OPINION, P8 ECONOMY, P3 TV RAMACHANDRAN GST-type template could help reduce telecom levies INTERNATIONAL, P16 EDITORIAL CONNECTIVITY SUMMIT APPEAL HEARING Capping surcharges in power sector and ATC losses could finally turn it around India proposes $1-bn credit for connectivity with ASEAN: Gadkari Khosrowshahi-led Uber stays on London streets till at least April MUMBAI, TUESDAY, DECEMBER 12, 2017 FOLLOW US ON TWITTER & FACEBOOK. APP AVAILABLE ON APP STORE & PLAYSTORE WWW.FINANCIALEXPRESS.COM READ TO LEAD VOLUME XXXXXV NO. 228, 18 PAGES, `6.00 P U B L I S H E D F R O M : A H M E D A B A D , B E N G A L U R U , C H A N D I G A R H , C H E N N A I , H Y D E R A B A D , K O C H I , K O L K ATA , L U C K N O W, M U M B A I , N E W D E L H I , P U N E SENSEX: 33,455.79 ▲ 205.49 NIFTY: 10,322.25 ▲ 56.60 NIKKEI 225: 22,938.73 ▲ 127.65 HANG SENG: 28,965.29 ▲ 325.44 `/$: 64.37 ▲ 0.09 `/€: 75.9 ▼ 0.25 BRENT: $63.62 ▲ $0.22 GOLD: `28,535.00 ▲ `43.00 TWO-PART OPERATION 28 STRESSED COMPANIES AI enterprise to split before sale SALES FORCE Air India+ Air India Express Sans their non-aircraft assets to be privatised A special purpose vehicle to house AI's working capital debt of `32,000 crore, land & buildings and subsidiaries other than Air India Express PRASANTA SAHU New Delhi, December 11 QuickPicks Economists urge govt to stick to fiscal consolidation path IN A pre-Budget meeting with finance minister Arun Jaitley and his team, economists on Monday ` impressed upon the government to stick to the fiscal consolidation path, announce a roadmap for further tax reforms and give more incentives on infrastructure investment and better remunerative prices to farmers, reports fe Bureau in New Delhi. PAGE 3 Benchmark yield closes at 16-month high of 7.17% THE BENCHMARK yield closed at a 16-month high level of 7.17% on Monday with traders consolidating their positions ahead of the release of the Consumer Price Index (CPI) inflation data on Tuesday, reports fe Bureau in Mumbai. The 10-year yield closed 8 basis points higher on Monday compared with Friday's closing level — recording the highest single-day surge since September. PAGE 10 Food procurement: India seeks lasting solution at WTO INDIA ON Monday sought a permanent solution to the critical issue of public procurement programmes at the ongoing ministerial of the World Trade Organisation (WTO) itself and asked the developed world to trim their massive trade-distorting farm subsidies, without putting the onus of a reduction in such dole on developing nations, reports Banikinkar Pattanayak in Buenos Aires. PAGE 2 Jai Balaji Industries IVRCL Soma Enterprises Asian Colour Coated Ispat the RBI's second list were likely to land up at the NCLT.“Almost the entire list will go to the NCLT,”Kumar had said. What the central bank has askedlenderstodoistoassessthe sustainabledebtforacompany— regardless of whatever scheme hasbeeninitiatedwhetheranS4A (scheme for sustainable structuring of stressed assets) or an SDR (strategic debt restructuring) — 5,638 7,367 3,641 7,122 2,460 3,511 andhavethisdebtupgradedtoinvestment grade by rating agencies. Since there were not too many companies that needed to be rated, the process should not takemuchlonger,theyexplained. “Only a few of the 28 companies listed by RBI have been sent to credit rating agencies for a rating upgrade,” one said. Continued on Page 2 ● 2ND ARBITRATION Vodafone case: Govt seeks stay on Delhi HC order Continued on Page 2 INDU BHAN/SUMIT JHA New Delhi, December 11 CASE FILE ■ SC to hear Unitech's appeal against govt takeover on Tuesday Leadership change Rahul Gandhi has been elected unopposed as Congress president, it was announced on Monday. Gandhi will take charge as party president on December 16. ■ SC more concerned ■ NCLT on Friday suspended Unitech board, asked MCA to appoint 10 nominee directors to run co monitoring being implemented by the apex court a nullity and rendersitimpossibleforthepetitioners(Unitechanditsdirectors) to complywith the SC orders.” Low base effect FE BUREAU CVs, two-wheelers drive sales Siam data showed sales of passenger vehicles in November grew a relatively unimpressive 4.5% over last year but robust sales of commercial vehicles and two-wheelers took overall sales up 24%. Nov-16 Nov-17 Change (%) 4.49 44.65 Passenger cars 62.63 Utility vehicles M&HCVs 5,06,267 ■ Unitech says NCLT order was in complete disregard of SC orders; renders it impossible for it to deposit `750 cr by December end 3,88,692 about home buyers than "company or investors" 9,59,122 Monetisation in sports via sponsorships has reached a substantial level, but a big revenue stream which remains untapped is licensing and merchandising (L&M). What is the true potential of this segment? BILT 7,78,173 Authentic licensed sports merchandise: Yay or nay? Uttam Galva Steel informal talks with the government, lenders to the carrier have understood to have expressed theirwillingnesstonegotiatewith it on howto settle theAI loans. AI’s physical assets include its aircraft fleet (including Boeing Dreamliners), land parcels/ buildings in India and abroad and also itsvaluable bilateral flying/landing rights and parking slots at airports across theworld. NCLT went against SC order: Unitech CORNERED BY FRIDAY’S National Company Law Tribunal (NCLT) order suspending all its nine directors and letting the government take over its managementcontrolwithits10nominees, embattled real estate firm UnitechonMondaymadeabidto escape the process bypleading to the Supreme Court in vehement termsthatthetribunalwentcontraryto the SC’s earlierdirections in a criminal case.A bench led by Chief Justice Dipak Misra posted the matter for hearing on Tuesday, but not before Misra observed,“We are more concerned with home buyers (rather than) with the company and fixed deposit holders/investors. Home buyers are not investors.” The Unitech stock, which rose 19.9% on Friday following the NCLTorder,climbed another 10.6% on the BSE on Monday. Unitechinitsappealsaid,“Despitecleardirectionsissuedbythe SC, the tribunal in complete disregard to the said orders proceeded to pass an order which makes the entire process and 39,063 JP Associates BOARD SUSPENSION INDU BHAN New Delhi, December 11 47,554 Videocon Inds 40,387 As you make the most of the tax saving instruments under Section 80C, 80D and and 80CCD, do not forget to invest in ELSS and NPS to make the most of a rising equity market ■ Personal Finance, P15 prospective buyer of AI-AIE will also have to take over the airline’s `20,000-crore aircraft-related loans and AI’s `8,000crore dues to oil retailers. Though valuations are yet to be done, officials reckon that government’s receipts from the sale this year could be close to `15,000 crore. Separately, the proposed SPV will negotiate for settling AI’s `32,000-crore debt which could seebankstakingahaircut.During 28,268 Doing annual tax planning? Look at ELSS, NPS Expected receipts for govt from AI and Air India Express privatisation, value largely attributed to 100-plus aircraft fleet and premium on bilateral rights across the world including profitable West Asia operations 44,477 43,502 37,284 37,248 23,443 10,333 10,274 8,100 7,922 6,953 3,928 3,387 stressed accounts that are being assessedbythecreditratingagencies for a rating upgrade or those which are nearing resolutions. However,bankers are not too hopeful of getting an extension and are readying to refermost of the defaulting firms to the NCLT. State Bank of India (SBI) chairman Rajnish Kumarhad indicated to reporters last month a majority of the companies on 28,459 Special Features Up to `15,000 cr Total debt of AI, of which about `20,000 crore of aircraft-related loans has to be taken over by the buyer along with about `8,000 crore dues to oil PSU retailers HAVING FAILED TO come up with resolution plans formost of the 28 stressed companies on the Reserve Bank of India’s (RBI) second list, bankers are understood to have asked the central bank for a little more time to resolve a few of them. The deadline for coming up with resolution plans for these companies is December13; if not resolved,they need to be referred totheNationalCompanyLawTribunal (NCLT) in another18 days. TwobankerstoldFE,onconditionofanonymity,therequestfor agraceperiodrelatesonlytothose 17,499 RISING FOR the second straight session, the rupee on Monday strengthened by 8 paise to end at a fresh oneweek high of 64.37 to a dollar on sustained selling of the US currency ahead of key macroeconomic data, reports PTI. The domestic unit largely withstood intense pressure emanating from strong dollar overseas following robust weekend jobs data and fears of an imminent rise in US interest rates with the US central bank's two-day monetary policy starting on Tuesday. The Federal Reserve is widely expected to hike key interest rates for the third time this year. ~`52,000 cr Second list First list Bhushan Steel Lanco Infratech Essar Steel Bhushan Power Alok Industries Monnet Ispat Electrosteel Steels Era Infra Jaypee Infratech ABG Shipyard Amtek Auto Jyoti Structures » Rupee ends at one-week high Gross debt (` core) 77,824 TO FAST-TRACK THE privatisationofstate-runAirIndia(AI),the governmentislikelytofirstdivide theenterpriseintotwo:AIandAir India Express (AIE),which undertakes the airline’s profitable West Asia operations, would be combinedandputupforsale;another special purposevehicle (SPV) that will include AI’s `32,000-crore working capital debt, its other subsidiariesincludingAllianceAir andassetssuchaslandandbuildings,will be monetised later. According to official sources, while a Cabinet note detailing this plan has been prepared on the lines of the recommendations of a ministerial group headed byfinance ministerArun Jaitley,the idea is to conclude the sale of AI-AIE by the end of the fiscal and the undertake the balance transactions in due course. The sources added that along with AI’s 12,000-strong workforce, its headquarters building at Delhi’s Gurudwara Rakabganj Road and 115 aircraft, the Cases before NCLT FE BUREAU Mumbai, December 11 53,803 AI-Air India Express combine will be first to be put on the block; SPV of other assets to be monetised later Bankers say relates only to those accounts being assessed by rating agencies for an upgrade or those nearing resolutions 1,81,395 INDIA’S FUEL demand went up by 6.2% in November as diesel consumption showed signs of recovery, reports PTI. Fuel consumption totalled 17.4 million tonnes (mt) in November against 16.4 mt in the year-ago period, according to the latest data from the Petroleum Planning and Analysis Cell of the oil ministry. This mirrors a recovery from 0.9% growth in October, but pales before the 10.4% expansion in November last year. Demand for diesel, which had entered negative territory in October, was up 7.5% at 7.25 mt in November, a sign of increased economic activity. Diesel accounts for over 40% of the country’s total consumption. Lenders seek some more time 1,73,607 IN THE NEWS Fuel demand jumps 6.2% in November 42.87 LCVs 23.25 Motorcycle 30.25 Scooter THE FINANCE MINISTRY on Monday moved the Supreme Court seeking a stay on the Delhi High Court’s October order that allowed the Vodafone Group to go ahead with its second arbitration proceedings against India under a treaty with the UK in connection with a tax demand, `20,000 crore when last reported,on the company over its $11-billion acquisition of Hutch’s stake in Hutchison-Essar in 2007. It contended that the high court order amounted to“an abuse of process (since another arbitration in the same case was already underway) and,therefore, (is) null and void”.The multinational firm, the ministry alleged, was trying forum shopping, while it was essentially contesting a 2012 retrospective tax amendment over indirect transfers in both cases. Dutch firm Vodafone International Holdings had initiated the arbitration process underthe India-Netherlands tax and investment treaty in April 2014. While the proceedings were under way, two other group firms initiated anotherarbitration under the India-UK bilateral investment promotion and Protection Agreement (BIPA) in January 2017. A bench led by Chief Justice Dipak Misra posted the matter for hearing on Tuesday. Source: SIAM Continued on Page 2 Continued on Page 2 PROFIT MOTIVE At Amazon India, scaling up and cutting costs is the bottom line ANUSHREE BHATTACHARYYA New Delhi, December 11 AMAZON SELLER SERVICES, the marketplace arm of USbased e-tailer Amazon, says it has alreadystarted to focus on its bottom line. Gopal Pillai, director and general manager, seller services, Amazon India, told FE that given the company was a for-profit organisation worldwide,itwas at all timeswatching both the top line and the bottom line.“As faras India is concerned, it is a strategic long-term investment and we would continue to make investments that enhance the customer and seller experience,”Pillai said. Without divulging a timeline by when the e-commerce firm hopes to turn profitable, Pillai said a specific target drives wrong behaviour. “We would continue to make progress in Year-on-year growth (in %) 2017 Volume Value Q1 85 68 Q2 88 59 Q3 67 72 2016 Source: Amazon India Daily active users on mobile app (in %) 5 4 124% Volume 108% Value cost savings, revenue generations, etc, as long as we provide the right experience. With the best services and experiences, 3.6 3 2 3.5 4.7 3.9 1 0 Nov-16 Source: Similarweb Oct-17 the right progress will come in due course of time,”he said. The e-tailer claims that after taking close to three years to add 1 lakh sellers on the platform, it took just oneyearforit to add another1 lakh sellers in January.Between January and September, the e-tailer claims to have added another70,000 sellers,taking its total seller base to 2.7 lakh.“We have been adding 3,000 sellers a week post July 1,” said Pillai.According to Pillai,Amazon is now working towards what he calls creating a business based on economyof scale.“Growth comes in byproviding best customerex- perience which in turn helps in driving traffic. The increase in traffic helps in getting more sellers with a large number of selections.When the business starts to register growth,that reduces the cost structure, further lowering losses. For example, if earlier we were selling 100 units of a product and had just two people at the warehouse shipping the items... Even if the volume rose by 10 times to 1,000, one is not required to double up the manpower, thus saving on cost,” he said. Continued on Page 2
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