OPINION, P8 ECONOMY, P2 SUNIL JAIN Hardik problem will worsen as most want a piece of the pie INTERNATIONAL, P16 ASHU SAGAR BUDGET ESTIMATE ECB’S MOVE Excessive levies like the oil cess will just make local exploration that much less attractive Deficit target to be met without spending cut: Lavasa Draghi calls for caution as flagship stimulus heads to exit MUMBAI, FRIDAY, OCTOBER 27, 2017 FOLLOW US ON TWITTER & FACEBOOK. APP AVAILABLE ON APP STORE & PLAYSTORE WWW.FINANCIALEXPRESS.COM READ TO LEAD VOLUME XXXXXV NO. 189, 124 PAGES, `10.00 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 SENSEX: 33,147.13 ▲ 104.63 NIFTY: 10,343.80 ▲ 48.45 NIKKEI 225: 21,739.78 ▲ 32.16 HANG SENG: 28,202.38 ▼ 100.51 `/$: 64.82 ▲ 0.07 `/€: 76.52 ▼ 0.12 BRENT: $58.09 ▼ $0.35 GOLD: `29,393.00 ▼ `21 EXPRESS PHOTO: TASHI TOBGYAL ● SHAREHOLDERS’ NOD 33,147.13 IBC not in conflict with Companies Act, govt clarifies Oct 26, 2014 31,892.23 Sept 1, 2017 S&P BSE SENSEX FE BUREAU New Delhi, October 26 MOST EXPENSIVE MARKET tinued challenges with domestic economic recovery. Moreover, it believesthere’safairdealofearnings uncertainty as also risks to profitabilityacrosssectors.“Many sectors have historically high gross and Ebitda (earnings before interest, taxes, depreciation and amortisation) margins,” the brokerage pointed out. On Tuesday, the government announced a `2.1-lakh-crore recap package for public sector banks,a move that is expected to spur lending and help kick-start the economy by strengthening the balance sheets of lenders. THE INSOLVENCY AND Bankruptcy Code (IBC), 2016, isn’t in conflictwith the CompaniesAct, 2013, and Wednesday’s clarification that a resolution plan approved by the committee of creditors and the adjudicating authority doesn’t require shareholders’nod forimplementation was made to clear any confusion among stakeholders regarding the applicability of the existing provisions of both the laws,a senior corporate affairs ministry official said. Theclarificationcameassome stakeholders drew attention to Section 30(2)(e) of the IBC,which directsresolutionprofessionalsto ensure any such insolvency resolution plan“does not contravene anyoftheprovisionsofthelawfor the time being in force”.Since the CompaniesActprovidesforshareholders’approvalincasesoftransfers of assets or shares of a company,somestakeholderssoughtto know if,in the light of Section 30 (2)(e)oftheIBC,suchthingswould be applicable to the insolvency resolution plan aswell. “The regulation that shareholders’ approval to a resolution planwasnotrequiredwasalready made clear by the Insolvency and Bankruptcy Board of India (IBBI). Still,theclarificationwasmadeto make it even more explicit,” he said.“IBCisapplicabletoastressed company that is under the insolvency resolution process,and not to all companies.So,in matters of insolvencyresolution,theIBCcan even override certain Companies Act regulations,” he added. Continued on Page 2 Continued on Page 2 Sensex, Nifty close at lifetime highs IN THE NEWS ‘Janet Yellen out of Fed chair race’ PRESIDENT DONALD Trump’s search for the next chair of the US Federal Reserve has come down to Fed governor Jerome Powell and Stanford University economist John Taylor, reports Reuters citing Politico on Thursday. Politico cited an unnamed source who talks regularly to Trump. of it in August; their sales have been offset by purchases by domestic institutions to the tune of $7.1 billion.Indeed,local buying since January has hit nearly $11 billion whereas foreign funds have invested just half this amount. Market strategists believe there is potential for disappointment in the markets given the rich valuations both on an absoluteandrelativebasis.KotakInstitutional Equities has drawn attention to the macroeconomic headwindsgivenchancesofmodestdeteriorationinthecurrentaccount deficit, the gross fiscal deficit and inflation and the con- 7 KOSPI 9.65 HANG SENG 12.01 IBOVESPA 13.41 0 Shanghai Com 13.35 4 Taiwan TAIEX 14.13 14 FTSE 100 14.45 21 8 SE THAI 15.68 12 NIKKEI 225 17.52 28 Jakarta Comp 15.80 BOTH THE SENSEX and the broaderNiftyonThursdaysoared to lifetime highs, leaving India the most most expensive market in the world. That’s despite the fact that corporate earnings are yet to show any meaningful recovery.The Sensex closed Thursday’ssessionat33,147.13points. The 50-share Nifty,which ended the session at 10,343.80 points, trades at a price-earnings multiple of nearly 22 times estimated earningsforFY18and17.4times estimated earnings for FY2019, onafree-floatbasis.That’sahuge premiumtohistoricalvaluations. Indian stock markets have rallied to new highs despite foreign portfolio investors having sold stocks worth $3.4 billion in the last three months, the bulk 35 16 Dow Jones 17.55 FE BUREAU Mumbai, October 26 YTD dollar return (%) RHS 30.45 S&P 500 17.98 A RED initiative appears in today’s edition of Financial Express. These pages are an initiative of the marketing solutions team of The Indian Express Group and contain content paid for by advertisers. These pages should be read as an advertisement. One year forward PE 20 Sensex 18.82 LUXURIOUS DUBAI That’s despite little earnings recovery and FPIs having sold $3.4 bn in stocks in the last three months 0 Special Feature House call Tokyo Motor Show: Thinking beyond the motor New home sales and launches collapse Reliance Nippon Life IPO subscribed 7.45 times on Day 2 THE INITIAL public offering (IPO) of Reliance Nippon Life Asset Management was subscribed by 7.45 times on Thursday, the second day of the offer, with investors bidding for 31.92 crore shares against 4.28 crore shares on offer, reports fe Bureau in Mumbai. Qualified institutional buyers bid for 11.99 crore shares against 1.22 crore shares on offer. High net worth individuals bid for 14.83 crore shares against 91.80 lakh on offer. Retail investors bid for 5.09 crore shares against the 2.14 crore reserved for them. PAGE 11 Gurgaon Gurgaon Hyderabad 12,101 11,462 3,606 29 « « « 18 6 « 60 3,356 4,105 3,342 2,090 6,976 27 Bengaluru Mumbai Noida 9,557 9,584 8,084 1,084 19 « « 51 Hyderabad 18% 5,104 « 383 2,192 3,492 2,460 1,331 2,363 5,647 89 85 Mumbai Noida Source: Proptiger DataLabs Sep '17 Uttar Pradesh chief minister visited the Taj Mahal on Thursday and described it as a gem and an integral part of Indian culture, countering some of his own partymen MISSING GST RETURNS Several reasons detected, from net reach to glitches No common theme; Centre’s outreach programme to continue to ensure more returns are filed, says CBEC SUMIT JHA New Delhi, October 25 A SURVEY BY the revenue department has detected multiple reasons for the glaring gap betweenthenumberofeligibletaxpayers on the Goods and Services Tax Network (GSTN) and the tax returns being filed in each month.Apart from lack of internetconnectivitywithsomeofthe taxpayers and GSTN’s technical glitches, lack of funds for paying taxesandanotionthatnoreturns areneededtobefiledincaseofnil supplies caused returns trailing the eligible taxpayer base, Mahender Singh, member (GST), Central Board of Excise and Customs, told FE.The problems encountereddiffereddependingon the taxpayers’ profiles, he said, adding that the department would continue its outreach programme,includinghand-holding ofsmalltaxpayerstoensuremore returns are filed. Even afterseveralweeks have REASONS FOR THE GAP IN GST RETURNS FILING ■ Lack of internet connectivity ■ Technical glitches at GSTN ■ Lack of funds to pay taxes ■ Below-GST-threshold assessees awaiting de-registration ■ Assessees under GST- exempt supplies not filing passed after the deadline for filing the interim return GSTR-3B for July,at least 10 lakh of the 65 lakh eligible taxpayers haven’t filed it so far. Similar gaps existed in the subsequent two months as well. Some assessees haven’t filed returns as they are below the GST threshold (`20 lakh annual turnover) but have migrated to GSTN from the earlier VAT regime, which had a lower INFRASTRUCTURE PUSH ‘Investments to grow a third to `50 L cr in FY18-22’ (` lakh crore) 10.2 11 10 5.5 7.4 7.6 8.0 Railways Roads & highways 0.8 0.9 1.0 1.1 1.9 4.6 Power FY07-12 FY13-17 RE FY18-22 Niti Aayog CRISIL projection 12.7 14.7 INVESTMENTS IN INDIA’S Infrastructure sectors will grow to `50 lakh crore in the five fiscal years to FY22, up over a third from the previous five years, Crisil said onThursday,predicating the estimate on average GDP growth of around 7% during the period. However, the rating agency stressed the need for deepening the infrastructure financing ecosystem in the country and suggested five specific steps for the same, including faster execution of the National Infrastructure Investment Fund and a well-calibrated Bond Guarantee Fund to address the sluggish bond market participation in the infrastructure sector. Significantly, the share of private investments in infrastructure, which has been stagnant in recent years, will continue to be rathersubdued — private players’ share in overall infrastructure investment will be just around 28%, the agency predicted. Infrastructure investments 7.8 FE BUREAU New Delhi, October 26 Urban Ports & aviation We have recommended 34 sick PSUs for strategic disinvestment... All infrastructure projects owned by the govt should be offered for O&M by private players through transparent competitive bidding Others Source: CRISIL, Niti Aayog; RE= revised estimate — AMITABH KANT, NITI AAYOG CEO CRISIL InfraInvex Investment attractiveness score (Scale=10) 0 threshold.A section of these assesses is awaiting de-registration from the portal. Assessees dealing in exempt supplies have also chosen not to file returns. “We didn’t find anycommon theme (for the slow filing of returns)...Instead,there are myriad reasons for the same. However, these issues can be resolved by continuing our outreach programme effectively,”Singh said. The government had waived late fee for filing returns for July. It extended the waiver toAugust and September also on Tuesday. Although,nearly 95% of GST revenue comes from less than 5% taxpayers, the government needs data from all eligible taxpayers to analyse the impact of GST more efficiently and accurately. However,with many taxpayers not filing returns,thevital GST feature which matches sales and purchases of businesses to check tax avoidance could be difficulttoimplement.Revenuesecretary Hasmukh Adhia had told FE earlier that the department could look at non-coercive ways to improve compliance. The revenue department is keenly watching the first cycle (July) of filing comprehensive returns (GSTR-1, GSTR-2 and GSTR-3) which ends on November 10. Continued on Page 2 ● NPA ASSESSMENT 2.0 3.8 SEBI ON Thursday revised the framework for block deals by providing two separate trading windows of 15 minutes each and increasing the minimum order size to `10 crore, reports PTI. The move is aimed at ensuring confidentiality of the large trades and stable prices for such transactions. The block deal window is provided for buyers and sellers to execute trades for a large number of shares. Such deals are usually negotiated before their execution. PAGE 11 Q2 FY'18 44,755 % Chg « Sebi revises block deal norms; minimum order size hiked 58 Bengaluru 53% « THE MUMBAI bench of the National Company Law Tribunal has admitted an insolvency petition against Abhijeet MADC Nagpur Energy, reports fe Bureau in Mumbai. The petition was filed by Alchemist Asset Reconstruction Company under the Insolvency and Bankruptcy Code. As per the tribunal’s final order, `728 crore was disbursed by Axis Bank, State Bank of Hyderabad, Bank of Maharashtra and UCO Bank from July 2, 2009 to April 30, 2013. PAGE 10 Q2 FY'18 22,115 Total Sales volume (units) Q2 FY'17 54,721 % Chg « NCLT bench admits insolvency petition against Abhijeet MADC Launch volume Total (units) Q2 FY'17 47,032 « QuickPicks RERA and GST hit sales and launches of residential units in nine cities with sales down 18% y-o-y and launches falling 53% in Q2. Only Mumbai and Gurgaon saw a rise in demand and supply. « The future of mobility will be all about fully autonomous cars, electronic vehicles that get charged as they run and intelligent vehicles that mould their functioning according to their drivers’ traits. ■ Motobahn, P15 FE BUREAU Yogi’s Taj moment 2 Power Transmission Renewables Highways & roads Ports & shipping Aviation Power distribution Railways Thermal generation Urban infrastructure Unveiling “Crisil InfrastructureYearbook 2017”,NITIAayog CEO Amitabh Kant said there was an urgent need for private sector investments to “come 4 6 7 6.9 6.6 6.1 5.4 8 10 8.1 5 4.9 4.5 back”.State-level initiativeswere required for this,he said. According to Crisil, the power, highways, transport and urban sectors would account for 77% of the infra spending in the FY18-22 period, which will see infrastructure investments of 5.5% of the gross domestic product.The sectors thatwill see rapid growth in investments in the five-year period are railways (`8 lakh crore versus just `3.8 lakh crore in FY13-17) and urban infrastructure (`5.5 lakh crore versus `1.9 lakh crore). Crisil suggested that public sector banks must be nudged to securitise assets from their infrastructure portfolio and called for fast-tracking of the muchdelayed corporate bond market reforms, particularly with respect to enhancing investment limits for foreign investors, developing primary bond market akin to that of the primary equity market and revisiting infra bonds to attract retail investors. It said: “To some extent, the twin balance sheet challenge in infrastructure can be attributed tounravellingofkeyrisks,including policy inconsistency...Action on the demand side including comprehensive re-tooling of PPP (public-private partnership) frameworks and creation of bankable projects are of vital importance in the road ahead.” Continued on Page 2 Yes Bank, RBI rating gap `6K-cr FE BUREAU Mumbai, October 26 YES BANK SAID onThursdaythe divergence in gross non-performing assets (NPAs) between the assessment of the Reserve Bank of India and that reported by the bank on March 31 was `6,355.20 crore.The divergence in net NPAswas `4,819.40 crore, the bank said in its second-quarterearningsstatement.Ofthetotal divergence, only 19.2% was classified as NPAs as of September with the rest having been eitherupgraded,sold toARCs orrepaid. The lender reported an increase in NPAs for the quarter after the RBI directed it to reclassify more assets as NPAs as on March 31. Gross NPAs rose to 1.82%forQ2FY18,upabout100 points year-on-year. Gross NPAs at end-September were `2,720 crore. Net NPAs rose to 1.04% from 0.29% over last year. Detailed report on Page 10
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