OPINION, P8 INTERNATIONAL, P14 SUNIL JAIN Aadhaar verification vital for NHPS, as are live photographs INTERNATIONAL, P14 CHANDRA BHUSHAN H-1B VISA DIGITAL AD PUSH Equating samosas with burgers is to ensure junk food gets off scot free Trump administration plans to end work permits for spouses Page-led Alphabet logs over 70% surge in quarterly profit NEW DELHI, WEDNESDAY, APRIL 25, 2018 FOLLOW US ON TWITTER & FACEBOOK. APP AVAILABLE ON APP STORE & PLAYSTORE WWW.FINANCIALEXPRESS.COM READ TO LEAD VOL.XLIV NO. 46, 28 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: 34,616.64 ▲ 165.87 NIFTY: 10,614.35 ▲ 29.65 NIKKEI 225: 22,088.04 ▼ 74.20 HANG SENG: 30,636.24 ▲ 381.84 `/$: 66.39 ▲ 0.09 `/€: 81.09 ▲ 0.25 BRENT: $74.65 ▼ $0.06 GOLD: `31,131.00 ▼ `82.00 RINGING CHANGE TDSAT gives old telcos big relief ■ With Trai's new rules, predatory pricing kicked in if an operator had 30% market share ■ It would have impacted Bharti Airtel but not Jio ■ Now Bharti gets a huge relief ■ Earlier, for calculating market power, subscriber & revenue market share, volume of traffic & network capacity was considered ter of the current fiscal Bharti’s numbersmaynotbeaffectedas much as it was during the DecemberandMarchquarters. During December quarter,due to a 57% cut in mobile termination rate, Bharti’s gross revenue took a `1,062-crore hit, earnings before interest, taxes, depreciation and amortisation or Ebitda fell `338 crore and mobileArpu by`16. Similarly,during the March quarter,due to a cut in international termination rates, its gross revenue was affected by `124 crore and Ebitda by `86 crore. Had the incumbents not got relief on segmented offers, according to rough estimates drawn up by FE, it would have * As on February 2018 Source: Trai ■ Telecom regulator changed it to only subscriber & revenue market share ■ This affected Bharti and not Jio ■ Earlier, segmented offers were allowed, which Trai now prohibited ■ This also impacted operators like Bharti Airtel and not Jio cost them around `10,00012,000 crore in a year.This has nowgot been reined in. The TDSAT in its interim orderonTuesdaysaid that both theseaspectsofthenewregulation (definition of significant market power and bar on segmented offers) will be kept in abeyanceandoperatorswillnot be penalised for not following them till a it completes a detailed hearing on the matter. Providing relief to the incumbents, the tribunal noted that the regulation with regard to SMP has undergone major changes compared with what was in place since 2003. BHARTI AIRTEL ON Tuesday beat analysts’ estimates by posting a net profit of `83 crore during the fourth quarteragainst expectation of a net loss of `104 crore. The company had posted a net profit of `306 crore in the preceding quarter,when itwas hit hard by the 57% cut in the mobile termination rates for domestic calls effected by the Telecom RegulatoryAuthority of India. But taking only the India business into account, it posted a net loss of `652 crore against a net profit of `95 crore in the quarter. Bharti’s MD and CEO,India and South Asia, Gopal Vittal blamed the trend of belowcost tariffs in the industry, a veiled criticism of rival Reliance Jio. “The telecom industrycontinues to witness below cost, artificially suppressed pricing. Industryrevenueswerefurther adversely impacted this quarter due to the reduction in international termination rates,”Vittalsaidinastatement. THE CABINETWILLlikelyconsidera proposal onWednesday to bring in an ordinance to effect major changes to the Insolvency and Bankruptcy Code (IBC), ranging from narrowing an exclusion criterion to boost the numberof bidders forstressed assets and treating home-buyersasfinancialcreditors to allowing promoters of small businesses who are not wilful defaulters to bid. The ordinancewill be based on the changes suggested in a report by a 14-member InsolvencyLawCommittee,headed by corporate affairs secretary Injeti Srinivas.A draft Cabinet note has already been circulated by the corporate affairs ministry for this purpose, said an official source. The ordinance will seek to address the problem of unintended disqualification of bidders by streamlining Section 29Aof the IBC.Onlythosewho contributed to defaults of the company or are otherwise undesirable would be rendered ineligible. The ordinance will narrow Detailed report on Page 6 PROPOSED ALTERATIONS Voting thresholds to be set: 90% of creditors to withdraw application before a plan is approved, 66% to approve a plan Home-buyers to be treated as financial creditors MSME promoter who is not a wilful defaulter can bid 'Related party' to be properly defined Exclusion criteria under Section 29A to be narrowed Mainly those who contributed to defaults to be ineligible Changes to apply where resolution plan not yet submitted the scope of disqualifications under 29A of the code by makingwayforacarve-outforpureplay financial entities. Appli- Continued on Page 2 PRESS TRUST OF INDIA New Delhi, April 24 ■ NCLT directs KMB to file affidavit with RP, CoC; cites no jurisdiction over the matter ■ If approved, share of lenders that voted for the Monnet sale would go up to 99.27% have offered to pay `3,750 crore for Monnet Ispat, which owes lenders a staggering `12,262 crore. Continued on Page 2 A year on, Jio changes the game FE BUREAU Market share 35.8 (in %) 25.4 Overall mobile phone shipments to India grew 48% year-on-year in the January-March quarter 2018. Unlike previous 9.8 quarters, this time the market was driven by feature phones due to strong shipments of 0 JioPhone. Meanwhile, the smartphone market Reliance Jio Samsung remained flat y-o-y. JanuaryMarch 2017 15.9 9.4 Itel 7.3 0 Nokia JanuaryMarch 2018 9.1 5.6 Lava Source: Counterpoint Research IN A BIG-TICKET real estate deal, the Essar group said in a statement on Tuesday that it has sold prime commercial property Equinox Business ParksatBandra-KurlaComplex (BKC) in Mumbai to global investment firm Brookfield Asset Management for an enterprise value of `2,400 crore.The10-acrebusinesspark comprises four towers, with a leasable office space of about 1.25 million sq ft. “We have been able to conclude a marquee deal with a quality investor, Brookfield, who has an enviable track record of highly strategic and well-considered acquisitions. “This is among the largest transactions in India's commercial real estate sector, and demonstrates the value we have been able to create in our Equinox investment,” said Anshuman Ruia, director, Essar Global Holdings. Some of the companies that occupy space in the business park are Tata Communications, Experian, Crompton Greaves and Lafarge,Essarsaid in a statement. The groupwould utilise the entire sale proceeds to repay loans. It is reducing debt by monetising non-core assets. Continued on Page 2 HYDROCARBON SECTOR Import intensity on the rise despite PM’s roadmap for relief (against domestic consumption, %) Crude oil imports (million tonne) 189.2 202.9 220.8 189.4 213.9 FY14 FY15 FY16 FY17 FY18* 44.5 45.4 FY18* 40.7 Import dependence for gas (%) Domestic crude production (including condensate, million tonne) 37.8 37.5 36.9 36 35.7 FY14 FY15 FY16 FY17 FY18* Source: PPAC Import dependence for oil FY17 *Provisional 36.2 IN MARCH 2015, speaking at the global hydrocarbon meet ‘UrjaSangam’here,PrimeMinister Narendra Modi delivered a passionate call for timebound reduction in India’s onerous import dependence foroil and gas.He also set a target for the stakeholders to reduce the country’s import dependence for oil from around 77% then to 67% by 2022 and 50% by2030,with a commensurate increase in domestic production. Three years later, the high import intensity,whichoverlongyears hashadapronounceddeleterious effect on the national exchequer,thecurrentaccount and the economy as a whole, hasonlyrisen—worse,eventhe rate of increase hasn’t abated despite Modi’s urging; in fact, theratehaslatelygoneupabit. According to official data from the Petroleum Planning FY16 SAURABH KUMAR New Delhi, April 24 FY15 HDFC Bank revised interest rates on deposits of under `1 crore, raising the rate on one-year fixed deposits (FDs) by 10 basis points (bps) to 6.85%, reports fe Bureau in Mumbai. While rates on deposits with shorter maturities were left unchanged, FDs with longer maturities saw even larger hikes in some buckets. The rate on deposits in the maturity bucket of one year and 17 days to two years was raised by 75 bps to 7%, while that on deposits maturing between two years and five years was hiked by 100 bps to 7%. PAGE 10 to recover at least 5% of its exposure of `73 cr 33.2 HDFC Bank raises deposit rates by up to 100 bps ■ This will enable KMB Feature phone market share FY14 THE GOODS and Services Tax Council will likely take up as early as in its next meeting a proposal for the imposition of a cess on sugar to create a fund that will help mills clear cane dues owed to farmers, a senior government official told FE, reports Banikinkar Pattanayak in New Delhi. The fund is proposed to finance a gap between the cane price mills can pay to farmers in accordance with a revenue-sharing formula recommended by the Rangarajan committee and the benchmark rate — the fair and remunerative price — fixed by the Centre. PAGE 12 ■ KMB requests that it be classified an assenting creditor 82.8 GST council may consider sugar cess in next meeting Prime Minister Narendra Modi hands over a cheque to a woman under the Pradhan Mantri Jeevan Jyoti Beema Yojana in Madhya Pradesh on Tuesday PTI 81.7 IN YET another twist in the race for Fortis Healthcare, IHH Healthcare on Tuesday made a binding offer to immediately infuse `650 crore in the Indian firm, reports PTI. The revised offer from the Malaysian firm comes two days ahead of a meeting of Fortis Healthcare board to consider the recommendation by an expert advisory panel formed to finalise evaluation process of only binding offers. IHH had earlier made a non-binding offer to invest `4,000 crore in Fortis at `160 per share. PAGE 6 Cheque it out FY18* IHH revises binding offer to invest `650 cr in Fortis A DECISION ON the sale of Monnet Ispat and Energy to the JSW Steel-Aion Investments combine was held up in the National CompanyLawtribunal (NCLT) on Tuesday after Kotak Mahindra Bank (KMB) requested that it be classified as an assenting creditor. KMB, an unsecured creditor to the steelmaker, said it agreed to the sale of the company under the insolvency process having earlier dissented.The change of stance — from a dissenting to an assenting creditor — will enable the bank to recover at least 5% of itsexposuretoMonnetIspatof `73 crore. The Mumbai bench of the NCLT directed the legal counsel for KMB to file an affidavit with the resolution professional and the committee of creditors (CoC) as it had no jurisdiction over the matter. TheAion Investments-JSW Steel alliance is understood to FINE POINTS 80.6 QuickPicks FE BUREAU Mumbai, April 24 FY17 Mobile water dispensing systems from ventures such as Swajal and JanaJal are providing safe drinking water with the help of IoT and solar energy ■ Start-ups, P13 No Monnet deal yet as lender flips stand FY16 Water ATMs: Taps that don’t go dry in summer Continued on Page 2 Essar sells office asset in Mumbai to Brookfield for `2,400 cr KOTAK’S NEW VIEW Special Feature cants holding an non-performing asset account due to the acquisitionofacorporatedebtor will be exempted from the disqualificationcriteriaunderSection 29A.However,such financialentitieswillbedefinedinthe code to clarify the scope of the exemption,whichwill,however, not be applicable to financial entitiesiftheyarerelatedparties of the corporate debtor. Also,wheredisqualification is personal in nature,itwill not result in exclusion of related parties.Theordinancewillprovide for a proper definition of ‘related parties’ of individuals under the IBC. A case admitted for resolution can be withdrawn (before the plan is approved) by the appellate body if 90% of creditors agree. This means even unsuccessfulbiddersmaystand a chance to bid for a stressed asset if they sweeten their offers,which could ultimately lead to a lowerhaircut bycreditors.Thevotesharerequiredfor approving a plan for resolution orliquidationbythecommittee of creditors is to be reduced to 66% from the current 75%. ● CUTTING DEBT 77.3 AUDITORS OF RELIANCE Naval and Engineering have raised doubts about the firm's ability to “continue as a going concern”, reports PTI. In its notes to the company's 2017-18 earnings statement, Pathak HD & Associates listed cash losses, network erosion, loans being called back by secured lenders, current liabilities being substantially higher than assets and winding-up petitions being filed by a few operating creditors to raise its doubts. Jio: 15.31 Govt to bring in ordinance with major changes soon FE BUREAU New Delhi, April 24 78.3 Auditors of RNEL raise doubts on going concern BHARTI AIRTEL, WHICH on Tuesdaysurprised the Street by postinganetprofitof`83crore duringtheJanuary-Marchquarter — its smallest in 15 years — againstexpectationofanetloss ofaround`104crore,mayhave put theworst behind it.Reason: The Telecom Disputes Settlement and Appellate Tribunal (TDSAT) onTuesdayprovided it andotherincumbentoperators a huge relief by putting an interim stay on the Telecom RegulatoryAuthority of India’s (Trai) new regulation that defined predatory pricing by giving a new definition of significant market power (SMP) and sought to end segmented offers to consumers. This means Bharti aswell as other legacy players like Vodafone and Idea Cellular can go ahead and bring out any tariff scheme irrespective of their revenue and subscribermarket share without being penalised as predatory.They can also go ahead with providing segmented offers (read discounts) to theirhighArpu (average revenue peruser) customerswithoutviolating anyregulation.As a result,in the April-June quar- i Airtel: 25. 57 Bhart Vodafone: 18.76 Idea: 17.47 BANKRUPTCY CODE FE BUREAU New Delhi, April 24 FY14 THE FINANCE MINISTRY said on Tuesday that the third tranche of electoral bonds sale will take place from May 1-10, reports PTI. Electoral bonds are being pitched as an alternative to cash donations made to political parties and bring transparency in political funding. The government had notified the Electoral Bond Scheme 2018 in January this year. FE BUREAU New Delhi, April 24 Subscriber market share (%)* Bharti Airtel Q4 profit slumps 73% FY15 IN THE NEWS Third tranche of electoral bonds sale from May 1 They can now offer any tariff scheme, segmented offers regardless of revenue, subscriber market share ● 15-YEAR LOW andAnalysisCell(PPAC),against domestic consumption,India’s oilimportswere78.3%inFY15 (theyeartheprimeministerlaid theroadmapforcuttingimport intensity) and the figure has since grown to 80.6% in FY16, 81.7% in FY17 and further to 82.8% in FY18. The dependence had grown from 76.7% inFY13to77.3%inFY14.During all these years, domestic crude oil production has steadily fallen (see graphic). Of course, acceleration in con- sumption,aided by a softening ofcrudeoilprices,alsoaddedto the pace of imports and,therefore,higher import intensity in recentyears. Import dependence for gas too has risen steadily (from 36.2% in FY15 to 45.4% in FY18), although its domestic productiontouchedafive-year high in FY18. Continued on Page 2 Oil tops $75 on supply cuts, likely Iran sanction, Page 12
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