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APP AVAILABLE ON APP STORE & PLAYSTORE WWW.FINANCIALEXPRESS.COM READ TO LEAD VOLUME XLIII NO. 234, 22 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: 33,149.35 ▼ 453.41 NIFTY: 10,226.55 ▼ 134.75 NIKKEI 225: 22,724.96 ▲ 127.76 HANG SENG: 29,177.35 ▼ 446.48 `/$: 64.46 ▼ 0.14 `/€: 76.32 ▼ 0.18 BRENT: $64.03 ▲ $0.92 GOLD: `29,260.00 ▼ `181.00 Q2 GDP Growth recovers to 6.3% 7.6 8 6 6.8 6.7 7.9 7.5 5.6 5.6 6.1 7 6.1 5.7 6.3 4 2 FE BUREAU New Delhi, November 30 REVERSING ATREND of declining growth in five successive quarters earlier that put the Narendra Modi government in a spot, India’s economy posted 6.3% growth in July-September quarter (Q2) of the current financial year. Gross domestic product (GDP) on a real basis had grown at a 13-quarter low of 5.7% in the previous quarter and 7.5% in Q2FY17. Among the aggregate drivers of growth,the principal one,private consumption,continued its tendency of losing GDP share that commenced in Q4FY16 in Q2FY18 as well and “net exports”, despite a very modest year-on-year increase,still had a negative effect on growth. Investment, disconcertingly laggardly over the last few years, showed a marginal uptick. While finance minister Arun Jaitley took heart from the growth trajectory reversal being enabled by a 7% annual expansion in manufacturing and 4.7% growth in gross fixed capital formation(investment),therestocking following the roll-out of the goods and services tax (GST) contributed in some measure to the 0 Q1 Q2 Q3 Q4 Q1 2016-17 Q2 Q1 2017-18 Q2 Q3 Q4 2016-17 GVA Q1 Q2 2017-18 GDP Note: GDP is equal to GVA plus indirect taxes minus output subsidies Govt consumption slows, investments inch up 40 (% real growth, y-o-y) GFCE 30 16.6 20 PFCE 8.4 10 7.4 0 -10 6.5 GFCF Q1 4.7 4.1 Q2 Q3 2016-17 Q4 Q1 Q2 2017-18 PFCE: Private final consumption expenditure; GFCE: Government final consumption expenditure; GFCF: Gross fixed capital formation Source: MoSPI former and some of the sheen of the acceleration in investment would be off as it was skewed towards investments in valuables that have little bearing on the economy’s productive capacity. Despite the latest rise in India’s growth, China’s GDP expansion has outpaced India’s for a third straight quarter. Theworld’s second-largest econ- omy grew 6.8% in the July-September quarter. After the release of the Q2FY18 GDP data by the Central Statistics Office (CSO), chief statistician TCAAnant said Q2 indirecttaxesmighthavebeenhigher than estimated owing to GST-related uncertainties over industries’ tax liabilities and could probably be revised later. Higher taxes would inflate the GDP, which is gross value added (GVA) plus indirect taxes minus subsidies.However,whileahighersubsidy outgo (up an annual 45%) had dampened the Q1FY18 figure,it hasn’t hit the GDPas much in Q2, when annual subsidy growth was just 18.4%., the GST regime posed some “statistical challenges”leadingtoaconservative estimate of growth in retail trade,which was earlier based on collections of sales tax,an impost now subsumed by the GST. While a withering of the unfavourable base effect will aid the GDP growth in the second half of 2017-18 — most analysts now peg the annual expansion in the range of 6.3-6.5% — key questions are how fast exporters can add value to the economy by exploitingtheworldeconomythatis on an upward trajectory and whetherpublicspendingcangive theeconomysolidsupportduring the period.Already,the growth of government final consumption expenditure has declined from a strong32%inQ4FY17to17%in Q1FY18 and further to 4.1% in Q2DY18.By the fiscal deficit target of 3.2% of GDP, the Centre hasn’tgotthecapacitytokeepthe budget capex pace while it might still push PSUs and other state-run bodies like NHAI to accelerateinvestments.Infact,budget capex in October 2017 was around`16,000crore,downfrom a monthly average of over `24,000 crore in the first half of the fiscalyear. In a switch, a teacher who’s the pupils’ pet ASK BYJU RAVEENDRAN toplay ball, and he’ll probably rattle out numbers. That’s what the 38year-old maths whiz knows best, with his mesmeric hold over studentsmakingByju’s,thetech-driven education start-up, a dominant player in teaching, apart from,obviously,playing ball. YoucouldcatchRaveendranat the dead of night on a football field along with his colleagues — alwaysamidnightgamebetween 12 and 2 am. He uses football to keep himself motivated.“I don’t like half measures, whether at work or play,” he says. This has served him well for the last 10 years to graduate from tutorial classes to the cutting-edge technologyof apps. The goal-driven Raveendran has been a mathematics prodigysince his school days. It all started with him helping out his friends to prepare for their CAT exams. Back then, he was working as an engineer with a UK-based shipping firm. Since he was extremely good at maths and had a knack of solving objective questions in seconds, he was a natural choice for his friends to turn to.One byone,everyfriend he coached cracked the exam and soon it was clear he had a special talent for it.He himself STOCKS WENT into a tailspin on Thursday, with the benchmark Sensex suffering its biggest single-day fall in a year, after growing fiscal deficit concerns triggered a flight to safety among investors, reports PTI. The BSE Sensex plummeted over 453 points to close at 33,149.35, while the broader Nifty finished below the key 10,300-mark. Investors' wealth as measured by market capitalisation of BSElisted companies declined by over `1.06 lakh crore. The Sensex, after a gap opening lower at 33,542.50, continued its slide to touch a low of 33,108.72. It finally settled 453.41 points or 1.35% lower at 33,149.35. The broader NSE Nifty, after cracking below the key 10,300-mark, touched a low of 10,211.25, before finally ending 134.75 points or 1.30% down at 10,226.55. PAGE 11 Oil retreats as OPEC agrees to review production cut in June OIL DROPPED after an OPEC-led coalition of major crude producers left the door open to dropping supply cuts halfway through 2018, reports Bloomberg. Brent for January settlement, which expires Thursday, rose 80 cents to $63.91 on the ICE Futures Europe exchange. Futures fell as much as 0.8% in New York. The Organization of Petroleum Exporting Countries (OPEC) on Thursday ratified a long-awaited extension of output caps for a second year and were urging Russia and other major producers to do the same. PAGE 14 law. In fact, the scope of the changes is so enormous that most of the promoters of over 300 stressed companies,includ- Centre's finances fe Bureau Time to tighten The April-October expenditure more than kept pace with Budget despite a slowing down of revenues; capital expenditure, however, slowed to around `16,000 crore in October from a robust monthly average of over `24,000 crore in H1; sticking to deficit target will necessitate revenue acceleration % of annual target 120 100 April-October FY17 FY18 80 60 40 96.1 Fiscal deficit data unnerves markets, Sensex crashes 453 pts Finance minister Arun Jaitley in New Delhi on Thursday 79.3 HDFC ASSET Management Company (AMC) on Thursday announced its plans for an initial public offering (IPO), reports fe Bureau in Mumbai. Housing Development Finance Corporation and Standard Life Investments (SLI) approved the IPO of HDFC AMC and will be offering shares to the public through the offer. After the dilution, the shareholding of HDFC and SLI in HDFC AMC will be at least 50.01% and 24.99%, respectively. “We believe that the listing would unlock value of the business for the shareholders and provide investors an opportunity to participate in the emerging asset management space within our group,” said Deepak Parekh, chairman of HDFC AMC. PAGE 11 52.6 HDFC AMC gets board approval for public issue PROMOTERS WISHING TO bid for their own stressed assets on the block forsale should first pay up their dues to the banks, finance minister Arun Jaitley said onThursday,indicating the government’s resolve on the issue despite criticism from some quarters including embattled owners on the recent tightening of the bankruptcy law. Speaking at the HT Leadership Summit here, the minister also hinted that 12% and 18% tax rates in the goods and service tax (GST) regime could be merged once revenue collections gather pace while the 28% slab could be limited to a “very thin” list of luxury and“sin”goods. Last week, the government effected an ordinance to make sweeping changes to the Insolvency and Bankruptcy Code (IBC),2016,to preventwilful defaulters, dubious promoters, undischarged insolvents and other “unscrupulous, undesirable persons”from misusing the 50.7 QuickPicks Continued on Page 2 INSOLVENCY PROCEEDING FE BUREAU New Delhi, November 30 60.2 Various technologies, including electric, fuel cell, ethanol and hybrid, can compete with each other to achieve the best results, rather than relying on one technology alone (electric) ■ Motobahn, P15 him in rapt attention. From 2007 onwards,Raveendran was all about jet-setting across cities, taking classes that wereprimarilyforCAT.Later,realising that it was not physically possible to be at all the locations, he came upwith the idea ofvideo tutorials, which were beamed across all the centres. This was the turning point in terms of investorinterest.Ranjan PaioftheManipalGroupsawhim in action at Manipal one afternoon and he was stunned to see a large group of students listening to Raveendran in total silence, as if in a trance. He knew instantly that thiswas something unusual. AarinCapital,afundofRanjanPai and former Infosys board memberTV Mohandas Pai,pumped in `54 crore in 2013. Forsomebodywhogrewup inAzhikode,inKerala’snorthern district of Kannur, and studied in a Malayalammedium school, this was naturally a big transition. He also confesses that his English is still not up to speed. “I still think of words in Malayalam before I can translate them into English to communicate,” he says. Pay to play, FM tells promoters again IFCI files petitions against Reliance Naval, arm in NCLT 58.2 Electric is good, combination of technologies is better scored a 100 percentile but did not proceed further. He decided to turn his informal coaching of friends into a business. During the week it was allinBengaluruandonweekends, the teaching shifted to Mumbai and Pune.What started in classroomsmovedintoauditoriumsas over 1,000 students listened to Continued on Page 2 ■ Core-sector growth drops to 4.7% in October, P2 STRESSED ASSET BIDS Special Feature 35.8 POWER FINANCE Corporation (PFC) has listed its first international bond in almost two decades on the London Stock Exchange to fund renewable energy projects in the country, reports PTI. The 10-year dated green bond raised $400 million, paying a 3.75% semi-annual coupon. 10 50.6 PFC lists green bond on LSE (% real growth, y-o-y) 51.6 A DAY after the civic polls concluded in the state, the Uttar Pradesh Electricity Regulatory Commission (UPERC) on Thursday announced new power tariffs for the current financial year, allowing an average hike of 12.73% across all segments of consumers, reports Deepa Jainani in Lucknow. While the industry sector has been spared, rural unmetered consumers would feel the pinch as electricity will get costlier for them by almost 63-66.7%. GDP slide reversed 50.3 IN THE NEWS Power tariff hike in UP day after municipal polls Ends 5-quarter decline; post-GST restocking, manufacturing rebound help, investment looks up ● WINNER OF THE NEWSMAKER AWARD: BYJU’S FOUNDER BYJU RAVEENDRAN 20 0 Tax revenue Non-tax Total revenue expenditure Capex Fiscal deficit Major subsidies were `1.91 lakh crore in Apr-Oct of FY18 vs `1.92 lakh crore in the year ago peiod ing a dozen large bad debt accounts recommended by the central bank where the insolvency resolution process has been initiated, will be disqualified from acquiring assets of such firms. “If somebody says I owe the bank money, but I won’t pay the money, I won’t even service, but at half the cost I want my company back, I don’t think in India it is going to be acceptable,”Jaitley said. The political process in India would not have accepted a situation wherein banks take a substantial haircut only to have the same promoters back,he added. On GST, he said merging of 12% and 18% slab would mean some items in the 12% bracket would move to 5%.The newindirect tax regime started with multiple rates in order to keep the tax incidence around the same level that existed pre-GST. Currently,GSThas fourbroad tax slabs of 5%, 12%, 18% and 28%. Certain essential daily use items attract zero tax. Jaitleysaid Indiawould eventually move to a two-tier GST, but how fast it could be done would depend on the revenue position of the government. ● CLIMATE TARGETS IFC sees a $3-trillion opportunity by ’30 PRESS TRUST OF INDIA Mumbai, November 30 THE GOVERNMENT'S PLANS to meet the climate targets under the Paris agreement represents a $3.1-trillion investment opportunities by2030,says a report from the International Finance Corporation,a member of the World Bank Group. The sectors where this investment would come in include renewable energy, green buildings, transport infrastructure, electric vehicles, and climate-smart agriculture,according to the report.The analysis is part of a regional study that examines the climate-investment opportunities in Bangladesh, Bhutan, India, the Maldives, Nepal and Sri Lanka, which together represent 7.38% of global carbon dioxide emissions, the report noted. “The onlyway that the South Asian countries can take advantage of these climate investment opportunities is with a strong and engaged private sector,” IFC chief executive Philippe le Houérou said in the report. “We also need to have a comprehensive approach to creating markets for climate business in key sectors. That means putting in place the necessary policy framework,promoting competition,and building capacities and skillsets to open new markets,” he added. FE BUREAU New Delhi, November 30 IFCI HAS FILED two insolvency petitions, the first against RelianceNavalandEngineeringand the other against its subsidiary Reliance Marine and Offshore withtheAhmedabadbenchofthe National Company Law Tribunal (NCLT) under the Insolvency and Bankruptcy Code (IBC). On November 27, the twomemberbench asked both firms to file their objections, if any, within a week. Both cases have been listed for further hearing on December 8. Sources close to the company told FE that IFCI aims to recover `150 crore from the subsidiary Reliance Marine through the insolvency application. Reliance Marine and Offshore is engaged in building and repairing ships and boats. Reliance Naval and Engineering reported a net loss of `523 crore in 2016-17, marginally smaller than the `528 crore in 2015-16. The firm’s website claims it is the first company in theprivatesectortohaveobtained a licence and contract to build warships and has six subsidiaries, including one in Singapore. Reliance Naval’s debt stood at `8,951 crore in FY17,according to Bloomberg data. As on September 30, promoters held a 30.70% stake in the company. Reliance Naval and Engineering said in a statement on Thursday that there are no merits in the application filed by IFCI before NCLT, Ahmedabad, as it is an unsecured creditor. “The action of IFCI is unwarranted and premature. The 25 secured lenders of the company have also requested IFCI that the matter be resolved outside the NCLT,” it said. Inthelatestannualreport,Reliance Naval said its operations were “severely impacted” due to long gestation period of largescaleinfrastructurecreatedbythe company and non-availability of timelyworking capital. Once a petition is admitted in the NCLT, the interim resolution professional is needed to find, along with the committee of creditors, a resolution plan within 180 days, which can be extended up to 270 days. If the committee fails to find one,then the companywill be liquidated. ■ RCom’s lenders to oppose China Development Bank's insolvency petition, P6 CASE FILE On November 27, the twomember bench asked both firms to file their objections, if any, within a week Reliance Marine and the Offshore is engaged in building and repair of ships and boats Reliance Naval and Engineering said in a statement there are no merits in the application
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