OPINION, P6 ECONOMY, P3 CHANDRA BHUSHAN Little evidence that the permit system helps India’s forests INTERNATIONAL, P10 EDITORIAL ENERGY SECURITY ‘STRUCTURAL SEXISM’ RBI’s new NPA rules may cause immediate capital shortage, but are healthy in the long run India, Iran to discuss deepwater pipeline during Rouhani visit Lawsuit claims Steven A Cohen's firm Point72 is hostile to women MUMBAI, WEDNESDAY, FEBRUARY 14, 2018 FOLLOW US ON TWITTER & FACEBOOK. APP AVAILABLE ON APP STORE & PLAYSTORE WWW.FINANCIALEXPRESS.COM READ TO LEAD VOLUME XXXXXV NO. 282, 26 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 REVIVAL ROUTE Banks dealt a good hand on bad loans 2.1 1.4 Q1 Q2 FY18 SMA 0 is at 1.3% of loans for private banks 2.4 1.8 1.2 Q3 Q4 FY15 Q1 Q2 Q3 FY16 Q4 Q1 Q2 Q3 Q4 Q1 Q2 FY17 FY18 Source: Public sources, RBI, Kotak Institutional Equities mention accounts — SMA 0 — banks must begin resolution proceedings. SMA 0 loans are those where payments are overdue by 1-30 days. The accompanying charts shows the extent of SMA 0 loans for public and private sector banks; the level currently is quite low. Going by the new framework forresolution of stressed accounts, released late on Monday, the fate of a defaulting entitywill be sealedwithin 465days.Iflendersarenotable towork out a solution to revive a company within 180 days, the account must be referred to the National Company Law Tribunal and the casewould be decided under the Insolvency and Bankruptcy Code. For exposures of `2,000 crore or more,where the company is a defaulter, the meter starts ticking on March 1, 2018. For smaller companies, to which lenders have an exposure of between `100 crore and `2,000 crore, the RBI is expected to come out with timelines in due course. Continued on Page 2 QuickPicks Fortis Healthcare issue under ICAI’s ‘consideration zone’ The matter of alleged financial irregularities at Fortis Healthcare is under “our consideration zone” and the institute will look into it as soon as details are available, Institute of Chartered Accountants of India (ICAI) president Naveen ND Gupta said on Tuesday, reports PTI. Fortis Healthcare was issued notices by stock exchanges following a media report claiming that the company's promoters took at least $78 million (about `500 crore at the current exchange rate) out of the publicly-traded hospital company they control without board approval about a year ago. PAGE 4 Sindh’s sugar subsidy offer prompted India duty move A RECENT announcement by the Sindh government to offer a subsidy for sugar exports — on top of another dole-out by the federal government of Pakistan — to cut a massive inventory was the trigger for India to double its import duty on the sweetener to 100% and stop potential dumping from the neighbour, official sources told FE, reports Banikinkar Pattanayak in New Delhi. An analysis of the viability of supplies from the neighbouring country shows a 70% customs duty is required to stop likely imports from Pakistan via Mumbai now. PAGE 2 300 250 THE DEFENCE ministry on Tuesday approved capital acquisition proposals worth `15,935 crore, which included purchase of 7.40 lakh assault rifles, 5,719 sniper rifles and light machine guns to bolster the strength of the armed forces, reports PTI. The long-pending proposals were cleared at a meeting of the Defence Acquisition Council (DAC), the defence ministry's highest decision making body on procurement. The ministry said the DAC cleared procurement of assault rifles for the three services at an estimated cost of `12,280 crore. 10-days Plants with less than 4 days' stocks: 15 pays the railways `35,000 crore annuallyas freight,a cost borne finallybyits consumers. Once the rakes are owned by the company, the freight bill will reduce drastically as only track rents will need to be paid to the national transporter. Shortage of railway rakes for coal transportation has been one of the major reasons 200 Rabi sowing area (lakh hectares) 2014-15 150 100 2015-16 2016-17 2017-18 50 0 Wheat Mustard Chana Source: Agriculture ministry ON HOLD ON LENDER’S PLEA DELHI AIRPORT ■ The controlling stake in the pipeline was earlier held by Essar Steel ■ It sold it to Srei Infra in 2015, which was challenged by lenders ■ The Calcutta HC has put a temporary stay on the deal ■ Lenders fear that SreiNumetal deal will hamper their recovery process HC upholds LCCs’ T2 move order judge bench directing budget airline IndiGo to move part of its existing operations from Terminal 1 of Delhi InternationalAirport (DIAL) toTerminal 2 and to approach DIAL within a week’s time with its decision on the sectors it FE BUREAU Mumbai, February 13 INDIGO’S DOMESTIC PASSENGERS flying out of Delhi will now need to check whether they need to reach Terminal 1 or Terminal 2, depending on their destination. The Delhi High Court’s division bench on Tuesday upheld the order of the single Steel’s controlling stake in the 253 km slurry pipeline to Srei Infrastructure in 2015 is also under a stay by the Calcutta High Court after a consortium of lenders’ to Essar Steel had objected and the matter is still pending for final disposal before the Calcutta court. DIAL V/S INDIGO decides to operate from the assigned terminal. Delhi airport operator GMR and InterGlobe-promoted IndiGo have been at loggerheads for nearly a year now over the former’s proposal to move part of the airline’s operations out of the existing terminal. Continued on Page 2 DIAL Masterplan 2016 JAN 2017 To handle more DIAL asks passengers IndiGo, SpiceJet DIAL needs to & GoAir to move upgrade T1 to T2 Continued on Page 2 OCT 2017 GoAir shifts entire operations to T2 NOV 2017 JAN 2018 IndiGo SpiceJet refuses IndiGo files It appeals in the seeks govt to move too, appeal against division bench intervention to move with the move in against decision on the shift IndiGo Delhi HC to move Plants with no stocks: 9 behind the supplyshortage.In order to improve supply of coal to power plants, the government had earlier asked electricity generation units located within 60 km from the mines to build covered conveyor belt systems for coal transportation. Continued on Page 2 ● 17 PSBS Provisions up nearly 100% in Q3 FE BUREAU Mumbai, February 13 PROVISIONS MADE BY a clutchof17public-sectorbanks (PSBs) in the quarter ended December 2017 almost doubled over the same quarter in the previous year to `60,742 crore. Much of the jump came from banks provisioning againstloanswheretheReserve BankofIndia’s(RBI)viewonthe status of the account differed from theirs. Provisioning against cases referred to the National Company Law Tribunal (NCLT) also took a toll. Among large banks, the worst hit were State Bank of India (SBI) and Bank of India (BoI),bothofwhichsawanover 110%year-on-year(y-o-y) rise in provisions. SBI was dealt a further blow by hardening bond yields, whichrequiredthebanktoprovision for about `3,500 crore against possible mark-to-market losses. After the bank’s results, SBI chairman Rajnish Kumartoldreporters,“Treasury income also got impacted and there were no major sales of investments in this quarter.” He added that from November 2017,wage negotiation with employees had become due and the bank has consciously decided to make a provision of about `700 crore. Continued on Page 2 ADEX REPORT Digital platforms corner expanding share of advertising spending MEGHNA SHARMA Mumbai, February 13 DIGITAL PLATFORMS, WHICH managed to win an estimated 15.5% share of total ad spends in 2017, up from 13.1% in 2016, are tipped to grow their share to nearly 18% in 2018, according to GroupM’s annual advertising expenditure (AdEx) report, ‘This Year, Next Year’. The report predicts India’s overall AdEx growth at 13% for 2018, with overall advertising investment to reach an estimated `69,346 crore.In 2017, the total advertising spends An optimistic outlook for 2018 (` cr) All media 55,671 61,263 69,374 2016 2017f 2018f TV Print Source: GroupM Digital Growth (%) 17f vs 16 18f vs 17f 10 13 « « Defence min clears `15,935-cr capital acquisition proposals THE DELHI HIGH Court on Tuesday restrained Srei Infrastructure from transferring its controlling stake in Odisha Slurry Pipeline to Numetal MauritiusuntilApril5,thenext date of hearing. The court’s order was on the petition of State Bank of India,which had petitioned that Odisha Slurry Pipeline, which supplies raw materialstoEssarSteel’sOdisha plant,cannot sellitsstakewithout its (lender’s) approval. NumetalMauritiusonMonday emerged as one of the bidders for the debt-laden Essar Steelundertheinsolvencyresolution proceedings. Principal shareholders in Numetal are understood to be Russia’s VTB Capitalwhilesomemembersof the Ruia family are believed to be minority stakeholders.The otherbidderforEssarSteelisLN Mittal’sArcelorMittal. In fact, the sale of Essar Actual stocks: to last for 350 Continued on Page 2 Delhi HC blocks Odisha Slurry sale FE BUREAU New Delhi, February 13 Stock situation at coal-based power plants (As on Feb 11) Wheat acreage has fallen by 4.3% in the ongoing rabi season, as many farmers in Madhya Pradesh shifted to chana, eyeing higher returns. The government is confident of another good crop and feels imports might not be required to meet demand. 560 672 806 While a home loan covers 70-90% of the cost of a home, the rest has to be paid by the homebuyer. Investments in MFs and PPF can be used for the down payment ■ Personal Finance, P9 468 mt FE BUREAU 2,240 2,419 2,782 Six handy tips for first-time homebuyers Total dispatch: *By CIL and SCCL Wheat area down a bit, pulses up CONTROLLING STAKE Special Feature 372 mt (April-December) Rabi sowing 70.6 0 SMA 0 for private banks, March fiscal year-ends (` bn) 426 mt 66.88 0.6 WITH COAL SHORTAGE at power stations leading to generation losses at frequent intervals (in January,state-run NTPC had complained to the power ministry about critical fuel shortage at four of its plants), the government has come out with a permanent solutiontotheissue:CoalIndia will, over the next five years, acquire enough railway rakes to transport coal to all thermal power stations in the country, without having to wait for the railways to make the container trains available to it. Currently, around 260 rakes a day are used by CIL for coaltransportation,allonrent. It is estimated that CIL would need 288 rakes a day to meet thecountry’selectricitygeneration targets in 2018-19. CIL 64.53 FY17 Dispatch to power sector: Coal production*: FE BUREAU New Delhi, February 13 65.18 Q4 107.63 Q3 99.54 Q2 89.46 Q1 85.18 Q4 304.29 Q3 FY16 FY15 3.0 Q2 318.88 Q1 297.24 Q3 Q4 306.17 0 SMA 0 for public banks, March fiscal year-ends (` bn) 17,472 17,779 18,437 THE GOVERNMENT proposes to allow premature closure of Public Provident Fund (PPF) accounts and opening of small savings accounts in the names of minors, the finance ministry said on Tuesday, reports PTI. The legislative changes proposed in the Finance Bill, 2018, are aimed at adding flexibility in the operation of accounts under small savings schemes, it said. The ministry said all existing protections have been retained while consolidating the PPFAct under the proposed Government Savings Promotion Act. THE INDIAN INSTITUTE of Management at Ahmedabad (IIM-A) is finally on its way to making its global debut,having inkedanagreementwithUnited ArabEmirates(UAE)-basedBRS Venturestoestablishitsmaiden overseas extension centre in Dubai.Theproposedcentrewill beginwith executive education programmesthatarerelevantto theregionandwillincludeboth open learning and customised training programmes. “Withthesynergy,thispartnership is expected to benefit both the organisations,besides benefiting the UAE regional business and governance,” IIMA said in a statement,though it didnotgiveanydetailsonwhen thecentrewillactuallybesetup. IIM-A said the agreement wassignedattheWorldGovernment Summit 2018,an annual Dubai event that brings together leaders for a dialogue on governmental process and policies with a focus on the issues of futurism, technology and innovation. 25,350 27,961 31,596 IN THE NEWS Govt proposal on early closure of PPF accounts WITH A FIRM deadline and clear process now in place, banks can no longer dither on resolution plans (RP) for defaulting companies. Over the past couple of years,banks have attempted to revive businesses via one scheme or another — a strategic debt restructuring or an S4A — and if one process failed, another could be tried out. The Reserve Bank of India (RBI) is now empowering banks to come up with revival schemes.Thesecouldincludea sale of the exposures to other investors as also a change in the ownership of the businesses. Banks could also reorganise or restructure the debt, much in the manner of a corporatedebtrestructuring,such that payments are regularised. Late on Monday evening, the RBI asked banks, either singly or jointly, to initiate an RP as soon as a corporate default is spotted. In other words, banks have several options to revive the defaulting companies but these must be exercised within 180 days. From now on, as soon as a loan is classified as special SMA 0 is at 1.5% of loans for public banks 2.8 0.7 Move meant to overcome fuel shortage at thermal plants; will also save on freight costs FE BUREAU Ahmedabad, February 13 2,750 2,942 3,389 FE BUREAU Mumbai, February 13 3.5 CIL to have own railway rakes to transport coal IIM-A’s first overseas campus to be in Dubai 7,300 9,490 12,337 RBI gives several options to deal with defaulting companies, shortens timelines, clarifies process GENERATION LOSS ● LEARNING CURVE OOH Radio Cinema stood at `61,263 crore. Advertising spends on digital platforms, which in 2017 stood at an estimated `9,500 crore, are expected to come in at close to `12,350 crore in 2018. This will be the fastest growing segment for the next few years, Tushar Vyas, chief strategy officer, South Asia, GroupM, said on Tuesday. “With India seeing digital maturity and companies following the mobile-first philosophy, the medium cannot be ignored now,”Vyas added. Within the digital space, video advertising is estimated to grow at 54% in 2018 as bandwidth improves and data and mobility devices become more affordable. Advertising agencies and advertisers are looking formore reliable measurement and transparencyin digital media. Unlike 2017,which sawthe lowest growth in advertising expenses in the last five years, at 10%,this year could be better with the economy back on track.“GoingbyGDPgrowthas well as the increase in population of middle income groups, we are optimistic. Continued on Page 2
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