OPINION, P8 M&M, P10 BIBEK DEBROY Govt did well to ease bamboo trade, but a long way to go INTERNATIONAL, P16 EDITORIAL INSOLVENCY PROCEEDINGS BUFFETT SUCCESSOR? RBI-arm article used to trash Aadhaar full of holes, ignores any data that supports it Financial bids for all 12 large NPA accounts by month-end: SBI Ajit Jain named deputy chair of Berkshire’s insurance operations MUMBAI, THURSDAY, JANUARY 11, 2018 FOLLOW US ON TWITTER & FACEBOOK. APP AVAILABLE ON APP STORE & PLAYSTORE WWW.FINANCIALEXPRESS.COM READ TO LEAD VOLUME XXXXXV NO. 254, 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: 34,433.07 ▼ 10.12 NIFTY: 10,632.20 ▼ 4.80 NIKKEI 225: 23,788.20 ▼ 61.79 HANG SENG: 31,073.72 ▲ 62.31 `/$: 63.60 ▲ 0.12 `/€: 76.31 ▼ 0.31 BRENT: $69.12 ▲ $0.30 GOLD: `29,563.00 ▼ `64.00 Monte Carlo Fashions Indian Terrain Fashions Intra-day on BSE (`), January 10 243 232.95 Intra-day on BSE (`), January 10 675 237 229.85 650 606.2 231 625 225 Open Previous Close : 219.85 Close 600 245 250 237.5 240 Previous Close : 601.75 Close Open 230 Previous Close : 233.40 Close Open FE BUREAU Mumbai, January 10 PRE-BUDGET BOOST SOVEREIGN BONDS SAW a sell-off on Wednesday led by concernsoverasurgeinUStreasuryyieldsandspikeinoilprices. The yield on the old 10-year benchmark(maturingin2027) closedat7.44%onWednesday, hitting the highest level since it wasintroducedinMaylastyear. The yield on the new 10-year benchmarkbonds(maturingin 2028),introducedlastweek,also closed at the highest level of 7.26%,up10pointsfromTuesday’s close. Yield on a 10-year bond was last near these levels only in end-June 2016.Experts attributethesell-offinbondsto a surge in the 10-year US treasury yield,which crossed 2.5% on Tuesday. Dealers also took noteofatweetbybondguruBill Gross of Janus Henderson on Tuesday: “Bond bear market confirmedtoday...” OnWednesday evening, the US treasury yieldwasaround2.595%levels, the highest since March 2017. Also aiding the sell-off was a spikeinoilprices—Brentcrude wastradingatathree-yearhigh of $69.27 a barrel. Govt opens FDI door wider Air India can have up to 49% FDI; 100% FDI in single-brand retail via automatic route, eases sourcing rule 51% 51% 100% FDI FDI (JV) with Reliance Retail Net sales (FY16) Net sales (FY17) (between Dec 2016 & Aug 2017) `714.3 cr FE BUREAU New Delhi, January 10 FDI (JV) with Tata Group's retail arm Trent `1,023 cr `704 cr Sourcing from India for also global operations is a step in the right direction. We look forward to same relaxation beyond the initial five years as well. THE CABINETON Wednesday decided to allow foreign airlines to invest up to 49% in ailing Air India, which is on the block,and eased foreign direct investment (FDI) policies in some critical areas, including single-brand retail, broking services in construction,pharmaceuticals and power exchanges. It permitted up to 100% FDI in single-brand retail through the automatic route and relaxed the 30% local sourcing norm, a major irritant forforeign players.The incrementalprocurementthat foreign companies will do in India for their global operations will also be counted as part of their local sourcing obligations in initial fiveyears. The changes will help foreign companies, including iPhone maker Apple, that are eyeing a bigger slice of the — JANNE EINOLA H&M INDIA COUNTRY MANAGER Indian market, and even Ikea and H&M that have been seeking relief in the sourcing rule (Ikea plans to launch its first store in Hyderabad in April). Priortothemove,althoughthe government allowed up to 100% FDI in single-brand retail, investments beyond 49% required the government’s approval. To facilitate the divestment Special Features High quality, low-cost printing with Epson L380 A multifunction printer with a sleek and compact design, the L380 prints well and snappily for home and office use. It’s also very good at handling colour graphics ■ Gadgets, P15 QuickPicks World Bank projects 7.3% growth for India in 2018 INDIA’S GROWTH rate in 2018 is projected to hit 7.3% and 7.5% in the next two years, according to the World Bank, which said the country has “enormous growth potential” compared with other emerging economies with the implementation of comprehensive reforms, reports PTI. India is estimated to have grown at 6.7% in 2017 despite initial setbacks from demonetisation and the goods and services tax, according to the 2018 Global Economics Prospect released by the World Bank on Tuesday. PAGE 2 Rice exports may see new highs as Bangladesh boosts buying INDIA’S RICE exports likely jumped 22% in 2017 to a record 12.3 million tonnes as Bangladesh ramped up purchases after flooding hit its crops, industry officials told Reuters. The boost in shipments from the world’s top exporter of the grain is set to extend into 2018 as Bangladesh and Sri Lanka continue to buy aggressively amid depleting inventories in Thailand, the second-highest exporter, the officials added. PAGE 14 India’s oil demand growth weakest since 2013 INDIA’S OIL consumption in 2017 expanded at the slowest pace in four years as demonetisation and GST weakened the economy, reports Bloomberg. The consumption of petroleum products rose 2% to about 200 million tonnes, the oil ministry’s petroleum Planning and Analysis Cell said on Wednesday. That’s the slowest since 2013, when demand grew 1.7% while global oil prices averaged about $109 a barrel. PAGE 14 Revenue It would allow many new brands to enter as the process has become simpler. The existing JV brands now have an option to operate on their own — KAVINDRA MISHRA PEPE JEANS CEO of Air India (AI),foreign airlines willnowbeallowedtobuyupto 49% in the national carrier, through government approval, on condition that the investments won’t exceed this limit even indirectly and substantial ownership as well as effective control will continue to be vested in an Indian national. Continued on Page 2 Apex court stymies RBI’s winding-up move on JAL Benchmark yields rise to near 18month high Intra-day on BSE (`), January 10 260 625.75 LIABILITY PAYMENT FIRST ● US GILTS, OIL Zodiac Clothing Existing cos likely to keep JVs going FE BUREAU Mumbai, January 10 OVERSEAS COMPANIES CAN now set up their 100% subsidiaries in India at a much fasterpacethanearlier,analysts and industryleaders said.However,itisunlikelyforeignplayers already present in single-brand retailthroughjointventureswill ditch their domestic partners. Industryveterans said overseas players generally prefer having a domestic partner as it helps them betterhandle the market, but they don’t like such conditionstobeplacedonthem.Also, theautomaticrouteaddstoease ofdoingbusiness.Sowhileexisting JVs may not see much change, newer companies may bemoreinterestednowtoenter this space. Sreedhar Prasad, partner, consumer markets, KPMG India, said: “Large global players would seriously consider entering or accelerating their India plans. We will see more fashion, beauty and personal care, baby product brands coming to India as well as existing brands strengthening their position.” Benchmark yield (%) 7.441 7.650 Jan 1 6.73 6.630 6.375 6.120 2018 2017 Source: Bloomberg TAKING WING AirAsia explores India unit initial public offering REUTERS Singapore, January 10 MALAYSIA-BASED AIRASIA IS considering an initial public offering(IPO)foritsIndianunit and seeking a partner for its services business, the carrier’s groupchiefexecutiveTonyFernandes said onWednesday. This is the latest in a series of asset monetisations being undertaken by the budget airline group, which this week received shareholder nod for a reorganisationtomakeAirAsia Group the listed holding company for assets across Asia. AirAsia has already completed a backdoor listing of Indonesia AirAsia TBK and finalised a S$119.3-million ($89.38 million) joint venture for its ground-handling businesswith Singapore’s SATS.Its Philippine unit is looking to an IPO, Fernandes posted on Twitter on Wednesday. While analysts are “giving zero value to AirAsia India”,the unit is a “very valuable asset withhugegrowthpotential”,he said in separate tweets, adding thesubsidiary“wasnotfarfrom 20 planes and a potential IPO”. AccordingtoIndianregulations, airlines need to have a fleet of at least 20 aircraft to fly on international routes. AirAsia India, a joint venture with Tata Sons, had 14 planes at end-2017. Its revenue last year was expected to double to `1,200 crore and climb to `1,800 crore in 2018. The fast-growing Indian venture reported a net loss of `16.4 crore in the quarter endedSeptember,accordingto AirAsia’s latest accounts. ASSET MONETISATION ■ AirAsia has already completed a backdoor listing of Indonesia AirAsia TBK ■ It has finalised a S$119.3-million joint venture for its groundhandling business with Singapore’s SATS ■ Its Philippine unit is looking to raise up to $250 million via an IPO in mid-2018 raise up to $250 million via an IPO in mid-2018. AirAsiawillseekapprovalat the next AirAsia India board meeting to pick a banker to start a preliminary process for ■ SC refuses give nod to RBI to ‘initiate’ insolvency proceedings against JAL till firm deposits `2,000 crore A MOVE BY the Reserve Bank of India (RBI) to ensure that commencement of solvency resolution process against developer Jaiprakash Associates(JAL)isn’tdelayedbyacase pending in the Supreme Court stumbled on the court’s decision to give utmost priority to interests of home-buyers. The apex court refused to allowthe RBI to initiate proceedings against JALtill the company,as directed by the court earlier, paid`2,000croresoastocover part of its subsidiary Jaypee Infratech’s (JIL) liability towards 32,000 home-buyers. It said that all debt restructuring and proceedings under the Insolvency and Bankruptcy Code (IBC) against JAL and JIL must wait till homebuyersgettheirrefundsorpossession of flats. Abench led byChief Justice Dipak Misra said:“Your (RBI’s) plea will be considered at a ■ JAL figures in RBI’s second list of about 30 companies to be taken to NCLT ■ JAL to deposit `125 cr by Jan 25; give details of all its housing projects in the country and stages of construction ■ Amicus curiae to set up a separate web portal for hassled JAL home-buyers later stage.” JAL owes over `25,000 crore to a consortium of lenders led by ICICI Bank. The RBI’s movewas seen by many analysts as a strategic one aimed at pre-empting a THEAADHAAR DATABASEhas introduced new security features like a virtual ID (VID) and UID tokens to make use ofAadhaar safer in the light of stories about Aadhaar information being leaked orof useragencies like telcos downloading Aadhaarnumbers of peoplewho go to get phone connections and misusing them later. The virtual ID is similar to that offered by UPI for payments where instead of your phone number you can mask this with another ID. In this case,users can go to the UIDAI databaseandgenerateavirtual VID as often as they want. So when you buy a mobile connection,givetheVIDinsteadof your Aadhaar number. When the telco sends this VID along with your biometric to UIDAI, the latter will mask your Aad- India's current population (estimate) Aadhaar issued 88.5% Continued on Page 2 IR aims for `6k cr in 8 yrs from 17 plots 1,31,66,80,660 1,16,54,28,377 situation similar to the Unitech case. The apex court had on December 13 stayed theNationalCompanyLawTribunal’s(NCLT’s)orderallowing the Centre’s plea to take over the management of the embattled realty firm even as the court had earlier given time to the company’s chief Sanjay Chandra to negotiate from jail to sell assets to generate `750 crore for refunding money to home-buyers. A May 5 ordinance amendingtheBankingRegulationAct —whichwas ratified byParliament in the monsoon session — had buttressed the RBI’s powers to “issue directions” to banks as it deems fit to initiate insolvency process in case of a defaultundertheprovisionsof the IBC. Analysts pointed out that the RBI onlycan ask banks to start the insolvency proceedingsagainstafirmandnot do its own.So,the central bank has locus standi (in filing the petition to the apex court in JAL’s case),” said an insolvency expert,seeking anonymity. InSeptember2016,JALhad received shareholder nod to allow conversion of its debt into equity with 88% of votes in favour of the conversion. ● LAND MONETISATION haar number and even other informationwhile confirming your identity to the telco. The move to enhance security is an ongoing process for all systems like banks and credit cards.While all biometrics are stored only on UIDAI’s servers in a heavily encrypted form, UIDAI installed GPS on its biometric-capture devices so it knew where the data was being captured. It then ruled that biometric authentication requests would only be entertained if they came from devices that were registered with UIDAI. To ensure people didn’t open bank accounts with stolen Aadhaar numbers — the Jharkhand government put out 1 million Aadhaar numbers by mistake last year, with names and addresses as well — the PMLA rules were changed to ensure all bank accounts would be authenticated with biometrics. FE BUREAU New Delhi, January 10 Jan 10 Dec 5 HOME RULES A virtual ID now to make it safer 7.140 6.885 FE BUREAUS New Delhi & Mumbai, January 10 AADHAAR SECURITY 7.337 7.395 Gives priority to interests of buyers of homes from subsidiary Jaypee Infratech; says central bank’s plea will be heard later Population with Aadhaar Continued on Page 2 SAURABH KUMAR New Delhi, January 10 INDIAN RAILWAYS HAS fasttracked its project for vacant landmonetisation,amovethat could boost its investible resources.TheRailLandDevelopment Authority (RLDA), whichisempoweredtoidentify portions of the transporter’s vacant land prone to commercialexploitation,hasidentified 17 plots for leasing out and aims to generate `6,000 crore as rentals over the next 8-10 years,officials said. While eight of these plots areinChennai,fiveareinMumbai and two in Secunderabad. IR’stotalvacantlandisestimated at a massive 47,300 hectares, but only a portion of this area can practically be used forcommercial purposes, as 90% of it is linear land on the sides of tracks. The RLDA’s track record in monetisationoflandisnotsatisfactory as it was hamstrung by land use restrictions imposedbystategovernments and other issues, including an earlier policy of earmarking land to it in a piecemeal fashion by the Railway Board. The RLDA, which started operationsin2007,hadgenerated just `200 crore till FY16. Continued on Page 2 SUBSCRIBER BASE When it comes to number portability, Jio finds there are no free launches RISHI RANJAN KALA New Delhi, January 10 RELIANCE JIO MAY have stormed the market,first with its free offers and then with low charges, forcing incumbents to follow suit.It also created a record by garnering the fastest 100-million subscriber base. However, though the incumbents like Bharti Airtel, Vodafone and Idea Cellular may have got badly bruised in terms of revenue and profitability, they haven’t lost on subscribers to Jio. Mobile number portability ing of Jio. In fact, the pecking order in terms of gains by way of MNP remains intact with Idea Cellular at the top, fol- — the facility to retain one’s number while changing operators — does not show any material changewith the com- tember 2016 and October 2017 is a very low proportion of its overall subscriber base (145 million at October 2017 lowed byVodafone and Bharti. Jio comes after them. Jio’snetport-insatcumulative 3.8 million between Sep- Mobile number portability scorecard until October 2017 Gross port-ins (% of total) Port-ins (m) 90 1.5 30 65.5 Idea 69.4 67 Vodafone Bharti 4 60 20 60 0 Port-outs (m) 30 24.4 40 10 0 0.1 Idea 50.1 48.5 Vodafone Bharti 30 14 20 0 Net gain/(loss) 21 15.1 40.6 R-Jio Gross port-outs (% of total) 20 7 12 8 1.4 10 24.9 0.2 R-Jio Net port-ins (% of total) 9.3 0 0 Idea 19.4 18.4 Vodafone Bharti 3.8 R-Jio 4 0 Source: TRAI, Kotak Institutional Equities end). During the same period the gains byBharti stood at 9.1 million, Vodafone 6 million and Idea at 5.4 million. This shows that Jio is still not the primarynumberforthebulkof its customers. In fact, MNP data from the Telecom Regulatory Authority of India — cumulative port-ins and port-outs from MNP since inceptioninJanuary2011until end-October 2017 — shows that the incumbents (Bharti, Vodafone and Idea) and Jio are the onlynet gainers from MNP. Continued on Page 2
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