OPINION, P8 COMPANIES, P6 EDITORIAL Abolishing FCI will cut cost of MSP deficiency payments INTERNATIONAL, P16 R CHAKRABORTY DATA BREACH MEETING WITH XI Modest labour reforms could create 10 million sales jobs over three years India issues notice to Zuckerberg-led Facebook China says North Korea's Kim pledges denuclearisation MUMBAI, THURSDAY, MARCH 29, 2018 FOLLOW US ON TWITTER & FACEBOOK. APP AVAILABLE ON APP STORE & PLAYSTORE WWW.FINANCIALEXPRESS.COM READ TO LEAD VOLUME XXXXXV NO. 318, 106 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: 32,968.68 ▼ 205.71 NIFTY: 10,113.70 ▼ 70.45 NIKKEI 225: 21,031.31 ▼ 286.01 HANG SENG: 30,022.53 ▼ 768.30 `/$: 65.18 ▼ 0.21 `/€: 80.81 ▼ 0.31 BRENT: $69.81 ▼ $0.30 GOLD: `30,672.00 ▼ `46.00 IN THE NEWS PNB says to settle claims of `6,500 crore FE BUREAU New Delhi, March 28 THE CRISIS-RIDDEN PUNJAB National Bank (PNB) on Wednesday said that it will honour all its liabilities arising out the letters of undertakings (LoUs) and foreign letters of credit (FLCs) fraudulently issued by some of its employees to firms of jewellers Nirav Modi and Mehul Choksi, ending the possibility of any ugly interbank spat. The bank said it will settle claims of `6,500 crore on 352 LoUs and FLCs with seven banks that mature on or before March 31. Continued on Page 2 FE-EY BEST BANKS SURVEY 2016-17 March 2018 Read to Lead Knowledge partner Associate partner Presented by Ernst & Young LLP WITH TODAY’S ISSUE OPENING ROUND AI starts taxiing towards its flight to privatisation Govt to offer 76% equity in airline, budget arm and AI-SATS; effective control to remain in Indian hands FE BUREAU Mumbai, March 28 SETTINGTHE BALL rolling for the divestment of flag carrier Air India, the government on Wednesday issued a preliminary information memorandum (PIM) offering 76% equityin the airline alongwith its budget arm Air India Express and airport service unit Air India SATS. The proposed dilution will ensure transfer of complete management control of the carrier, while allowing foreign airlines orforeignconsortiumpartners to pick up 49% equity in the airline provided that the chairman and at least two-thirds of directorsareIndiansandeffective control vests with Indian nationals.Aminimum of 27% equity must remain with Indian entities. The government has KEY FINANCIALS Air India losses in FY16-17 `5,765 crore Total assets with AI in FY16-17 `4,591.5 crore WITH THE CAPITAL market regulator accepting the bulk of the recommendations of the the Kotak Committee on Corporate Governance, India Inc willneedtobecomemuchmore transparent making many more disclosures than they do now. Even as the eligibility criteria for independent directors has been made more strict, the top 500 companies,the Securities and Exchange Board of India(Sebi)saidonWednesday, must have at least one woman independent director by April next year while the top 1,000 must have one byApril 2020. The Sebi board decided that companieswouldneedtomake more detailed disclosures of related-party transactions; moreover,relatedpartieswould be permitted to vote against these transactions. Companieswill also need to seek the approval of minority shareholders — and get a Government offers 76 % of equity in Air India Interested bidders to submit EoI on May 14 H1 bidder to go through security clearance Consortia can bid for Air India Qualified interested bidders to be allowed to submit RFP in Stage II sought an expression of interest (EoI) for a 76% stake in Air India along with control of its 100% owned subsidiary and low-cost arm Air India Express,and a 50% equitythat Air India holds in AI-SATS (a joint venture with Singapore Airport Terminal Services). Therewill be a separate divest- ■ Requires quarterly disclosure of consolidated results ‘Value of merged entity to be `15K cr’ PRESS TRUST OF INDIA New Delhi, March 28 such proceeds are utilised. While 40 of the 80 suggestions of the Kotak committee were accepted in totality, 15 were accepted with modifications.Thecapitalmarketsregulatoralsodecidedthatthepositions of the chairman and the CEO ormanaging directorswill be separate for the top 500 listed companies by market capitalisation fromApril 2020. Moreover,themaximumnumber of directors on listed companies will be pruned from 10 to eight by April 2019 and furtherto seven byApril 2020. THE VALUE OF the entity resulting from the merger of Fortis Healthcare and Manipal Hospital Enterprises will be `15,000crore,atopFortisofficial said on Wednesday. The merger is expected to be completed in 10-12 months,he added. “When you look at value of Fortis,whenyoulookatvalueof Manipal and when you look at money being infused that is `3,900 crore, that adds up to `15,000 crore,” Fortis HealthcareCEOBhavdeepSinghsaidin aconferencecallonWednesday, takingthevalueoftheresulting entityto `15,000 crore. Thecompany’sboardhadon Tuesdayapprovedthedemerger of Fortis hospitals business, whichwillbeacquiredbyManipal Hospitals and TPG Capital, alongwiththesaleof20%stake in diagnostics chain SRL. Ranjan Pai and TPG will invest `3,900 crore into Manipal Hospitals.The fundswill be utilisedforfinancingtheacquisition of a 50.9% stake in SRL (20% from Fortis Healthcare and 30.9% from other investorsforwhichdiscussions arecurrentlyunderway),Fortis HealthcarehadsaidonTuesday in a statement. Continued on Page 2 Continued on Page 2 ■ Expands roles of governance committees ■ Makes secretarial audits mandatory for listed companies and subsidiaries ■ Sebi accepts 40 ■ Directs reduction in directorships from 10 to 7 by 2020 ■ Webcast ofAGMs compulsory for top 100 companies ■ Makes one woman director mandatory for top 500 companies ■ Calls for ■ Royalty payment disclosure of QIP/ preferential offer fund use majority vote — for any payments on account of brand or royalty to a related party exceeding 2% of the consolidated turnover. In a decision that could be onerous for companies,consolidated accounts must be furnishedeveryquarter.Moreover, they must now reveal how they havespentorusedmoneyraised through qualified institutional placements(QIPs)orapreferential issue.The Kotak committee was of the view that for better transparency, appropriate disclosuresmayberequiredonutilisation of proceeds of preferential issues and QIPs till the time ment forAirIndia Engineering Services, Air India Hotel Corporation and its regional lowcost armAllianceAir.The final bids are to be invited on May 14 and the divestment process is to be completed by December this year. Advisory firm EY has been appointed as the sole transac- ● FORTIS-MANIPAL NEW RULES recos of Kotak Committee; 15 with modification `48,781 `2,841 crore crore Appoints EY as the sole transaction advisers Sebi partly accepts Kotak committee suggestions FE BUREAU Mumbai, March 28 over 2% of revenue to require majority of minority vote Data-centric RISHI RANJAN KALA 4G takes the lead The October-December quarter saw 4G data subscribers for the first time surpassing the combined 2G & 3G data user base, clearly showing that with handset ecosystem established, 4G is the way ahead. Reliance Jio had a lion’s share of 67.2% of the 4G data user base but incumbents are slowly catching up Total contingent liabilities The proposed divestment plan CORPORATE GOVERNANCE Pushes greater transparency, more disclosures; tightens independent director norms, pushes for more women Total debt as on Mar 2017 2G/3G mobile data subscribers (Million) 4G mobile data subscribers (Million) 248 268 210 197 129 Jan-Mar 2017 160 April-June 2017 Source: Trai, Kotak Institutional Equities July-Sept 2017 238 186 Oct-Dec 2017 ● UTTAM GALVA SAT notices to bourses on promoter status of ArcelorMittal tion advisor and has made the EoI the first stage for the potential bidders to qualify, following which the selected bidders will become eligible for the second stage or the request for proposal (RFP) round. The government has allowed for consortia to be formed for the Air India bids and these can be companies with an airline,private equity fund or sovereign funds or also entities that are not incorporated entities. It has set a net worth criteria of `5,000 crore for all bidders — thiswill be computed through a specified formula in case of consortium bids. Though there is a profitability criteria for the interested bidders which is at least three of the immediate preceding five financial years from the EoI deadline, if the consortium has a scheduled airline operator in India as its partner, the condition to meet positive profit after tax shall not be applicable provided the shareholding of such a member is restricted to a maximum of 51% of the paid-up equity share capital of the consortium. THE SECURITIES APPELLATE Tribunal (SAT) on Wednesday issued notices to stock exchanges to respond within two weeks on the petition of minority shareholders of Uttam Galva challenging the bourses’ decision to approve the declassification of multinational steel giant ArcelorMittal as a promoter of Uttam Galva. According to the appeal filed earlier by the appellants — Sulbha Sanjay Naik and others — with the SAT, their counsel submitted that the reclassification of promoter shareholders of the company has been approved in violation of Regulation 31A(5) and 31A(3) of the Listing Regulations and without waiting for informal guidance that had been sought from the Securities and Exchange Board of India (Sebi). “Pending disposal of the appeal, impugned decisions of the stock exchanges must be stayed forthwith,” the counsel for minority shareholders submitted. Continued on Page 2 Continued on Page 2 SHUBHRATANDON Mumbai, March 28 VIDEOCON LOAN ICICI Bank board backs Kochhar ‘Reposes full faith and confidence’ in the MD & CEO; says advances made as part of consortium FE BUREAU Mumbai, March 28 THE BOARD OF ICICI Bank on Wednesdaydefended its management after a review of the bank’s internal processes for credit approval in general and its exposure to the Videocon group in particular, saying it “expresses and reposes full faith and confidence” in managing director and chief executive officer Chanda Kochhar. Thestatementisimportant in the light of recent reports that ICICI Bank’s lending to some of its clients may not have been prudential. The board observed that the process of credit approval at the bank is such that no individual employeewould be in a position to influence credit decisions there. Multiple independent departments are involved in providing independent credit risk rating, doing credit appraisal, credit approvals and monitoring the proposals. The bank’s Chanda Kochhar, MD & CEO, ICICI Bank BOARDSPEAK ■ No individual employee has the ability to influence the credit decision at the bank ■ ICICI Bank was not the lead bank for the consortium of banks that lent to the Videocon group in April 2012 and sanctioned less than 10% of the total consortium facility credit approval authorisation framework is laid down bythe board. In its statement, the board said,“The larger exposures are approved by the credit committee of the board.” Continued on Page 2
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