OPINION, P8 COMPANIES, P6 ABIZER DIWANJI RBI’s new NPA framework in line with global practices INTERNATIONAL, P16 EDITORIAL PREDATORY PRICING TERM TACTICS If sops to a Kotak-Cube helps homebuyers, these must be pushed. UP must explore this Trai regulation favours Jio, says Vodafone CEO Vittorio Colao China’s Xi Jinping lampooned on social media for power play MUMBAI, TUESDAY, FEBRUARY 27, 2018 VOLUME XXXXXV NO. 293, 22 PAGES, `6.00 FOLLOW US ON TWITTER & FACEBOOK. APP AVAILABLE ON APP STORE & PLAYSTORE WWW.FINANCIALEXPRESS.COM READ TO LEAD 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: 34,445.75 ▲ 303.60 NIFTY: 10,582.60 ▲ 91.55 NIKKEI 225: 22,153.63 ▲ 260.85 HANG SENG: 31,498.60 ▲ 231.43 `/$: 64.79 ▼ 0.07 `/€: 79.95 ▼ 0.32 BRENT: $67.00 ▼ $0.31 GOLD: `30,573.00 ▲ `183.00 NIRAV MODI EFFECT DOING A RETHINK ACC calls off planned RBI teams land up at banks ICAI quizzes merger with Ambuja PNB official, manufacturing plants & 8 cement grinding units FACING CRITICISM OVER its supervisory framework following the `11,394-crore fraud at Punjab National Bank (PNB), the Reserve Bank of India (RBI) has taken an unusual step of despatching teams to headquarters or important authorisedbranchesofsomebanksto check if they have built in enough safeguards in their systems to avoid a recurrence of such scandals, banking sources told FE. In some cases, the teams also went to select branches of banks to see if banks’ claims matched their action on the ground, said a senior official benefit all stakeholders. ACC and Ambuja Cements are part of LafargeHolcim and a merger between the two had been on the cards since 2013. The move would have brought about synergies between the two like a common brand name.If the merger had taken place it could also have brought in more pricing discipline in the industry. The domestic cement industry has been witnessing a spate of mergers and acquisitions over the last few years which saw the Jaypee Group selling its cement assets to a largerplayer,UltraTechCement. Ambuja Cements holds a 50.05% stake in ACC, while Lafarge holds 4.48% through Holderind Investments. Continued on Page 2 Investing in balanced funds? Look beyond tax gains While tax efficiency of a balanced fund remains higher than that of a focused allocation plan, the decision on where to invest should be made based on what the investment is worth FE BUREAU New Delhi, February 26 THE NIRAV MODI episode has prompted the government to fast-track the Fugitive Economic Offenders Bill (FEOB), which is meant to make it easierforittoconfiscatetheassets of economic offenders fleeing India to escape the reach of law.To be tabled in Parliament once its Budget session ■ Personal Finance, P15 The ugly truth: Growth of yellow journalism As governments and publishers grapple with fake news, the handshake between tech giants and publishers is loosening its grip with the mushrooming of alternate strategies for content distribution QuickPicks Ircon to file for `550-crore IPO before March-end THE GOVERNMENT’S disinvestment plan seems to be well on track, with FE learning that Ircon International, the railways’ infrastructure and engineering arm, planning to file draft papers for its proposed IPO soon, reports Sundar Sethuraman in Mumbai. “This will be a dilution of 10%, and the amount raised will be around `550 crore based on final valuation,” a banker said. PAGE 11 RBI says wallet users may use existing balances after Feb 28 THE RESERVE Bank of India (RBI) on Monday clarified that customers using mobile wallets and other prepaid payment instruments will be able to use their existing wallet balances even if full KYC hasn’t been carried out for them by February 28, reports fe Bureau in Mumbai. Reloading and remittances, however, will only be permitted after compliance with KYC requirements. PAGE 10 Sensex vaults 300 points on global leads, macro optimism THE BENCHMARK Sensex ratcheted up by more than 300 points for the second session in a row on Monday on optimism over India’s growth recovery amid positive global cues, reports PTI. The Sensex closed at a three-week high of 34,445.75 points, while the wider NSE Nifty went past the 10,550-point mark. PAGE 11 Delhi HC orders seizure of Singh brothers’ assets Orders attachment of all assets of their holding companies RHC Holdings and Oscar Investments CASE FILES APR 2016 A Singapore arbitral tribunal orders Singh brothers to pay `2,562 crore to Daiichi for damages JUNE 2016 FE BUREAU New Delhi, February 26 INAMAJORembarrassmentfor brothersMalvinderandShivinder Singh, promoters of Fortis Healthcare and Religare Enterprises,the Delhi High Court on Mondayorderedattachmentof all assets of RHC Holdings and OscarInvestments,theprivately held holding companies that own theirassets. The court’s order came on the petition of Japanese drug maker Daiichi Sankyo for enforcement of the `3,500-crore international arbitration award that it has won against the brothers. The court also asked the brothers and others to give “up-todate”details of all their unencumbered assets by March 23, the next date of hearing. As is known, the Singh Daiichi moves Delhi HC to execute the award JAN 31, 2018 HC upholds the enforceability of the award FEB 16, 2018 SC dismisses Singh brothers’ appeal against HC order FEB 26, 2018 Delhi HC attaches assets of the brothers to enforce the award brothers have lost the appeal against the award, which was passedbyaSingaporetribunal, in the Delhi High Court and even the Supreme Court has dismissed their appeal. The assets,which were disclosed to the HC by the two companies in their December 2, 2016, and March 14, 2017, temberlastyear.The proposed law will allow the Financial Intelligence Unit to file an application for declaration of fugitive economic offenders forconfiscationoftheirassets,” said a finance ministryofficial, adding, “It will soon be presented in Parliament for passage, possibly as soon as the Budget session reconvenes.” Continued on Page 2 Continued on Page 2 especiallywhenitcametolight that letters of undertakings (LoUs) had been fraudulently issued to firms of jewellers Nirav Modi and Mehul Choksi at least since 2011. Continued on Page 2 Fugitive fraud Bill likely this session DAIICHI SANKYO CASE Special Features with a public sector bank. The fraud at PNB — the single largest in the country’s bankinghistory—hasbrought to the fore uncomfortable questions about the role of auditors, bank management, supervisors and the regulator, affidavits, include shares, moveable and immovable property,etc. Justice Jayant Nath also restrained the two companies from operating their bank accounts, except for the purpose of payment of salaries and satisfying their statutoryliabilities.However,its earlierorderdirectingtheSingh brothersandotherstomaintain status quo with regard to the remaining“unattached”assets held by them, directly or indirectly,would continue. Earlier, the court had directed the two brothers and 12 others,including theirfamilymembersandcompanies,to come up with a plan on how they seek to pay the `3,500-crore amount. Daiichi’s counsel told the bench that the assets held by the two companies should be attached and an attachment officer should take custody of them as perthe civil procedure code. The Japanese major had lastweekarguedthatitdoesn’t have faith over the brothers as they have siphoned off a large amount of money earlier. Continued on Page 2 resumes on March 6, the Bill will define a “fugitive economic offender”, empower special courts to declare one so and allow designated investigating agencies to attach such a person’s assets, without any encumbrances, even when he is not convicted by a court of law for the relevant offences. “The law ministry had cleared the Fugitive Economic Offenders Bill, 2017, in Sep- High living BLOOMBERG Expats in Mumbai get highest pay Mumbai tops global rankings for expat salaries, according to a survey conducted by HSBC Bank International. Foreigners moving to the subcontinent’s most populous city reported average annual earnings of $217,165. That’s more than double the global expat average of $99,903, the HSBC Expat survey shows $217,165 250K 200K $99,903 150K 50K London on Monday approved an arrangement with Ambuja Cement for mutual purchase and sale of materials and services. “Further details on the abovearrangementshallbeprovidedinthenoticeforthepostal ballot which is proposed to be filed with the stock exchanges shortly,”ACC said. “As the proposed arrangement would be between related parties, the same shall be placed before the shareholders of the company and shall be subject to approval by the majority of the company’s minority shareholders,” the company said. In May 2017,when the two had initiated the exercise to explore the merger, they had said that a mergercould enable them to combine their strengths of business so as to Paris ACC, Ambuja, UltraTech Cement & Dalmia together have 40% cement market & combined capacity of 420 mt Hong Kong market share Jakarta 7.4% Los Angeles market share Ambuja is the third-largest cement manufacturer AMID MOUNTING CRITICISM of the failure of auditors to detect the scam at Punjab National Bank (PNB),the Institute of Chartered Accountants of India (ICAI) has taken statementsfromageneralmanager ofthebank’swesternzone,and hasissuednoticestoallthecentral statutory auditors of the crisis-ridden bank. The apex body of chartered accountants has also set up a panel to look into the PNB fraud and also suggest remedial measures. The first meeting of the panel took place on February 23. “The officers of PNB were called bythe ICAI to appearand produce copy of all related documents in the said fraud. The officers of PNB were called by ICAItoappearandproducecopy of all related documents in the saidfrauds.GM(WesternZone), PNB, appeared and made his statementinMumbai,”theICAI saidinastatement.Italsowrote toSebi,CBI,EnforcementDirectorate and PNB on February15, urging them to share details of the fraud, including copies of specific findings in respect of the involvement of any CA or such audit firms,it said. New York City 10% FE BUREAU New Delhi, February 26 Geneva ACC is the second-largest cement manufacturer sends notices to auditors 0K 1 2 3 4 5 6 7 8 9 10 26 100K Global average manufacturing sites & 50 concrete plants had cautioned banks on possible misuse of SWIFT at least three times since Aug 2016 ILLUSTRATION: SHYAM BANIKINKAR PATTANAYAK New Delhi, February 26 29.65 mt 5 integrated cement ■ RBI has said it regulators “have to have a thirdeye which is to be perpetually open” to detect frauds on time Shanghai IN ORDER to facilitate and encourage participation by retail investors in financially sound firms, BSE on Monday said it has waived the transaction charges on Sensex 30 stocks from March 12, reports PTI. Currently, transaction charges range from `0.50-1.50 per trade for securities under group A, B and other non-exclusive scrips. Ambuja Cements: Capacity 30.7 mt Runs 17 cement ■ FM has said Zurich No transaction fees on Sensex 30 stocks from Mar 12 ACC AND AMBUJA Cements haveshelvedtheirmergerplans. Inafilingtothestockexchanges on Monday evening, ACC said that on the basis of a comprehensive evaluation carried out by both the special committee andtheboardofdirectorsofthe company, “the board is of the opinionthatthereareatpresent certain constraints in implementing a merger between the companyandAmbuja Cements Ltd”.Itaddedthat,therefore,itis notproceedingwiththemerger at this juncture, though this remains the ultimate objective. In May 2017, ACC and Ambuja Cements had said that they were exploring the possibilities of a merger and the boards of the two companies had decided to constitute a special committee of directors with majority of independent directors to consider the matter further. In the meantime, to maximise synergies between the companies and to unlock value forshareholders,theACC board ACC: Capacity teams visited some banks to review systems and fraud detection mechanism San Francisco FORMER CABINET secretary TSR Subramanian has died, officials said on Monday, reports PTI. He was 79. The cremation will take place at the Lodhi Road crematorium at 5.30 pm, the IAS association said. Subramanian was the Cabinet secretary from August 1, 1996, to March 31, 1998. The cause of death and other details were not immediately known. FE BUREAU New Delhi, February 26 NIX AND MORTAR TIGHTER SCRUTINY ■ Central bank Mumbai IN THE NEWS Ex-Cabinet secy TSR Subramanian passes away In a stock exchange filing says certain constraints with going through with the deal at present Check systemic safeguards and fraud detection capabilities of some banks Note: The survey was completed by 27,587 expats from 159 countries and territories. With a minimum sample of 90 expat respondents required, 52 cities were included in the data analysis; overall rank is in brackets Source: HSBC Expat Explorer survey ● FIU ROSTER Govt lists 9,500 ‘high risk’ NBFCs PRESS TRUST OF INDIA New Delhi, February 26 THE GOVERNMENT HAS categorised about 9,500 nonbanking financial companies (NBFCs) in the country as“high risk”as they have not complied with a stipulated provision of theanti-moneylaunderinglaw. A list of 9,491 “high-risk financial institutions” has been published by the Financial IntelligenceUnit (FIU) that worksundertheUnionfinance ministryto check crimes in the Indian economy and alert enforcement agencies against such instances. The list containing the names of the firms has been updated till January this year. Under the Prevention of MoneyLaunderingAct(PMLA), NBFCs,whichincludescooperative banks, are required to furnish details about their financialoperationsandtransactions to the FIU. The FIU processed the data of these companies and found that they did not comply largely on one stipulated condition of appointing a principal officer who is responsible to check and report suspicious transactions and cash transactions of `10 lakh and above, and report it to the agency, sources said. Continued on Page 2 STEPPING ON THE GAS If taken on standalone basis, Nexa is India’s third-largest car seller RUPESH DUTTA New Delhi, February 26 MARUTI SUZUKI WILL see its premium dealership channel Nexa contributing around 2021% to its total sales volume in the domestic market during FY18,up from 15% in FY17.In fact,inMarch2017Marutihad achieved its target of 15% of its totalsalesvolumecomingfrom Nexathreeyearsaheadofschedule.In 2015-16,when the dealership was set up, its contribution to totalvolumeswas 6.9%. Thus far during the year, Nexa outlets sold on average nearly27,000-28,000carsevery month,ofwhichnearly15,00016,000 were Balenos,followed by Ignis,Ciaz,and S-Cross.This means on a monthlybasis more carsareretailedfromNexathan the showrooms of Tata Motors, Honda Cars and Mahindra & Mahindra. Had Nexa been a standalone retail showroom,its volumeswould have been highestafterMarutiandHyundai. Maruti’s total volume sales in domestic market during a OVERDRIVE 13,59,649 Maruti Hyundai Maruti (NEXA) M&M Tata Motors 4,43,727 2,70,651 1,99,968 1,67,208 3rd in order of sales during April-January 2017-18 (units) month ranges between 130,000 and 150,000 units. Analysts have estimated that in valueterms,Nexa’scontribution tothecompany’stoplinewould be around 28-30% in FY18 comparedwith 25% in FY17. Thefirstcartoberetailedvia Nexa was the S-Cross crossover vehicle,which was followed by the premium hatchback Baleno and Ignis, a premium urban compact car priced around `5 lakh launched in January 2017. MarutihadinApril2017shifted itssedanCiazalsofromitsregu- larshowroomtoNexa.SinceCiaz was launched prior to that of Nexa,the carwas earlierretailed throughitsregulardealerships. “Nexawillcontinuetocreate newanduniqueexperiencesfor itscustomerbeyondsellingcars, and forge relationships which last beyond carpurchases.Nexa is a response to changing customer needs, expectations and aspirations,”saidRSKalsi,senior executivedirector(marketing& sales),Maruti Suzuki India. Continued on Page 2
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