OPINION, P8 COMPANIES, P6 Q4 NUMBERS EDITORIAL UTI is not a PSU, it has to be allowed to function freely Soaring spot prices of power are the result of a deeper malaise that needs fixing INTERNATIONAL, P14 FOX ASSETS Guenter Butschek-led Tata Motors consolidated net profit halves Brian Roberts-led Comcast prepares to top Disney's $50-billion offer MUMBAI, THURSDAY, MAY 24, 2018 FOLLOW US ON TWITTER & FACEBOOK. APP AVAILABLE ON APP STORE & PLAYSTORE WWW.FINANCIALEXPRESS.COM READ TO LEAD VOLUME XXXXXV NO. 366, 26 PAGES, `7.00 P U B L I S H E D F R O M : A H M E D A B A D , B E N G A L U R U , C H A N D I G A R H , C H E N N A I , H Y D E R A B A D , K O C H I , K O L K ATA , L U C K N O W, M U M B A I , N E W D E L H I , P U N E SENSEX: 34,344.91 ▼ 306.33 NIFTY: 10,430.35 ▼ 106.35 NIKKEI 225: 22,689.74 ▼ 270.60 HANG SENG: 30,665.64 ▼ 568.71 `/$: 68.43 ▼ 0.38 `/€: 80.12 ▲ 0.21 BRENT: $79.08 ▼ $0.49 GOLD: `31,176.00 ▲ `111.00 IN THE NEWS Telcos add 70 m subscribers during Jan-March VULNERABILITY CONCERNS MOBILE OPERATORS added almost 70 million subscribers during the January-March quarter, according to Telecom Regulatory Authority of India (Trai) data, reports Rishi Ranjan Kala in New Delhi. The top five operators — Bharti Airtel, Vodafone India, Idea Cellular, Reliance Jio and BSNL — collectively added more than 69.2 million subscribers during the first quarter of calendar year 2018. Outpace equity sales, driven by fears of a weaker rupee on rising oil, which further hits Indian currency Nipah: Health min puts Kerala districts on alert NEIGHBOURING DISTRICTS of Kozhikode and Malappuram in Kerala have been put on "high alert" by a central health ministry team sent to the state in the wake of the outbreak of Nipah virus, which has already led to at least 11 deaths, reports PTI. In an advisory, the central team has also asked for setting up of screening facilities of suspected cases at the exit and entry points of these districts. According to the ministry, of the 11 deaths so far due to the virus, eight persons have died in Kozhikode district and three in Malappuram. FPIs dump Indian bonds FPI debt FPI equity 2.0 -2.11 3.0 1.54 4.0 3.14 5.0 1.0 0.0 -1.0 -0.69 BHAVIK NAIR AND TUSHAR GOENKA Mumbai, May 23 ($ billion) -2.0 -3.0 May 2017 May 2018* Source: Bloomberg APPREHENSIVE THAT THE rupee could weaken further as crude oil prices soar, foreign portfolio investors (FPIs) have dumped Indian bonds worth morethan$4.5billionoverthe past month or so. The sales in the equity market, at close to $1.63 billion over the same time, have been far smaller. However,theforeignexchange outflows have, in turn, aggravated the pressure on the rupee. The rupee lost 38 paise on Wednesday to drop to 68.426 against the dollar, the lowest level in nearly 18 months. Another 40 paise loss would take the currency to the alltime closing low of 68.825 seen on August 28,2013. Theweakness in the Indian currency was in sync with the fall in a host of otheremerging market currencies during the day. Many of them recovered 62 64 *Up till May 21 `/$ Inverted scale 66 68 70 68.426 68.655 Nov 29, 2016 but the Turkish lira lost 3.5%. SinceJanuary,therupeehas lost 6.7%. Over the past month, the US dollar Index — Dollex — has gained 3.5%. Treasury yields in the US have been rising over the past couple of months and hit 3.11% on May 17. The price of Brent oil was ruling at around $79 per barrel. Theweakening rupee could prompt foreign investors to May 23, 2018 offload more bonds market observers said,since otherwise their portfolios would continue to lose value. To be sure, otheremergingmarketswhich are vulnerable to rising crude oil prices have also seen selloffs in their bond markets. Manish Wadhawan, MD and head of fixed income, global markets at HSBC India, points out there is some general aversion to emerging market bonds at the moment with a sell-off taking place across Latin America as well as Asian countries like Malaysia and Indonesia. The value of bonds outstanding in the FPI portfolio is close to $63 billion of which$33billionisinvestedin gilts and $30 billion in corporate bonds. Ananth Narayan,professor, finance, at SPJIMR, said that FPIs will likely continue to be nervous with the move up in oil prices, fears around fiscal slippage,the worsening external sector, politics and global geopolitics. “Higher global oil prices impactusmorethanmostother countries,given our significant oilimportbill.Thefearamongst carry traders, including some FPIindebt,isthatifcrudeoilwas to move up to and sustain at $100 a barrel or more, India could be counted amongst the fragile economies of the world all overagain,” he said. “In addition, Indian bonds are not part of global bond indices — off-benchmark holdingsarevulnerableduring risk-off periods,”Narayan said. The Reserve Bank of India (RBI) recentlyrevised the rules for investments by FPIs in Indian bonds,allowing a lower residualmaturityforsomecategories of bonds. Continued on Page 2 EASING THE LOAD Cabinet clears ordinance for changes to bankruptcy code Follows inputs from Insolvency Law Committee; changes need to be ratified by the President FE BUREAU Mumbai, May 23 THE UNION CABINET on Wednesday approved an ordinanceamendingtheInsolvency andBankruptcyCode(IBC).This follows suggestions made by a 14-member Insolvency Law Committee, submitted to the government in March. The changes will need to be ratified by the President.The panel was headed byInjeti Srinivas,secretary,corporate affairs ministry. The changes to the IBC are likely to be effective prospectively and to affect companies for which resolution plans are yet to be submitted. One amendment that will help lenders enormously is if promoters of micro, small and medium enterprises (MSMEs) who are not classified as wilful defaulters are allowed to bid for theircompanies.Currently,they are barred from doing so under the ambit of Section 29(A). However, so far there has been limited interest in these CHANGES MOOTED ■ Home-buyers treated as financial creditors ■ MSME promoters if not wilful defaulters can bid for own firms ■ Voting thresholds reset: A resolution plan admitted for NCLT approval can be withdrawn if 90% of creditors agree units and, consequently, bankers are staring at a spate of liquidation that would fetch themverylittle.Makingthepromoters eligible to bid for their companies would help bankers recover a bigger share of their dues.Currently,the recognised non-performing assets of the MSMEborrowersisastaggering `77,000crore,accordingtodata fromTransUnion Cibil. However,thecommitteehad recommendedthatMSMEpromoterswhohavebeenclassified as wilful defaulters should not be eligible to bid. Other amendments that could be made to the code include allowing home-buyers to be treated as financial creditors and giving them a bigger ■ Vote share for CoC to approve resolution plan and take critical decisions cut to 66% from 75%; for routine decisions, threshold 51% ■ 'Related party' clearly defined ■ Exclusion criterion under Section 29A narrowed a bit; carve-outs for pure-play financial entities sayintheresolutionprocess.The corporate affairs ministry has been keen to provide homebuyers the status of financial creditors. Moreover, the committee had suggested the voting threshold for the committee of creditors may be lowered to 66% from the current level of 75% — this,bankers say,would speeduptheresolutionprocess. The panel has also recommendedthatbothpromotersof companies admitted by the NationalCompanyLawTribunal (NCLT)andlendersbeallowedto withdrawfromtheprocessprovided 90% of the creditors agree. Continued on Page 2 RISING FUEL PRICES Special Feature OnePlus 6: A sure-shot Android eyeball grabber At `39,999, the newly launched OnePlus 6 is a beautiful device—the first flagship model in an all-glass design—and a top-notch Android phone with great performance ■ Gadgets, P13 Smart devices: The power to transform healthcare in India At the cross section of smartphones, medical devices and intelligent software lies a solution that can contain if not eradicate the challenges of chronic health conditions ■ eFE, P13 QuickPicks India takes US steel tariffs complaint to the WTO INDIA HAS launched a complaint against the United States to challenge US President Donald Trump's tariffs on steel and aluminium, a filing published by the World Trade Organisation showed on Wednesday, reports Reuters. Indian officials said last month the government would open a WTO dispute if India's firms were not granted an exemption. Trump imposed the tariffs in March, levying 25% on steel imports and 10% on aluminium. He said they were justified by national security concerns and therefore outside the WTO's remit. PAGE 12 Jet Airways posts Q4 loss of `1,040 cr on rising fuel costs MARGIN PRESSURES, a weakening rupee and escalating fuel costs crimped Jet Airways' profitability as the country's second largest carrier posted a huge loss of `1,040 crore for the fourth quarter of FY18, against a profit of `583 crore for the corresponding quarter last year, reports fe Bureau in Mumbai. For the quarter, Jet Airways posted earnings before interest, taxes, depreciation, amortisation, and restructuring costs(Ebitdar) of `142 crore against an Ebitdar of `934 crore last year, a huge 85% decline. PAGE 7 Net direct tax collection for 2017-18 rises 18% THE COUNTRY’S net direct tax collection in 2017-18 stood at `10.03 lakh crore, up 18% on year, the finance ministry said on Wednesday, reports Reuters. The growth was the fastest in seven fiscal years. Last month, a finance ministry official had said the country's direct tax mop-up had exceeded the Budget target. Not tax cut, Centre for ‘long-term’ solution FE BUREAU New Delhi, May 23 AS GLOBAL OIL prices continued to be at elevated levels, the Centre on Wednesday seemed to be not opting foran immediate cut in the excise duties on petrol and diesel whose prices have reached new highs. It is keen to take the state governments on board for a plan to bring these fuels under the goods and services tax (GST). Addressing the media here, telecomministerRaviShankar Prasad said the government was in the process of finding a “long-term, structured” solution to the issues arising out of the volatility of crude prices. “There is a compelling need to find such a (long-term) solution,” he said, adding that ad hoc measures weren’t actually desirable.Inwhat reflected the government’sdisinclinationto cut the excise duties on petroleum products, the minister said the revenue collected is used for building highways, digital infrastructure, medical institutes,etc. Hindustan Petroleum Corporation (HPCL) chairman and managing director MK Surana said on Wednesday that one of theways to rein in the auto fuel prices was to review the taxation structure.“The long-term Retail prices of petrol (Delhi) Dealer commission Central excise State tax `/litre 71.41 11.9 2 May 2014 76.53 10.39 16.41 19.48 May 2018 3.63 solutionbeforethecountryisto bring all petroleum products underthe GST,”Surana said. However, analysts have pointedoutthateventhehighest GST rate of 28% won’t suffice for any semblance of tax neutrality with the current regime. Currently, around 47% of the retail petrol price and roughly 40% of retail diesel price are due to taxes.The central excise is now 25.4% of the retail price of petrol in Delhi while state value-added tax’s (VAT) share is 21.3%. Continued on Page 2 Show of hands, strength Opposition leaders including the Congress’ Rahul Gandhi, West Bengal CM Mamata Banerjee and Andhra Pradesh CM Chandrababu Naidu at HD Kumaraswamy’s swearing in as Karnataka chief minister in Bengaluru on Wednesday ● EGM STORM Fortis investors vote out Tempest PRESS TRUST OF INDIA New Delhi, May 23 FORTIS HEALTHCARE ON Wednesdaysaiditsshareholders hadvotedtoremoveBrianTempestfromtheboardofdirectors atthecompany’sextraordinary general meeting (EGM) held on Tuesday.Tempest is one of four directors of the cash-strapped healthcarechainwhoseremoval was sought bytwo institutional investors. Three of them — Brian Tempest, Fortis Healthcare Harpal Singh, Sabina Vaisoha and Tejinder Singh Shergill — resigned before the EGM. The development has cast a shadow over the ongoing attempt to sell Fortis as the four were among the five who had voted in favour of the `1,800-crore bid by Sunil Kant Munjal and Dabur’s Burman family for the healthcare firm.The Fortis board on May 10 in a 5-3 decision went with the offer from the MunjalBurman combine. Continued on Page 2 ● VIOLENT PROTESTS HC stays Sterlite smelter expansion Vedanta Intra-day, May 22 (`) 265 264 252.7 260 255 250 FUDGED FIGURES 245 Haryana’s eNAM ‘success’: FCI wheat buys inflate data PRABHUDATTA MISHRA New Delhi, May 23 SINCE THE ELECTRONIC national agriculture market (eNAM)projectwaslaunchedin April 2016, only a minuscule part of the wholesale trade in farmcommoditiesinthecountry has shifted to it while intermandi/interstate eNAM trade has remained a virtual nonstarter. But even as the eNAM objectiveofempoweringfarmerswithawiderbuyerbasehasn’t been met, there is a continued attempt to inflate the eNAM trade byadding in mini- mumsupportprice(MSP)operations.This practice is rampant inHaryana,theonlystatewhere eNAMhaspickedupatleastfor intra-mandi trade and trading ontheplatformisclaimedtobe over a half of the state’s wholesale trade in farm goods. Stating that the Haryana government has failed to stop field officials from showing governmentpurchaseofwheat at MSP as eNAM sales, a union agriculture ministry official told FE:“The practice is defeating the objective of the government.We wanted this (eNAM) platform to be a place to dis- 9.40 lakh tonnes Of 87.37 lakh tonne of wheat procured by FCI in Haryana from April 1 to May 17 shown as eNAM trade `17,355 per quintal Wheat price shown in some entries at Narwana mandi on April 24 585 Mandis in 14 states have been connected with eNAM Open Close FE BUREAU Chennai, May 23 cover real price between farmers and traders.” According to Food CorporationofIndia(FCI)data,Haryana has purchased a record 87.37 lakh tonnes of wheat this year for the central pool after the operation started from April 1, almost the entire crop that arrived in mandis. In all the three price columns on the eNAM portal — minimum, maximum and modal — officials have mostly entered `1,735perquintal,whichisthe MSPofwheat. THE MADURAI BENCH of the MadrasHighCourtonWednesday stayed the expansion of Vedanta’s copper smelter plant inTuticorindistrictamidacontinuing agitation against the plant that has led to several deaths and injuries.The bench also directed the Centre to submitareportinfourmonthsafter holding a public hearing to invite public opinion on the expansion plan. Vedanta fell over 7% in intra-day trade before finally ending 6.23% downat`252.70ontheBSE.P6 Continued on Page 2 Man killed in police firing, P6
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