OPINION, P8 ECONOMY, P2 CONDITIONS APPLY EDITORIAL GoM right to dismiss Reverse Charge and DigitalPay relief Taxman can't sell Cairn's seized assets while arbitration is still going on INTERNATIONAL, P14 WEAK SHOW DoT gives nod to Vodafone-Idea merger with riders Xiaomi debut hints at trouble for upcoming HK tech listings MUMBAI, TUESDAY, JULY 10, 2018 FOLLOW US ON TWITTER & FACEBOOK. APP AVAILABLE ON APP STORE & PLAYSTORE WWW.FINANCIALEXPRESS.COM READ TO LEAD VOL. 58 NO. 162, 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: 35,934.72 ▲ 276.86 NIFTY: 10,852.90 ▲ 80.25 NIKKEI 225: 22,052.18 ▲ 264.04 HANG SENG: 28,688.50 ▲ 372.88 `/$: 68.72 ▲ 0.16 `/€: 80.92 ▼ 0.20 BRENT: $77.74 ▲ $0.63 GOLD: `30,622 ▲ `82 BATTLE FOR BOMBAY HOUSE NCLT dismisses Mistry plea on dismissal Finds no merit in allegations, says management more accountable to shareholders under the present regime FE BUREAU Mumbai, July 9 IN A HUGE setback for Cyrus Mistry, the Mumbai bench of theNationalCompanyLawTribunal (NCLT) on Wednesday dismissed his plea relating to his removal asTata Sons chairman in October 2016. Mistry, through his firms Cyrus Investments and Sterling Investments, had contended that his removal was arbitrary and was a clear case of oppression of minority shareholders at the group. The tribunal also found no merit in his allegations against Rata Tata and Tata Trust’s Noshir Soonawala of acting as“superdirectors”and said that the management is more accountable to shareholders under the present regime. Mistry had alleged inappropriate interference from Tata and Soonawala in the affairs of the group. Issues related to misman- COUNTERING CYRUS Company Law Tribunal is disappointing although not surprising. We will continue to strive forensuring good governance and protection of interests of minority shareholders and all stakeholders in Tata Sons from thewilful brute rule of the majority.The ruling is in line with the earlier position expressed by the Tribunal. An appeal on merits will be pursued,” a statement from Mistry’s office said. Welcoming the judgment, Tata Sons chairman N Chandrasekaransaid,“Thejudgment has only reaffirmed and vindicated that Tata Sons and its operating companies have always acted in a fair manner and in the best interest of its stakeholders. The Tata Group hasalwaysbeencommittedand will continue to be committed to transparency and good corporate governance of global standards.TataSonshopesthat a finality will be given to the CA Sundaram, Mistry's counsel It's a total victory for the Tata Group and a very bad verdict for Cyrus Mistry as not only all his contentions have been rejected, but the NCLT has made some adverse comments against him Continued on Page 2 Related reports on Pages 6 & 11 HP Ranina, senior advocate, SC ARBIT APPROACH QuickPicks Discoms’ subsidy reliance seen rising to `85,000 crore: Icra LOWER POWER tariff hikes by state regulators is expected to raise discoms’ dependence on state subsidies by around 8% y-o-y to `85,000 crore, Icra said, reports fe Bureau in New Delhi. The median tariff hike for FY19 in 21 states that have issued tariff orders remained low at 2%, Icra noted. Seven states kept their rates unchanged and two states even lowered power prices in the run-up to the 2019 Lok Sabha elections, putting pressure on the cash-strapped discoms. PAGE 3 Sensex rises by 277 points to close at 5-month high THE SENSEX on Monday surged by 277 points to close at more than five-month high of 35,934.72 on positive leads from global markets, reports PTI. The bellwether rallied for the second day by rising 276.86 points to settle at 35,934.72, the highest closing level since January 31, when it had closed at 35,965.02. The Nifty closed above the 10,800 level by gaining 80.25 points to 10,852.90, the highest closing since June 13, 2018, when it ended at 10,856.70. PAGE 11 SC dismisses review pleas of 3 convicts in Nirbhaya case THE SUPREME Court on Monday dismissed pleas filed by three out of the four convicts seeking review of its verdict upholding the death penalty awarded to them in the December 16, 2012, Nirbhaya case, reports PTI. It rejected the review pleas filed by Mukesh, Pawan Gupta and Vinay Sharma, saying no grounds have been made by them for review of the verdict. The SC said the death row convicts failed to point out “error apparent on the face of record” in the judgment. THE INCOME TAX department has sold about 40% of Cairn Energy’s residual stake inVedanta for$216 million,as it persisted with enforcing its $1.6-billion (`10,247 crore) retrospective tax claim on the Edinburgh-headquartered energymajor,even as the final arbitration hearing on the matter is slated to start in The Hague on August 20 and the arbitral ruling is expected by the end of the year. Legal experts said though the department’s move might not be technically wrong, it indeed appeared a hasty one. Theyalsowonderedwhetherit had obtained a direction from the arbitral tribunal in such a way that its interests will be safeguarded even in the event of an adverse award. The department had earlier seized $155 million of Mohan Parasaran, former solicitor general Strategic wisdom and keeping in mind larger considerations of India as an attractive FDI destination would (have demanded) patience and awaiting the final award Prag Tripathi, former ASG, senior SC lawyer Vedanta’s dividend due to Cairn and had chosen not to refund extra capital gains tax of $234 million paid by it. “Following this (stake) sale, Cairn’s retained holding in (Vedanta) is now approximately 3%. It is possible that the (tax department) may WHAT I-T GOT VIA ENFORCEMENT ACTION $155 m Vedanta's dividend to Cairn seized and realised $234 m Extra capital gains tax paid by firm not refunded $216 m Proceeds from sale of Cairn's ~2% Vedanta stake Total: $ 605 m Retrospective tax claim on Cairn (plus interest, penalty) $1.6 bn make further sales,” the company said in a statement. Cairn’s is the only case of the government realising a part of the monetary value of the disputed retrospective tax claims. Continued on Page 2 HARYANA'S BHAVANTAR SCHEME A mere `12 lakh paid to tomato farmers, price rises fourfold since PRABHUDATTA MISHRA New Delhi, July 9 THE HARYANA GOVERNMENT'S much-touted pricedeficiency support scheme for crops — Bhavantar Bharpayee Yojana (BBY) — had got off to a dull start, having paid some 565 tomato farmers `12.07 lakh over the two and half months up to June or an average of just `2,137 per farmer. While the government paid `4 per kg to the farmers under BBY, the vegetable’s price has since sky- Tomato price to farmer Karnal (` quintal) 1,800 1,550 1,500 1,200 900 600 300 0 550 June 15, 2018 July 7 Source: Agmarknet rocketed; the current mandi price is `15-16 per kg. Obviously, if cold storage facility was available to farmers,they could have waited till the mandi prices surged and pocketed far better returns than what the BBY offered . A BBY-like scheme launched earlier by Madhya Pradesh had come a cropperas costs jumped after mandi prices of key crops like chana and masur plunged far below their respective minimum supportprices.Thestatehadto seek the Centre’s assistance to run the scheme. Continued on Page 2 Prime Minister Narendra Modi with South Korean President Moon Jae-in and UP chief minister Yogi Adityanath at Samsung’s factory in Noida on Monday EXPRESS PHOTO: RENUKA PURI MAKING MOBILES Samsung dials value-add, Modi’s Make in India gets a push FE BUREAU New Delhi, July 9 SAMSUNG INDIA’S PLANS to double its mobile phone production in India to 120 million units by 2020 — 30% of these will be exported — gave Prime Minister Narendra Modi’s ‘Make in India’a decisive push. The new facility, the largest in the world, was jointly inaugurated by Modi and Korean President Moon Jae-in in Noida, Uttar Pradesh. Uttar Pradesh chief minister Yogi Adityanathandcommerceand industry minister Suresh Prabhu were also present. At the inauguration, Modi said4lakhjobshadbeencreated asthenumberoffactoriesmaking mobile phones increased. “Today is an important day in making India a global hub of manufacturing,” PTI reported him as saying, adding that the investments in such factories areacornerstoneofIndia’seconomicandcommercialengagementswithcountrieslikeSouth Korea.Fiftyofthemobilephone manufacturing plants, Modi said,were in Noida alone. While the number of mobile manufacturing plants in India is up from just two in 2014 to 123, and the output up from 48 million phones to a Make-in-India gains traction Imports, $ million Mobile phones 12,000 9,000 6,000 3,000 0 11,369 Next 6-12 months critical as the biopharmaceutical company could launch multiple biosimilars in the US and the EU; TP at `720; remains one of top picks ■ Investor, P13 FE BUREAU New Delhi, July 9 The I-T dept is acting hastily. They could have obtained a direction from the arbitral tribunal so that their interests are safeguarded even in the event of an adverse award Components 1,971 Biocon’s plant certification removes an overhang ‘Hasty move’ despite ongoing arbitration in The Hague, legal experts term the move impatient 9,230 Besides debt and equity, retail investors can look at Alternative Investment Funds, commodities, real estate and gold to further diversify their investment portfolio ■ Personal Finance, P13 I-T sells part of Cairn’s stake in Vedanta 3,400 Check out these alternate investment options 6,829 Special Features AIFs agement and breakdown of governance raised by Mistry withregardtotheNanoproject, AirAsia, and C Sivasankaran in Tata Teleservices were also rejected as well as his plea for proportionate representation for Mistry group firms on Tata Sons’board. Though the Tata Group received a resounding victory atthetribunal,thematterisfar from over as the Mistry group in a statement while expressing disappointment but no surprise at the ordersaid itwill appeal against it. “The ruling of the National 4,188 Continued on Page 2 ILLUSTRATION: SHYAM It (the case) involves important issues of the rights of minority shareholders... We will have to study the judgment in detail and consider taking the matter further on appeal 6,514 RESCUE WORKERS IN Thailand on Monday brought four boys safely out of a labyrinthine flooded cave complex where a 12-member soccer squad and their coach were trapped for more than two weeks, taking the total number rescued to eight. The mission to save all the trapped boys and their coach could take three or four days, officials have said, a race against the clock with heavy rain expected this week which would again flood the tunnels with fast-flowing,rising water. AM singhvi, Tatas counsel 2,843 REUTERS Chiang Rai, Thailand, July 9 Taste and smell of victory is sweet and fragrant, glad that we won on every point. Tatas is too precious a brand name to be incessantly attacked. It is also a precedent setting judgment on many issues 7,382 Eight boys brought out in two days FIRST TAKE 1,405 ● THAI CAVE RESCUE judgment of NCLT,Mumbai,by allconcernedinthelargerinterest of companies, the shareholders and the public.” Ratan Tata said in a statement, “The judgment of the NCLThas been avindication of the actions that Tata Sons felt obliged to take in October 2016. It is a reinforcement of the principles and forthrightness that prevails in our judicial system, which should make all of us proud of our country and its democracy.” The NCLT while dismissing Mistry’s plea stated that his conduct does not bode well for thesmoothfunctioningofTata Sons, as he allegedly leaked information to the media. It said that the board of directors was competent to dismiss him and said that it can’t stop Tata Sons from converting itself into a private company. The Mistry firms had sought proportionate representation on the Tata Sons board, no interference from the trustees ofTataTrustswho hold 66% in Tata Sons, stopping the conversion of Tata Sons into a private company, and protection from anyforceful transfer of shares held by the Mistry family inTata Sons. 2014 2015 2016 2017 2018 3.6% 3.8% 5.6% 10.1% 17.7% Source: Computer Point Local value addition (%) likely279million—from19% in 2014, Made-in-India mobileswill rise to 90% bythe endof2018—domesticvalueaddition has been quite poor. Imports of mobile phones were down from 205 million in 2014to77millionin2017,but the import bill shot up from $8.8 billion in 2014 to a likely $13.3billionin2018asimports of components rose from $1.4 billion in 2014 to a likely $11.4 billionin2018.Domesticvalueadditionrosefromamere3.6% in 2014 to a little over 10% in 2017 (see graphic). Samsung, however, has the highest value-addition of all mobile phone manufacturers and is the only firm that has been ‘populating’ printed circuitboards(PCBs)rightfromits inception. To that extent, it is alignedwith the government’s phased manufacturing programme (PMP) goals.Last year in June, Samsung had announced an investment of `4,915croretoaddnewcapacity at the Noida plant. While India had a good PMP plan, this got disrupted when the goods and services tax came in since differential excise/CVD for local production and imports were no longer possible. Continued on Page 2
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