OPINION, P8 COMPANIES, P7 EDITORIAL Given ICAI’s poor record, proposed NFRA a good idea INTERNATIONAL, P16 RENU KOHLI STEEL THE DEAL INSURANCE MEGA-DEAL With currency-GDP back to pre-DeMo levels, informality may just have risen Aditya Mittal is new president of ArcelorMittal Buberl-led AXA buys Bermuda-based XL for $15 billion MUMBAI, TUESDAY, MARCH 6, 2018 FOLLOW US ON TWITTER & FACEBOOK. APP AVAILABLE ON APP STORE & PLAYSTORE WWW.FINANCIALEXPRESS.COM READ TO LEAD VOLUME XXXXXV NO. 298, 20 PAGES, `6.00 P U B L I S H E D F R O M : A H M E D A B A D , B E N G A L U R U , C H A N D I G A R H , C H E N N A I , H Y D E R A B A D , K O C H I , K O L K ATA , L U C K N O W, M U M B A I , N E W D E L H I , P U N E SENSEX: 33,746.78 ▼ 300.16 NIFTY: 10,358.85 ▼ 99.50 NIKKEI 225: 21,042.09 ▼ 139.55 HANG SENG: 29,886.39 ▼ 697.06 `/$: 65.11 ▲ 0.05 `/€: 80.13 ▼ 0.73 BRENT: $64.32 ▼ $0.05 GOLD: `30,488 ▲ `219 PIPAVAV DEFENCE TAKEOVER BANKRUPTCY PROCEEDINGS Essar Steel bids to be R-Infra sends notice to promoters studied Wednesday IN THE NEWS RBI slaps `3-crore fine on Axis Bank, `2 crore on IOB THE RESERVE BANK of India on Monday said it has imposed a penalty of `3 crore on Axis Bank for the violation of NPA classification norms, and `2 crore on Indian Overseas Bank for not complying with the KYC regulations, reports PTI. RBI had carried out a statutory inspection ofAxis Bank, and, among other things, found “violations of various regulations issued by RBI in the assessment of NPA”. The RBI said in a separate release that a “fraud was detected” in one of the IOB branches. Citi launches T-bill linked floating rate home loans CITI INDIA ON Monday launched a home loan product with pricing linked to the three-month treasury bill (T-bill), an external benchmark, in what could be the first such move by a bank in India’s consumer loan market, reports fe Bureau in Mumbai. At present, banks typically price mortgages at a spread over their one-year marginal cost of funds-based lending rate. Citi India will price loans over the threemonth T-bill rate. CoC meet deferred from Monday as RP yet to get advisers’ advice; Numetal, ArcelorMittal bids ‘legally sound’ SHAMIK PAUL Mumbai, March 5 THE COMMITTEE OF creditors (CoC) for Essar Steel is likely to meet on Wednesday to consider the resolution plans worked out by ArcelorMittal and Numetal for the loss-making steelmaker, sources close to the development said. Lenders will discuss the recommendations put forward bythe resolution professional (RP) Satish Kumar Gupta. The CoC comprises, among others, representatives from State Bank of India, Punjab National Bank,Bank of Baroda and Bank of India. The CoC meet, initially scheduled for Monday, was deferred because the RP was yet to receive recommendations from his advisers on the bids. Consultancy firm Asserts claims for warranties aggregating to `5,440.38 crore RESOLUTION ROAD ■ Committee of creditors expected to meet on Wednesday to consider resolution plans ■ Eligibility of bids can be questioned in context of the amendment to the IBC that bars defaulting promoters ■ ArcelorMittal's ■ Numetal's bid could run into trouble since Rewant Ruia is related to the promoters of Essar Steel ■ Bankers hesitant to take a decision although both plans may be legally sound ■ Committee bid could face an eligibility test because of the stake it held in Uttam Galva Steel Grant Thornton and law firm Cyril Amarchand Mangaldas are understood to be the two advisers to the RP on this matter. Meanwhile, bankers are understood to be hesitant taking a decision on the bids although both the resolution plans may be legally sound. “We are uncomfortable with the bidders even though they may be eligible as per the IBC norms,” a banker familiar with the development said. FE had reported in February the CoC is likely to of creditors likely to approach NCLT for decision on bids approach the National Company Law Tribunal regarding the bids received for Essar Steel since both the bidders were facing eligibility issues. The eligibility of the bids is being questioned in the context of the amendment to the Insolvency and Bankruptcy Code (IBC) which categorically states that promoters of defaulting companies are not allowed to bid unless they repay all pending loans before submitting the resolution plan. Continued on Page 2 Panel set up for making fintech rules flexible THE CENTRE HAS set up an eight-member panel to consider making regulations on fintech (financial technology) more flexible and promote financial inclusion, reports fe Bureau in New Delhi. The panel will be headed by the economic affairs secretary. The objective of the panel is also to consider various issues relating to the development of the fintech space. Lights, camera, Oscars (Left to right) Oscar winners Sam Rockwell, Frances McDormand, Allison Janney REUTERS and Gary Oldman pose backstage Report on Page 20 Special Feature The rise and growth of online travel players Consumers today use a mix of offline and online research while booking their sojourns forcing travel companies to innovate if they are to stay ahead of the curve ■ BRANDWAGON QuickPicks Solar row: WTO to set up panel THE DISPUTE settlement body of the World Trade Organisation (WTO) has decided to set up a panel to examine whether India has complied with its ruling over solar power last year, reports fe Bureau in New Delhi. The ruling went against India for favouring local manufacturers in its solar power programme on a petition filed by the US. The US had approached the WTO, seeking action against India for non-compliance of the ruling. PAGE 2 COAI hits back at Reliance Jio COAI ON MONDAY responded strongly against Reliance Jio’s charge that it is a mouthpiece of incumbents, Airtel, Vodafone and Idea, reports fe Bureau in New Delhi. It also said the “virulent tenor” of protest by Jio shows that its intention is to “sideline” genuine issues facing the telecom industry. COAI said every time it has taken up an issue on which the Reliance arm disagrees, it has tried to malign the body’s reputation. PAGE 5 FE BUREAU Mumbai, March 5 RELIANCEINFRASTRUCTURE (R-INFRA), along with its subsidiary Reliance Defence Systems, has issued an arbitration notice to the founder-promoters of Pipavav Defence & Engineering (now Reliance Naval & Engineering), a company it bought in 2015, asserting claimsforwarrantiesaggregating to `5,440.38 crore. The arbitration notice named Nikhil Gandhi, Bhavesh Gandhi and their companies — SKILInfrastructure, Grevek Investments and Finance and SKIL Shipyard Holdings — as founder-promoters of Pipavav Defence, ● FUNDING GAP THE PRIME MINISTER'S Office is learnt to have asked the food ministryto explore the feasibilityofimposingacessonsugarto create a fund that will finance any gap between the cane price mills can pay to farmers in accordancewiththeRangarajan panel formula and the benchmark rate fixed bythe Centre. If such a new levy is imposed, it would mark a departure from a recent policy consensus against cesses that are incompatible with a modern system of indirect taxes, free from tax cascades. The move, however, reflects the Centre's growing unease over the reluctance of states like Uttar Pradesh to fix their arbitrary cane-pricing mechanisms,which have hit farmers and industryalike.The move is also politically important as any cane arrears before the 2019generalelectionswillbea key issue for farmers in large states like Uttar Pradesh and Maharashtra. BANIKINKAR PATTANAYAK New Delhi, March 5 BLOOMBERG Washington, March 5 THE US PLAN to tax steel and aluminium imports may not hurtIndia’sexportsmuchbutit may prompt countries like China to divert a part of their supplies to India, raising chances of dumping here, industryandanalystssaid.Also, anyensuingtradewarinvolving large players like China and the European Union that would seek to retaliate against the US curbs will potentially dent globaltradegrowthandimpact India aswell,theysaid. “AMERICA FIRST” IS finally starting to bite. President Donald Trump’s March 1 announcement that he’ll slap stiff tariffs on imported steel and aluminium roiled markets, spurred warnings of harsh economic and political ramifications from some Republican lawmakers, and provoked threats of retaliation from allies such as the European Union. Trump doesn’t intend to bow to pressure for exemptions for some nations when he signs the formal tariffs order as early as this week, according to two of his trade advisers, though there could be business exemptions in select cases. The announcement should have come as no surprise from a president who campaigned on an “America First” agenda. Since being elected, Trump has promised to fight on behalf of Americans against what he sees as unfair foreign competition. Even before his inauguration he vowed to implement a big “border tax” on businesses that shift jobs overseas. Continued on Page 2 ● IMPORT DUTY HIKE Metals stocks melt on Trump's proposal METAL STOCKS WERE pummelled on Monday after US President Donald Trump ■ In March 2015, R-Infra had announced the acquisition of controlling stake in Pipavav Defence and Offshore Engineering of up to `2,082.3 crore ■ Legal sources said R-Infra had discovered that as per the share purchase agreement, the company is entitled to claim the loss caused. according to a stock exchange filing by R-Infra on Monday. While R-Infra paid `819 crore for a nearly 18% stake in Pipavav,itisunderstoodtohave boughtaround19%fromsmall shareholders in the open offer, taking its stake to just over festival,sawstocksreactsharply onMondaytothemove.TheBSE metalindexslid3.3%toendthe session at 14,534.31. Details on Page 11 36%. Debt on the company’s booksattheendofMarch2015 was `6,893.07 crore. The arbitration notice has been filed in accordance with Singapore rules (SIAC) and relates to breach of warranties underthesharepurchaseagree- PMI 53 ‘AMERICA FIRST’ announced his intent last week tolevyheftytariffsonimported steel and aluminium to protect the local industry.Indian stock markets,which were closed for trading since Friday due to Holi under the purchase agreement dated March 4, 2015 BANIKINKAR PATTANAYAK New Delhi, March 5 Trump’s tariff talk triggers tensions FE BUREAU Mumbai, March 5 ■ R-Infra asserted the claims for breach of warranties 55 Spectre of dumping haunts India Continued on Page 2 ■ R-Infra arm RDSPL issued arbitration notice against founder promoters of Pipapav Defence and Engineering Nikhil Gandhi and Bhavesh Gandhi PMO asks food ministry to see if sugar cess feasible Continued on Page 2 ● US TAX BATTLEGROUND ment dated March 4,2015. According to persons in the legal fraternity in the know of thematter,R-Infra,anentityin the Anil Ambani-led Reliance Group, had discovered serious breaches of warranties and representations made by the founder-promotersatthetime of acquisition of the company. “As per the share purchase agreementR-Infraisentitledto claim the loss caused through an arbitration process,” one of them explained. These warranties, the persons explained, are assurances for the state of affairs and governance standards of the company,anybreachofwhichcould lead to a claim. R-Infra, through a subsidiary, had entered into an agreementwiththepromoters of Pipavav Defence on March 4, 2015, to acquire 13 crore shares or a nearly 18% stake for `819 crore. Continued on Page 2 FE BUREAU Services at six-month low India's services sector contracted in February, hitting the lowest level since August, as new work orders suffered amid weak underlying demand conditions. The seasonally adjusted Nikkei India Services Business Activity Index fell from 51.7 in January to 47.8 in February. Manufacturing PMI Services PMI 49.6 52.1 51 49 47.8 47 46.8 45 Dec 2016 Note: Reading below 50 suggests contraction and above it indicates expansion Feb 2018 Source: Nikkei, IHS Markit
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