OPINION, P8 MONEY & MARKETS, P11 DEAL SEALED Selling IDBI to LIC helps govt avoid suit-boot-sarkar tag Cash demonised for no reason, so levels back to pre-DeMo days. Govt must still push DigitalPay ELECTRIC FUTURE Limaye-led NSE inks post-trade tech pact with Nasdaq EDITORIAL INTERNATIONAL, P14 Musk’s Tesla hits Model 3 target, focus shifts to sustainability MUMBAI, TUESDAY, JULY 3, 2018 VOL. 58 NO. 156, 18 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: 35,264.41 ▼ 159.07 NIFTY: 10,657.30 ▼ 57.00 NIKKEI 225: 21,811.93 ▼ 492.58 HANG SENG: 28,955.11 ▲ 457.79 `/$: 68.80 ▼ 0.33 `/€: 80.03 ▼ 0.25 BRENT: $78.08 ▼ $1.36 GOLD: `30,348.00 ▲ `7.00 ● INTERVIEW: NARENDRA MODI, Prime Minister ‘We don’t want to make a sale (and) be accused of selling it cheap’ Couldn’t you have done bet- retreat of bankers was held in Pune where top-most officials attended. I told them to go about their work with utmost professionalism and clean the sector. Earlier, if someone owed `500 crore and when it was time to repay that loan, a phone call from Delhi would ensure another loan of `500 crore is given so that the previous loan was repaid. We stoppedthis.Thisiswhytheold loans had to be shown as NPAs. Now (with the Insolvency and Bankruptcy Code), many ter in fixing India’s banks? NHPS rate We had identified the problem with banks in 2014 itself. A not fixed, govt will pay GOING PRIVATE what market decides You don’t seem too keen on privatisation…Air India... Our Government has undertaken significant disinvestment. As for Air India, the Government has done sions for strategic sales have already been taken. Where are the jobs? More than a lack of jobs, the issue is a lack of data on jobs. There are close to three lakh village-level entrepreneurs who are running Common Service Centres across the country and also creating more employment. Start-ups are working as job multipliers and there are around 15,000 start-ups, which the Government has helped in some way. If we look at numbers for employment, more than 41 lakh formal jobs were created from September2017 toApril 2018 based on EPFO payroll data. According to a study based on EPFO data, more than 70 lakh jobswere created in the formal sectorlastyear.If 41 lakh jobswere generated in the formal sector in eight months, how much would be the total formal plus informal sector jobs? Continued on Page 2 Agarwal to delist Nearly 80% stocks in the red Vedanta from LSE With Nifty 50 trading at 17.1 times forward, India among the most expensive in the world Cash is back, and how! The currency in circulation (CIC) in India was `17.77 lakh cr on November 8, 2016; demonetisation brought it down to `8.78 lakh cr on January 6, 2017, but it has since risen to a record `19.32 lakh cr on June 1, 2018. CIC as a share of GDP has risen from the lows after the note ban but is yet to reach the peak. Lifecycle investing strategy: Benefits versus risks Lifecycle investing delivers higher return due to elevated allocation to riskier assets until middle age after which a more conservative approach is taken. But what about longevity risk? ■ Personal Finance, P13 QuickPicks Infra sector growth drops to 10-month low of 3.6% in May THE GROWTH of eight infrastructure industries dropped to a 10-month low of 3.6% in May owing to a drop in the production of crude oil and natural gas, reports PTI. The eight sectors, which also include coal, refinery products, fertilisers, steel and cement, had expanded by 3.9% in May 2017, according to data released by the commerce and industry ministry on Monday. Rupee hits near five-year low of 68.80 on macro worries THE BATTERED rupee on Monday suffered yet another blow by plunging 34 paise to end at a near five-year low of 68.80 against the buoyant dollar in the midst of weak global trends and concerns on macro-economic front, reports PTI. This is the level last seen on August 28, 2013. The rupee had tumbled below the 69 mark for the first time on Thursday and hit a life-time low of 69.10. PAGE 10 Everstone arm to acquire Chennai-based Cookie Man EVERFOODS, THE packaged foods platform controlled by Everstone Group, has entered into an agreement to acquire Cookie Man, owned by Chennai-based Australian Foods India, for an undisclosed sum, reports fe Bureau in Chennai. The acquisition will ‘spice up' the Singapore-based, India-focused PE major Everstone's food business as it will further add value to the line-up of product offerings of Modern Foods. PAGE 4 FE BUREAU New Delhi, July 2 THE GOVERNMENTON Monday announced a banks-led, five-pronged, comprehensive plan — Sashakt — for the resolution of stressed assets with public-sector banks (PSBs), including creation of one or more widely held asset management companies for loans above `500 crore. The plan doesn’t involve regulatoryforbearanceoranimmediategovernment involvement,finance minister Piyush Goyal said. Though the committee headedbyPunjabNationalBank non-executive chairman Sunil Mehta refrained from proposing a‘bad bank’,it said in case of large stressed accounts — there areover200amountingto`3.1 lakhcrorewithexposurespread across multiple banks — an WHAT SASHAKT IS ■ AMC/AIF-led process to resolve bad assets worth over `500 crore ■ If no resolution within 180 days, mid-sized, large bad assets to be dragged to NCLT ■ More than one AMC may be set up; no plan to set up bad bank ■ Price discovery via open auction for high-value assets alternative investment fund (AIF) would raise funds from institutional investors. Continued on Page 2 12 6 ~11.20 New five-pronged plan for resolution 15 9 PSBs' STRESSED ASSETS Special Feature FE BUREAU 11.27 Continued on Page 2 DeMo blues Cash to GDP* (%) 3 0 Nifty Midcap 100 Drivers of Nifty 50 23,000 YTD gain (%) 21,109.80 Kotak Mahi Bank Infosys 19,000 17,000 15,000 2013 2014 2015 2016 2017 2018 2018 APRIL JUNE *Cash in circulation against nominal GDP; for June 2018, GDP is estimated assuming it grew 2.8% or a quarter of 11.5% estimated for FY19 over the FY18 level Jan 1, 2018 July 2, 2018 Broader market fares poorly in 2018 of 100 companies Up 22 Cos with mcap `1,000 cr (776) 168 Down THE US CHAMBER of Commerce, the nation’s largest business group and customarily a close ally of President Donald Trump’s Republican Party,is launching a campaign on Monday to oppose Trump’s trade tariff policies. With some of America’s tightesttradingpartnersimposing retaliatory measures, Trump’s approach to tariffs has unsettledfinancialmarketsand HDFC Bank India remains one of the most expensive markets One-year forward PE Nifty 50 YTD (%) return Jakarta Composite -14.5 78 YTD (%) return 608 Hang Seng 17.1 13.8 10.9 Shanghai Composite 10.3 Bovespa-Brazil 10.3 -5.2 ● CANE FRP FOR 2018-19 Tougher premium rule to limit cane price hike BANIKINKAR PATTANAYAK New Delhi, July 2 THE GOVERNMENT IS considering a proposal to raise the fair andremunerativeprice(FRP)of caneto`275perquintalforthe marketing year starting October,against `255 thisyear. However, in a potential relief to mills already struggling with exorbitant cane costs,theproposalbytheCommission For Agricultural Costs and Prices (CACP) involves a tightening of the criterion for farmers to get premium for supplyingqualitycane.Assumingthatthepan-Indiarecovery Cane prices (`/quintal) FRP Premium# 2017-18 255 2018-19* 275 2.68 2.75 *Proposed #For every 0.1 percentage point increase in recovery beyond 9.5% up to 2017-18; for 2018-19, it's linked to 10% recovery rateremains the same (10.8%) as this year, the cane FRP will effectively rise just 2.4% per quintal to `297 in 2018-19 — lower than over 14% hike in the effective FRPa year before. Detailed report on Page 12 ● PNB SCAM Interpol issues red corner notice against Nirav Modi, brother PRESS TRUST OF INDIA New Delhi, July 2 THE INTERPOL HAS issued a red corner notice against fugitive diamantaire Nirav Modi, his brother Nishal Modi and his employee Subhash Parab on the request of the Central Bureau of Investigation (CBI), which is probing the over $2-billion PNB scam, officials said on Monday. The notice was issued on June29butwasmadepublic by the international police cooperation agency on Monday,the sources said. The Interpol issued the red corner notice (RCN) on the basis of a charge sheet filed by the CBI in a special court in Mumbai and the arrest warrant issued by special judge JC Jagdale there. In its RCN issued against a fugitive, the Interpol asks its 192-member countries to arrest or detain the person if spotted in their countries after which extradition or deportation proceedings can begin. Continued on Page 2 Largest US business group attacks Trump on tariffs strained relations between the White House and the Chamber. The newcampaign,detailed first to Reuters, is an aggressive effort by thebusinesslobbying giant. Using a stateby-state analysis, it argues that Trump is risking a global trade war that will hit the wallets of US consumers. “The administration is threatening to under- HDFC 18,063.75 TRADE WARS REUTERS Washington, July 2 37.1 32.4 29.1 10.9 10.7 TCS 21,000 Continued on Page 2 9.54 offer by the shareholders,who would also be entitled to a previously announced dividend of $0.41 per share. Though the company said that it no longer sees the London listing as necessary to access capital and the dealwill THE BENCHMARKS MAY not reflect the damage but India’s stock markets are faring very poorly. Nearly 80% of stocks with a current market capitalisation of `1,000 crore are in the red, having lost value between January and June. Despitethis,Indiaisamong the most expensive markets in the world. The Nifty 50 now trades at 17.1 times forward compared with 13.8 times for the Jakarta Composite. Both the Brazilian Bovespa and the Shanghai Composite are trading at a price-earnings multiple of 0.3 times, data from Bloomberg shows. However,investorsinIndian equities are losing moneysince just a handful of stocks is propping up the markets. 12.53 LP Source: Bloomberg FE BUREAU Mumbai, July 2 11.97 24.2 177.78 3,053 2,459 -17.43 31.0 « AMID RISING PROTESTS in the UK following the death of 13 people in May during violent demonstrations against its coppersmelterinTuticorin, Tamil Nadu, Anil Agarwal has decided to delist his flagship firm Vedanta Resources from the London Stock Exchange after buying out 33.5% of non-promoter shareholders for about $1 billion. The company said in a filing that Agarwal’s Volcan Investments, which currently holds 66.53% of Vedanta, has made a cash offer for 825 pence a share, a 14% premium to the company’s three-month weighted average price. The company said it will recommend acceptance of the Vedanta Resources PLC (million £) Change (%) FY17 FY18 Ebitda Net income, Revenue GAAP 8,845 11,590 FE BUREAU Mumbai, July 2 simplify Vedanta’s corporate structure, analysts said the move has come after the killing of 13 protesters in police firing at its copper smelter plant in Tamil Nadu, which led to political protests in the UK, also leading to a drop in its share prices. UK’s main Opposition, the Labour Party had called for delisting ofVedanta Resources from the LSE to prevent reputational damage from the “rogue” company, which has been operating “illegal” mining concerns for years. However,in response to an e-mail queryfrom FE,Agarwal said there is no link between the protests and the proposal to delist.“This is driven by the desire to simplify the corporate structure,”he said.He further explained a two-fold rationale behind the move: 1. corporate simplification and 2. Increasing maturity of the Indian markets. 11.95 The mining mogul offers $1 billion to buy out 33.5% non-promoter shareholders « Detailed report on Page 2 what it had to with utmost sincerity. At the Cabinet level, we have cleared the sale of not onlyAirIndia but several other (loss-making) public sector units — this itself is historical in manyways; that theyareyet to be sold is the result of timing and process.We don’twant to make a sale where we will be accused of selling something for X amount when we could have got more. But the policy deci- MARKETS « WHATEVER THE COST of the ambitious National Health Protection Scheme (NHPS), the government is committed to bear it,NITI Aayog member Vinod K Paul said on Monday. Even though the NITI Aayog had estimated a premium of `1,000-1,200 perfamily,to be shared between the Centre and state governments at 6:4 ratio, many analysts had predicted the premium could be twice that. Paul said the scheme’s actual cost could be known only after insurers bid for the scheme, but whatever the bid, the centre and the states would pay up. Paul said of the 25 states that have, so far, come on board for the scheme, about half have opted for the ‘insurance model’while others have chosen a‘trust model’. In the trust model, the claims would be settled from a corpuscreatedfromthecontributions from the Centre and the state concerned. Many statesincludingKarnatakacurrently run healthcare schemes under the trust model. businessmen have had to lose their companies for failing to pay bank dues. Bank mergers were merely being talked about before, but not implemented. But we have moved ahead. Did you not see the merger of five banks? 12.27 ● HEALTH INSURANCE In an exclusive interview to Swarajya’s R Jagannathan, Prasanna Viswanathan and Amar Govindarajan, Prime Minister Narendra Modi covered a range of topics including the creation of jobs, farm sector initiatives, lack of privatisation, GST, etc. Read https://goo.gl/TCkrL3 forthe full interview.Excerpts: mine the economic progress it worked so hard to achieve,” said ChamberpresidentTom Donohue. “We should seek free and fair trade, but this is just not thewayto do it.” The Chamber, which has threemillionmembers,historically has worked closely with Republican presidents and praised Trump for signing business tax cuts in December. But mounting trade tensions have opened a rift with the president. Trump has implementedbillionsofdollars in tariffs targeted at China, Canada, Mexico and the ILLUSTRATION: ROHNIT PHORE European Union, saying such movesareneededtooffsettrade imbalances.Nationshavebegun retaliating. On Friday, Canada struck back at US steel and aluminum tariffs, vowing to impose punitive measures on $12.6billionworthofAmerican goodsuntilWashingtonrelents. Chinaisexpectedtoimpose a new 25% tax on soybeans in July.Mexico is adding duties to pork imports. The EU has targeted $3.2 billion inAmerican goods exported to the 28-member bloc. ● MANUFACTURING PMI June growth fastest since Dec 2017 FE BUREAU New Delhi, July 2 INDIA'S MANUFACTURINGSECTORactivityinJunegrewat thestrongestpacesinceDecember 2017, supported by rise in domesticandexportorders.The Nikkei India manufacturing PMI rose from 51.2 in May to 53.1 in June,marking the 11th consecutive month that the index remained above the 50point mark, that separates expansion from contraction. However, the government said the growth of eight infrastructureindustriesdroppedto a10-monthlowof3.6%inMay duetoadeclineinproductionof crude oil and natural gas. “India’s manufacturing economyclosed the quarteron a solid footing against a backdrop of robust demand conditions, highlighted by the sharpest gains in output and new orders since last December,”saidAashnaDodhia,economist at IHS Markit. “On the jobs front, the latest survey data pointed to a healthy labour market, with job creation accelerating to the sharpest since December 2017,”Dodhia said.
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