OPINION, P8 COMPANIES, P6 AFTER FLOP ATTEMPT EDITORIAL Listing Air India is no solution to its problems Centre must not press for forbearance for power loan defaults, should get SEBs to pay gencos INTERNATIONAL, P14 GROWING WEALTH Government may sell 100% shares in Kharola-led Air India Ivanka Trump, husband Kushner made $82 m last year, say reports MUMBAI, WEDNESDAY, JUNE 13, 2018 VOL. 58 NO.139, 20 PAGES, `7.00 FOLLOW US ON TWITTER & FACEBOOK. APP AVAILABLE ON APP STORE & PLAYSTORE WWW.FINANCIALEXPRESS.COM READ TO LEAD P U B L I S H E D F R O M : A H M E D A B A D , B E N G A L U R U , C H A N D I G A R H , C H E N N A I , H Y D E R A B A D , K O C H I , K O L K ATA , L U C K N O W, M U M B A I , N E W D E L H I , P U N E SENSEX: 35,692.52 ▲ 209.05 NIFTY: 10,842.85 ▲ 55.90 NIKKEI 225: 22,878.35 ▲ 74.31 HANG SENG: 31,103.06 ▲ 39.36 `/$: 67.49 ▼ 0.06 `/€: 79.51 ▼ 0.05 BRENT: $75.95 ▼ $0.51 GOLD: `30,858.00 ▲ `77.00 OVERSIGHT OF PSBs ● TATA TUSSLE RBI needs more powers: Patel THE GOVERNMENT is considering a proposal to raise the pension limit under the Atal Pension Yojana (APY) to up to `10,000 a month from the existing slab of up to `5,000, a top official said on Tuesday, reports PTI. There is a need to increase the value of pension under APY, Madnesh Kumar Mishra, joint secretary, department of financial services, said at a conference organised by PFRDA. RITES sets IPO price band at `180-185 RITES, a state-owned transport consultancy, and engineering services company, has set a price band of `180-185 per share for its initial public offering (IPO), reports fe Bureau in Mumbai. The company plans to offer 2.52 crore shares for subscription through the IPO, which priced at the upper price of the band would indicate an issue size of `466 crore. The offer will open on June 20 and close on June 22. PRESS TRUST OF INDIA New Delhi, June 12 THE RESERVE BANK of India (RBI) needs more powers to oversee public sector banks (PSBs),governorUrjitPateltold aparliamentarypanelonTuesday amid mounting bad loans in state-run lenders. The RBI governor, who appeared before the Parliamentary Standing Committee of Finance, faced tough questions from lawmakers on bad loans,bankfrauds,cashcrunch and other issues, according to sources. Sources said the governor assured the members that steps were being taken to strengthen the system. Regarding PSBs,he told the panel that the RBI has “inadequate”control over them. The governor asked for more powers to control the government-owned banks, said sources present at the meeting. There are 21 state-owned banks, including State Bank of India. Their combined losses crossed a whopping `87,300 crorein2017-18fiscal,topped by scam-tainted Punjab National Bankwhich took a hit of nearly `12,283 crore. Of the 21 state-owned banks, only two banks, Indian Bank and Vijaya Bank, posted profits during 2017-18. Indian Bank posted the highest profit of `1,258.99 It is impossible to look after each and every branch of a bank in terms of an audit... We are confident that we will be able to tide over the crisis — URJIT PATEL RBI GOVERNOR crore and Vijaya Bank’s profit was ` 727.02 crore in the fiscal. Gross non-performing assets (NPAs) of the entire banking sector stood at `8.31 lakh crore at endDecember 2017. SourcesfurthersaidtheRBI governor also answered queries regarding the $2 billionfraudallegedlycommitted bydiamantaireNiravModiand his associates in the PNB. According to sources, Patel said it was impossible to look after each and every branch of a bank in terms of an audit. Some members of the committee, headed by senior Congress leader Veerappa Moily, sought to know about the reasons for recent instances of ATMs running out of cash and why enough steps were not taken to tackle banking frauds. Patel told the panel that steps were being taken to strengthen the banking system.“We are confident thatwe will be able to tide over the crisis,”a source quoted the governor as saying with respect to the NPA situation. On an optimistic note, Patel informed the committee that after implementation of the Insolvency and Bankruptcy Code, the situation on the NPA front has been improving. No RBI nominee should be on banks' boards, says Patel, Page 10 FE BUREAU Mumbai, June 12 Look beyond your car dealer to buy motor insurance If your car dealer is selling you motor insurance, check if the premium that you are shelling out is much more than what you would be paying if you bought it online ■ Personal Finance, P13 QuickPicks Debit card volumes back to demonetisation levels THE VOLUME of debit card transactions at point of sale (PoS) terminals came in at 333.77 million for April, reports Shritama Bose in Mumbai. These levels were last seen in January 2017, after demonetisation, when they were 328.62 million. However, the value of transactions in April at `45,457 crore remained about 7% lower than the January 2017 aggregate of `49,004 crore. The latest figures on debit card usage mark a recovery over the first few months of 2018, when a number of factors converged to give rise to a major cash crunch in parts of India. PAGE 10 Trump-Kim bonhomie takes markets to four-month highs THE DOMESTIC equity market surged to over fourmonth highs on Tuesday, joining a global relief rally sparked by the historic summit between the US and North Korea on denuclearisation of the Korean peninsula, reports PTI. The Sensex soared 209 points to close at 35,692.524, while the broader Nifty reclaimed the key 10,800mark. Asian markets advanced after North Korean leader Kim Jong Un agreed to work towards "complete denuclearisation of the Korean Peninsula" following his landmark summit with US President Donald Trump in Singapore. PAGE 11 Sebi proposes direct listing of Indian firms on foreign bourses SEBI ON Tuesday proposed to allow direct listing of Indian companies on overseas bourses and of foreign firms on Indian exchanges, while setting up an expert panel to look into the details, reports PTI. Currently, Indian companies can list their shares through depository receipts abroad, while foreign companies need to go through the Indian depository receipt route for listing of equities. However, Indian firms can list their debt securities directly on international exchanges as what are known as ‘masala bonds’. PAGE 11 INDU BHAN, SHAMIK PAUL & BANIKINKAR PATTANAYAK New Delhi/Mumbai, June 12 A RULING BY the Mumbai bench of the National Company Law Tribunal (NCLT) — that provisions of a November 2017 ordinance on the ineligibility of defaulting promoters NCLT verdict is significant because it nullifies the entire intention of the legislature for earlier filings. — ABHISHEK MANU SINGHVI SENIOR LAWYER, SC to bid for their stressed firms can’t be applicable to cases where insolvency proceedings had started before its promulgation—mayopenaPandora’s box and negate the very objective of the explicit bar. Lawyers and government officials are perplexed by the NCLT’s interpretation of the ordinance (which was made into law in January),as the verdict could be cited in other cases by defaulting promoters of most of the 12 large accountsrecommendedbythe central bank including Bhushan Steel and Essar Steel The ruling is surprising, as the law explicitly bars defaulting promoters even if they have submitted plans before Nov ordinance. — SENIOR GOVT OFFICIAL Continued on Page 2 Trump-Kim meet ends with promise, light on substance Statement sans any mention of sanctions; no details on how denuclearisation will be achieved REUTERS Singapore, June 12 US PRESIDENT DONALD TRUMP said North Korean leader Kim Jong Un pledged at anhistoricsummitonTuesday to move toward complete denuclearisation, while the United States promised its old foe security guarantees. The start of negotiations Experts say Mumbai NCLT’s order threatens code’s intent Code explicitly bars promoters from bids, even where process initiated, say officials negotiator: Trump, Page 14 HISTORIC SUMMIT IBC'S SECTION 29A Special Feature Continued on Page 2 THE ORDER IN the case filed by Cyrus Mistry,former chairman, Tata Sons, and his companies alleging mismanagement and oppression of minority shareholders in Tata Sons will be pronounced on July 4, the Mumbai bench of National Company Law Tribunal (NCLT) on Tuesday informed both the Ratan Tata and Mistry factions. Mistry was unceremoniously ousted from the chairmanship of the holding company of the Tata Group on October 26, 2016. Subsequentlyhewasalsoremovedas chairman of other Tata Group companies including Tata Consultancy Services (TCS). While some independent directors on the boards of Indian Hotels and Tata Chemicals had lauded Mistry’s performance, he was either voted out or resigned from the various boards. While the Tata Trusts, including the Sir Dorabji Tata Trust and the Sir Ratan Tata Trust, own 66% of Tata Sons, the Shapoorji Pallonji Group owns around 18.4%. In September 2017,shareholders voted in favour of turning it from a public limited company to a private limited one, ensuring the Shapoorji Pallonji Group couldn’t sell its stake without board approval. I’VE GOT YOUR BACK: North Korea's Kim and US President Trump leave after signing documents at the Capella Hotel on Sentosa Island in Singapore on Tuesday to be eligible to bid.Their cases were admitted by the adjudicatingauthoritybeforethepromulgation of the ordinance. Although NCLT benches hearing other cases are not mandated to go by this ruling, it, nonetheless, could lead to a litanyofunnecessarylegaltussles and furtherdelaythe resolution process. The government had introduced a new section to the Insolvency and Bankruptcy Code on November 23, 2017, through the ordinance. Continued on Page 2 It may defeat the very object of the (Nov) amendment and may not be the correct interpretation of the code. — TUSHAR MEHTA ADDITIONAL SOLICITOR GENERAL aimed at banishing what Trump described as North Korea’s “very substantial” nucleararsenal could have farreaching ramifications for the region, and in one of the biggest surprises of the day, Trump said hewould stop military exercises with old ally South Korea. ButTrumpandKimgavefew other specifics in a joint statement signed at the end of their summit in Singapore, and several analysts cast doubt on how effective the agreement would provetobeinthelongrunatgetting North Korea to give up its cherished nuclearweapons. “PresidentTrump committed toprovide securityguarantees to the DPRK and Chairman Kim Jong Un reaffirmed his firm and unwavering commitment to complete denuclearisation of the Korean Peninsula,”the statement said, referring to North Korea bythe initials of its official name,the Democratic People’s Republic of Korea. Trump later told a news conference he expected the denuclearisation process to start“very,very quickly”and it would be verified by“having a lot of people in North Korea”. US secretary of state Mike PompeoandNorthKoreanofficials would hold follow-up negotiations“attheearliestpossible date”,the statement said. ■ Kim a very worthy, smart IIP/CPI FE Bureau Inflationary pressures building up Higher fuel prices and a falling rupee pushed retail inflation to 4.87% in May, a fourmonth high; core inflation nearly touched 6%. April saw a slight uptick in industrial output — year-on-year growth was 4.9%, compared with 3.2% a year earlier. IIP (% rise, y-o-y) Retail inflation (% rise, y-o-y) 12 Manufacturing Mining Overall IIP 10 Electricity 8 4.87 4.5 3.1 CPI food 5.1 1.5 4.9 0.0 2.1 4 2 1.5 0 -2 CPI 6.0 5.2 3.0 6 Apr 2017 Apr 2018 3.0 May 2017 May 2018 ● BATTLE FOR RUCHI Adani tops with `6,000-crore bid SHAMIK PAUL Mumbai, June 12 ■ Patanjali offered close ADANI WILMAR, A joint venture between the Adani Group and Singapore’sWilmar International, has beaten rival bidder Patanjali to place a higher bid of close to `6,000 crore for the bankrupt Ruchi Soya, bankers said. Yoga guru Baba Ramdev’s to `4,000 cr upfront ■ May be given option to match Adani’s offer Patanjali has offered to pay closeto`4,000croreasupfront payment and another `1,700 crore as capital infusion. Personsclosetothedevelop- mentsaidaSwisschallengeauction will be conducted, where Patanjaliwillbegiventheoption to match Adani Wilmar’s offer. Also,AdaniWilmarwillbegiven the first right of refusal after Patanjalisubmitsitsrevisedbid. Continued on Page 2 ■ Bhushan Power & Steel lenders likely to pick bidder next week, Page 6 ‘DO-IT-FOR-ME’ CULTURE With assembly team and samosas, IKEA lays ground for India debut REUTERS Mumbai/Stockholm, June 12 IKEA IS SET to open its first store in India next month,and the world’s biggest furniture retailerislocalisingitsoffering — from the food menu to its “do-it-yourself” (DIY) assembly model — to ensure success in the country. IKEA, which aims to soon open a 400,000 sq ft store in Hyderabad, is setting up its first ever in-house assembly team and offering local delica- cies such as samosas to woo shoppers, at a time when growth in some of its more establishedmarketsisslowing. “The entry point has been that the identity was going to be the same,” said IKEA’s finance head Juvencio Maeztu. “But, for example, Indians like firm mattresses so you need to adapt the mattress offering. And we are developing a mattress that has a coconut layer because it is cooler for the summer,” said Maeztu,adding such customi- ILLUSTRATION: ROHNIT PHORE IN THE NEWS APY: Govt mulls raising limit to up to `10k a month RBI governor tells parliamentary panel that it currently has ‘inadequate’ control; deposition against backdrop or rising NPAs NCLT order on Mistry plea to be delivered on July 4 sation would be seen in items ranging from cutlery to showroom layouts. India’s furniture market is largely dominated by unorganisedretailandlocalvendors,and consumersareusedtoenjoying thecomfortofmade-to-orderor fullyassembledfurnituredelivered to theirdoorsteps. The “do-it-for-me” culture is very prevalent in India, said Sowmya Adiraju, an analyst at research firm Euromonitor, adding IKEA would have to look into delivery and assem- bly needs to woo Indians. While IKEA’s popular DIY furniture is well known, it is also sometimes parodied as shoppers are at times overwhelmed bythe task of assembling intricate units. The Swedish retailer is setting up a 150-memberteam to help assemble furniture and is also partnering with UrbanClap,an app-based service that connectspeoplewitheveryone from tutors to carpenters. Continued on Page 2
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