OPINION, P8 EDITORIAL COMMODITIES, P10 Govt must get less litigious for courts to get unclogged INTERNATIONAL, P12 SUMIT K MAJUMDAR STEEL & ALUMINIUM DATA SCANDAL CLOUD Trade-war talk will hurt the US’s heartland, China may emerge with fewer scars Trump delays tariffs on Canada, Mexico & EU, exempts some others WhatsApp CEO Koum to leave Facebook amid privacy flap NEW DELHI, WEDNESDAY, MAY 2, 2018 FOLLOW US ON TWITTER & FACEBOOK. APP AVAILABLE ON APP STORE & PLAYSTORE WWW.FINANCIALEXPRESS.COM VOL.XLIV NO. 52, 18 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 READ TO LEAD SENSEX: 35,160.36* ▲ 190.66 NIFTY: 10,739.35* ▲ 47.05 NIKKEI 225: 22,508.03 ▲ 40.16 HANG SENG: 30,808.45* ▲ 527.78 `/$: 66.66* ▲ 0.09 `/€: 80.54* ▲ 0.77 BRENT: $74.07* ▼ $1.10 GOLD: `31,033* ▼ `157 *Prv close BUMPY RIDE ● GST COLLECTIONS Government reluctant to allow Air India free flight March sees record mop-up, but deficit lingers Jul ‘17 93,590 Aug ‘17 93,029 95,132 Sep ‘17 Oct ‘17 85,931 Nov ‘17 83,716 Dec ‘17 88,929 Jan ‘18 88,047 Feb ‘18 85,174 1,03,458 Mar ‘18 (` crore, including cess) aninitialpublicoffering,itsaid additional details would be providedintherequestforproposals (RFP). Prospective buyers have also sought manymore details on the financial liabilities of QuickPicks the carrier, especially relating to the large quantum of debt. Moreover, they are concerned theymaynotbeinapositionto extract synergies from the acquisition of Air India if the business is to be run at “arm’s Continued on Page 2 IN-FLIGHT MENU No second round of Bhushan bids LENDERS TO Bhushan Power and Steel (BPSL) have rejected the proposal for a second round of bidding, reports Surya Sarathi Ray in New Delhi. This is good news for UK-based Liberty House, which has submitted the highest bid, though after the deadline. Two other contenders, Tata Steel and JSW Steel, submitted within the deadline, but their bids were lower. PAGE 4 Satellite- Speeds based services soon, internet speeds of just 256-512 kbps for now. good enough for SMS, surfing, WhatsApp, email Oil cos to be offered fresh sops WITH A view to ramping up production from ageing hydrocarbon fields, a draft Cabinet note has been prepared for inter-ministerial consultation, reports Saurabh Kumar in New Delhi. A 10year waiver from oil cess/royalty on gas and a cut in revenueshare/profit petroleum obligations (linked to enhanced production) are among the incentives planned. PAGE 2 A credit card holder can avoid paying high interest on outstanding credit card balance by using the balance transfer facility of another card of a different bank ■ Personal Finance, P11 quality will be patchy at best, no gaming either. Wait till network quality improves networks on trial too. Speed can go to 8-10 Mbps. Seamless Air Alliance using satellites will also give similar speed, but after 2019 Costs ■ Part of company’s strategy to divest non-core businesses ■ Valuation 2.8 times revenues of E&A biz ■ L&T earlier divested general insurance, cutting tools and alloys businesses (Jebel Ali, Dubai), Kuwait, Malaysia,IndonesiaandtheUK. The transaction includes all the current business segments of E&A except marine switchgear and the UK unit Servowatch Systems. It is subject to regulatoryapprovals. According to reports, the deal,whichwas in theworks for Car-nival spirit Domestic sales (April, units) Passenger vehicle Voice likely to be high. SingaporeAir packs start at $5 for economy, 100MB free for 1st/business pax One of the biggest transaction in India so far in 2018 ■ FE BUREAU Data from six leading auto players on Tuesday showed year-on-year growth of between 6% and 86%. Detailed report on Page 4 (In 2-3 months, surf the net, make calls, email on planes) Terrestrial CORE FOCUS Gearing up Wi-Fi in the sky Special Feature How balance transfer can reduce your credit card woes Video INDIA’S HEAVY ENGINEERING major Larsen & Toubro (L&T) has signed definitive agreements with Schneider Electric for divesting the company’s electrical and automation (E&A) business for an allcash consideration of `14,000 crore, the company said in a statement on Tuesday. The company’s E&A business, which reported net revenues of `5,038 crore during the financialyearended March 31, 2017, offers low- and medium-voltage switchgear, electrical systems, marine switchgear, industrial and buildingautomationsolutions, energy management systems and metering solutions. Its manufacturing facilities are located at Navi Mumbai, Ahmednagar,Vadodara, Coimbatore and Mysuru in India as well as in Saudi Arabia, UAE calls will be possible, so good idea to keep earplugs handy! Related reports on Page 2 2017 13.4 Maruti Suzuki 2018 Growth (%) Commercial vehicle 126 4.4 13 M&M 34 Tata Motors 26 Tata Motors M&M 32 2,590 3,409 Buyer can realise synergies subject to applicable laws, details in RFP Govt says no time frame specified for IPO, details in RFP Eicher (VECV) Two-wheelers 27.4 Hyundai Motor 2,05,522 2,41,604 Qualifying interested bidders to be named on June 15 FE BUREAU Mumbai, May 1 15,060 18,963 Deadline for EoI now May 31 L&T to sell its automation, electrical biz to Schneider 16,017 36,276 Of 160 queries, 50 to be answered in RFP Individuals, other than employees, are not allowed to bid 58,564 74,627 No pension costs or liability on AI `14,000-CR DEAL 44,758 46,735 Details on retirement benefits in RFP 12,827 17,235 Buyers asked to seek legal view on arm's length Foreign entity cannot hold more than 49% of the 76% sold South Korean soldiers move loudspeakers that were set up for propaganda broadcasts near the demilitarised zone separating the two Koreas on Tuesday REUTERS 19,391 21,927 THE GOVERNMENT HAS said itintendstoretaina24%stake inAirIndia(AI)afterthedivestment despite suggestions from prospective buyers it should exit the carrier completely. This stake would be owned directly by it. Interested parties for the bankrupt airline are understandably anxious that the government, although a minority shareholder, would interfere in its operations. Importantly, the government has also clarified no more than 49% of the 76% up forgrabscanbehelddirectlyor indirectly by a foreign entity. Refutingthatathree-yeartime frame had been specified for Conditions to safeguard employees' interests in RFP FE BUREAU New Delhi, May 1 Sound barrier 1,63,434 FE BUREAU Mumbai, May 1 Govt says divesting management control length”and as a going concern as the government insists it should be. The ministrysaid in a corrigendum on Tuesday: “Provided that confirmed selected bidder shall be allowed to realize operational synergies to applicable laws with further details being defined in the RFP.” This concern had been raisedbytheTataGroup,which questioned why a business group with an existing airline needed to run AI at arm’s length and not derive operational synergies. In a somewhat curious response, the government has said arm’s length being “a widely used concept”, bidders are advised to take their own legal view on this. A reading of the 160 queriesreceivedbythegovernment by interested parties following the release of the preliminary information memorandum suggests employee benefits are also of some concern. The government said that the conditions to safeguard employees’interestswill be included in the FRP. 1,44,081 Stated intention of retaining a 24% stake has potential bidders worried about airline’s operational freedom 17.6 Eicher (Royal Enfield) TVS Motor LABOUR DAY Look ma, no more ‘nokkukooli’ in Kerala any more PRESS TRUST OF INDIA Thiruvananthapuram, May 1 IF SEEING IS believing, longtime Kerala watchers would have a difficult time believing their eyes on reading the state government’s statement. In a major push to transform Kerala as an investmentfriendlydestination,the CommunistPartyofIndia(Marxist) or CPI(M)-led Left Democratic Front government has banned the obsolete “nokkukooli” practise used by headload workers to extract exorbitant wageswithoutdoinganywork. “The order, which was issued last night, comes into effect from today on Labour Day,”anofficialstatementsaid. Nokkukooli,which literally means ‘gawking wages’, is a euphemism for extortion by organised labourunions in the state under which wages have to be paid to trade unionworkers for loading and unloading worksdonebyotherworkersor by machines. The practise is widely considered a product of militant trade unionism that resulted in frequent altercation between workersandbusinessmen. “The orderwas issued after chief ministerPinarayiVijayan held discussions with labour union leaders on March 8,”the statement said. Overcharging and “nokkukooli”hadbeencausing ILLUSTRATION: ROHNIT PHORE difficulties in entrepreneurship development in the state, the labour department said. According to the new order, entrepreneurs can now pay the wages fixed by the district labour officers. For non-listed works,wages need to be paid onthebasisofabi-partyagreement,whilefordomesticloading and unloading works and those related to farming,workers of theirchoice can be hired. In case trade unionworkers are employed,theycan be paid as perthe rate fixed bythe government,it said. The state government said strict warnings had been issued to trade unions against threatening entrepreneurs demanding more money or the right to work. The major trade unions — Centre of IndianTrade Unions of the ruling CPI(M) and Indian National Trade Union Congress of the opposition Congress — have welcomed the decision. long, took time due to differencesonvaluation.Thedealhas finally been struck at about 2.8 times revenues,which industry playersconsiderahealthyprice. Earlier, Siemens, ABB, Hitachi andHoneywellwerealsosaidto haveshowninterestinthebusiness. L&T said that over the years,theE&Abusinesshasbuilt strong research and developmentcapabilitiesandhasawide network of channel partners across India and international markets.The segment reported operating margins of 15.1% in FY17, which increased from 12.5% ayearago. In what could be one of the biggesttransactionsinIndiaso far in 2018, the deal forms a part of the overall strategy of L&T to divest non-core businessesandfocusonkeygrowth businesses like IT, technology services, defence, smart world and water management. Continued on Page 2 AS THE GOODS and services tax (GST) collections for March (collected in April) came in at `1,03,458 crore, compared with a monthly average of around `90,000 crore in July-March, finance minister Arun Jaitley called it (collections exceeding `1 lakh crore) “a landmark achievement and a confirmation of increased economic activity as brought out by other reports”. Tax experts noted that the record March mop-up could have seen some impact of “year end-push and adjustments”, but said that clearly, compliance was steadily improving. Continued on Page 2 Electrosteel: NCLAT orders status quo THE NCLAT on Tuesday ordered status quo on Vedanta’s resolution plan for Electrosteel Steels, reports fe Bureau in New Delhi, pausing the process till it settles a Renaissance Steel plea on an NCLT Kolkata order okaying Vedanta’s `5,320-crore bid. Report on Page 4 TUESDAY DEADLINE IHH, Munjals-Burmans raise bids for Fortis REUTERS Bengaluru/Mumbai, May 1 CASH-STRAPPED INDIAN HOSPITAL operator Fortis Healthcare said on Tuesday that two of its five suitors had boosted their bids to invest in the company as of a deadline for binding offers on Tuesday. Malaysia’s IHH Healthcare lifted its offerto `175 a share,a 9.4%premiumtoanearlierproposal. IHH earlier proposed injecting `650 crore immediately into Fortis, and then `3,350croreafterduediligence. Indian businessmen Sunil Munjal and Anand Burman increasedtheircombinedoffer to invest in the company to `1,800 crore from `1,500 crore, via a subscription to sharesandwarrants.Theyhave offered `167 per share and `176 perwarrant. Five companies and investment groups are vying to either control or partner with Fortis, which has 30-odd hospitals in India, as they bet on a rapid growth for the private healthcare market in Asia’s third-largest economy. Tuesday noon was the deadline for binding offers, which will be evaluated by an expert advisory panel. Fortis’board is due to meet on May 10 to consider the panel’s recommendations. Manipal, another operator of Indian hospitals along with SWEETENER `175 a share IHH Healthcare’s revised offer, a 9.4% premium to previous one `650 cr Immediate infusion proposed by IHH earlier, `3,350 cr after due diligence `1,800 cr Increased combined investment offer by Munjals and Burmans buyout firm TPG, last week raised its binding offer to buy Fortis’ hospitals business at a valuation of `6,322 crore, 4.3% higher than its previous bid. The group, the first suitor for Fortis, has until May 6 to further revise its offer. RadiantLifeCare,backedby private equity firm KKR & Co, hasalsomadeabindingofferto acquireFortis’MulundHospital locatedinMumbaiforanenterprise value of `1,200 crore. It has also made a separate nonbinding offer involving a separation of diagnostic services company SRL from the Fortis stake sale process. Continued on Page 2
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.