OPINION, P8 ECONOMY, P3 SURJIT BHALLA Piketty’s inequality claims don’t pass even the smell test INTERNATIONAL, P16 EDITORIAL ONBOARD AMENITIES CLOUD COMPUTING FOCUS Import surge confirms that strong `, DeMo and GST continue to hurt the economy Sharma-led Trai clears usage of internet, mobile services during air travel Ginni Rometty-led IBM logs first revenue growth since 2012 NEW DELHI, SATURDAY, JANUARY 20, 2018 WWW.FINANCIALEXPRESS.COM FOLLOW US ON TWITTER & FACEBOOK. APP AVAILABLE ON APP STORE & PLAYSTORE READ TO LEAD VOLUME XLIII NO. 277, 22 PAGES, `8.00 (PATNA `9.00, RAIPUR `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: 35,511.58 ▲ 251.29 NIFTY: 10,894.70 ▲ 77.70 NIKKEI 225: 23,808.06 ▲ 44.69 HANG SENG: 32,254.89 ▲ 132.95 `/$: 63.85 ▲ 0.01 `/€: 78.33 ▼ 0.17 BRENT: $68.51 ▼ $0.80 GOLD: `29,958.00 ▼ `67.00 Blended ARPU (`) 575 694 459 Usage per customer (mins) Bharti Airtel Bharti Airtel 4,38,688 Idea Cellular 43,10,000 Reliance Jio 11,05,839 Bharti Airtel Reliance Jio 123 Reliance Jio Idea Cellular 5,349 9,600 3,805 Usage per customer (MB) 154 Idea Cellular 132 Idea numbers are for Q2 RIL net up 25% at `9,423 crore line method by other telecom operators. Under Jio’s method, depreciationandamortisation depends on the pattern of con- Revenue 30.5 PBDIT 39.4 Q3FY18 % change 9,423 RELIANCE INDUSTRIES LTD (RIL) reported a strong set of numbersforthethreemonths ended December 2017,beating street estimates on all fronts. Boosted by volume increase with the start-up of petrochemicals projects and increase in prices in refining and petrochemical businesses,consolidatednetprofit Q3FY17 7,533 (` crore) 19,845 FE BUREAU Mumbai, January 19 14,237 JUSTLIKE ITdidintheSeptember quarter,Reliance Jio on Friday once again surprised by turningoutanimpressivesetof numbers during the OctoberDecemberperiod.Thecompany, which had posted a net loss of `271 crore during the previous quarter, posted a net profit of `504 crore during the December quarter.This is higher than the country’s largest telecom operator Bharti Airtel, which postedanetprofitof`306crore during the quarter. Jio,which started commercial operations from September 2016, started releasing its earnings from the July-September quarter. It had started charging its subscribers from April 1,2017. ThoughJiohasbeenposting impressive numbers, analysts have raised some questions over its accounting practices. For instance, Jio does not fully capitalise its assets and spectrum is amortised on a usage basis rather than the straight 2,55,035 FE BUREAU Mumbai/New Delhi, January 19 Comparision: Metrics of Bharti Airtel, Reliance Jio & Idea Cellular DATA (Volume, million MB) VOICE (Volume, million mins) 1,09,905 BENCHMARKS EXTENDED their gravity-defying run for the third straight session on Friday as healthy earnings by bluechips and GST rationalisation gave a fresh boost to buying momentum, reports PTI. The BSE Sensex spurted 251.29 points to end at its fresh lifetime high of 35,511.58, while the broader NSE Nifty advanced 77.70 points to record 10,894.70. Intra-day, it breached the 10,900-mark for the first time. Continues to beat peers on data volumes and usage per customer 84,189 Markets climb to new record highs RESULT CORNER RJio turns profitable, `504 cr in Q3 3,11,130 IN A blow to Delhi's ruling Aam Aadmi Party (AAP), the Election Commission (EC) on Friday recommended to the President the disqualification of 20 of its MLAs for holding offices of profit, setting the stage for their ouster from the assembly, reports PTI. The EC said the MLAs, by occupying the post of parliamentary secretaries between March 13, 2015 and September 8, 2016, held offices of profit, and were liable to be disqualified as legislators, highly-placed sources said. AAP’s MLAs have moved the Delhi High Court against the EC's recommendation. QUICK TURNAROUND 4,94,546 IN THE NEWS EC recommends disqualification of 20 AAP MLAs Net profit* 25.1 GRM($/bbl) 10.8 11.6 0.8 *Excluding exceptional items sumption of expected future economicbenefit,whichisakin to the unit of production depreciation method. This excluding exceptional items increasedasharp25.1%yearon-yearto `9,423 crore. Gross refining margins came in at $11.6/bbl against $10.8/bbl in Q3FY17, in line with street estimates. But EBIT(earningsbeforeinterest and tax) for the refining and marketing business marginally fell 0.5% y-o-y to `6,165 crore during the period. Continued on Page 2 means Jio has determined the total data capacity of its network over the life of the spectrum allocation and the con- ITC Intra-day on BSE (`), Jan 19 278 276.2 273.85 276 sumption of GBs per quarter willdeterminethequantumof depreciationandamortisation charge. The D&A cost under this would be lower, especially in the initial years, compared with the straight line method. Analysts also feel that Jio’s averagerevenueperuser(Arpu) at`154tobeonthehigherside as bulk of its customers are on the `309/399 tariff package. During October-December, Jio’s revenues increased 12% quarter on quarter at `6,879 crore. Ebitda (earnings before interest,taxes,depreciationand amortisation) stood at `2,628 crore, an 82.1% increase from theprecedingquarter.Theearnings before interest and tax (Ebit) stood at `1,436 crore, a 453.1%sequentialrise.Margin expanded to 38.2% against 23.5%intheprecedingquarter. With a revenue of `6,879 crore, Jio is a tad behind Idea Cellular,which reported a revenue of `7,465.4 crore during the July-September quarter. Idea is yet to report its December quarter earnings. On operating metrics, Jio continues to be far ahead of peers like Bharti Airtel.Its Arpu during the quarter was `154, which though was lower than `156.4reportedbyitinthepreceding quarter, but was higher than Bharti’sArpu of `123. 274 272 270 Previous close : 272.85 Open Close HDFC Bank Q3 net up 20% HDFC BANK on Friday reported a 20% year-onyear growth in Q3 net profit to `4,642.6 crore on the back of an 18% y-o-y rise in income, reports fe Bureau in Mumbai. ■ P20 Wipro Intra-day on BSE (`), Jan 19 332.5 328.45 329.0 327.2 325.5 322.0 318.5 Previous close : 326.05 Open Close Kotak Mahindra Bank net rises KOTAK MAHINDRA Bank on Friday reported a 19.72% rise in its standalone net profit to `1,053.21 crore in Q3 of FY18, reports fe Bureau in Mumbai. ■ P20 Continued on Page 2 NSAI-MMB DISPUTE Special Feature ICICI Lombard has strong potential for quality growth Premium valuations may be sustained for the stock as its investment yields and return ratios are far superior to peers; initiated with Buy and TP of `810 ■ Investor, P15 Space flight: Size matters in the new play The biggest rocket in the world, Elon Muskfounded SpaceX’s Falcon Heavy prepares for its maiden voyage. Even bigger ones are in the offing ■ Science & Tech, P15 QuickPicks SAT refuses to stay Sebi ban on Price Waterhouse THE SECURITIES Appellate Tribunal on Friday refused to grant a stay on the two-year Sebi ban on audit major Price Waterhouse (PW) to undertake new clients, reports PTI. On January 10, markets watchdog Sebi had banned the auditor for its alleged complicity in the multi-crore Satyam scam. Posting the matter for further hearing on February 13, SAT, however, on Friday clarified that the audit major and its networking entities can continue serving its existing clients. PAGE 11 Govt sends tax notices to cryptocurrency investors INDIA HAS sent tax notices to tens of thousands of people dealing in cryptocurrency after a nationwide survey showed more than $3.5 billion worth of transactions have been conducted over a 17-month period, the income tax department said, reports Reuters. Tech-savvy young investors, real estate players and jewellers are among those invested in bitcoin and other virtual currencies, tax officials said after gathering data from nine exchanges in Mumbai, Delhi, Bengaluru and Pune. PAGE 3 Forex reserves at new record high of $413.825 billion THE FOREIGN exchange reserves rose by $2.7 billion to scale a new life-time high of $413.825 billion in the week to January 12, due to an increase in foreign currency assets, the Reserve Bank of India (RBI) said on Friday, reports PTI. In the previous week, the reserves had touched $411.124 billion after it rose by $1.758 billion. The reserves had crossed the $400billion mark for the first time in the week to September 8, 2017 but has since been fluctuating. IFTHE COTTONcropinMaharashtra and elsewhere became vulnerable to pink bollworm (PBW)attack,theblameshould lie with the local seed companies who could not get the farmers to comply with the required protocol to resist it, Monsanto,which out-licensed Bollgard II technologyto these firms,has said.In a letterwritten to Union agriculture minister Radha Mohan Singh, Mayhco Monsanto India (MMB), Monsanto’s 50:50 joint venture with Maharashtra-based Mahyco, said the National Seeds Association of India(NSAI)wasattemptingto deflect the blame fornaturally emerging resistance to MMB without acknowledging the responsibilityof its own member seed companies in undertakingtechnologystewardship practices. “We categorically disagree with with NSAI’s positions, find theirthreat to stop supply of cotton seeds with BG-II technologyas completelyirresponsible and against farmer interests,”MMB wrote. According to the firm,BG-II continues to provide effective control of American Bollworm, whichistheprimarypestofcotton. Depriving farmers of an effectivetooltocombatthispest havingapotentialtocauseyield losses of more than 50%would be irresponsible on the part of NSAI,MMB said. The NSAI had earlieralleged “a clear case of failure”of MonsantoBGIItechnology.TheCentral Institute of Cotton Research,theassociationnoted, had declared PBW developed resistance twoyears ago. According to Monsanto, however,there are six Biotechnologies approved for commercial use in India and NSAI’s member seed companies have always had the option of choosinganapprovedtechnology and not limiting their portfolios to Bollgard. Continued on Page 2 HDFC Bank Intra-day on BSE (`), Jan 19 1,960 1,948 1,935 1,951.2 1,936 1,924 1,912 Previous close : 1,931.80 Open Close Wipro net falls sequentially WIPRO REPORTED an 11.6% sequential fall in its Q3 net profit due to a onetime financial impact caused by the insolvency of a client, reports fe Bureau in Bengaluru. ■ P6 Kotak Mahindra Intra-day on BSE (`), Jan 19 1,070 1,062 1,053 1,059.95 1,054 1,046 1,038 Previous close : 1,045.40 Open Close Honda Cars India recalls over 22,800 vehicles We do note that very little benefit of the reduction of trait fee has been passed to the farmers while the seed companies seem to have benefitted substantially — MMB director Satyender Singh wrote to NSAI director general Kalyan Goswami ITC'S OCTOBERDECEMBER standalone net profit met estimates by rising 16.75% YoY at `3,090.20 crore, reports fe Bureau in Kolkata. Total income fell 26%. ■ P6 ● FAULTY AIRBAGS Monsanto says it is not to blame for pink bollworm NANDA KASABE & PRABHUDATTA MISHRA Pune/New Delhi, January 19 ITC net profit meets estimates FE BUREAU Chennai, January 19 Bollywood bash Israeli PM Benjamin Netanyahu on Thursday tweeted a selfie alongside his wife Sara and some of Bollywood’s biggest stars, including Amitabh Bachchan, Abhishek Bachchan and Aishwarya Rai Bachchan, among others. Also seen are Unilazer Ventures founder Ronnie Screwvala, Viacom18 COO Raj Nayak and Hungama Digital Media CEO & MD Neeraj Roy US output impact AGENCIES AGENCIES Oil heads for biggest weekly fall since Oct Oil prices slid on Friday, putting them on course for the biggest weekly fall since October, as a bounce-back in US output outweighed ongoing falls in crude inventories WTI Crude ($/bbl) 65.00 Brent ($/bbl) 63.55 72.00 68.81 62.50 69.00 60.00 58.36 66.00 63.73 57.50 6 63.00 55.00 Dec 1, ’17 60.00 Jan 19, ‘18 Dec 1, ’17 Jan 19, ‘18 HONDA CARS INDIA is recalling 22,834 units of theAccord, City and Jazz models in the countryaspartofaglobalexercise to rectify faulty airbags. The latest exercise takes the overallnumberofrecalledvehicles, equipped with airbags manufacturedbyTakata,bythe company to 3.13 lakh units in India. The company, which is present in India through a wholly-ownedarmHondaCars India Ltd (HCIL), announced that the latest recall would impact models which were manufactured in 2013. The replacement will be carried out free of cost at HCIL dealerships across the country in a phased manner starting Friday (January 19) and the company will communicate with customers directly,it said in a statement. According to the company, the recall would affect 510 units of the premium sedan Accord, 22,084 units of the City and 240 units of the Jazz. Continued on Page 2 GST COMPLIANCE Easier system in the works but no blunting of anti-evasion tools SUMIT JHA New Delhi, January 19 THE EASIER RETURNS-FILING systembeingputinplacebythe Goods and Services Tax (GST) Councilmayevendispensewith thesummaryreturnformGSTR 3B eventually. In the new system,verification of businesses’ taxliabilitiesbyrevenueofficials will hinge a lot on the supply invoices that will necessarily have to be uploaded on the GST Networkportal.Otheranti-eva- sionmeasureslikee-waybilland reverse charge mechanism will complement the effort to plug revenue leakages. Tax experts said the proposed regime, much simpler than the tried-and-failed mechanism of filing returns in three comprehensive forms, would still allow invoicesmatching on a real-time basis, thoughtheonusofthisprocess will shift to the assessees themselves. Small businesses, however, fear that they could ILLUSTRATION: ROHNIT PHORE finditdifficulttogettheirsuppliers to comply promptly and save them the hassle of tax credits getting blocked. The new system,mooted by Infosys chairman Nandan Nilekani in his presentation to theGSTCouncilonThursday,is akin to what many states employed for value added tax (VAT),butissuperiorforitsability to present the invoice mismatches on a real-time basis. Even as over 1 crore businesses have registered them- selvesontheGSTNandthenew tax is into its seventh month, just 1.5 crore detailed returns (GSTR-1) on outward supplies have so far been filed, showing the lowlevel of compliance. While the supply-invoicesonly system appears to be much simpler, there are concerns that it will increase the need forbusinesses to interact with the tax authorities aswell the units they transact with. Continued on Page 2
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