OPINION, P8 MONEY & MARKETS, P11 SUNIL JAIN Fix reserve price for spectrum scientifically INTERNATIONAL, P16 ABINASH VERMA SINGLE-FUTURE STOCKS LAUNCH HAEMOPHILIA MARKET Resolve cane pricesugar realisations mismatch to end cane arrears SGX's plan will shift liquidity out of Indian markets: NSE's Limaye Brandicourt-led Sanofi to buy US' Bioverativ for $11.6 billion NEW DELHI, TUESDAY, JANUARY 23, 2018 WWW.FINANCIALEXPRESS.COM FOLLOW US ON TWITTER & FACEBOOK. APP AVAILABLE ON APP STORE & PLAYSTORE READ TO LEAD VOLUME XLIII NO. 279, 24 PAGES, `5.00 (PATNA `6.00, RAIPUR `7.00) P U B L I S H E D F R O M : A H M E D A B A D , B E N G A L U R U , C H A N D I G A R H , C H E N N A I , H Y D E R A B A D , K O C H I , K O L K ATA , L U C K N O W, M U M B A I , N E W D E L H I , P U N E SENSEX: 35,798.01 ▲ 286.43 NIFTY: 10,966.20 ▲ 71.50 NIKKEI 225: 23,816.33 ▲ 8.27 HANG SENG: 32,393.41 ▲ 138.52 `/$: 63.87 ▼ 0.02 `/€: 78.30 ▲ 0.03 BRENT: $68.45 ▼ $0.16 GOLD: `29,965 ▲ `7 R OPEC AND Russia reaffirmed that they’ll persevere with oil-production cuts until the end of the year to clear a global glut and signalled readiness to cooperate beyond that, reports Bloomberg. Russia is prepared to continue cooperating with OPEC and its de-facto leader Saudi Arabia even after the cuts expire, energy minister Alexander Novak said in an interview held jointly with Saudi counterpart Khalid Al-Falih. Producers should keep limits on output through 2018 as the market may re-balance at the end of 2018 or in 2019, Al-Falih said. Neither minister said whether the cuts would continue in 2019. PAGE 14 PSBs end FY17 with high NPAs in education loan category PUBLIC-SECTOR BANKS (PSBs) ended FY17 with bad loan ratios in the education loans category as high as 18% in some cases, data released by the finance ministry showed, reports Shritama Bose in Mumbai. Going by the data placed in the Lok Sabha and numbers put out by PSBs in their annual reports and/or investor presentations, seven PSBs had a double-digit gross NPA ratio as a share of their education loan portfolio as on March 31, 2017. At 18.43%, Chennai-based Indian Bank had the poorest NPA ratio among PSBs, followed by Central Bank of India (16.64%) and Bank of Baroda (16.13%). PAGE 10 NTPC 12,569 18,228 18,597 ONGC (59%) 73 62 PGCIL IOC lakh crore Investment in first 9-months of FY18 Investment by all CPSEs and departmental agencies (` lakh crore) 2.63 2.29 3.11 4.06 FY14 FY15 FY16 FY17 (RE) 4.10* FY18 (BE) Warming up Prime Minister Narendra Modi arrives at Zurich International Airport for the World Economic Forum, in Davos on Monday. Ahead of his departure, the PM hinted in a Times Now interview that the Budget won't be populist and that the common man did not demand freebies and sops but rather expected honesty. Reports on Page 2 *BE of `3.85 lakh crore likely to be revised `2.9 lakh crore achieved last year,therecouldbeamoderate slippage, given the fiscal constraints.This is despite the fact that riding on defence and road projects, the budgetary capex rose 29% to `1.84 lakh crore in April-November this year compared to `1.43 lakh crore a year ago. Gross fixed capital formation is expected to grow 4.5% thisfiscal,comparedwith2.4% last year,according to the CentralStatisticsOffice(CSO)forecast,indicatingthatthespending by the Centre via Budget and its firms has helped arrest the decline in gross fixed capital formation (GFCF). Nevertheless,the data from the specified CPSEs and DUs signal that public spending, which was a key growth driver in 2016-17, retained that role into the current fiscal as well. In2016-17,investmentsby the large entities with capex above `500 crore, from own resourcesandborrowings,were `2.54 lakh crore. Their capex target forthe currentyearis set at a comparatively lower `2.4 lakh crore,but sources said,the investments in the full year couldbehigherthanthetarget. The government has nudged these firms to spend more. Continued on Page 2 LOYA CASE IN SC Petitions clubbed; top lawyers spar SC restrains high courts from entertaining any petition related to the judge’s death FE BUREAU New Delhi, January 22 DESCRIBING IT A “serious” issue, the Supreme Court on Monday transferred to itself two petitions pending before theBombayHighCourtrelating totheallegedmysteriousdeath of special CBI judge BH Loya in 2014. It also restrained all the highcourtsinthecountryfrom entertaining any petition related to the judge’s death. The Loya case is seen as the triggerforthefoursenior-most Supreme Court judges — justices J Chelameswar, Ranjan Gogoi, MB Lokur and Kurian Joseph — to hold an unprecedentedpressconferencetoraise issues of “lack of accountability” and the Chief Justices of Indiaassigningimportantcases to“preferred”juniorjudges. Loya died in Nagpur on December1,2014,afterattending a marriage party. He was ONE'S OWN MASTER INDIAN CORP BONDS FPIs show significant interest Pick up close to $500 million worth of bonds; Monday’s auction saw an over-subscription of 1.5 times BHAVIK NAIR Mumbai, January 22 GOING BYPURCHASES in the secondary markets as also the response to auctions, foreign investors are showing a fairbit of interest in Indian debt. While they picked up close to $500 million worth of bonds on Thursday and Friday, Monday's auction for corporate bonds saw an over-subscription of 1.5 times. While limits for bonds worth `9,475 crore ($1.48billion) were auctioned, the subscriptions totalled around Auction stats Monday's 2.25 61 `13,900 crore ($2.18 billion). The cut-off bid at Monday’s auction came in at 1.30 basis points,higherthanthe0.2basis pointsseenduringtheprevious auction, reflecting keener demand. The highest bid this time rose to 2.25 basis points compared to 1 basis point on January 3 auction while the number of bidders also increasedto61comparedto49 during the previous auction. Ajay Manglunia, EVP at Edelweiss Securities, pointed out investors may be accumulating investment limits since FE BUREAU S&P BSE SENSEX NIFTY 50 Intra-day, January 22 Intra-day, January 22 35,798.01 10,966.20 10,970 35,800 then presiding over the Sohrabuddin Sheikh fake encounter case where BJP president Amit Shah was named an accused. Shah was discharged by a new judge later in the same month on grounds that there wasn’t enough evidence fora trial. 11,010 35,613.97 35,700 10,930 35,600 10,890 Prev. close: 35,511.58 35,500 Open Continued on Page 2 Close 10,883.20 10,850 ONGC Intra-day on BSE (`), January 22 Prev. close: 10,894.70 Open Close 49 205 13,900 Amount available for auction (` crore) Robust earnings 35,900 208 Number of bidders ■ Dave said Salve cast aspersions on someone (Shah) who is not here’ 1.00 Total market demand (` crore) Both the Sensex and the Nifty continued their winning streak for the fourth straight session and closed at fresh life-time highs on Monday. While the Sensex hit a new high of 35,798.01, the Nifty 50 closed at record 10,966.20. The rally was driven by the heavy weights like RIL and TCS ■ Salve said ‘let us not 0.20 Highest bid (bps) Markets hit record highs appeared for Amit Shah in Sohrabuddin fake encounter case Previous January 3 1.30 (partial) Cut-off (bps) ■ Lawyer Dave objects to Salve representing Maharashtra govt WITH ONGC PAYING only a modest premium for a 51.1% stake in HPCL, limiting the dilution in the fairvalue to just 6%, the counter gained 3.3% on Monday to close at `199.95. ONGC will pay close to `37,000 crore to buy the stake. Meanwhile, the HPCL stock lost 3.6% on Monday to close at `401.75 apiece. The price — `474 pershare — at which the deal has been transacted is a 9% premium to HPCL’s 26-week average price of `435 and a near 14% premium over the Friday’s close of `416.55. “We compute a modest negative impact of `8 per share for ONGC from the proposed transaction, valuing HPCLat `344/share,”analysts at Kotak Institutional Equities wrote. The clarity on HPCL transaction sets the stage for a reversal of ONGC’s sharp under-performance against the rallyin global crude prices, they added. January 22 15,961 202 9,475 13,756 they will be able to make the purchases even after February 1,the day the government will unveil the Union Budget for 2018-19. Foreign portfolio investors (FPIs) are believed to have remained on the sidelines without utilising the acquired limits,acquiredintheprevious auction on January 8,at which limitsfor`6666croreworthof giltswereavailable.OnJanuary 12,the CPI inflation data came in at 5.21%,a 17-month high. Continued on Page 2 199.95 199 199 196 193 Prev. close: 193.60 Open Close HPCL Intra-day on BSE (`), January 22 420 415 407.90 410 Prev. close: 416.55 401.75 405 400 395 Open Close Continued on Page 2 INFRA BOOST NIIF, DP World set up $3-billion platform FE BUREAU New Delhi, January 22 THE NATIONALINVESTMENT and Infrastructure Fund (NIIF) on Monday announced its tieup with Dubai-based ports operator DP World to create a fund to invest up to $3 billion of equity in India’s transport and logistics sectors. This is NIIF's first investment,following the first close of the NIIF Master Fund in October 2017 withcontributionsfromasubsidiary of the Abu Dhabi Investment Authority (ADIA) and four domestic institutional investors. The fundwill aim at acquiring assets and developing projects in sea and river ports, freight corridors, special economic zones,inland container terminals, and logistics infrastructure such as cold storage, NIIF and DP World said in a joint statement. Economic affairs secretary Subhash Chandra Garg said NIIF has made “good progress”.NIIFchief executive Sujoy Bose said the fund will aim to reduce the cost of moving cargo between port and origin/destination. Continued on Page 2 TAX CUTS TO BOOST US GDP India to regain fastest-growing major economy tag, says IMF FE BUREAU New Delhi, January 22 THE INTERNATIONALMONETARY Fund (IMF) on Monday kept its growth projection for India unchanged at 6.7% for the current fiscal, despite the CentralStatisticsOrganisation recently estimating the country’s economic expansion at a four-year low of 6.5%. India will again emerge as the world’s fastest-growing majoreconomy,at least forthe next two years,the IMF said. India’s growth will rise steadily to 7.4% in 2018-19 and 7.8% in the year after,the multilateral body said in its latest forecast. However, China’s expansion will slow down to 6.6% and 6.4% in 2018 and 2019, respectively, against 6.8% in 2017. The IMF raised the global growth projections by20 basis points each to 3.9% for both 2018 and 2019, partly driven byhigh-than-expected expansionoftheUSeconomyfollowing a cut in corporate taxes by the Trump administration. “The US tax policy changes are expected to stimulate activity, with the short-term US drives up global growth forecast (% rise, y-o-y) 2017 India* China 2018 2019 US EU 4.7 4.6 4.4 OPEC, Russia signal global oil alliance may endure past 2018 NHAI `1.93 3.7 3.9 3.9 AXIS BANK on Monday reported a 25% year-onyear increase in its third quarter net profit to `726 crore, helped by a strong loan growth in both retail and corporate segments, and a lower provision for bad loans, reports fe Bureau in Mumbai. The private sector lender said its net interest income grew 9.2% to `4,731.52 crore in the December quarter from `4,539.62 crore from a year ago. Provision for bad loans fell 26% to `2,811.04 crore in the quarter from `3,140.41 crore a year ago. The bank's gross non-performing assets increased marginally to 5.28% in the December quarter from 5.22% a year ago, but was lower than 5.90% in the September quarter. PAGE 10 66 20,162 2.4 2.2 2.0 Axis Bank’s Q3 net up 25% on slowing bad loan additions 88 `3.26 lakh crore FY18 capex plans of 39 CPSEs entities with `500 cr+ target (Sans railways) 2.3 2.7 2.5 QuickPicks 61 FE BUREAU Mumbai, January 22 6.8 6.6 6.4 The mobile ad ecosystem is undergoing a huge metamorphosis, with the rise of newer ad formats every day. But do marketers fully understand what mobile can do for them? 25,000 ONGC stock jumps 3.3% on 51% stake buy in HPCL 6.7 7.4 7.8 Fifty shades of mobile advertising in India 28,000 « Special Feature 29,968 26,498 PRASANTA SAHU New Delhi, January 22 THE CENTRE-OWNED COMPANIES and other undertakings have sustained last year's brisk pace in capital expenditure in the first nine months of the current fiscal, continuing with theirenhanced contribution to fixed assets creation in the economy amid lackadaisical private investments. The central public sector enterprises (CPSEs) and departmental undertakings (DUs) with annual capex plans of `500 crore and above have invested `1.93 lakh crore in April-Decemberthisyear,60% of the annual target for these firms.About 40% of the capital spending by these entities usually take place in the last quarter of the year. Including other (smaller) firms, the Centre’s PSU capex target for the current year could be revised from the budgeted `3.85 lakh crore to `4.1 lakhcrore,officialsourcessaid. On the budgetary capex side, where the 2017-18 target is `3.1 lakh crore comparedwith (` crore) FY18 Target Actuals in Apr-Dec 2017 Achievement (%) « THE NEXT SUBMISSIONS hearing in the extradition trial ofVijay Mallya over the `9,000-crore alleged fraud and money laundering case remains uncertain, reports PTI. The matter was listed for hearing at the Westminster Magistrates’ Court on Monday, however, the case was not discussed as the lawyers are yet to agree on a mutually convenient date. 94,724 « Mallya trial's next hearing date uncertain ON TRACK « THE NATIONAL COMPANY Law Tribunal (NCLT) on Monday directed the USbased McDonald's to submit a reply to the show-cause notice issued by it over a contempt plea filed by the fast food chain's estranged joint-venture partner Vikram Bakshi, reports PTI. The NCLT listed the matter for hearing on February 7, 2018. Firms with capex budget of `500 cr+ achieve 60% of annual target in nine months; Q4 seen stronger « NCLT seeks McDonald's reply to notice ● MODEST PREMIUM PSUs, other govt units keep spending pace « INORGANIC MOVES IN the renewable segment are picking up pace, with the latest target being Iron Triangle, which has a 20 MW solar power capacity in Gujarat, reports Vikas Srivastava in Mumbai. Large players like renewables major ReNew Power Ventures are believed to be in the race to buy the solar power assets of the Gujaratbased infrastructure player. FY18 PUBLIC CAPEX 57,392 IN THE NEWS ReNew Power in race for Iron Triangle's assets World GDP World trade^ Difference from October forecast (percentage point) 0 0 0.1 0.1 0.4 0.6 0.3 0.3 0.2 0.2 *Data for fiscal years 2017-18, 2018-19 and 2019-20 ^Both goods and services Source: IMF 0.6 0.5 impact in the US mostlydriven by the investment response to thecorporateincometaxcuts,” the IMF said in its latest World Economic Outlook Update. However,duetothetemporary nature of some of its provisions,the tax policy package is projected to lowergrowth fora fewyears from 2022 onwards, it added. The effects of the package on output in the US and its trading partners contributeabouthalfofthecumulativerevisiontoglobalgrowth over 2018–19. The US recently announced the biggest tax cuts in 30 years, bringing the corporate tax rate downfrom35%to21%.Lower corporatetaxandlikelyinterest ratehikesbytheFederalReserve could draw investors from all overtheworld to the US. The IMF has revised up the predictionfortheUSby40basis pointsto2.7%for2018,against 2.3% last year. It has raised its projectionfortheEUby30basis points to 2.2% for2018. The current cyclical upswing in global growth offers an ideal opportunity for structural reforms. Continued on Page 2
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