OPINION, P9 COMMODITIES, P14 MUKESH BUTANI Thanks to BEPS and other treaties, tax evasion tougher now INTERNATIONAL, P16 N BANIK & P STEVENS PETCOKE BAN IMPRESSIVE GAINS Cheaper access to medicines important but cannot be at the cost of innovation Pradhan asks oil companies to boost gas supplies to states Tencent’s stellar share rally sees it surpass Facebook in market value NEW DELHI, WEDNESDAY, NOVEMBER 22, 2017 FOLLOW US ON TWITTER & FACEBOOK. APP AVAILABLE ON APP STORE & PLAYSTORE WWW.FINANCIALEXPRESS.COM READ TO LEAD VOLUME XLIII NO. 226, 20 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 SENSEX: 33,478.35 ▲ 118.45 NIFTY: 10,326.90 ▲ 28.15 NIKKEI 225: 22,416.48 ▲ 154.72 HANG SENG: 29,818.07 ▲ 557.76 `/$: 64.89 ▲ 0.20 `/€: 76.11 ▲ 0.62 BRENT: $62.40 ▲ $0.18 GOLD: `29,434.00 ▼ `200.00 SPECTRUM HOLDING GST COMPLIANCE Move seen as boosting efficiency, consolidation in sector; Voda-Idea entity to be immediate gainer To further relax procedures, address GSTN glitches; last-minute filing of returns remains a vexing issue Trai for lifting intraband cap of 50% IN THE NEWS SAIL,ArcelorMittal JVfor auto-grade steel plant UNION STEEL minister Birender Singh on Tuesday said SAIL and ArcelorMittal will sign an MoU for forming a joint venture to set up a 1.5 million tonnes per annum auto-grade steel plant in the next few days, reports PTI. SAIL and ArcelorMittal had entered into an MoU in May 2015 to explore the possibility of setting up an auto-grade steel manufacturing facility under a joint venture in India. FE BUREAU New Delhi, November 21 IN A MOVE that promotes optimum spectrum efficiency andutilisationaswellasencouragesconsolidationinthesector,the Telecom RegulatoryAuthority of India on Tuesday recommended theremovaloftheintra-bandcap of 50% spectrum holding by operators in a circle.It also said that operators should now be allowed cepted by the department of telecommunications (DoT), will enable operators to create better LTE-capable 4G networks as they can optimise their spectrum holdingsinamuchmoreefficient manner.Intheimmediatetermit would benefit Vodafone India and Idea Cellular, which are merging their operations and were breaching the intra-band cap of 50% in five circles. It will alsoenableRelianceJiotoacquire more spectrum through trading deals in the 800 MHz band from Reliance Communications. The Trai recommendation has come after a consultation process with the operators, which in turn came afterthe DoT asked it to examine the current caps following a suggestion from the government-appointed inter-ministerial group that the caps should be relaxed. Most operators had favoured a relaxation in the caps. While BhartiAirtel was not in favour of relaxing the intra-band cap of 50% on the ground that itwould lead to one operator monopolising spectrum in a given band, it had batted for relaxation in the overall limit. Explainingtherationaleofdoingawaywiththe50%intra-band cap and instead replacing it with an overall 50% limit on all sub-1 GHz spectrum put together,Trai said this option would prevent concentrationofsub-1GHzspectrum in the hand of one operator. tohold35%ofthetotalspectrum assigned in a circle against the current cap of 25%. In the intra-band cap where current regulations prohibit any operator to have more than 50% in a given band,Trai has said that instead the government should nowensure that an operatordoes nothavemorethan50%ofallthe sub-1 GHz band like 700, 800, and900MHzbandsputtogether. Both the measures, once ac- Current regulation ■ An operator cannot have more than 25% of total spectrum allocated in a circle ■ In addition, can’t have more than 50% in a given band Xiaomi sets up new 3rd party unit in India Trai recommendation ■ The overall cap should be raised to 35% ■ 50% intra-band cap be removed; instead put 50% on all sub-1 GHz spectrum put together SMARTPHONE MAKER Xiaomi on Tuesday said it has tied up with Hipad Technology for third-party manufacturing of its power banks in India, reports PTI. This is the firm’s third contract-manufacturing unit in the country and is located in Noida. It has a capacity to make seven power banks a minute,Xiaomi India head Manu Jain said. Beneficiaries —operators ■ Merged entity ofVoda-Idea would not have to surrender excess spectrum in 5 circles ■ Jio can buy more spectrum from RCom Industry gain ■ Lead to more consolidation ■ Will ensure better spectrum purchase by operators & greater spectral efficiency Continued on Page 2 TAPPING OPPORTUNITY Special Feature Kotak sees gold in big debt dross For fresh exposures, short bond products are better Though G-Secs yields have moved up from 6.4% in July to 7% now, in the absence of any strong driver to move interest rates down, there isn’t any strong case for taking exposure to duration products ■ Personal Finance, P15 BLOOMBERG Mumbai, November 21 QuickPicks FAQs on rating: Moody’s justifies India upgrade MOODY’S ON Tuesday justified its upgrade of India’s sovereign rating by a notch, saying the move was based on its assessment that a number of reforms by the Narendra Modi government will combine to enhance the country’s structural credit strengths, including its strong growth potential, improving global competitiveness and its large and stable financing base for government debt. PAGE 2 ONGC Videsh takes 15% stake in Namibian oil block ONGC Videsh (OVL) on Tuesday said the explorer has bought a 15% stake in an oil block in Namibia without mentioning the deal value, reports sfe Bureau in New Delhi. For OVL this is the second deal in the African country. The current buy is a 15% participating interest in Namibia Petroleum Exploration Licence30 which covers Block 2012A from Tullow Oil of the UK. PAGE 7 HAIRCUT ADVANTAGE FOR INDIA, IT’S a $207-billion mess,a pile-up of bad loansyears in the making that’s dragging on growth. For the nation’s wealthiest banker, it’s the kind of opportunity that very rarely presents itself. What has billionaire Uday Kotak salivating is the government’s attempt to finally draw a line under delinquent loans, with recent steps to overhaul India’s bankruptcylaws and recapitalise state-owned banks. The moves are intended to lift a burden from the country’s banks and encourage them to accelerate lending, supporting economic growth. Over the next year,the assets and debts of about 50 of India’s biggest defaulters may be sold off by court-appointed professionals, in a process in which banks are expected to take deep haircuts on theirloans.The companies’borrowings total an estimated `3 lakh crore, close to one-third of total recognised bad loans in India’s banking system. “The whole insolvency and ■ Bankruptcy court process, deep discounts are key attractions ■ Sovereign wealth and pension funds also interested, Kotak says ■ Companies’ borrowings estimated at `3 lakh crore, close to a third of all bad loans Centre sees a steady rise in returns filed, tax mop-up INVESTORS AND ANALYSTS are a relieved bunch after Mahindra GroupexecutivechairmanAnand MahindrarevealedonTuesdayhis choice of successorwas known to the governing board. India Inc has seen several familybattles overassets and the value-destroying consequences for stakeholders.One of the epic examples of a family tussle was the spat between the Ambani brothers. Even the Tata Group was, not so long ago, embroiled in a nasty public display of acri- (` cr) Consolidated financials Key companies M&M Tech Mahindra M&M Financial Services Mahindra CIE* Mahindra Holidays Mahindra Lifespace Net revenue Mcap 83,773 3,698 91,795 — 43,785 29,141 7,189 5,525 2,282 762 3,956 2,813 512 169 149 102 29,766 20,645 48,920 4,989 3,325 2,452 87,546 46,681 24,778 9,024 4,570 2,265 *For December 2016; m-cap as on Nov 20 M&M, Mcap (` cr) 100,000 88,142 80,000 60,000 40,000 20,000 3212 0 Mar 31 Nov 21 1997 2017 Source: Capitaline, Bloomberg 59.6 28.5 68.2 39.4 73 43.7 78 90,662 93,141 95,131 *GST revenue collected since August includes residual receipts from previous months also; #The deadline for filing GSTR-3B without fine for a month ends on 20th of susbsequnt month While only 33.98 lakh July returns were filed by the due date, the number has since gone up to 55.87 lakh. Similarly for August, 28.46 lakh returns were filed till the deadline, but these went up to 51.4 lakh later it did in the previous regime. Filings of the summary returns GSTR-3B —withwhich the tax needs to be paid or nil liability claimed — have increased over the months since July. Till theAugust 20 deadline for filing GSTR-3B for the month of July without fine, 34 lakh returns were filed; the returns filed before the respective deadline forSeptemberwas higherat 39.4 lakh and the numberforOctober grew further to 43.7 lakh. Continued on Page 2 FE BUREAU Big three telcos get back to winning ways After three consecutive months of losing subscribers, Vodafone and Idea got back to adding users in October. While Vodafone added 0.9 million subscribers during the month, Idea added 0.7 million. Bharti Airtel led with an impressive addition of 3.15 million subscribers. Subscriber addition (million) -- COAI (calendar year 2017) 4 3 2 1 -1 Vodafone India Idea Cellular 0.76 3.15 0.9 -0.21 0.68 -3 -4 Govt relook on promoter repurchases BLOOMBERG New Delhi, November 21 (See: Mahindra Group Snapshot).Looked at in aggregate,the market capitalisation of the listed companies adds up to about `1,75,000 crore. That’s a big business empire to lead. Mahindra,though,dismisses such apprehensions. He argues that there is no such thing as a TINA(There is no alternative) factor.“There is always an alternative. The biggest mistake any leader can make is that he or she is indispensable,” he adds.“The board already knows my choice of leaderto replace me,”he states. 0.7 -2.4 -2 ● BANKRUPTCY LAW Continued on Page 2 Bharti Airtel 2.85 0 Continued on Page 2 M&M wealth creation PAT Total assets 34 Come October Continued on Page 2 Mahindra Group snapshot Aug THANKS TO THE proactive steps taken by the Goods and Services Tax (GST) Council to remove the sundryglitches that used to troubletaxpayersintheinitialmonths after the GST launch and also the progressive lowering of tax rates by the council over its last few meetings,complianceandtaxcollections have picked up of late. This has not only reduced the states’revenueshortfallconsiderably over the period but boosted thegovernment’sconfidencethat GSTwouldeventuallyexpandthe tax base andyield revenue higher than the taxes that collapsed into INDIA HAS SET up a panel to review provisions of the 11month old bankruptcy law including whether to bar defaulting founders from repurchasing assets. The committee set up to improve The Insolvency and Bankruptcy Code will have 14 members and includes officials from the finance ministry, Reserve Bank of India and representatives from industry and accountants groups, corporate affairs minister PP Chaudhary said in an interview on Monday. The code in force since December 2016 aims to accelerate winding-up process of loss-making companies or recovering dues. his hands. The company today boasts a consolidated revenue of over `80,000 crore and a profit of nearly `3,700 crore, after adjusting for minority interests Eligible taxpayers (lakh) July 92,384 Oct bankruptcyprocessisaonce-in-alifetimeevent,”saidKotak,theKotak Mahindra Bank MD,in an interview.“Through this you could actuallygetassetsthatwouldgive disproportionate returns forlong periods of time.” Funds controlled by Kotak Mahindra are looking at deals involving the assets and debts of some of the first 12 companies going through the bankruptcy courts,Kotak said.Industries including steel are of particularinterest,according to the banker. leadership bench in the group that could step up to take on new roles as and when required. Whoever succeeds Mahindra, though,will have a huge task on GSTR-3B filings by deadline# (lakh) Revenue* (` crore) Sept Mahindra succession roadmap in place, investors cheer mony between Ratan Tata and Cyrus Mistry. Mahindra, while responding to questions on a news channel, assured stakeholders of a strong Up and running SUMIT JHA New Delhi, November 21 CLEAR-CUT FE BUREAU Mumbai, November 21 ● RETURNS AT 22% -2.9 April May June July Aug Sept Oct EPFO wants to up equity exposure SURYA SARATHI RAY New Delhi, November 21 THE EMPLOYEES’ PROVIDENT Fund Organisation (EPFO) wants toupitsinvestmentsintheequity market,giventhemuchhigherreturns relative to conventional instruments like government securities fetched from its limited exposure to stocks in the last couple of years. Currently, the EPFO can invest up to 15% of incremental deposits of around `1.5 lakh crore annually in exchangetraded funds (ETFs).“We have to `32,299 crore EPFO’s investment in equity market so far (Between August 2015 and October 2017) Annual return on EPF investments* (%) G-secs ~6.5 Corporate bonds ~7.1 ETFs^ ~21.9 *As on October 31, 2017 ^About 78% in SBI MF and balance in UTI MF and CPSE funds step up investment in ETFs.Otherwise it will be difficult to pay higherreturnstooursubscribers,” Central Provident Fund commissionerVPJoytold FE. Between August 2015 — whenitstartedinvestinginstocks —andOctoberthisyear,theEPFO hasputalittleover`32,000crore in ETFs.Joy said by the end of the currentfiscal,itwillhaveinvested `45,000 crore in these funds. EPFO’s returns from the equity market fetched annualised return of 21.87% till Octoberend, over three times what it receivedfromitsinvestmentincorporate bonds. Continued on Page 2
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