OPINION, P8 COMPANIES, P6 FAMILY MATTERS EDITORIAL IBC has changed banking, but the progress is uneven The no-detention policy played havoc with learning, govt right to plan to scrap it INTERNATIONAL, P14 ‘PURE SPECULATION’ Sunil Bharti Mittal may invest over $1 billion in son-in-law’s hotel chain China rejects US charge of ‘forced technology transfer’ at WTO NEW DELHI, TUESDAY, MAY 29, 2018 FOLLOW US ON TWITTER & FACEBOOK. APP AVAILABLE ON APP STORE & PLAYSTORE WWW.FINANCIALEXPRESS.COM READ TO LEAD VOL.XLIV NO. 75, 30 PAGES, `6.00 (PATNA `6.00, RAIPUR `7.00) P U B L I S H E D F R O M : A H M E D A B A D , B E N G A L U R U , C H A N D I G A R H , C H E N N A I , H Y D E R A B A D , K O C H I , K O L K ATA , L U C K N O W, M U M B A I , N E W D E L H I , P U N E SENSEX: 35,165.48 ▲ 240.61 NIFTY: 10,688.65 ▲ 83.50 NIKKEI 225: 22,481.09 ▲ 30.30 HANG SENG: 30,792.26 ▲ 204.22 `/$: 67.43 ▲ 0.35 `/€: 78.46 ▲ 0.82 BRENT: $75.14 ▼ $1.30 GOLD: `30,901.00 ▼ `270.00 WHILE BANKS HAD to take a haircut of around 37% in the case of Bhushan Steel and 60% in the case of Electrosteel Steels, they might not have to take any such haircuts in the case of the bankrupt BinaniCement.Thecompany’s committee of creditors (CoC) on Monday voted in absolute majority in favour of the revised resolution plan submitted by the Aditya Birla Group-controlled UltraTech Cement which has offered to pay `7,960 crore. Under this plan, all the financial Electrosteel Steels debt `13,175 cr Vedanta's approved bid* `5,320 cr Haircut for banks 60% Continued on Page 2 *Subject to approval by NCLAT Special Features Smart Investing: Four ways to invest for your child’s education With increasing costs of higher education, it is essential to plan for it early with proper asset allocation comprising equity, bonds and real estate. One must also do portfolio rebalancing when ever required ■ Personal Finance, P13 Revolution in value-added dairy products market The Indian dairy industry is at the tip of another major transformation. In its pursuit to become a developed dairy industry, India is marching towards a value-added dairy products market QuickPicks Icra cuts rating for loan facilities of debt-laden Jet Airways RATING AGENCY Icra on Monday lowered credit ratings on Jet Airways' short-term and long-term loan facilities citing weakened financial performance as the airline is unable to pass on rise in jet fuel prices to customers, reports PTI. After posting a `1,036-crore loss in the three months ended March 2018, mainly due to high oil prices and weaker rupee, Jet Airways last week said it may see a rise in debt for the next one or two quarters. PAGE 10 Walmart-Flipkart deal: CAIT files plea with competition body THE CONFEDERATION of All India Traders (CAIT) on Monday said it has approached the Competition Commission of India (CCI) against the Walmart-Flipkart deal, stating that it will create unfair competition and an uneven playing field for domestic players, reports PTI. The traders’ body pointed out that the deal would deny market access to non-preferred sellers and impact small traders on offline platforms. PAGE 16 Only 4% NPAs in PM’s flagship Mudra loan scheme till Dec ’17 HOUSEWIVES, POOR widows and small and budding entrepreneurs seem more reliable in loan repayment than the promoters of some large corporations, reports Banikinkar Pattanayak in New Delhi. Contrary to perceptions, loans under Mudra Yojana — a pet initiative of PM Narendra Modi aimed at supporting budding entrepreneurs from vulnerable sections of the society — had a gross NPA ratio of only 4% as of December 2017, much lower than roughly 10% for the banking industry. PAGE 2 Binani Cement debt `7,000 cr UltraTech's bid* `7,960 cr Haircut for banks Nil *Subject to approval by NCLT/NCLAT/SC as well as the operational creditors will receive their complete dues. The resolution plan will now be sent to the National Company Law Tribunal (NCLT) for its approval as per the Insolvency and Bankruptcy Code (IBC) process. After the NCLT’s approval, the plan will need to be approved by the National Company Law AppellateTribunal(NCLAT). The stance of the Supreme Court also needs to be seen as on Monday it agreed to hear next week the petition of rival bidder Dalmia Bharat, which wants that Bhushan Steel debt `56,000 cr Tata Steel's approved bid `36,400 cr Haircut for banks 37% `300 crore towards working capital of Binani Cement,” a senior banker who was part of the nine-hour-long CoC meeting,told FE. Continued on Page 2 Ebitda Net profit 11 23 Thegrowthinitsorderbook, themajorityofwhichismadeup ofgovernmentordersorgovernment-led spends,remained sta- ble at `2.63 lakh crore against `2.61lakhcrorelastyear. Continued on Page 2 85 ($/bbl) 75.36 80 Brent 75 70 63.83 75.95 May 25 65 60 55 People queue up to vote at a polling station in Kairana, UP. Amid complaints of EVM malfunction, over 54% polling was recorded in the politically sensitive Assembly seat SHAMIK PAUL Mumbai, May 28 REUTERS Bengaluru, May 28 that the moneywill be released from the escrowaccount onlyif its bid for Essar Steel is recognised as thewinning bid. “It is not clear if the offer to repay dues with certain conditions is the same as actually making the payment. The NCLT will have to give a direction on this.Therefore,we have approached the NCLT,”a senior banker told FE. A section of the committee ofcreditors(CoC)alsofeelsthat the offers received in the second round of bidding should be considered in order to get the best value for the asset. Continued on Page 2 62.8 Indian basket Mar 5 Poll-pourri Banks move NCLT for clarity ■ ArcelorMittal has deposited `7000 crore in an escrow account for payment of dues of Uttam Gala and KSS Petron 100 bps Consolidated figures Oil extends fall as Opec, Russia look to up output ● TAKEOVER BATTLE ■ Numetal has moved NCLAT saying second round of bids should be considered 5 ● RISING SUPPLY ARCELOR BID FOR ESSAR STEEL LENDERS TO THE bankrupt EssarSteel have filed a petition with the Ahmedabad bench of theNationalCompanyLawTribunal(NCLT)seekingclarityon whether ArcelorMittal’s offer to repay the dues of Uttam Galva and KSS Petron makes the company’s bid for Essar Steel eligible. While billionaire LN Mittalled ArcelorMittal has transferred `7,000 crore into a State BankofIndiaescrowaccountfor the payment of dues of the two companies, it is understood to have laid down the condition 5 — SN SUBRAHMANYAN CEO & MD, L&T Farmers plan pan-India strike from June 1 to 10 Detailed report on Page 2 12 It is a predominantly govt-written story right now which is the biggest spender on infrastructure as well as other social spending. Continued on Page 2 an umbrella organisation of the110farmeroutfits.Inline with what happened in Maharashtra lastyear,farmerswill be told to stop selling their produce including milk and vegetables during this period. In fact, a farmer delegation on Monday met the President in the capital and petitioned for a special session of Parliament to discuss the agrarian crisis in the country. Ebitda margin (%) 13 Source: Company ● AGRARIAN CRISIS MORE THAN 110 farmer outfits across the country have planned a nationwide strike from June 1 to 10 to press for their demands, reports Nanda Kasabe in Pune. The farmers are demanding higher rates for theirproduce,completeloan waiver,payouts to small farmers to match their income withthatofaclassIVgovernment employees,and lifting the ban on cowslaughter. The strike has been plannedunderthebannerof RashtriyaKisanMahasangh, Order inflow 49,560 Net sales Chg (%) y-o-y 47,290 SINGAPORE EXCHANGEAND National Stock Exchange have abandonedtalksonacross-border trading link, according to peoplefamiliarwiththematter, amid a bittercourt battle that’s soured an 18-yearpartnership. The companies couldn’t reach consensus on issues including timing, regulatory guidelines and the resources requiredfortheproject,accordingtothepeople,whoaskednot to be identified. The venture would have seen traders in Singapore buy and sell derivatives on exchanges in Gujarat Gift City.OfficialsfromNSEandSGX declined to comment. A months-long quarrel betweenthetwoexchangesover data and licensing rights escalated last week when NSE sued to stop SGX from launching derivatives based on Indian stocks next month. INCREASED GOVERNMENT SPENDING on the infrastructuresectorandasharpincrease in domestic order inflows led thecountry’sbiggestengineering and construction firm Larsen&Toubro(L&T)onMonday to report good growth in fresh order intake for the full year ended March 31, 2018, versus the company’s own guidance of a nominal growth in the orderinflows. In fact, a steady flow of orders from the infrastructure segment — which formed about 57% of the company’s orderinflowsduringtheyear— and a good run with the orders from domestic oil and gas companies helped L&Treport a 7% rise in order inflows to `1.53 lakh crore in FY18. However, private sector spendingremains“illusive”with capacityutilisationremaininga matterof concern and the issue of unresolved debt on theirbalance sheets remaining a dampener,the companysaid. Q4FY18 3,170 MITHUN DASGUPTA & SHAMIK PAUL Kolkata/Mumbai, May 28 BLOOMBERG Mumbai/Singapore, May 28 Q4FY17 3,020 THE TAMIL NADU government on Monday ordered the permanent closure of Sterlite’s copper plant in Tuticorin following last week’sviolent protests during which 13 peoplewere killed in police firing. The move is expected to trigger a longdrawn legal battle between the company and the state government. The decision follows the visit of deputy chief minister O Panneerselvam to Tuticorin. He said that the state government will take resolute steps for the permanent closure of the Vedanta Group’s copper smelter plant. In an order issued in the evening,principal secretaryto the government MD Nasimmuddin said under Sections 18(1)(b) of the Water Act, 1974, in the larger public interest the government endorsed the closure direction of the Tamil Nadu Pollution Control Board (TNPCB) and also directed the board to seal the unit and close the plant permanently. UtlraTech’s bid not be considered at all. The NCLAT has been hearing multiple petitions filed by both UltraTech Cement and Dalmia Bharat.It is scheduled to hear the matter again on July10.In the interim,it asked the resolution professional (RP) Vijaykumar V Iyer to continue with the resolution process, but said that the final outcome will be subject to its order. “The creditors have voted for UltraTech Cement with a 100% majority. UltraTech Cement has agreed to pay `7,960 crore, which includes (` cr) 5,390 Will mean all financial, operational creditors will get complete dues FE BUREAU Mumbai, May 28 4,380 FE BUREAU Chennai, May 28 Govt’s spending helps L&T beat expectations in FY18 40,680 Binani lenders opt for UltraTech’s bid NSE, SGX end talks on cross-border trading link LOCAL HERO « TN orders permanent closure of copper unit ● SOURED TIES 36,620 CEMENTING A DEAL ● BLOW TO STERLITE Fortis board undecided on reopening bidding process FORTIS HEALTHCARE SAID on Monday it had not decided whether to reopen bidding for itself,after an offer of funding that its board had accepted got a tepid response from investors, prolonging a fierce takeover battle. The Hero Enterprise Investment Office and Burman Family Office’s offer this month to invest `1,800 crore in the company did not go down well with Fortis shareholders,who voted out a director last week.Three directors quit before thevote. The cash-strapped hospi- tals operator has become an attractive investment target in recent months with five local and international suitors wanting to invest in or buy it, seeking to cash in on an expected boom in India’s private healthcare market. Continued on Page 2 Mar 1, 2018 May 28 FE BUREAU Mumbai, May 28 OIL PRICES EXTENDED losses for the third day as top producers Saudi Arabia and Russia signalled raising output to meet concerns about supply amid strong demand.The move comes at a time when record US crude production and a surprise gain in inventories pushed US West Texas Intermediate’s discount to Brent higher. Having erased close to 6% of the gains in the last three days, the benchmark Brent was trading at close to $75 a barrel on Monday after hitting a three-and-a-half-year high in May. The world’s major oil exporting countries had cut back production to ensure a reduction in global inventories,which led to a surge in oil prices since the beginning of the year. Brent surpassed its multi-year high of $80 a barrel earlier this month. LIMITED RESOURCES Uttar Pradesh’s farm loan relief led to big cut in capital expenditure PRASANTA SAHU & DEEPA JAINANI New Delhi/Lucknow, May 28 UTTAR PRADESH, THE first state to announce a farm loan waiver in the current series of such succour, spent `20,598 crore in 2017-18 to relieve the state’s 34.11 lakh farmers of theonusofrepayingtheirloans, butnotwithoutcuttingitsbudget spending drastically from the targeted levels.The state’s overall budget expenditure in the last fiscal turned out to be `2,91,592 crore, about 22% lowerthantheoriginalestimate (BE) of `3,71,504 crore; the capexcomponentofthespending saw an even sharper reduction of 33% to `38,647 crore. Giventhatthetrendofcurbing development spending to meetthecostofloanwaiversfor farmers is likely to have been replicated by the other four `36,359 cr Size of the farm loan waiver announced by the Uttar Pradesh government `20,598 cr ` Amount spent by the state for farm loan waiver in FY18 UP’s total Budget spending (FY18), ` crore Target Actuals 3,71,504 2,91,591 Capex (FY18), ` crore Target Actuals 57,613 38,647 states(Maharashtra,Karnataka, Punjab and Tamil Nadu) that made similar promises, the largessemighthavehavetakena toll on the economic growth already.EconomicSurvey201617 had predicted that the spate of farm loan waivers could significantly reduce aggregate demandandimpartadeflationaryshock to the economy. According to the survey’s second volume released in August 2017 (UP announced the farm loan waiver in April 2017),evenifonlytheabovefive states implemented the loan waivers as announced then,the estimated impact could be `11.25 lakh crore.If all states followed the UPmodel — up to `1 lakh for all small and marginal farmers — the survey had said, the aggregate demand would reduce by as much as 0.7% of gross domestic product (GDP). Continued on Page 2
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