OPINION, P6 ECONOMY, P2 A GULATI & S SAINI Agri-trade policies must lose consumer bias INTERNATIONAL, P4 EDITORIAL MONETISING HIGHWAYS PERSONAL MISCONDUCT CHARGES Don't arm-twist Vodafone-Idea on payments. Let courts decide first Govt eyes $3 billion from 25 projects in nine states Sorrell quits as head of world's biggest ad group WPP NEW DELHI, MONDAY, APRIL 16, 2018 FOLLOW US ON TWITTER & FACEBOOK. APP AVAILABLE ON APP STORE & PLAYSTORE WWW.FINANCIALEXPRESS.COM READ TO LEAD VOL.XLIV NO. 38, 20 PAGES, `6.00 (PATNA `6.00, RAIPUR `7.00) 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 comprises loans between six months and one year while loans for a period of less than six months, accounts for $30 billion, Kotak Institutional Equities wrote recently citing latestdata.“Webelievethatthe LoU/LoC business would be a part of this overall credit,” the brokerage said. While demand for working capital has picked up somewhat, bankers believe the uptick could accelerate in the coming months. To be sure, 7.429 7.550 7.400 7.250 7.100 6.950 6.800 Mar 9, ‘18 Apr 13, ‘18 banks are collectively holding an excess of government securities — of around 8% — while meeting statutory liquidity ratio (SLR) norms of 19.5% of net demand and time liabilities (NDTL).To that extent,the excess liquidity is approximately`8 lakh crore.However, banks also need to maintain a liquidity coverage ratio (LCR) whichleaves`3-4lakhcroreof excess liquidity. Continued on Page 2 MSP FOR JOWAR Special Features Putting the bots to work on the Indian shopfloor Bajaj Auto, Renault Nissan, Mahindra & Mahindra and Aurolab are among the Indian firms that have got Universal Robots’ collaborative robots (cobots) to work with their staff ■ EFE, P8 How to reduce the impact of a higher interest on home loans As banks raise interest rates on home loans, you can pay a higher EMI, go for a partial prepayment or switch your loan balance to a bank offering a lower rate ■ Personal Finance, P9 At 150% of cost, will distort market price PRABHUDATTA MISHRA New Delhi, April 15 IF THE GOVERNMENT implements the assured minimum support price at one and a half times the production cost, as promised,it would jack up consumer prices of jowar and distortthemarketdynamicsofthe “poorman’scereal”.Besides,the measure would also dampen Cost vs MSP of jowar `/quintal A2+FL 2013-14 1,269 MSP 2014-15 1,370 1,530 2015-16 1,467 1,570 1,500 2016-17 1,501 QuickPicks Govt plan to retain 24% stake, other riders, deter AI bidders THE GOVERNMENT'S decision to retain a 24% stake in Air India is deterring prospective buyers from bidding for the ailing airline, sources said, reports Manisha Singhal in Mumbai. With the 24% stake, the Centre would appoint two nominees on the board which would mean continued interference in the running of the business. While both domestic and international airlines were looking forward to the divestment ofAir India, the conditions for the sale are onerous, they pointed out. PAGE 5 India says will not take sides in ongoing US-China trade spat INDIA SAID on Sunday that it would not take sides in the ongoing trade spat between the US and China as it concluded the key Strategic Economic Dialogue (SED) with Beijing during which differences persisted over China's controversial Belt and Road Initiative, reports PTI. NITI Aayog vice-chairman Rajiv Kumar said, "India, suo motu, has been the supporter of the rule-based multilateral trading order. In that sense, we don't have to take sides one way or the other." PAGE 3 I-T seizes `440-crore dividend income of Cairn Energy THE INCOME tax department has seized a further `440 crore of dividend income due to Cairn Energy to recover a part of the `10,247-crore tax demand it had raised on the British firm using a retrospective tax legislation, reports PTI. The taxman had previously seized `666 crore of dividends due to Cairn from its 4.95% residual holding in Vedanta. It has also refused to pay a tax refund of `1,594 crore due to Cairn as a result of overpayment of capital gains tax to recover the dues. PAGE 5 1,625 2017-18 1,556 1,700 Jowar production (in tonne) 7.5 7 6.8 6.1 5.4 4.66 4.7 4.0 2010-11 2017-18* *April-January exports,analystswarn. At150%ofthecost(A2+FL), the MSP for jowar for the next season could be at least 37% higherthanthe`1,700/quintal announced for 2017-18 crop year (July-June); the resultant increase in retail prices to the consumer will be even steeper because a higher MSP would also inflate traders’margins. “Undersuchapricingstructure, farmers may find it profitable to allocate more area for jowar cultivation and increase its production significantly. However,intheabsenceofcommensurate demand for the cereal, market prices may fall waybelowtheannouncedMSP, necessitating large-scale procurement at MSP. This would notbeaneconomicallyrational choice,” said Ashok Gulati, noted economist and former chairman of CACP. Production of jowar, a coarse cereal grown during both kharif and rabi seasons in states like Maharashtra, Karnataka and Tamil Nadu, has been declining steadily over the last fewyears. Haircuts (in %) Binani 2 Cement Bhushan Steel Electrosteel Steels Amtek Auto Monnet Ispat & Energy 25 45 72 72 Jyoti Structures 85 Source: CLSA, media reports Continued on Page 2 It’s a wrap Women's singles badminton gold medallist Saina Nehwal (left) and silver medallist PV Sindhu (right) with their coach P Gopichand, in Australia on Sunday. With 26 gold, 20 silver and 20 bronze medals, India signed off third in the Commonwealth Games table STATE FINANCES 2018-19 Optimistic revenue forecast could hit capex or deficit A revenue growth forecast of 14.4% in 2018-19 seems optimistic; a shortfall could mean lower capex or bigger deficits FE BUREAU New Delhi, April 15 WITH A CLUTCH of states expected to clock in a slower pace of aggregate revenues in 2018-19,the casualtycould be either their capital expenditure (capex) or their deficits. For a group of 13 states, aggregaterevenuesareforecast to grow at 14.4% compared withafarbetter21.3%in201718.The muted revenue growth, a studybyIcra reveals,is thanks to a smaller increase in grants Revenues to grow 14.4% in 2018-19, they grew 21.3% in 2017-18 Share of capex in total spend to rise to 15.1%, slightly higher than 14.4% in 2017-18 Smaller increase in grants from Centre, slower rise in own tax revenues Capex spends may suffer due to elections in some states from the Centre and a slower rise in the tax revenues that states collect themselves.However, taxes devolving from the Foreign direct investment FE BUREAU Services are the bigger draw FDI inflows to industry may have more than doubled to $17 billion in FY17 from the low of $8 billion five years back, but services pulled in far more at $27 billion. Over the years, IT and financial services, especially insurance, have soaked up much of the investment. The hits… 14.2 10.3 $ billion, change in FDI flows 8.0 7.5 …and the misses 7.1 -3.0 -2.3 -1.6 -1.0 -0.6 *Software & hardware **Finance, banking, insurance, etc Source: CEIC, UBS. Note: The data looks at incremental FDI flows received after NDA government came to power (Q2FY15 till Q3FY18) and the corresponding previous quarters (Q4FY11-Q1FY15) Continued on Page 2 ROADS MORE TRAVELLED Bus services overtake Shatabdi on busy, short routes SAURABH KUMAR New Delhi, April 15 IMPROVED ROAD CONNECTIVITY, especially on hightraffic short-distance routes,is hitting the occupancylevels of the premium Shatabdi trains, with some sections seeing patronage as low as 20%. These superfast express trains with air-conditioned chair cars connect major Indian cities and complete toand-fro journey between two destinations on the same day. As many as 25 Shatabdi trains are being operated by the Indian Railways.Of course, some of Shatabdi routes — NewDelhi-HabibganjandNew Delhi-Chandigarh, among others — are still seeing occu- pancies as high as 150%, but the average occupancy of the 25 trains in the last financial yearhasvariedwidely,between 68% and 82%. MAJOR ROUTES ● New Delhi – Habibganj ● Mumbai – Ahmedabad ● New Delhi – Amritsar ● Howrah – Ranchi ● Chennai – Coimbatore In comparison, the other two premium-category trains — Rajdhani and Duronto — have seen average occupancy of 83% and above during the period.Ofcourse,noneofthese trains are profitable,with only theAC 3-tiersegmentyielding positive returns for the national transporter. 68-82% Occupancy levels of Shatabdi trains in FY18 83-110% Occupancy levels of Rajdhani trains in FY18 July 1988 First Shatabdi train ran between New Delhi and Gwalior Taxes from Centre tipped to rise 14.1%, higher than 11% in 2017-18 Limit for FPI investment in state loans unchanged at 2% of outstanding Internal non-tax revenues to rise 18.7%, higher than 9.2% rise in 2017-18 Total borrowings by states in April-June period is `1.16-1.28 lakh crore Source: ICRA study based on 2018-19 budgets of 13 states Mechanical & engineering Last month, the central bank had disallowed banks from issuing LoUs or guarantees 7.671 Hotel & tourism THE DEBATE ON rewriting history is unnecessary as certain "exaggerations" need to be removed, Indian Council of Historical Research chairman Arvind Jamkhedkar said, reports PTI. He said the ICHR mandate is not to dictate history but to encourage research to facilitate the rewriting of history. India’s trade credits are estimated at around $86 billion 7.700 Metallurgical industries ‘Exaggerations in history need to be removed’ LoU exposure is hard to quantify as it is a subset of the overall trade credit portfolio 10-year bond yield (%) Food processing industries FOLLOWING THE RESERVE Bank of India’s (RBI) ban on issuance of letters of undertaking (LoU),at least $5 billion (approximately`35,000crore) of non-fund creditwill need to be converted into domestic loans. The total non-fund based exposure is estimated at $20 billion (`1.4 lakh crore). The migration of customers to the home market could soak up a lot of domestic liquidity in the next few months, say bankers who are apprehensive yields might spike up. “We will need to watch liquidity though the higher FPI investment limits will help,”said a banker. Analysts point out the LoU exposure is hard to quantifyas itisasubsetoftheoveralltrade credit portfolio. India’s trade creditsareestimatedataround $86 billion.Of this,$56 billion This migration might soak up a lot of domestic liquidity in the next few months Drugs & pharma THE BINANI OPERATIONAL Creditors Forum (BOCF) said it has sought a forensic audit of the insolvency resolution process of Binani Cement, reports PTI. It said there was an alleged lack of transparency and stepmotherly treatment towards MSME players. LoU Construction activities SHAYAN GHOSH Mumbai, April 15 of non-fund credit to be converted into domestic loans LENDERS ARE LOOKING at haircuts of anywhere between 2% and 85% going by the bids received for bankrupt companies.While the resolution plan undertheInsolvencyandBankruptcy Code for Binani Cement would see a small haircut of around2%,forJyotiStructures, the hit is a big one at 85%.The companyattracted just one bid from a group of professionals which has reportedly offered `3,000 crore over 15 years. Again, lenders appear to have rejected the sole proposal for Alok Industries since it would mean a very big haircut. The haircutsforothercompanies— Coastal Projects,Essar Projects, IVRCL—couldbecloseto90%. However, the IBC has got a big boost after the Supreme CourtonFridayshowedadisinclination to interfere in the process as it heard a plea from Binani Industries which was looking to get the resolution of Binani Cementwithdrawn. Trading IN THE NEWS Binani resolution: Creditors’ forum seeks audit `35,000 crore ($5 billion) SHAYAN GHOSH Mumbai, April 15 Telecom Banks expect around At least $5 billion or `35,000 crore of overseas non-fund credit will need to be converted into domestic loans Banks stare at large haircuts Services** Switch to local credit may squeeze liquidity ● IBC RESOLUTIONS Computer* RBI BAN ON LoUs The Indian Railways has observed that the passenger movement between non-terminating and non-originating railway stations on the route of Shatabdi trains is low and the passengers were opting forAC bus services in these sections. Even in some of the busyroutes such Delhi-Ajmer, while the trains remain fully occupied till their journey to Jaipur, the occupancy levels drop dramatically in the last leg between Jaipur andAjmer. Same is case with the Chennai-Mysore Shatabdi which has a high occupancy level till Bengaluru, but commuters prefer roads between Bengaluru and Mysore. Continued on Page 2 Centrearetippedtoseeabigger increase—up14.1%from11%. Continued on Page 2 ● INSOLVENCY PROCEEDINGS RIL-JM Fin bid to buy Alok Industries rejected PRESS TRUST OF INDIA New Delhi, April 15 RELIANCE INDUSTRIES SAID on Sunday the resolution plan for acquiring Alok Industries in conjunction with JM Financial Asset Reconstruction Company has been rejected by the committee of creditors. RIL had bid jointlywith JM Financial to acquire debt-ridden textile manufacturerAlok Industries. “As intimated earlier, Reliance Industries in conjunction with JM Financial Asset Reconstruction Company submitted a resolution plan for Alok Industries. We have been informed that our plan did not meet with the approval of the committee of creditors ofAlok Industries as required underthe Insolvency and Bankruptcy Code,” the MukeshAmbani-led company said in a regulatory filing to the exchanges. In July 2017, the Ahmedabad bench of the National Company Law Tribunal had admitted insolvencyproceedings against the textile company under the Insolvency and Bankruptcy Code. The consortium of lenders, led by State Bank of India, is claiming dues of over `23,000 crore from Alok Industries.
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