OPINION, P8 COMPANIES, P6 SURJIT S BHALLA Data suggest BJP win, Cong has most at stake in K’taka polls INTERNATIONAL, P14 EDITORIAL CHANGE OF GUARD IN A FIRST There’s clearly a problem if, even for an RBI post, former babus get chosen Infosys says independent director Venkatesan steps off board Barclays CEO Staley fined $1.5 m for trying to unmask whistleblower KOLKATA, SATURDAY, MAY 12, 2018 FOLLOW US ON TWITTER & FACEBOOK. APP AVAILABLE ON APP STORE & PLAYSTORE WWW.FINANCIALEXPRESS.COM READ TO LEAD VOLUME XXVII NO. 163, 22 PAGES, `10.00 (NORTH EAST STATES & ANDAMAN `13.00) P U B L I S H E D F R O M : A H M E D A B A D , B E N G A L U R U , C H A N D I G A R H , C H E N N A I , H Y D E R A B A D , K O C H I , K O L K ATA , L U C K N O W, M U M B A I , N E W D E L H I , P U N E SENSEX: 35,535.79 ▲ 289.52 NIFTY: 10,806.50 ▲ 89.95 NIKKEI 225: 22,758.48 ▲ 261.30 HANG SENG: 31,122.06 ▲ 312.84 `/$: 67.33 ▼ 0.15 `/€: 80.36 ▼ 0.33 BRENT: $77.30 ▼ $0.17 GOLD: `31,379 ▲ `118 IN THE NEWS SC Collegium for Joseph's elevation THE SUPREME COURT Collegium on Friday agreed in principle to reiterate the recommendation for the elevation of Uttarakhand HC Chief Justice KM Joseph as a judge of the apex court, after his name was returned by the Centre, reports PTI. The five-member collegium unanimously decided on Joseph's recommendation. Airfares: CCI lens on possible cartelisation THE COMPETITION COMMISSION plans to assess algorithms used by domestic airlines for ticket pricing to check for possible cartelisation, chairperson DK Sikri said on Friday, reports PTI. There have been instances of sharp fluctuations in airfares at times of peak demand. Non-food credit growth hits 3-year high GROWTH IN NON-FOOD bank credit rose to a threeyear high of 12.75% year-onyear during the fortnight ended April 27, from 11.39% in the previous fortnight, reports fe Bureau in Mumbai. Non-food bank credit had recorded a 5.07% y-o-y growth a year earlier. MUNJAL-BURMAN OFFER Certainty factor led to bid choice: Fortis Earlier healthcare investments, liquidity also played a role in decision by most of the directors PRESS TRUST OF INDIA Gurgaon, May 11 THE MAJORITY OF Fortis Healthcare’s board opted for the Munjal-Burman offer keeping in mind the certainty and liquidity issues, the company’s director Brian W Tempest said on Friday. While five board members had voted in favour of the `1,800-croreoffer,threemembers had opted for other offers outofthefourbindingbidsthat Fortis Healthcare had received. Shares of Fortis Healthcare fell nearly 3% on Friday. The stock declined 2.66% to close at `148.40 on the BSE. Intraday, it had slumped 4.39% to `145.75.On the NSE,shares of the companyfell 2.27% to end at `149.50 each. “We looked at all the binding bids from the point of viewof certaintyand liquidity for the company... We took advice from the expert committee, from two financial organisations and from a legal organisation,” Tempest told reporters here. When asked if the decision was unanimous, he said three Idea,Airtel tumble on Jio’s new plan Move opens a new front — postpaid segment — in ongoing tariff war ON A WAR FOOTING Jio's rental charge — BRIAN W TEMPEST BOARD OF DIRECTOR, FORTIS HEALTHCARE shareholders for approval. “There will be a shareholders’meeting on this within 30 days and I am positive that there will be support from the shareholders forthe decision,” he said. On the issue of erstwhile promoters Malvinder Singh and Shivinder Singh continuing on the board of diagnostics chain SRL, Tempest said they should step down. `0.50/minute Incumbents Incumbents `399 SHARES OF INCUMBENT operators Bharti Airtel and Idea Cellular tumbled on FridayfollowingRelianceJioInfocomm’s announcement of a new postpaid plan on Thursday evening after market hours, which has brought the tariff war in a segment (postpaid)thatwassofaruntouched by its disruptive pricing. While shares of Idea Cellular on the BSE fell 11.83% to end at `51.45 each,BhartiAirtelsawadropof6.44%toclose at `385.70.Intra-day,Idea had slumped 12.93% to `50.80, while Bharti had fallen 7.53% to `381.20. `8-10/minute Bharti Airtel Idea Cellular Intraday on BSE (`) 410 402 Intraday on BSE (`) 60 400 57 58 385.7 390 Autonomous vehicles: Robotics rules of the world Some in the industry think It’s time to devise standardised rules for how AVs should behave in different situations. Can safe-driving rules really be defined mathematically? ■ Science & Tech, P13 QuickPicks Transactions via IMPS cross 100-million mark in March TRANSACTIONS MADE using the Immediate Payment System (IMPS) crossed the 100-million mark in March to clock a total volume of 110.15 million transactions worth `1.04 lakh crore in the month, showed data released by the RBI, reports fe Bureau in Mumbai. According to data available on the National Payments Corporation of India website, the payment mode retained its momentum in April as well, recording 109.55 million transactions worth `1.02 lakh crore. PAGE 10 NCLAT admits NuMetal’s plea against Essar CoC decision THE NATIONAL Company Law Appellate Tribunal (NCLAT) on Friday admitted NuMetal's plea against Essar Steel’s committee of creditors’ (CoC) decision that said it needs to repay the existing debt of the steel firm before it is considered eligible to bid for its asset, reports fe Bureau in New Delhi. The NCLATwill now hear the appeal along with the cross appeals of NuMetal and ArcelorMittal on May 17. It also issued notices to ArcelorMittal, resolution professional and CoC. PAGE 2 412.25 Open Close Bharti Airtel’s market capitalisationslumped`10,612.28 croreto`1,54,179.72croreand thatofIdeadropped`3,006.79 crore to `22,429.21 crore. Basically, Jio, which had broughtindisruptivepricingin 48 58.35 Open Close the prepaid segment which forced the incumbents to follow suit, has now done the same in the postpaid segment. Its new tariff, which will becomeeffectivefromMay15, comeswithamonthlyrentalof FE BUREAU New Delhi, May 11 Continued on Page 2 PRASANTA SAHU New Delhi, May 11 Flagging interest Prime Minister Narendra Modi with Nepalese counterpart KP Oli flag off a bus service between Janakpur in Nepal and Ayodhya in India, in Janakpur on Friday 2016-17; ` crore Net profit 496 -2,941 2,870 TCIL 71 1,139 HCL 62 1,220 -84 349 Mecon Anotherprofitableandlisted firmidentifiedforprivatisation is HCL, which reported a turnover of `1,220 crore and a net profit of `62 crore in FY17. The mining firm’s market capitalisation stood at `6,851 crore as on May11. In the case of Mahanagar Telephone Nigam (MTNL), which continues to struggle with declining revenues and mounting losses in a fiercely competitive market, NITI is understood to have suggested strategic disinvestment with options to monetise its tower business,land and buildings. Continued on Page 2 Industrial slowdown FE BUREAU IIP growth slows to 4.4% in Mar Industrial output growth slowed to a 5-month low of 4.4% in March, as expansion in manufacturing slowed. The usually volatile capital goods segment shrank 1.8%, against a 19.5% jump in February. Report on Page 2 (% rise, y-o-y) 12 10 Electricity Mining Manufacturing 8 5.9 6 4.4 4 2.8 2 0 -2 Mar 2017 that’s smart enough to trick humans be forced to disclose itself. Google executives don’t have a clear answer yet. Duplex emerged at a sensitive time for technology companies, and the feature hasn’t helped alleviate questions about their growing power ILLUSTRATION: ROHNIT PHORE over data, automation software and the consequences for privacy and work. “Horrifying,” Zeynep Tufekci, a professor and frequent tech company critic, wrote on Twitter about Duplex.“Silicon Valley is ethically lost, rudderless and has not learned a thing.” Robotic voices should always sound “synthetic” rather than human, wrote Stewart Brand, an author who advocates for long-term thinking and responsibility in the face of advancing technology and other trends. “Suc- Mar 2018 cessful spoofing of any kind destroys trust.” Asinpreviousyears,Google unveiledafeaturebeforeitwas ready. Google is still debating how to unleash it, and how human to make the technology, several employees said during the conference. That debate touches on a far bigger dilemma for Google: As the company races to build uncanny, human-like intelligence, it is wary of any missteps that cause people to lose trust in using its services. Continued on Page 2 HIGH NPAs Reserve Bank orders Dena to stop lending FE BUREAU Mumbai, May 11 Overall IIP Oh, the humanity! Google faces fallout of eerily non-robotic product technology saves people time and effort.In a demonstration on stage, the Google Assistant spoke with a hair salon receptionist, mimicking the “ums” and “hmms” pauses of human speech. In another demo,it chattedwith a restaurant employee to book a table. The audience of software coders cheered. Outside the Google technologybubble,criticspounced. The companyis placing robots inconversationswithhumans, withoutthosepeoplerealising. The obvious question soon followed: Should AI software THE DEPARTMENT OF financial services (DFS) will write to the revenue department to provide relief to banks that have been slapped with a tax notice, asking them to pay service tax, penalties and interest on free services offered to customers. Asked about the tax notice, financial services secretary Rajiv Kumar said his departmentisintheprocessoftaking upthematterwiththerevenue department. “The DFS believes that such free services are not taxable,”Kumar said. Continued on Page 2 29,475 MTNL PTI Turnover BHEL Continued on Page 2 DFS to seek relief, take up matter with revenue dept BHEL, MTNL on NITI’s new list THE GOVERNMENT, WHICH has made little progress in carrying out strategic sales of the 40 central public sector enterprises (CPSEs) including Air India from four earlier lists given by NITI Aayog, has receivedafreshlistof11CPSEs for privatisation from the official think tank. Bharat Heavy Electricals (BHEL), Hindustan Copper(HCL),theailingMTNL, Telecommunications Consultants India (TCIL) and Mecon topped the new array of companies that could be put up for sale,according to NITIAayog. The details such as quantum of stake sale in each of the CPSEs would be finalised by the group of secretaries on disinvestmentheadedbytheCabinet secretary, a source said, confirming the NITI Aayog’s latest recommendation. Of these new firms identified for stake sales,BHEL has a market capitalisation of `29,647 crore as per the share price of the firm on May 11 on the BSE.The integrated power plant equipment manufacturer reported a turnover of `29,475 crore and a net profit of `496 crore in FY17. `199 with 25 GB data against the incumbents’starting point of `399. Further, Jio has dropped ISD rates for such users. For instance, its ISD rate forcallstotheUSandCanadais at 50 paise per minute against `8-10 per minute being charged by the incumbents. Though the postpaid segment accounts fornearly20% of the industry’s revenues, close to 22-23% for the incumbents, the average revenue per user here will get affected if the incumbents match Jio’s tariff in theireffort to hold on to the their customers. Similarly, while ISD outgoing is a very low proportion of the industry’s overall voice volumes (less than 0.1% of outgoing volumes), and the contribution to industry revenues could be in the range of 1.5-2% (`2,000-3,000 crore in absolute revenues), this can easily get cut by half. ● TAX NOTICE TO BANKS AI ANXIETY THE MOST TALKED-ABOUT, futuristic product from Google’s developer show isn’t evenfinished—butit’salready stoking heated debate. At its I/O conference on Tuesday, Alphabet’s Google previewed Duplex, an experimental service that lets its voice-based digital assistant bookappointmentsonitsown. Itwaspartofaslateoffeatures, such as automated writing in emails, where Google touted how its artificial intelligence 51.45 51 Previous close 380 Previous close 370 54 CPSE PRIVATISATION Special Feature BLOOMBERG San Francisco, May 11 Jio's lowest ISD rate `199/month FE BUREAU New Delhi, May 11 We looked at all the binding bids from the point of view of certainty and liquidity for the company... We took advice from the expert committee, from two financial organisations and from a legal organisation members of the board, who have been with Fortis, voted for the Munjals-Burmans bid and out of five new members twovoted forthe bid and three voted for other options. Another major reason for accepting the bid was that “theyhaveseveralinvestments in the healthcare sector”. Accepting the offer was a culmination of a process which started two years ago, Tempest said, adding that it would now be presented to RINGING IN CHANGE THE RESERVE BANK of India (RBI) has restricted Dena Bank from “assuming fresh credit exposure” and recruiting staff as part of restrictions imposed under the central bank’s prompt corrective action (PCA), the bank said in a regulatory filing on Friday. “Wewish to inform that the RBI vide their letter dated May 07,2018 (received by the Bank onMay08,2018)hasrestricted the bank from assuming fresh credit exposure and recruitment of staff,”Dena Bank said. Last year, the central bank had imposed PCA restrictions onDenaBankforhighnetnonperforming assets (NPAs) and negativereturnonassets(RoA). At least half the listed stateowned lenders have now been put under corrective action includingBankofIndia,Indian Overseas Bank,United Bank of India, Corporation Bank, Oriental Bank of Commerce, Central Bank, IDBI Bank and Bank of Maharashtra. The RBI had released revised PCA norms last year and said that if a bank reached the level of‘risk threshold 3’,it could end up as a candidate for amalgamation,reconstruction or even be wound up. Among the manymetrics that are used SETTING LIMIT ■ Restrictions under the central bank's PCA ■ At least half the listed PSBs have been put under corrective action ■ Under PCA, banks also face limits on distributing dividends and remitting profits to gauge how weak a lender is are capital, net NPAs, RoA and Tier 1 leverage ratio. Under PCA, banks face restrictions on distributing dividends and remitting profits. The owner — government in this case — may be asked to infuse capital into the lender. That apart, lenders would also be stopped from expanding their branch networks. It wouldneedtomaintainhigher provisions and management compensation and directors’ fees would be capped. Q4 loss widens to `1,225 cr, NPAs soar, Page 10
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.