OPINION, P8 COMPANIES, P6 INTERNATIONAL, P16 INFOSYS HITS BACK MISCONDUCT ALLEGATIONS Former CFO Bansal slapped with `100-cr counterclaim Ford US chief Raj Nair departs abruptly after behaviour probe EDITORIAL Price govt insurance plans correctly for them to work Deploying appropriate technology will help settle farm insurance claims more effectively MUMBAI, FRIDAY, FEBRUARY 23, 2018 WWW.FINANCIALEXPRESS.COM FOLLOW US ON TWITTER & FACEBOOK. APP AVAILABLE ON APP STORE & PLAYSTORE READ TO LEAD VOLUME XXXXXV NO. 290, 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: 33,819.50 ▼ 25.36 NIFTY: 10,382.70 ▼ 14.75 NIKKEI 225: 21,736.44 ▼ 234.37 HANG SENG: 30,965.68 ▼ 466.21 `/$: 65.05 ▼ 0.27 `/€: 79.91 ▼ 0.09 BRENT: $65.39 ▼ $0.03 GOLD: `30,384.00 ▼ `9.00 AIR POCKET Jet’s pilot loss could mean actual losses IN THE NEWS Sale of 1st tranche of electoral bonds from March 1 THE FIRSTTRANCHE of electoral bonds, aimed at improving transparency in the poll-related funding system, will be available at four branches of State Bank of India (SBI) from March 1, the finance ministry said, reports fe Bureau in New Delhi. The bonds can be purchased only from main SBI branches in New Delhi, Mumbai, Kolkata and Chennai till March 10. The bonds can be also bought only through bank accounts after meeting all the KYC norms. Only registered political parties, which have secured at least 1% vote in the last general or assembly polls, will be eligible to receive these bonds. WITH CHANCES OF nearly 50 senior pilots moving out of Jet Airways, the airline could be in trouble as it faces a shortage of captains. Every flight must have at least one captain and Jet’s present pool of pilots includes about 831 captains, of whom only about 330 fly wide-bodied aircraft.It is critical for the carrier to have captains to fly wide-bodied aircraft as it is hugely dependent on its overseas operations for revenues and profits. Even before this, Jet was already having trouble with first officers over pay cuts.The pilot count at about 1,734 today (according to industry sources,as the airline does not disclose these numbers) is down from about 2,000 in July last year,and falling. FE has learnt that the majority of the 50 senior pilots is headed to Vistara,the Tata-Singapore Airlines joint venture, which is in expansion mode. The trouble between junior pilots and the management startedinJulylastyearafterthe management wrote to them suggesting they either take a 30-50% cut in theirsalaries or stipend or leave.The move followed excess hiring of about 66.0 62.4 Jet Airw a Jet ys + Lite 66.9 Vistara 67.4 Air India 74.4 GoAir 4 75. Jet Spice MANISHA SINGHAL Mumbai February 22 More than 5,000 cases of PSB staff penalisation SHAYAN GHOSH Mumbai, February 22 iGo Ind Shortage of captains to hit overseas flights it relies on for revenue, profit; OTP too affected ● BANK MISSTEPS Jet at the bottom of the pack On-time performance of airlines in Bengaluru, Delhi, Hyderabad, Mumbai* (January 2018, %) Source: DGCA 200 first officers on an inaccurate demand forecasting by its team.This was reported by the media at the time. A pilot at Jet said on condition of anonymity that the functioning of the airline had changed with sudden changes being introduced. “They are also a breach of the contract that was entered into by the pilots and the airline,”the pilot added. He said today pilots do not want to fly after their duty hours if there is a shortage of hands as was the case earlier. Jetdeclinedtocommentfor the story. On an investor call earlier this month, Jet CFO Amit Agarwal said the airline was taking a series of steps to improve its on-time performance (OTP).Agarwal said the OTP had improved in January and February compared with that in the December quarter and that this is the ongoing focus area for the airline. In response of FE’s queryto Vistara on the subject,the airline said, “As we continue to scale up our business and operations, it is only natural for us to hire more talent, including cockpit crew. As every other airline, most applications for technical positions, such as that for pilots,come to us from within the industry. We’re glad that in a short span of three years, our success has drawn great interest from people within and outside the aviation ecosystem,helping us become an employer of choice.” The non-cooperative stance of several pilots is impacting the on-time performance of Jet. Continued on Page 2 PUBLIC SECTOR BANKS (PSBs) have penalised employees in more than 5,000 instances between January 2015 and March 2017 with more than half of them being in 2015, the government's reply to a question in the Parliament showed. Action taken includes employees convicted, and awarded major or minor penalties including being dismissed from service. According to the data, India’s largest bank State Bank ofIndia(SBI)hastakenactionin 1,538 cases during the same periodwiththebulkofit—888 instances — in 2015. SBI had 2,13,238 employees as of March2015;2,07,739employees as of March 2016; and 2,09,567 as of March 2017. Chennai-basedIndianOverseas Bank (IoB), already under theReserveBankofIndia’s(RBI) prompt corrective action (PCA) list, took action in 449 cases in the27monthsunderreview.IoB is followed by Central Bank of India,also under PCA,with 406 instances of employees being penalised for fraud during January 2015 and March 2017. Meanwhile, Punjab National Bank,whichisinthemiddleofa `11,300-crore fraud,has taken action in 184 cases during the same period. According to the government's reply, although “PSBs have about 70% market share, the incidence of such frauds in private sector banks is higher than in PSBs”. POWER PIPELINE Over 20,000 MW of projects face an uncertain future Lack of PPAs, coal linkage add to overcapacity woes as costs balloon from `1,85,000 cr from `1,45,000 cr (MW) ANUPAM CHATTERJEE New Delhi, February 22 BMW will launch new X3 in April; X4 next year The new X3, a mid-size luxury SUV, is among the six new vehicles showcased by the German carmaker at the Auto Expo 2018 earlier this month ■ Motobahn, P15 QuickPicks Malaysia’s Sime Darby Plantation considers Ruchi Soya purchase MALAYSIA'S SIME Darby Plantation, the world's largest oil palm planter by land holdings, said it has submitted an expression of interest for leading Indian edible oil importer Ruchi Soya, reports Reuters. Ruchi Soya is currently undergoing bankruptcy proceedings. “This is preliminary at this point in time. (This is) still subject to due diligence and many other steps before we can come up with an indicative offer price,” Sime Darby Plantation MD Mohd Bakke Salleh said. Rupee closes above 65 mark for first time in three months FOR THE first time in three months, the rupee closed above the 65 mark led by a considerable dollar demand in the spot market and a general strengthening of the dollar, reports Bhavik Nair in Mumbai. On Thursday, it closed 27 paise down at 65.045 after having fallen to as low as 65.10 in the day. Dealers reasoned that due to a spurt in dollar demand led by an apparent squeeze in buyers’ credit, the onshore dollar-rupee 12-month forward premia fell to 15-month lows of 260.25. PAGE 10 India ranks 81st in global corruption perception index INDIA HAS been ranked 81st in the global corruption perception index for 2017, released by Transparency International, which named the country among the “worst offenders” in terms of graft and press freedom in the Asia Pacific region, reports PTI. In 2016, India was in 79th place among 176 countries. India has been ranked worse than China and Bhutan in terms of 'corruption perception', but fares better than its other neighbours Pakistan and Bangladesh. PAGE 2 TOKYO-BASED DIVERSIFIED conglomerate Sumitomo Corporation on Thursday announced its joint venture worth $2 billion with Indian partner Krishna Group for an integrated township project in Gurgaon. The 50:50 joint venture, Krisumi Corporation, will build 5,000 flats priced from `1 crore onwards, a shopping mall, office space and an educational institution at 65-acre land parcel in Sector 36-A, Gurgaon. The project, which will have a total built-up area of 18-18.5 million square feet, will be developed in phases, the two partners told reporters. PLOT THICKENS ■ The JV will build 5,000 flats priced from `1 crore onwards ■ Mall, office space and educational institutions will also be built ■ Gurgaon project will have total built-up area of 18-18.5 million sq ft ■ Currently, govt allows 100% FDI under automatic route in construction development “The first phase will comprise 1.2 million square feet of built-up area, consisting of 430-450 apartments and will 25,185 Private LOWER-THAN-EXPECTED growth in demand for electricity,coupledwiththeovercapacity of installed power projects, has precipitated a situation wheremorethan20,000MWof under-construction coal-based power projects in the private sector are staring at an uncertain future. Out of the 25,185 MW such capacity under construction, only projects with 5,085MWhaveannouncedthe commissioningdate,whileothersarelistedbytheCentralElectricityAuthority(CEA)as“uncertain”. Most of these ‘uncertain’ projects are among the stressed power plants identified by the government. The cost of the under-construction private sector power projects now stands at more than `1,85,000 crore, up from original estimate of `1,45,000 crore. Bankers are reluctant to Private projects* 20,100 *with ‘uncertain’ commission date Capacity addition 91,730 (FY13-17) Total 53,660 Private release the sanctioned loans to most of these projects. Till December 2017, independent power producers had spentmorethan`63,000crore on these uncertain projects.At the same time, the Centre and state governments,with easier electricityofftakeandcoalsupply assurances, are busy augmentingthermalpowercapacitycreationinthepublicsector, makingitmoredifficultforprivate players to implement announced projects. According to informed ASSET RECYCLING Continued on Page 2 PNB transfers 1,415 employees, Page 10 Potential upfront receivables from the first lot of (9) toll-operatetransfer (TOT) projects Continued on Page 2 SHRITAMA BOSE Mumbai, February 22 Continued on Page 2 Continued on Page 2 ~`60,000 cr* *over 2-3 years THE NATIONAL HIGHWAYS Authority of India’s (NHAI) plan to augment its non-debt resources by transferring its operational projects on long-term lease basis to domestic and foreign“patient capital”investors has got off to a good start. AstheNHAIofferedthefirst bunchofninehighwayprojects, with a total length of 680 km, undertheso-calledtoll-operatetransfer (TOT) model,Canada’s Brookfield and Australian firm Macquirehavebeenamongthe fourto place bids. Netherlands-based Roadis Transportation Holding — which has tied up with India’s quasi-sovereign National RPSL seeks to move PPIs to bank arm Investment and Infrastructure Fund — and IRB Infrastructure too have bid. While NHAI expects to raise about `6,300 crore from the current lot of projects,rating agency Crisil said this would potentially be the single largest foreign investment in India’s road transportation sector with a ticket size of `6,500-7,000 crore. “This is India’s first foray into asset recycling.If it is successful in highways, other sectorslikepower,telecom,and oilandgasshouldfollowsuit.If thathappens,itwouldunlocka huge capital base forfinancing newer infrastructure projects so critical for India,” NHAI’s member,finance,RohitKumar Singh told FE. Funds to be raised by NHAI from 75 operational projects to be transferred under TOT mode FE BUREAU New Delhi/Mumbai, February 22 Continued on Page 2 RELIANCE PAYMENTS SOLUTIONS (RPSL) on Thursday sought permission from its JioMoney customers to transfer their prepaid payment instruments (PPIs), or wallet accounts,toJioPaymentsBank, according to a public notice. “YourJioMoneyPPI shall be transferred to Jio Payments Bankinitsexistingcapacity,i.e. Your full KYC shall be transferred as full KYC PPI and your minimum details PPI shall be transferred as minimum details PPI,”the notice stated. Those who do not wish to continue with their JioMoney account will have to notify RPSL through their JioMoney app or via email.They will also have to provide their bank account details for RPSL to process the refund of money stored in their accounts. The refund will be processed within seven days. JioMoney accounts that have not been operated in the last six months and do not have any balance will only be migrated to the payments bank on receipt of the user’s “specific consent”. `6,500-7,000 cr be completed in four to five years,” Krisumi chairman Ashok Kapur said,adding that the project will be compliant with the Real Estate (Regulation and Development) Act. The Krishna Group is a diversified business house with interests in auto components, media, travel, and entertainment seating. Currently, India allows 100% foreign direct investment under the automatic route in the construction development segment,which includes townships, housing, built-up infrastructure and real estate broking services. This will be the first time that a Japanese company will participate in the Indian real estate space. sources who did not wish to be identified, the project delays were mainly due to delays in land acquisition, procuring environmentalandotherregulatoryclearances.Privateindustry players complained that state power plants are putting up their own power plants and getting state electricity regulators approve power purchase agreements (PPAs) without goingthroughcompetitivebidding. These measures do not provide a level playing field for independentpowercompanies. Most of the uncertain underconstructionprivatepowerprojects were awarded letters of allocation between 2009-11. Research firm India Ratings recentlysaid that newand under-construction thermal power projects, in the absence of long-term PPAs, might be unable to refinance their construction loans if the demand scenario does not improve. Going by the power demand estimates by the CEA, existing PPAs are sufficient to meet electricity demand till FY22. In the five-year plan period FY13-17, private power players had commissioned 53,660 MW of thermal generating units,22%morethantheoriginal target of 43,540 MW. ● WALLET ACCOUNTS NHAI plan tots up healthy interest Sumitomo plans $2-bn realty project with Krishna Group FE BUREAU New Delhi, February 22 65,861 Total JAPANESE ENTRY Special Feature Under-construction thermal power projects FARE GAME Uber to continue solo ride, keep investing in India despite losses FE BUREAU New Delhi, February 22 CAB HAILING FIRM Uber Technologies will continue to invest in India though it continues to lose money here, because the company considers the country an important and core market. Interacting with a group of journalists on Thursday during his maiden visit to India, CEO Dara Khosrowshahi, who took over the reins only five months ago amid a litany of regulatory problems, also put to rest all speculations regarding merging its operations with rival, homegrown cab hailing firm Ola, on the prodding of Japanese investor SoftBank. SoftBank has investment in both Uber and Ola. SoftBank Vision Fund, which recently became Uber’s largest shareholder with the formalclosingofa$9.3-billion investment giving it a 15% stake, has reportedly stated that Uber should focus on recovering its market share in the US and growing in key European markets to have a faster path to profitability. “While SoftBank may have an opinion, theirs is not the only opinion in the room. It is Uber CEO Dara Khosrowshahi with the company’s APAC communications director Amy Kunrojpanya in New Delhi mybelief thatwe as a company need to have a balanced profile in terms of growth and investment.Wewill activelyinvest in markets like India and Latin America because of their size,” Khosrowshahi said. Headdedthatthoughoperations in India are not profitable, it accounts for more than 10% of Uber’s trips globally.“I expect India to account for higher and higher trips going forward,”he said. While India remains Uber’s largest market outside of the US,it is also the biggest cost for the company. While he declined to dis- close how much the company has invested here so far and whatthefutureplansareinthis regard, and how much money itislosing,headdedthatalotof investments have gone and a lot will continue to go on. The CEO said Uber accounts for less than 1% of miles driven in the world, and is an alternative to taxis.“What we reallywant is to be alternative to car ownership,” he said, adding that problems of traffic and pollution that India faces can be solved with its pioneering share rides. Continued on Page 2
The Financial Express (FE) is a business paper that’s closest to the people who are in the business of business. From business policies to market trends to new developments, The Financial Express comes packed with incisive news on every relevant issue.