OPINION, P6 ECONOMY, P2 JOB CREATION India’s growth is picking up, but hold the champagne While govt yet to fly out of Air India mess, BSNL looks like it is going the same way TRADE TENSIONS Prasad: New-age technology to create more employment EDITORIAL INTERNATIONAL, P4 China says all progress at risk if US imposes tariffs NEW DELHI, MONDAY, JUNE 4, 2018 FOLLOW US ON TWITTER & FACEBOOK. APP AVAILABLE ON APP STORE & PLAYSTORE WWW.FINANCIALEXPRESS.COM READ TO LEAD VOL.XLIV NO. 80, 14 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 Q4 RESULTS Toplines still weak, profits even weaker Excluding ‘other income’, net profits fell 2.6% y-o-y Continued on Page 2 Continued on Page 2 23.12 1.56 19.61 (% chg y-o-y) Q1 Q2 Q3 Q4 FY18 RM to sales 128.67 228.43 -114.32 Q1 Q2 Q3 Q4 FY18 58.57 (bps, chg y-o-y) 22.89 (bps, chg y-o-y) Q1 Q2 Q3 Q4 FY18 Sample of 1,578 companies (excluding banks, financials & OMCs) Source: Capitaline Topline growth has been justaboutsatisfactorysuggesting not too many companies havebeenabletopushthrough bigvolumes and fewhave been able to take price increases to pass on the rising input costs. Consequently,profitabilityhas suffered except whether companieshavebeenabletoekeout operationalefficiencies.Forthe automobile,cement and pharmaceutical sectors,either real- BSNL MAANGE MORE Special Features Give free spectrum, will boost revenues Rural/urban subscriber split (Mar 2018) 7 BSNL Idea 0 Airtel The insurance regulator has asked insurers to design third-party insurance covers which will be five years for twowheelers and three years for four-wheelers ■ Personal Finance, P9 RJio 10 50 40 9 0 RISHI RANJAN KALA New Delhi, June 3 QuickPick No GST on free banking services, but MF exit load to attract levy FREE SERVICES like ATM withdrawals, provided by banks to customers will not attract GST, but late payment charges on outstanding credit card bills and purchase of insurance policies by NRIs will attract the levy, reports PTI. On whether GSTwill be levied on the exit load of mutual funds, the revenue department said exit load in the form of a fee is liable to GST. 300 186 18 60 LOSS-MAKING, STATEOWNED firm Bharat Sanchar Nigam (BSNL) has requested the department of telecommunications for allocation of an additional carrier (5 MHz) spectrum in the 2100 MHz band across 19 circles so that it can provide 4G services to shore up its revenues.To boost its case, since it does not want to pay `12,955 crore which is the price of the spectrum as per the latest auction deter- 225 150 20 75 0 0 RJio 100 80 112 27 23 22 375 Idea 150 Long-term third-party cover for private cars & two-wheelers 100 BSNL 36 30 Vodafone 200 Urban subscriber base (%) Rural subscriber base (%) Total subscribers (mn, RHS) 223 Rural subscribers (mn) Market share (%, RHS) 211 Rural subscriber market share (Mar 2018) 304 The South Korean tech behemoth has hired 1,000 engineers in 2018 from top engineering colleges to work on IoT, AI, ML, Natural Language Processing and India-specific innovations ■ EFE, P8 Airtel Betting on R&D: Samsung set to lead IoT and AI in India Source: Trai mined price,BSNLhas said if it is enabled to provide 4G services,it will lead to faster penetration of such services in rural areas and give a leg-up to the government’s Digital India initiative. While the DoT is yet to respond to BSNL’s proposal, subscriber figures collated by the Telecom Regulatory Authority of India (Trai) show that BSNL lags far behind its private sector peer when it comes to rural subscriberbase. Continued on Page 2 FM RADIO Channels air fewer ads to keep listeners tuned in Minutes FY17 18-20 Number of ad breaks in an hour FY17 4-5 FY18 FY18 10-15 2,430 4.5-4 3-3.5 2018 (E) FY18 2020 (E) FY17 Advertising revenue (` crore) 3-4 Duration of per ad break (minutes) 2017 FEARING A DROP in listenership as listeners move to OTT musicstreamingspace,private FM radio broadcasters are now airing fewer advertisements. From 18-20 minutes for every 60 minutes of programming, advertisements now account for just about a fourth of the time every hour. However, in an effort to protect their toplines they’ve upped advertising rates by about 7-8%. In some smaller markets, the rates are up by as much as 20%. In absolute numbers,though,the increase isn’t too much because prime time spots in the metros cost Advertising in a clock hour 2016 ANUSHREE BHATTACHARYYA New Delhi, June 3 2,580 2,840 3,380 Source: Industry estimates, FICCI-EY media report between `800 and `1,200 while in the smaller towns the rates are only `200 to `300. But the strategy has cost stations some revenue, concedes Prashant Panday, MD and CEO, Entertainment Network India (ENIL), which runs PRESS TRUST OF INDIA New Delhi, June 3 isations orprofitabilityorboth were weaker than expected, KIE observed. Better consumer spends — private final consumption expenditurerose6.7%y-o-y— helped push up sales of durables and staples as reflected in the volumes for cars,two-wheelers and household products. OPM Net profit 160.43 13.65 13.22 Q4 Vodafone India on Sunday successfully test-fired its indigenously developed nuclear-capable Long Range Ballistic Missile Agni-5, reports PTI. The surface-to-surface missile has a strike range of 5,000 km, from a test range off the Odisha coast. Q1 Q2 Q3 FY18 -77.73 DESPITE THE TURNAROUND in the commodities space, which has seen metals producers swing from losses to profits, India Inc’s performance in the March quarter has been less than ordinary. That’s despiteafavourablebaseeffect — Q4FY17 was the first full quarter post-demonetisation. At 13.6%,the operating profit margin for a sample of 1,528 companieswas the lowest in at least eight quarters; in Q4FY18, the OPM contracted by 114 basis points.Excluding other income, the net profits for the sample actually fell 2.6% y-o-y compared with an increase of 24% y-o-y in Q3FY18.“The Q4FY18 results were generally below expectations and have resulted in moderatedowngradestoFY19 andFY20netprofitestimates,” Sanjeev Prasad, managing director, Kotak Institutional Equities wrote, adding the Q4 net profit for the Nifty 50 Index fell 9% y-o-y. India successfully test-fires nuclear capable Agni-5 9.78 8.38 FE BUREAU Mumbai, June 3 THE CENTRE WILL give environment clearance to regularise illegal mining projects provided the companies pay penalty as directed by the Supreme Court, reports PTI. The SC in its August 2, 2017, order had said the mining companies in Odisha operating without EC will have to pay a 100% penalty to the state. ■ At 13.6%, OPM was the lowest in at least eight quarters ■ In Q4FY18, the OPM contracted by 114 basis points ■ Results less than ordinary despite a favourable base effect (% chg y-o-y) Bankers to brief House panel today TOP OFFICIALS OF both public and private banks will on Mondaybrief a parliamentary panel on the issue of mounting Non-Performing Assets (NPAs) and banking frauds. The Parliamentary Standing Committee on Finance headed byVeerappa Moily has called the Indian Banks’Association officials to appear before it on Monday. The association has top officials of all the major banks in the country as its member. As pera Lok Sabha bulletin, the parliamentary panel will be briefed on the issue of rising NPAs and other matters related to banks. Members of the parliamentary panel said there will also be discussion on the recent frauds in the banks. The meeting is being called after the RBI governor Urjit Patel had said the Central Bank did not have adequate powers to deal with public sector banks. The panel has also called Patel to brief on the same issue later this month. The parliamentary panel was earlier briefed by financial services secretary Rajiv Kumar about issues related to the banking sector. -6.89 Net sales -121.80 IN THE NEWS Green nod to illegal mines only if firms pay fine NO SPRING THIS QUARTER ● NPAs, FRAUDS Radio Mirchi stations.“In our opinion, that’s a temporary loss,given the listenership has strengthened after this initiative,”Panday observed. Panday added that on some of his stations advertisements are down to ten minutes an hour and it’s paying off.“We have emerged the number one station in Chandigarh beating two well entrenched players,” he said. Given how music streaming apps are now easy to access with the sharp fall in data bandwidth charges,radio stations may not have an option but to keep ads to the minimum. Continued on Page 2 RAJASTHAN SCHEME Insurer de-empanels 66 hospitals, govt overrules it De-empanelment done as claims spiral and insurer suspects large-scale fraud Insurance claims 600 (` lakh per day) 500 400 300 200 SUNIL JAIN New Delhi, June 3 NEW INDIA ASSURANCE Company (NIAC), the insurer in Rajasthan’s Bhamashah health insurance scheme, deempanelled66hospitalsitsuspected of making fraudulent claims, but within a few hours of this, the state government overruled it. In a mail to NIAC’s branch head in Jaipur,the joint CEO of the Rajasthan State Health Assurance Agency (RSHAA) said the de-empanelment was “completely unilateral, arbitrary,malafideandinclearviolation of the provisions of the … agreement” between NIAC and the government. NIAC’sactionsfollowspiraling of insurance claims, from `1.6 crore perdayin December 2017whenthesecondphaseof theschemebegan,to`3.7crore inMay2018(seegraphic).Over this period,NIAC has been regularly rejecting claims from those hospitalswhere it felt the claimswere fraudulent. When the scheme was first begun in 2015, the premium 100 0 Dec 2017 Jan 2018 158 210 Feb Mar Apr May 2018 242 266 290 368 Average daily claims (` lakh) was`370perfamily,butdueto very high claims, NIAC raised the premium to `1,263 for the second phase in 2017 — from 90% in 2015-16, the claims ratios rose to a staggering 176% in 2016-17 under the first phase of the scheme. In a replyto this newspaper, the managing director of Rajasthan’s National Rural Health Mission confirmed the de-empanelment and its cancellation,saying“the insurance company did not give any opportunityofhearingtothese hospitals”andaddedthat,after itsintervention,NIACishearing the hospital’sviews. The dispute stems from the fact that while the Rajasthan government feels the “clauses related to de-empanelment can be invoked by none other than RSHAA” — to quote from the RSHAA mail cancelling NIAC’sde-empanelment—the insurance company seems to be relying on Clause 1.25.10 of the agreement that says “Deempanelment is a separate clause and Insurermayinitiate the process of de-empanelment irrespective of penalty clause for the hospitals”. While cancelling the deempanelment, the Rajasthan government has said the hospitals shall continue towork as before and till it is satisfied there is a fraud,“all claims submittedbythehospitalsshallbe honored and shall NOT be rejected on this ground”. As for the insurance company’s interpretation of its contract, the RSHAA mail terms it “mala-fide misinterpretation of the clauses numbered 1.25.9 and 1.25.10 of (agreement) aimed at bringing down the numberand amount of claims to wrongly benefit the insurance company”.
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