OPINION, P8 MONEY & MARKETS, P10 NEXT STOP, LONDON? EDITORIAL Have to cut other subsidies to fund big social security plan How can ‘duty-free’ shops be asked to pay GST? AAR’s ruling makes little sense INTERNATIONAL, P14 BIG WEEK Raghuram Rajan contender for top job at Bank Of England Google CEO Pichai poised to cash in $380-million award NEW DELHI, TUESDAY, APRIL 24, 2018 FOLLOW US ON TWITTER & FACEBOOK. APP AVAILABLE ON APP STORE & PLAYSTORE WWW.FINANCIALEXPRESS.COM READ TO LEAD VOL.XLIV NO. 45, 24 PAGES, `6.00 (PATNA `6.00, RAIPUR `7.00) P U B L I S H E D F R O M : A H M E D A B A D , B E N G A L U R U , C H A N D I G A R H , C H E N N A I , H Y D E R A B A D , K O C H I , K O L K ATA , L U C K N O W, M U M B A I , N E W D E L H I , P U N E SENSEX: 34,450.77 ▲ 35.19 NIFTY: 10,584.70 ▲ 20.65 NIKKEI 225: 22,088.04 ▼ 74.20 HANG SENG: 30,254.40 ▼ 163.93 `/$: 66.48 ▼ 0.37 `/€: 81.33 ▲ 0.05 BRENT: $73.44 ▼ $0.62 GOLD: `31,213 ▼ `85 TAX TANGLE IN THE NEWS CJI impeachment: Naidu rejects, Cong to move SC March GST mop-up hits `96,000 crore VICE-PRESIDENT M VENKAIAH Naidu on Monday rejected the unprecedented notice by seven opposition parties led by the Congress to impeach CJI Dipak Misra on five grounds of "misbehaviour", saying the allegations were neither "tenable nor admissible", reports PTI. Calling Naidu’s order "hasty", Congress leader Kapil Sibal said the party will move the Supreme Court. Leaders of seven opposition parties had met Naidu on April 20 and handed over the notice of impeachment against the CJI. Collections highest so far, yet are way short of budget projection; analysts say buoyancy improving FE BUREAU New Delhi, April 23 THE GOODSAND services tax (GST) collections for March exceeded `96,000 crore by April 23, the largest mop-up for any month since the comprehensive indirect tax’s launch in Julylastyear,an official source said.The March collections could cross the coveted `1 lakh crore mark by April-end,as payments are still being made bya section of taxpayerswith late penalties,analysts feel.The forecast is based on the customary spurt in tax payments in the last month of the financial year and the fact thatonly55lakhassesseeshad paidthetaxbyApril23—three days past the deadline for payment without fines — against anaverageofaround65lakhin the previous months. However, the Centre is still farfrommeetingitsownprojections of GST revenue; for now, GSTrevenueislessofaproblem Munjals, Burmans extend validity of offer for Fortis FORTIS HEALTHCARE SAID Hero Enterprise Investment and the Burman Family have extended the validity of their improved, joint binding offer to invest `1,500 crore till May 4, reports PTI. The Fortis board had formed a panel last week to evaluate binding offers and make the final recommendation by April 26. On April 18, the companies improved their binding offer with a proposal to invest `1,500 crore directly at a valuation of `161.6 per share, from the earlier `1,250 crore. They had stated that their improved offer was valid for five working days. Special Features How safe are assets managed by insurance companies The insurance industry must learn lessons from the banking sector as, overlooking the potential risk and vulnerability may prove costly to all stakeholders ■ Personal Finance, P13 From ‘fashion-conscious’ to ‘conscious fashion’ A few fashion clothing retailers have taken deliberate steps towards creating environment — friendly, sustainable fashion. And here’s how it can make business sense for textile brands QuickPicks TCS brass cheer $100-bn market-cap record THE TATA Consultancy Services share extended its post-results rally to briefly hit the $100-billion market capitalisation mark on Monday, creating a significant milestone, reports fe Bureau in Mumbai. The stock gained as much as 4.4% during the day's trade before settling at `3,415.20 on the BSE, up 0.26%. The move cheered the management, as it must have the stakeholders. PAGE 11 India to file dispute with WTO if US rejects tariff exemption INDIAWOULD lodge a trade dispute against the US at the World Trade Organisation ifWashington does not grant it exemptions from higher tariffs on steel and aluminium, government officials told Reuters. India recently requested exemptions, arguing that its exports of these products to the US did not create a security concern for a country with whom it has a strategic partnership that goes beyond trade. PAGE 12 India highest recipient of remittances at $69 bn INDIA RETAINED the top position as recipient of remittances with its diaspora sending about $69 billion back home last year, the World Bank said, reports PTI. Remittances to India picked up sharply by 9.9%, reversing the previous year’s dip, but were still short of the $70.4 billion seen in 2014. The World Bank estimated that officially recorded remittances to low- and middle-income countries reached $466 billion in 2017. PAGE 2 $ Average monthly GST collections between July 2017 and March 2018 ~`90,000 cr } Of this, the Centre's share (CGST) `27,000 cr Monthly CGST revenue required to meet budget projection for FY19 `50,325 cr for states as 14% annual GST revenuegrowthisguaranteedto themforfiveyears,underacompensation mechanism. Of the total GSTcollections, theCentre’sshare(CGST)hasso far been 30% (though CGST sharewas even lowerin the initialmonths,whentheaccumulated integrated GST (IGST) pool was apportioned, it share subsequently went up). With the March figures also in, the average monthly GST mop-up sofarhasbeencloseto`90,000 crore, which means a CGST share of `27,000 crore.This is still a far cry from monthly CGSTreceiptsof`50,325crore budgeted for2018-19. The recent roll-out of the eway bill mechanism could help theCentretobridgetherevenue gap to an extent. It is also pinning its hopes on the planned introductionofinvoices-match- ing(asimplifiedcomprehensive form for returns-filing was approved by a group of state finance ministers recently; the new form is expected to facilitate invoices-matching). MS Mani,seniordirectorat Deloitte India,said:“It appears that the GSTrevenues are now achieving the required buoyancy and the final figures (for March) may be even higher. Several anti-evasion measures such as the extension of the eway bill to many states even for intrastate transactions during April could propel the revenues further during the current fiscal.” The CGST target for FY18 (July-February)was `2,21,400 crore, or `27,675 crore a month. The actual collections were a bit lower but the Centre could still meet its overall tax collection target for the year. ● ANTI-PROFITEERING NAA's first order goes against consumer FE BUREAU New Delhi, April 23 IN ITS FIRSTorder,theNational Anti-profiteering Authority (NAA)forthegoodsandservices tax (GST) has absolved a Barielly-based dealer of Honda cars of the charges of not passing on the benefit of reduced tax incidence to a consumer. According to the complaint lodgedwiththeNAAinNovember last year,the consumer had booked the car for `9.13 lakh before the GST regime kicked in;althoughthedealerreduced the deliveryprice to `8.98 lakh post-GST, the consumer felt that the price should have been lowerstill. The NAA was set up in September last year.The objective behind setting up NAA was to pass the benefits of the GST in the form of lower tax rates/higher input tax credits in business-to-business transactions to consumers. AccordingtotheNAAorder, the director general of safeguards (DGS), which probed the matter,found that the allegation of the applicant (consumer) that the total tax on the car prior to the implementation of GST was 51% which was reduced to 29% post-GST, was not correct. INVESTORS ABOARD Walmart nears $12-bn deal for Flipkart stake IN THE CART US giant may complete the agreement in the next two weeks Walmart will All major likely end up with investors in 60% to 80% of Flipkart Online Flipkart, valued at Services now on about $20 billion board the Walmart purchase Tiger Global SoftBank Management Group will offload will sell nearly a substantial part all its 20% stake of its 20%-plus in Flipkart holding ? BLOOMBERG Bengaluru, April 23 WALMART IS CLOSE to finalising a deal to buy a majority stake in India’s leading e-commerce company for at least $12 billion and may complete the agreement in the next two weeks, according to people familiarwith the matter. All the major investors in Flipkart Online Services are nowonboardwiththeWalmart purchase,afteranearlierdebate over an Amazon.com acquisition,saidthepeople,askingnot to be named because the matterisprivate.TigerGlobalManagement will sell nearly all its 20% stake in Flipkart, while SoftBank Group will offload a substantialpartofits20%-plus holding, the people said.Walmart will likely end up with 60%to80%ofFlipkart,valued at about $20 billion,theysaid. Among the issues still to be Issues still to be resolved: ■ Whether Flipkart’s founders will lead the business ■ How much each existing investor sells ■ What Walmart’s final stake will be resolved arewhetherFlipkart’s founderswill lead the business after the purchase, how much each existing investor sells and what Walmart’s final stake will be. It’s also possible that terms will change or the talks will fall apart. The deal, if completed, will give Walmart a substantial foothold in an emerging market of 1.3 billion people. The Bentonville, Arkansas-based company is the world’s largest retailer, but it has struggled against Amazon as consumers migrate to online commerce. India is the next big potential prize after the US and China, where foreign retailers have made little progress against Alibaba Group Holding. Continued on Page 2 Continued on Page 2 RACE FOR BHUSHAN NCLT tells lenders to consider late bid by Liberty House FE BUREAU New Delhi/Mumbai, April 23 THE STORY SO FAR THE NATIONAL COMPANY Law Tribunal (NCLT) on Monday asked lenders to Bhushan Power and Steel, led by Punjab National Bank, to consider the late bid submitted by UKbased Liberty House for the bankrupt company. LibertyHousehad,onFebruary26,challenged the rejection of its bid by the resolution professional (RP) on the grounds it had been submitted late. The twobidderswhohadsubmitted theirbidsbythedeadlineofFebruary8wereTata Steel and JSW Steel. It was not clear whether these two steelmakers would challenge the order. The decisionsopensupthepossibilityof bids being submitted late but being entertained bythe NCLT. Bhushan Power and Steel owed lenders close to `47,000 crore as on March 31,2017. A two-member NCLT bench, headed by justice MM Kumar,saidonMondaythebid by Liberty House could not be disqualified only on the grounds it had been submitted after the deadline. “The resolution plan of the JULY 2017 26 Bhushan Power & Steel admitted in the insolvency court FEBRUARY 2018 8 RP fixes last date for submission of resolution plans 20 Liberty House submits bid 22 RP rejects the bid, leaves it unopened 26 Liberty House moves NCLT challenging the decision APRIL 2018 23 NCLT asks CoC to consider Liberty's bid Liberty House shall not be rejected on the ground of delayemanating from process document or any other document internally circulated by the RP or the CoC (committee of creditors). The rejection shall be on some substantive ground as against flimsy one,” the bench said. Thetribunalhasnowdirected the CoC to complete its resolution proceedings byJune 23. The bench’s order noted that since the resolution plan is underconsideration andyet to be decided by the CoC there is still considerable time left for completion of resolution process, “It is expected that CoC will take appropriate commercial decision in terms of the code, rules and regulations in order to achieve the object of the Code.” Liberty House has emerged the highest bidder for Amtek Auto and had offered to pay approximately `4,334 crore. SpokespersonsforTataSteeland JSW Steel had not commented till the time of going to press. Bhushan Power and Steel was among the 12 non-performing assetstheReserveBankofIndia hadreferredforinsolvencyproceedings in June lastyear. Beijing diary Foreign minister Sushma Swaraj with Chinese President Xi Jinping before a meeting at the Great Hall of the People in Beijing on Monday AP Regional connectivity FE BUREAU Biggies outpace small fry Established airlines have rolled out Udan services much faster than smaller players, who are under-capitalised. RCS routes won (UDAN) Routes operational 11 15 15 exercise,given talk of a possible initial public offering for the unit oreven an acquisition. A review of Jio’s unaudited results for the last year shows that the wireless venture and its parent relied on a series of accounting decisions that wound up portraying Jio’s financial performance in the best possible light. Analysts have previously noted some anomalies in Jio’s accounting, like the inclusion of six months of revenues in a three-monthreportingperiod. THEARMED FORCES (Special Powers) Act (AFSPA) has been removed completely from Meghalaya and its area of operation in Arunachal Pradesh has been restricted to eight police stations bordering Assam and three districts neighbouring Myanmar,officials said on Monday. AFSPA, which empowers security forces to conduct operations, arrest anyone anywhere without prior notice, has been removed from all areas of Meghalaya from March 31. The decision has been taken due to a significant improvement of security situation in the state, a home ministry official said. In Arunachal Pradesh, areas under the controversial act have been reduced from 16 police stations areas bordering Assam to eight police stations besides Tirap, Changlang and Longding districts, the official said. Continued on Page 2 Continued on Page 2 2 TruJet 6 Air Odisha Air Deccan Source: Civil Aviation ministry $38-BN START-UP Reliance Jio packs six-month sales into a quarter BLOOMBERG New York/Mumbai, April 23 A SMARTPHONE IN India cost over $200 two years ago. Now you can get a decent phone for nothing but a refundable , $23 deposit. Data packages are cheap, and a start-up even throwsinfreevoicecallsforlife. For this, consumers can thank Mukesh Ambani, a 61year-old petrochemicals titan who is the country’s richest man.Fromhisperchoverseeing Reliance Industries, one of India’s largest conglomerates, Ambani has ploughed more than$38billionintohiswireless entry,Reliance Jio Infocomm. It’saclassicbusinessdisruption. Jio has quickly garnered 14% of a market that is expanding rapidly, putting pressureonothermobilephone providers.Along the way,virtually every promise Ambani madeaboutthecompany’sperformance in the marketplace has held up, from inexpensive Jio handsets to state-of-the-art wireless connections. Butoneclaimmeritsacloser look:ThatJiohasbeenprofitable virtually from its commercial launch. And it’s a worthwhile Unaudited results for last year show a series of accounting decisions portraying Jio’s financial performance in best possible light Analysts noted anomalies in Jio’s accounting like inclusion of six months of revenues in a threemonth reporting period Also, Jio took advantage of a rule that allowed it to burn through billions of dollars in expenses during roll-out without costs showing up on income statements No AFSPA in Meghalaya, partly in Arunachal PRESS TRUST OF INDIA New Delhi, April 23 34 18 18 7 SpiceJet Alliance Air 50 ● IMPROVED SECURITY
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.