OPINION, P8 ECONOMY, P3 PRANJUL BHANDARI NHPS, higher MSPs will be a drag on govt’s debt goal INTERNATIONAL, P14 EDITORIAL ORDERLY GROWTH FIZZ OUT EPFO data is too fraught to be used to talk about ‘robust jobs growth’ Commerce ministry considering national policy for retail trade Nooyi-led PepsiCo’s big-name chips boost results as soda falters MUMBAI, FRIDAY, APRIL 27, 2018 WWW.FINANCIALEXPRESS.COM FOLLOW US ON TWITTER & FACEBOOK. APP AVAILABLE ON APP STORE & PLAYSTORE READ TO LEAD VOLUME XXXXXV NO. 343, 90 PAGES, `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: 34,713.60 ▲ 212.33 NIFTY: 10,617.80 ▲ 47.25 NIKKEI 225: 22,319.61 ▲ 104.29 HANG SENG: 30,007.68 ▼ 320.47 `/$: 66.76 ▲ 0.14 `/€: 81.31 ▲ 0.24 BRENT: $74.63 ▲ $0.63 GOLD: `31,289 ▼ `15 HIGHER PROVISIONING EPFO NUMBERS Jobs jumped. Or did they? Axis Bank posts first ever 37.6 FY17 FY18 Average number of contributors (million) 33 35 47.5 37.6 41.2 47.5 FY14 FY15 FY16 FY17 FY18 C Pick your data point EPFO has 61.5m ‘active’ subscribers 47.5m ‘average’ subscribers 33.0m 41.2 ‘Aadhaar-seeded’ subscribers government has had to face. But just a bit of analysis would reveal how facile these optimistic assumptions are. Even though the EPFO wasn’t putting out month-wise payroll data earlier,it used to publish the average number of subscribers (who contributed) annually. And the average subscriber base has seen accelerating D Rapid formalisation? If 6 m new subscribers* added in one year, this means 10% added based on 61.5 m users or 12.5% added based on 47.5 m users *Based on net addition of 3 m from Sept 2017 to Feb 2018 growth over the last four to five years, from 6% in in FY15, the firstyearof this government,to over15% in FY18. So was that not a sign of a boosttojobcreation?Hardly.Job growth has little to do with the recent jump in the EPFO subscriberbase. AnamnestyschemeforEPF defaulter firms that ran betweenJanuaryandJuly2018 Continued on Page 2 FE BUREAU Mumbai, April 26 AXIS BANK ON Thursday reported a net loss of `2,189 crore for the three months to March after more than doubling provisions,year-on-year, to a sizeable `7,180 crore.This is the private sector lender’s first quarterly loss since it listed on the exchanges in 1998. The bank’s operating profit fell 16%year-on-yearto `3,672 crore in Q4FY18. In Q4FY17, the bank had reported a net profit of `1,225 crore. The loss in the March 2018 quarter came despite a tax writeback of `1,319 crore. The surge in provisions resulted primarily from slippages to the tune of `16,536 crore of which `13,938 crore originated from the lender’s corporate portfolio. The bank said the new Reserve Bank of Indiaguidelines,announcedon February 12, had led to more recognition of stress in the 0.02 Domestic NIM (%) 3.59 4.11 52 bps Gross NPA ratio (%) 6.77 5.04 173 bps Source: Axis Bank restructured loans portfolio. Asset quality remained poor in Q4FY18 with gross non-performing assets (NPAs) rising 173 basis points (bps) year-on-year and 149 bps sequentially to 6.77%. In absolute terms, gross NPAs stood at `34,249 crore at the end of March 2018 while the watchlistwas`428croreinthe quarter.The lender’s managed recoveries and upgrades stood RACE FOR ESSAR STEEL Special Features How Toyota Yaris sedan bucks the trend QuickPicks Gems and jewellery exports decline by 8.67% in FY18 GEMS AND jewellery exports declined by 8.67% to `2,64,130.64 crore in FY18, mainly due to a drop in demand from the UAE, the Gem and Jewellery Export Promotion Council of India said on Thursday, reports PTI. Exports stood at `2,89,207.47 crore in FY17, according to data from the industry body. Demand from the UAE declined by 27% to `66,862.98 crore in FY18, compared with `91,458.57 crore a year ago, on a 5% VAT imposed in the UAE in January, it said. PAGE 12 TCS becomes first Indian firm to close with $100-bn m-cap TATA CONSULTANCY Services (TCS) on Thursday became the first Indian company to close the trading session with an over $100-billion market valuation, reports PTI. It had became the first Indian IT company on Monday to cross the $100-billion-mark in m-cap in intra-day trade. Before TCS, Reliance Industries had breached the mark in 2007. But it too had failed to sustain that level. At the end of trade, TCS' m-cap was up by `13,869.81 crore to `6,77,724.81 crore ($101.5 billion). PAGE 11 UP sugar mills complain of threats from politicians UP’S SUGAR industry has complained of cases of “unreasonable behaviour, unlawful demands, threats and physical harm against its workers” involving none other than the “elected representatives of the ruling party” (BJP), reports Deepa Jainani in Lucknow. In a letter to the CM, the UP Sugar Millers' Association said such unlawful activities by the politicians have been reported in as many as five factories. It also said that falling sugar prices are causing great financial stress. PAGE 12 FE BUREAU Mumbai, April 26 THE VTB BANK-LED Numetal on Thursday moved the National CompanyLawAppellate Tribunal (NCLAT) against an orderthat givesArcelorMittal a chance to clear its dues to banks and make it eligible to bid for Essar Steel. TheNationalCompanyLaw Tribunal (NCLT) had in anApril 19 order asked the committee of creditors (CoC) and the resolution professional (RP) for Essar Steel to reconsider the first set of bids received from Numetal and ArcelorMittal, granting an additional 30 days for the resolution process. The Ahmedabad bench of the NCLT had suggested the two bidders be allowed an opportunity to rectify their bids to make them eligible. “We have challenged the NCLT’s orderat the NCLAT.The matter will be heard on Friday,” a spokesperson for Numetal said. Sources familiar with the development said Numetal’s challenge was based on legal advice that bids received after Section 29 A was added to the Insolvency and Bankruptcy Code, 2016, (IBC) cannot be givenadditionaltimetoberectified.The amendment,which came into effect from Novem- OBJECTION (` cr) Q4FY17 Q4FY18 Change (% y-o-y) Net-interest income ■ Numetal objects to NCLT order giving ArcelorMittal a chance to clear its dues to banks, making it eligible to bid ■ Numetal's challenge is based on legal advice that bids received after Section 29 A was added to the IBC cannot be given additional time to be rectified Net profit 31.4 NIM (%) 29 In black and white « Starting April, millennials should create a plan to put their finances in place over the next year to take care of the household budget, emergency needs, etc ■ Personal Finance, P13 Yes Bank posts 29% growth in Q4 profit Numetal approaches NCLAT on Arcelor bid « Millennials, start planning for your financial goals now ● IMPROVED SHOW « The Yaris is the most feature-rich car in its segment, especially in safety features. Toyota knows customers will pay a small premium on the ‘value’ they are getting ■ Motobahn, P13 Continued on Page 2 1,179 FY18 914 FY17 Gross NPA ratio (%) 3.4 3.6 Models wait backstage before designer Lino Villaventura presents her collection during the Sao Paulo Fashion Week in Brazil REUTERS 1.28 1.52 20 bps 24 bps « FY16 2,189 FY16 Net profit/ loss 2,154 GOOGLE HAS SECURED an Indian patent for an invention relating to identifying images using the facerecognition method, reports Sajan C Kumar in Chennai. The online search giant had filed the application in 2009, and was granted the patent on April 16. 35 9.5 Net interest income 1,640 Google secures Indian patent for facial recognition Since 4.9 m came in via amnesty, so effective FY17 subscribers are 36.2 m or lower than in FY16! at `3,401 crore, while writeoffs during the quarter were `3,887 crore. The bank’s net interest income — the difference between interest earned and interest expended — at `4,730 crorewasflatbothyear-on-year and also on a sequential basis. Thedomesticnetinterestmargin,akeymeasureofprofitability,fell52bpsyear-on-yearand 1 basis point sequentially to 3.59%. MD and CEO Shikha Sharma told reporters the recent regulatory framework forresolutionofstressedassets is an important milestone in theevolutionofcreditpractices in India.“It allows this acceleration(recognitionofbadloans). It withdraws a variety of restructuring dispensations that existed prior to the guideline and this will materially change credit culture in the long term even if it means short-term pain,”Sharma said. Sharma admitted that Axis Bank’s bets on the infrastructure sector have not paid off. “One area which has been an area of disappointment for us has been on credit risk. We made some significant bets on the infrastructure sector and thathasnotturnedoutwellfor us in this credit cycle,”she said. « THE COUNTRY’S PIONEERING payroll count — based on the Employees’ Provident Fund Organisation’s (EPFO) subscription database — released on Wednesday gave government managers and some data analysts their“I told you so” moment. As the EPFO said 3.1 million contributors were added on a net basis during the half year between September 2017 and February 2018, they claimed that it meant a whopping 6 million new formal jobs — roughly equivalent to the skilledworkforce entering the job market annually or 10% of the retirement fund body’s active subscriber base — were created in the whole of 2018-19. If true,that would have dismantled all criticism of jobless growththattheNarendraModi FY15 « THE I-T DEPARTMENT has seized `14.48 crore during raids at multiple locations, including in poll-bound Karnataka, in the wake of recent cash crunch in the country, reports PTI. Various entities were found to be hoarding cash across states. But changes with amnesty scheme (Jan-Jun 2017) Q4FY17 Q4FY18 Change (% y-o-y) 1,225 7.7 FY15 SURYA SARATHI RAY New Delhi, April 26 15.3 Rate of growth, % p.a. 6.1 B (` cr) 4,730 EPF subscriber base accelerating Driven by poor asset quality; had earned a profit in the same quarter of the previous year 4,729 A loss in fourth quarter « You can reach whatever conclusion you want with the data sawthesefirmsenrollingsome 4.9 million people in FY17and the bulk of these were obviously old workers rather than new recruits. Including the amnesty additions, the EPFO contributor base rose 9.5% to 41.2 million in FY17, but the basewouldhaveshrunkto36.2 million in the year — even lowerthanpreviousyear'sbase of 37.6 million — had the amnesty not been implemented. Since the amnesty extended to four months in FY18 (inApril-May,1.2 million got enrolled, as per available data) too, the reported active subscriber base in the year of 47.5 million could be deflated by2.4millionorthereaboutsto get the growth in the base attributable in at least in some measure to new jobs. Pronab Sen, former chairman of the National Statistical Commission,said:“It(3.11million)reflectsthenumberofregistration under the EPFO but there is nothing that suggests that these many people were unemployed earlier. Since the additiontothejobsectorannually is roughly 6-7 million, the claim that 3.11 million new jobswerecreatedbetweenSeptember 2017 and February 2018 will mean every new entrant got a formal sectorjob, which is not possible.” « IN THE NEWS Cash crunch: I-T seizes `14.48 cr from hoarders PROVIDENTIAL DATA! « EPF base has expanded at faster clip in recent years, aided by an amnesty scheme and other policy support, but this hardly reflects job growth Source: BSE ber 2017, bars defaulting promoters from bidding forassets under the IBC. Despite a long meeting on Tuesday,the CoCwas unable to reachaconsensusonreconsidering the bids and is expected to regroup on Friday. Bankers present at the meeting said opinions differed sharply,with some lenders wanting to call for a fresh round of bids from all interested investors and others wanting to give the initial bidders a chance to rectify their bids. Continued on Page 2 ● IDBI BANK LOAN CBI books Siva firms, two bank chiefs PRESS TRUST OF INDIA New Delhi, April 26 THE CENTRAL BUREAUofInvestigation (CBI) has registered a case against former Aircel promoter C Sivasankaran’s two companies andthemanagingdirectorsand CEOs of Syndicate Bank and Indian Bank for allegedly defaultingonloansworth`600 crore taken from IDBI Bank, officials said onThursday. Sivasankaran’s firms had allegedly taken a loan of `530 crore in February 2014. The amount increased to `600 crore after becoming a nonperforming asset,they said. Former IDBI CMD Kishor Kharat, presentlyMDandCEO FE BUREAU Mumbai, April 26 of Indian Bank, and Syndicate Bank MD and CEO Melwyn Rego, who was deputy MD of IDBI Bank, have also been booked by the CBI in the case, the officials said.They said the agency carried out searches at 50locations,includingtheresidences of former senior IDBI Bank officials. YES BANK ON Thursday reported a net profit of `1,179.44 crore for the quarter ended March 31, up 29% fromthecorrespondingperiod in the previous year, on the back of a 31%year-on-year(yo-y) rise in net interest income (NII) to `2,154.2 crore. NII is the difference between interest earned and interest paid by the bank. Continued on Page 2 Continued on Page 2 ANTI-SOCIAL MEDIA How fake Zuckerbergs scam Facebook users out of their cash NEW YORK TIMES San Francisco, April 26 AFACEBOOK NOTIFICATION on Gary Bernhardt’s phone woke him up one night last November with incredible news: a message from Mark Zuckerberg himself, saying that he had won $750,000 in the Facebook lottery. “I got all excited. Wouldn’t you?” said Bernhardt, 67, a retiredforkliftdriverandarmy veteran in Ham Lake, Minnesota. He stayed up until dawn trading messages with the person on the otherend.To obtain his winnings, he was told, he first needed to send $200 in iTunes gift cards. Hours later, Bernhardt boughtthegiftcardsatagasstation and sent the redemption codes to the account that said it was Zuckerberg. But the requests for money didn’t stop. By January, Bernhardt had wired an additional $1,310 in cash, or about a third of his SocialSecuritychequesover three months. Bernhardt eventually realised that he had been the unwitting victim of a scamthathasthrivedonFace- ILLUSTRATION: ROHNIT PHORE book and Instagram by using the sites’own brands — and its top executives — to lure people in. At a time when the real Zuckerberg has vowed to clean up Facebook, the Silicon Valley companyhasfailedtoeliminate impostoraccountsmasquerading as him and his chief operating officer, Sheryl Sandberg, to swindle Facebook users out of thousands of dollars. An examination by The New York Times found 205 accounts impersonating Zuckerberg and Sandberg on Facebookanditsphoto-sharing site Instagram, not including fan pages or satire accounts, which are permitted under the company’s rules.At least 51 of the impostor accounts, including 43 on Instagram,were lottery scams like the one that fooled Bernhardt. The fake Zuckerbergs and faux Sandbergs have proliferated on Facebook and Instagram, despite the presence of Facebook groups that track the scams and complaints about thetrickdatingtoatleast2010. A day after The Times informed Facebook of its findings, the company removed all 96 impostor Mark Zuckerberg and Sheryl Sandberg accounts onitsFacebooksite.Ithadleftup all but one of the 109 fakes on Instagram, but removed them afterthis articlewas published. “Thank you so much for reportingthis,”saidPeteVoss,a Facebookspokesman.Hecould not say why Facebook had not spotted the accounts posing as its top executives, including several that appeared to have existed for more than eight years.“It’snoteasy,”hesaid.“We want to get better.” Continued on Page 2 Related report on Page 14
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