OPINION, P8 COMPANIES, P6 PROFIT FOCUS India taxes farmers, but higher MSPs are not the solution Replacing UGC a good idea but funding can’t be govt controlled either $5.9-BN DEAL Chandrasekaran-led Tata Global to exit loss-making units EDITORIAL INTERNATIONAL, P14 Yujiro Ichihara-led Taiyo Nippon to buy Praxair European assets MUMBAI, FRIDAY, JULY 6, 2018 FOLLOW US ON TWITTER & FACEBOOK. APP AVAILABLE ON APP STORE & PLAYSTORE WWW.FINANCIALEXPRESS.COM READ TO LEAD VOL. 58 NO. 159, 28 PAGES, `7.00 P U B L I S H E D F R O M : A H M E D A B A D , B E N G A L U R U , C H A N D I G A R H , C H E N N A I , H Y D E R A B A D , K O C H I , K O L K ATA , L U C K N O W, M U M B A I , N E W D E L H I , P U N E SENSEX: 35,574.55 ▼ 70.85 NIFTY: 10,749.75 ▼ 20.15 NIKKEI 225: 21,546.99 ▼ 170.05 HANG SENG: 28,182.09 ▼ 59.58 `/$: 68.94 ▼ 0.20 `/€: 80.66 ▼ 0.67 BRENT: $78.01 ▼ $0.23 GOLD: `30,467.00 ▼ `43.00 501 REASONS TO SWITCH RIL roils telecom segment again (2.4”) Jio Phone 2 Market price (`) Bharti-Karbonn-A40 Market (4”) price (`) Market price (`) 1,500 2,999 2,899 Effective price (`) Effective price (`) Effective price (`) 501* RAM 2,999 RAM 512 MB 1,399 RAM 1000 MB 512 MB Voafone-Itel A20 (4”) Idea-Karbonn A41 (4”) Market price (`) 3,690 2,999 Effective price (`) RAM * Under Jio Phone Monsoon Hungama, customers can purchase a Jio Phone by exchanging their old feature phone plus Market price (`) Effective price (`) 1,590 1,499 RAM 1000 MB `501 1000 MB afterseeingtheresponsetothe newlypriced phone. The JioPhone was first announcedlastJulyatthecompany’s annual general meeting with a refundable security deposit of `1,500 (returnable afterthreeyears)andintheeight months since it hit the market hasacquired 25 million users. In an attempt to push sales further—Ambanihasset atarget of 100 million users in the shortest time possible — the price has been slashed to `501 under Jio’s Monsoon Hungama offer. All that consumers will have to do to avail this price is to give their old feature phone in return. As the JioPhone would have by August this year the three most popular apps — YouTube, WhatsApp and Facebook — at `501 it would be a steal for the low-end feature phone user. Continued on Page 2 OECD-ICRIER REPORT Pooled lending: Bankers agree to adopt inter-creditor pact BANKERS ON Thursday agreed to adopt an intercreditor agreement for consortium lending, under which the lead bank will be entrusted with preparing a time-bound resolution plan for mid-sized bad loans, reports fe Bureau in New Delhi. Finance minister Piyush Goyal attended the meeting for some time. A panel led by PNB non-executive chairman Sunil Mehta had mooted the idea in a report titled Project Sashakt. PAGE 2 Negative PSE in India as producers receive prices below those on world markets FE BUREAU New Delhi, July 5 INDIA’SFOODANDagriculture policieshaveanaggregateeffect of reducing gross farm revenues,anewOECD-Icrierreport has said, and estimated that during 2014-16,the reduction was over 6% a year. Even as farmers got large subsidies for inputslikefertilisers,powerand India 30 20 10 0 -10 -20 -30 -40 -50 US % consumption expenditure at farm gate EU28 60 50 40 30 20 10 0 -10 OECD DEPOSITS WITH the banking system grew at a slower 7.59% year-on-year to `113.535 lakh crore as on June 22, against 8.36% for the fortnight ended June 8, reports fe Bureau in Mumbai. Non-food bank credit growth stayed flat at 12.88% y-o-y during the fortnight, versus 12.67% in the previous fortnight. According to provisional RBI data, outstanding loans to firms and individuals stood at `85.53 lakh crore on June 22. PAGE 10 % of gross farm receipts Consumer Support Estimate (CSE): India heavily subsidises its consumers China Non-food bank credit growth at 12.88%, deposits at 7.59% Producer Support Estimate (PSE): India taxes its farmers Korea ELECTRICITY BILLS could have a goods and services tax (GST) component at times, with non-tariff charges being liable to be taxed GST at 18%, reports Sumit Jha in New Delhi. Rajasthan’s Authority of Advance Ruling has ruled that while distribution and transmission was outside GST’s ambit, other associated services would attract GST. PAGE 2 ‘Negative policy effect on farmers’ EU28 Electricity bills: Non-tariff charges liable to be taxed GST at 18% Norway QuickPicks OECD INDIA REGISTERED doubledigit domestic air passenger growth for the 45th straight month in May even though volumes have fallen in recent months, the International Air Transport Association (IATA) said on Thursday, reports PTI. IATA said the country's revenue passenger km rose 16.6% in May. (2.4”) Jio Phone China 45 months of double-digit air passenger growth JUSTWHEN INCUMBENTtelecomoperatorsthoughtthattariff wars in the sector had bottomed out, Mukesh Ambani’s Reliance Jio Infocomm on Thursdayonceagainplayedthe pricecard,themajorbeneficiary of which will be the 500-million-strongfeaturephoneusers whowillnowbeabletoupgrade to a 4G, VoLTE feature phone offering apps like YouTube, WhatsApp and Facebook,for as lowas `501. Since the JioPhone, as it is called, can work only on the Jio network, incumbent operators stand the risk of losing a bulk of their2Gsubscribersorwillhave toofferthemsimilarhandsetsat cheaper rates. The country’s largest telecom player Bharti Airtel, for instance has 75% of its userswho are 2G customers. Manufacturers of low-end smartphones with which JioPhone competes and with which incumbents have so far tieduptocountertheJioPhone challengesaidthatanydecision onpricecorrectionandproduct launchbythemwouldbetaken — MUKESH AMBANI RIL CHAIRMAN US PETROLAND diesel prices were on Thursday hiked for the first time in more than a month on the back of rising international rates and weakening rupee, reports PTI. The increase of 16 paise a litre in petrol and 12 paise per litre in diesel came after an eight-day self-imposed hiatus in rate revisions by state-run oil firms in anticipation of softening international rates due to Opec’s decision to raise output by 1 million barrels per day. FE BUREAUS New Delhi/Mumbai, July 5 As the Golden Decade rolls on, our consumer businesses will contribute as much to overall earnings as energy and petrochem India IN THE NEWS Fuel prices hiked for first time in over a month Targets chunk of 500 m feature phone users with 4G JioPhone for `501 in exchange for old device Policies that depressed farm prices together with food subsidies reduced consumption expenditure by 25% on average across all commodities irrigation,lowmarketpricesfor theirproduce—whicharebelow global levels — resulted in overall negative producer support, thereporthighlighted,andreckoned that for 2000-16, overall producer support estimate was around -14% on average. Continued on Page 2 ■ Karnataka budget: HDK waives `34k-cr farm loans: P2 HARD CHOICE JLR warns UK of $106-bn ‘bad Brexit’ toll BLOOMBERG London, July 5 JAGUAR LAND ROVER warned the UK government that failing to secure a good deal on Brexit would wipe billions from its coffers and hobble an iconic British carmaker at a timewhen business isworried about limited trade access to the European Union. A “bad Brexit” would jeopardise as much as £80 billion ($106 billion) in spending by Jaguar Land Rover over the next fiveyears,chief executive officer Ralf Speth said late on Wednesday in an emailed Tata Motors slides to over five-year low on Brexit woes 261.5 600 259.96 Jul 7, 2018 500 Apr 9, 2013 400 300 200 100 0 statement. Extra costs and delays in parts deliveries coming from outside the UK would cut profit by £1.2 bil- lion a year, he said. “As a result, we would have todrasticallyadjust ourspending profile,” Speth said. Shares of parent Tata Motors fell as much as 5.4%,before recovering a bit to end 2.06% lower than their previous close. The warning from Speth cameaheadofacrucialcabinet meeting on Friday where Prime Minister Theresa May will try to find consensus on herlatest proposal forthe UK’s future economic relationship with the EU. Brexit secretary David Davis has already told May in a letter that the new customs plan is unworkable, a person familiar with the matter told Bloomberg News. Continued on Page 2 ● JIOGIGAFIBER And now comes RIL’s broadband broadside FE BUREAUS New Delhi/Mumbai, July 5 AFTER ACQUIRING 215 million subscribers in 22 months and totally redefining the country’s mobile landscape by making all local calls freewhile bringing down data prices by around 90%,Reliance Jio Infocommhasnowsetsightsonthe fixed broadband segment for homes and enterprises. Highlighting this as the company’s next move,Reliance Industries chairman and MD Mukesh Ambani said in countries with better-developed communicationinfrastructure, over 80% of data consumption happensindoorsthroughfixedline connectivity in homes, offices andotherpremises. However, since fixed-line servicesthatofferdataservices at much higher speeds than wireless internet require fibre to be laid and homes to be wired, its roll-out is more time consuming and tedious. Perhaps realising this, while Ambani was bullish on its prospects he did not set out a roll-out date. Continued on Page 2 ■ Broadband providers' shares fall: Page 11 MALLYA ASSETS CASE UK court rules for lenders, grants enforcement order Order allows entry into tycoon’s properties PRESS TRUST OF INDIA London, July 5 A UK COURT judge has issued an enforcement orderin favour of a consortium of 13 Indian banks seeking to recover funds owed to them by beleaguered liquorbaronVijayMallyawhois fighting extradition to India on fraud and money-laundering charges ofnearly`9,000 crore. The order grants permission to the UK High Court Enforcement Officer to enter the 62-year-old tycoon’s properties in Hertfordshire, near London. Itpermitstheofficerandhis agents entry to Ladywalk and Bramble Lodge in Tewin,Welwyn,where Mallya is currently based. However, it is not an Charting the fall instruction to enter, which means the banks have the optiontousetheorderasoneof the means to recoverestimated funds of around £1.145billion. “The High Court Enforcement Officer, including any enforcement agents acting under his authority, may enter Ladywalk, Queen Hoo Lane, Tewin,Welwyn… and Bramble Lodge,Queen Hoo Lane,Tewin, Welwyn,includingalloutbuildings of Ladywalk and Bramble Lodge to search for and take control of goods belonging to the First Defendant (Mallya),” notes the order,dated June 26. Continued on Page 2 FE BUREAU BrandWagon 13 Rupee at all-time low close The rupee on Wednesday ended at a record low of 68.9413, against the 68.825 it ended at in August 2013. `/$ 67.06 June 1, 2018 July 5, 2018 68.94 Inverted scale ‘We have to build our equity in India’ Anand Chakravarthy, MD, Essence India
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