 11 Govt to unshackle varsities: Modi Announces `10,000 crore for 20 Indian universities to make them ‘world-class’ India has high growth potential for next 20 years: FM After liquor ban bomb, Diwali spirit missing for alcohol makers Still reeling from effects of the ban, most companies report low growth volumes MOINAK MITRA New Delhi, October 14 THE SUPREME COURT might have softened its stance on the countrywide ban on all liquor shops on national and state highways,exemptingmunicipalareas, but this has clearly not helped liquor majors much,who are still strugglingwith lowvolumes. Diageo,the world's largest alcoholic beverages company, has even cited low first-half sales growth owing to the liquorban in India. Sales have also slumped in the ongoing festival season, and analystsanticipatethemutedofftake to continue through Diwali. SincetheSCbancameintoeffect on April 1, the first quarter bore the brunt with a 7% decline in volumes (liquor companies don't disclose monthly volumes) over the same period a year ago, claims Abneesh Roy of Edelweiss Securities. Almost 35% of the vends fall on highways. As the ban came into force, Anand Kripalu,CEO of Diageo India, which controls 40% of the IMFL market, said,“I expect the highway ban will continue to impactourperformanceforthenext Volumes of alcohol companies are akin to these empty shelves EXPRESS FILE PHOTO fewquartersandalsothattheGST (goods and services tax) implementationislikelytocreateoperationaldisruptionatamacrolevel in the marketplace,which could also could impact our FY2018 shorter-term performance.” Though GST doesn't apply directly to liquor, it impacts glass bottles, molasses, etc, totting up an indirect cost burden on the industry.“Margins(ofliquorcompanies) will get adversely impacted in the second quarter since GST would skycosts,” portends Roy. India is one of the most important sales drivers for Diageo andPernodRicard,thetoptwoalcoholic beverages makers worldwide. While French distiller Pernod Ricard SArefused to comment on the impact of the liquor ban on highways, India's thirdlargest distiller Allied Blenders & Distillers (ABD) is categorical that approximately 25,000 vends are still shuttered owing to the ban. AlongwithDiageoandPernodRicard,ABD constitutes 60% of the IMFLmarket. “Though the impact (of the liquor ban) is waning,it is significantly high in states like Maharashtra where the volume dip in thefirstquarterofthisfiscalsitsat 15% compared to the year-ago period,” says Deepak Roy, executive vice-chairman and CEO of ABD. Even Karnataka has registered a sharp drop in sales with 1,441 outlets downing shutters after the ban came into effect in April. Thebeermarket,too,seems to be missing out on cheer in the first quarterwith a 15% year-onyear drop, says Shobhan Roy, director general,All India Brewers' Association(AIBA).At280million casessoldinFY2017,beergrowth was flat over the previous financial year. However, Roy believes that the true impact of the ban could reduce consumption by as muchas5%.“Weareexpectingan offtake of 265 million cases this fiscal,” he says. Besides, Roy is quick to point to the spillover effect of the ban this Diwali, with no instance of gift packs from any liquor company, an annual ritual of sorts at least a month prior to the festival of lights.“None of the companies are investing in promotional packaging owing to low volumes and strict regulations.”
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