OPINION, P8 ECONOMY, P3 ED’S FRESH CHARGE SHEET Dump new MSP plan, use per-acre cash payments instead Why is govt talking of a 10%+ GDP growth when even a 7-8% is not a done deal? CHEATING SCANDAL Mallya diverted `3,700 cr bank loan funds to F1, IPL, private jet sorties EDITORIAL INTERNATIONAL, P14 Audi CEO Stadler arrested in diesel emissions case MUMBAI, TUESDAY, JUNE 19, 2018 FOLLOW US ON TWITTER & FACEBOOK. APP AVAILABLE ON APP STORE & PLAYSTORE WWW.FINANCIALEXPRESS.COM READ TO LEAD VOL. 58 NO. 144, 18 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: 35,548.26 ▼ 73.88 NIFTY: 10,799.85 ▼ 17.85 NIKKEI 225: 22,680.33 ▼ 171.42 HANG SENG: 30,309.49* ▼ 130.68 `/$: 67.99 ▲ 0.03 `/€: 78.99 ▼ 0.16 BRENT: $74.49 ▲ $1.05 GOLD: `30,693 ▼ `375 *Prv close If we deduct inflation from posttax FD returns for a long tenure, there isn’t any room to enjoy bank interest rates as it hardly beats inflation. The only advantage is the safe principal amount and nominal returns Double-digit growth by Q4, says Goyal BLOOMBERG New Delhi, June 18 the economy and India is a market-place of billions of aspirational consumers, he said at a CII event. “I think the government has been trying to make it easier to do business....And when this countrybecomes a nation of honest businesses, then a 10%-plus growth is a given for us,” he added. THE GOVERNMENT IS planning to offload a stake in staterun Coal India to speed asset sales after a disastrous attempt to find a buyer for the cash-strapped national airline,peoplewith knowledge of the matter said. The department of investment and public asset management is finalising the amount of stake to be offered in the financial year ending March 31,the people said,asking not to be identified as the information is not public. If needed, the government could explore the option of staggering the sale offerin two tranches,they said. Modi’s plan to raise about $12 billion in the current year from asset sales is at risk after a high-profile plan to sell Air India ground to a halt as no prospective suitors emerged. State-run Coal India, the world’s biggest miner of the fuel, has reported strong shipment numbers in recent months due to demand from power plants. Continued on Page 2 Continued on Page 2 ■ Personal Finance, P13 QuickPicks Temasek invests `1,000 cr in AU Small Finance Bank AU SMALL Finance Bank announced on Monday that its shareholders have approved a capital infusion of `1,000 crore into the lender by Temasek Holdings, reports fe Bureau in Mumbai. The Singaporean sovereign wealth fund joins other investors of the small lender, like IFC, Warburg Pincus, Chrys Capital and Kedaara Capital. The lender, which began as vehicle finance company in 1996 and converted itself into a small finance bank in April 2017, had in June last year made an initial public offering via the offer-for-sale route, raising `1,913 crore. PAGE 10 HT Media signs £24-million ad-for-equity deal with Koovs HT MEDIA inked an ad-for-equity deal valued at £24 million for two years with UK-based online fashion retailer Koovs, reports Anushree Bhattacharyya in New Delhi. Koovs will acquire four tranches of media worth £6 million from HT Media at six monthly intervals over 24 months. The deal rests on an initial cash raise of at least £6 million by Koovs. In aggregate, Koovs will get £16.8 million worth media and advertising services from HT Media in exchange for the issuance of new ordinary shares. PAGE 6 EPC road projects being given away at discounts THE AVERAGE bid for an engineering, procurement and construction (EPC) road contract has come down by 15-25% over the last few years, reports Rouhan Sharma in Mumbai. On an average 7-8 companies are vying for EPC projects of more than `200 crore. Smaller EPC projects find at least 12-15 bidders. In contrast, for HAM projects, there are about fivesix contenders for each project. On an average, nearly 86% of the bids in EPC projects in FY18 were at a discount to the NHAI’s estimated project cost, with 55% of the bids awarded at a discount greater than 10%. PAGE 6 A clarification: The chart with the report ‘Farm distress for real,pricesplunge’,whichappearedintheeditiondatedJune18, used C2 costs of the crops (except for cotton and mustard) for 2017-18,instead ofA2+FLcosts.We regret the error. Govt planning to sell stake in state-run Coal India FE BUREAU New Delhi, June 18 THE ECONOMY — WHICH grew 7.7% between January and March from a year earlier — can achieve double-digit expansion as early as the fourth quarter of the current fiscal, aided by a pick-up in demand, interim finance minister Piyush Goyal said on Monday.He also said the Centre will take all steps to contain fiscal deficit within the target of 3.3% for 2018-19, against 3.5% a year earlier, “despite 2019 being an election year”. Asked when India would reach the inflection point for double-digit growth, Goyal said: “... we can actually see it happening by the fourth quarter of this year. It’s not impossible.” There is a rise in demand in The government has been trying to make it easier to do business.... When we become a nation of honest businesses, 10%-plus growth will be a given. — PIYUSH GOYAL INTERIM FINANCE MINISTER Problematic MSP plan FE BUREAU Cultivating inflation, hurting exports Failure to reform has meant `1,50,000 cr of farm loan waivers already to alleviate farm distress, and Centre now working on MSP-based deficiency payments that could cost around `1,00,000 cr. It will spur inflation and will hit farm exports as local prices rise. A 19-28% hike in cotton prices will kill textile/garment exports. Acreage-based cash support is less distortionary, less prone to gaming MSP projections for 2018-19 based on cost (A2+FL) plus 50% `/quintal 8,000 7,000 6,000 5,000 4,000 3,000 2,000 1,000 0 54 MSP-2017-18 52 Likely MSP in 2018-19* % increase in MSP (Rhs) 60 44 42 50 40 34 28 21 21 19 15 30 14 12 11 10 20 5 0 0 Urad Bank fixed deposits: Why the cons outweigh the pros ● ASSET SALE Continued on Page 2 Tur ECONOMY WATCH Special Feature Continued on Page 2 (Arhar) consistently backed Chanda Kochhar; experts said it was surprising that it had not asked her to go on leave at any point. However, the investigations and the show-cause notice from capital markets regulator Securities and Exchange Board of India (Sebi) have left the bank board with no option, experts said. The chairman of the board, MK Sharma,retires at the end UNION MINISTER ARUN JaitleyonMondayurgedcitizensto pay their due share of taxes “honestly” to reduce dependence on oil as a revenue source, and virtually ruled out anycut in excise dutyon petrol anddieselsayingitcouldprove to be counter-productive. Bajra to probe whether any conflict of interest dogged the deals Grade A bank’s board had come up with a face-saving arrangement for Kochhar and one that would allow her to step down if found guilty of violating any rules. “The board has stood by Chanda Kochhar and having taken that position initially,it was difficult for them to change that stance and ask her to go,” a senior executive from a consultancy said. The ICICI Bank board has ■ Justice B Srikrishna PRESS TRUST OF INDIA New Delhi, June 18 Soyabean show-cause notice to Kochhar in shell ■ Sebi issues agreed, that would be smaller than the 1.5 million-barrel-aday quota increase that Russia has proposed. “People probably feared 1.5 million barrels a day,” but the current talk indicates a smaller increase, said Torbjorn Kjus, chief oil analyst at DNB ASA.“It’s going to be the most interesting meeting for a while.” Paddy by ED, CBI into NuPower Renewables 6:32pm 3:30am common on Monday, the ICICI Bank board appointed Sandeep Bakhshi, CEO & managing director,ICICI Prudential Life, whole-time director and chief operating officer (COO) designate for a period of five years. Bakhshi will report to Chanda Kochhar and depending on when the regulatory approvals come through, will take overas COO from June 19 or later. Corporate experts said the ■ Probes initiated 71 Groundnut in March it reposes full faith and confidence in Chanda Kochhar Jaitley hints at no cut in excise on oil 72 Maize ■ ICICI Bank board said Sandeep Bakhshi, ICICI Pru Life MD & CEO 73 Paddy Chanda Kochhar, MD & CEO 73.17 Cotton Almost 86% of that loan remains unpaid; Videocon account was declared NPA in 2017 ■ 74 long staple CHANDA KOCHHAR, CEO and managing director, ICICI Bank, decided on Monday to go on leave, stepping aside while justice B Srikrishna conducts an investigation into whether there was a conflict of interest in loans given by the private lender to the Videocon Group. The need for the probe has arisen following allegations Kochhar’s husband Deepak Kochhar benefitted financially, through his company Nupower Renewables, from the business relationship between ICICI Bank and the Videocon Group. Investigative agencies, including the Enforcement Directorate and the CBI have been pursuing an enquiryinto the matter. After a marathon meeting 74.17 Sesamum Transfer of NuPower to Kochhar took place 6 months after Videocon Group got ICICI Bank loan of `3,250 crore in 2012 ■ FE BUREAU Mumbai, June 18 75 Moong ■ Venugopal Dhoot loaned `64 crore to NuPower in 2010; later transferred his shares to Deepak Kochhar OPEC IS DISCUSSING a relatively modest production increase before its meeting in Vienna this week, an attempt tobridgethegapbetweenRussia’s push fora big rise and and Iran’s insistence that no change is needed. While a compromise may benecessarytoovercomevocal opposition fromTehran,Baghdad and Caracas,it could mean the resulting supply boost is smaller than oil traders — or indeed the US President Donald Trump — had been anticipating. Crude prices rallied in London on Monday after two weeks of losses, trading near $74 a barrel. Members of the Organization of Petroleum Exporting Countries are discussing an agreement that delivers 300,000 to 600,000 barrels a day of additional oil supply to global markets over the next few months,according to people briefed on the talks. If medium staple Deepak Kochhar set up NuPower Renewables as a 50:50 joint venture in 2008 of this month. Last month, market regulator Sebi had sent a notice to Chanda Kochhar, seeking her response on the alleged noncompliance with norms in dealings with the Videocon Group and Nupower Renewables, the company cofounded by her husband Deepak Kochhar. Sandeep Bakhshi will report to Chanda Kochharand will be responsible for all the businesses and corporate centre functions. All executive directors on the ICICI Bank board and the executive management will report to him. During Kochhar’s period of leave,Bakhshi will report to the board. The complaints against Kochhar were first raised in 2016 by investor Arvind Gupta. He alleged that the bank’s CEO and MD may have violated the bank’s code of conduct and provisions relating to conflict of interest while giving loans to the Venugopal Dhoot-led Videocon Group.The likely cause of the conflict is the series of financial transactions between the Videocon Group and Chanda Kochhar’s husband Deepak Kochhar. Brent crude oil (Jun 18, $/bbl) Jowar Maldandi Sunflower seed Cotton ■ Venugopal Dhoot and BLOOMBERG Kuwait/Vienna/Dubai, June 18 Jowar hybrid After marathon board meet, Sandeep Bakhshi named COO but will report to Kochhar Modest output hike on cards, oil prices rally Niger seed Chanda Kochhar goes on leave but remains the boss OPEC Ragi ICICI BANK 10 0 A2+FL cost for 2018-19 have been projected by increasing A2+FL costs for 2017-18 by 5% *Projected MSP based on 50% above cost A2+FL Source: Ashok Gulati, ICRIER presentation to CII ARTIFICIAL INTELLIGENCE Google is training machines to predict when a patient will die BLOOMBERG San Francisco, June 18 A WOMAN WITH late-stage breast cancer came to a city hospital, fluids already flooding her lungs. She saw two doctors and got a radiology scan. The hospital’s computers read her vital signs and estimated a 9.3% chance she would die during her stay. Then came Google’s turn. A new type of algorithm created by the company read up on the woman — 175,639 data points — and rendered its assessment of her death risk: 19.9%. She passed away in a matter of days. The harrowing account of the unidentified woman’s ILLUSTRATION: ROHNIT PHORE death was published by Google in May in research highlighting the health-care potential of neural networks, a form of artificial intelligence software that’s particularly good at using data to automatically learn and improve. Google had created a tool that could forecast a host of patient outcomes, including how long people may stay in hospitals, their odds of readmission and chances they will soon die. Continued on Page 2 FIFA WORLD CUP Sony hopes to ‘Liv’ it up, more than double revenues MEGHNA SHARMA & ANUSHREE BHATTACHARYYA Mumbai/New Delhi, June 17 AS ADVERTISERS JOSTLE for space between football matches, Sony Pictures Network and its video over-thetop(OTT)platformSonyLivare making the most of the FIFA World Cup. With ten second spots going at `3.5-4 lakh, the official broadcasterforthe eventishopingtonetrevenues of `200 crore; that’s twice the amountitmadeduringthelast World Cup. Sony Liv is expecting to earn advertising revenues of `50 crore from the once-in-four-years event. Uday Sodhi, EVP, SonyLiv, explained the advertising inventory had been bundled andsoldacrosssixlanguagesto advertisers. “We also have exclusive advertisers who opted to buy spots only on the digital platform,” Sodhi said. Moreover,ifviewerswantalive feed for the India-England cricketseriestootheycanbuya three-month combo subscription for `149 or a six-month pack for `199; else they can staywithaone-monthpackage which comes for `99 a month. Viewers can also watch the matchesfreeonadelayedfeed. With 14 brands on board, SPN could well achieve its revenue target.Rohit Gupta,president,network sales and international business, SPN, says the interest levels are high given FIFAis one of the biggest sporting events in the world. Among the sponsors are Hero MotoCorp, Parle Agro, Volkswagen, Castrol, Apollo Tyres, Apple, Uber, Amul, Honda Motors and Carlsberg. For the first time, the FIFA World Cup is being telecast in multiple languages — English, Hindi,Bangla,Tamil,Teluguand Malayalam — in India. Sunil Chhetri will host the pre-,midand post-match live studio show, Football Extraaa. SPN is also showcasing detailed insightsinthemorningthrough its breakfast show,Kick-Off. Continued on Page 2
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