OPINION, P8 MONEY & MARKETS, P10 SUNIL JAIN Quota unrest may rise with even PM wary of rebuffing caste groups INTERNATIONAL, P14 CHANDRA BHUSHAN PARTING TIP TECH STOCK SINKS District mineral foundations are failing their beneficiaries— the mining-affected BoB chief Venkatesan tells shareholders to stay out Huateng-led Tencent's $143-billion rout is world's biggest NEW DELHI, WEDNESDAY, AUGUST 1, 2018 FOLLOW US ON TWITTER & FACEBOOK. APP AVAILABLE ON APP STORE & PLAYSTORE WWW.FINANCIALEXPRESS.COM READ TO LEAD VOL.XLIV NO. 130, 22 PAGES, `6.00 (PATNA `6.00, RAIPUR `7.00) P U B L I S H E D F R O M : A H M E D A B A D , B E N G A L U R U , C H A N D I G A R H , C H E N N A I , H Y D E R A B A D , K O C H I , K O L K ATA , L U C K N O W, M U M B A I , N E W D E L H I , P U N E SENSEX: 37,606.58 ▲ 112.18 NIFTY: 11,356.50 ▲ 36.95 NIKKEI 225: 22,553.72 ▲ 8.88 HANG SENG: 28,583.01 ▼ 150.12 `/$: 68.55 ▲ 0.13 `/€: 80.46 ▼ 0.23 BRENT: $74.37 ▼ $0.60 GOLD: `29,726 ▼ `47 FOREX LOSS MALLYA EXTRADITION HEARING Court asks for video Tata Motors posts loss in Q1FY19 of Mumbai jail cell BRIBE GIVERS CAN now be get a jail term of maximum of seven years under a new anti-corruption law that has got the assent of President Ram Nath Kovind, reports PTI. Besides, public servants — politicians, bureaucrats and bankers, among others — have also been given a 'shield' from prosecution in the legislation that makes it mandatory for investigating agencies such as the CBI to take prior approval from a competent authority before conducting any enquiry against them. Trai chief’s dare: UIDAI warns not to share Aadhaar THE UNIQUE IDENTIFICATION Authority of India (UIDAI) on Tuesday asked people not to share publicly their Aadhaar number on Internet and social media, reports PTI. It also asked people to not pose such challenges to others. The warning comes days after Trai chief RS Sharma's Aadhaar dare created a flutter. “Such activities are uncalled for and should be refrained as these are not in accordance with the law,” the UIDAI said in a statement. Vijay Mallya leaves Westminster Magistrates court in London on Tuesday Judge limits hearing to conditions of the prison; closing arguments on September 12 PRESS TRUST OF INDIA London, July 31 A UK COURT on Tuesday asked the Indian authorities to submit a video within three weeks of Mumbai’s Arthur Road Jail cell where they plan to keep Vijay Mallya postextradition,asitsetSeptember 12 as the date forclosing arguments in his high-profile extradition trial. During a brief hearing on Tuesday, judge Emma Arbuthnotsaidshewasnotabletohear thecasefullyandjustaddressed representationsfromtheCrown ProsecutionService(CPS),representingtheIndiangovernment, and Mallya’s defence team on the conditions at Barrack 12 of Mumbai Central Prison. She asked the Indian authoritiestosubmita“stepby step video” of Barrack 12 for “the avoidance of doubt” over the availabilityof natural light in the cell where the 62-yearoldbusinessmanisexpectedto be detained pre-trial, during trial and in the event he is convicted by the Indian courts. “Iwould like avideo of Barrack 12, to see where the windows are…shot maybe at middaywith no artificial lighting,” the judge said,setting a threeweek time frame for the film to be provided to all parties in the case. Mallya, who has been on REUTERS bail on an extradition warrant since his arrest in April last year, is fighting extradition to India on charges of fraud and moneylaundering amounting to around `9,000 crore. As he arrived in court this morning for the hearing, he reiterated his offer to settle dues with the Indian courts. “I have made a comprehensive offer to the Karnataka High Court to settle dues...The question of stealing money, money laundering are all blatantly false charges. Now that the assets are before the court, I am in the hands of the court; I hope thiswill all end,”he said. “I have not included any clemency plea or plea bargain in my unconditional offer to the Karnataka High Court,” he added. Continued on Page 2 CENTRE’S FINANCES Special Feature Why starting early is key to building wealth Investing via SIP in equity mutual fund, PPF or NPS at an early stage can help the investor to accumulate a large corpus just by the power of compounding ■ Personal Finance, P13 QuickPicks Core sector growth jumps to 7-month high of 6.7% in June GROWTH OF eight core sectors expanded to a 7-month high of 6.7% in June due to better performance by cement, refinery and coal segments, reports PTI. The eight sectors, which also include fertilisers, steel, natural gas, electricity and crude oil, had expanded by 1% in June last year. The previous high rate of growth was recorded in November 2017 at 6.9%. The growth rate in May was 4.3%. PAGE 2 Govt seeks Parl nod for `980-cr equity infusion into Air India THE GOVERNMENT on Tuesday sought Parliament's approval for `980 crore as a supplementary grant for equity infusion into debt-laden Air India, reports PTI. The amount is part of the total gross additional expenditure of `11,697.92 crore, for which approval has been sought from Parliament. The grant has been sought as part of the equity infusion into Air India under the Turnaround Plan. Sensex, Nifty bounce back to stay on record smashing spree THE SENSEX sprang back from early losses to close at a new lifetime high of 37,606.58 on Tuesday, continuing its record run for the seventh straight day, reports PTI. The broadbased Nifty also continued its record-smashing streak for the fourth day by gaining 36.95 points to settle at a fresh all-time high of 11,356.50. The 30-share Sensex closed at 37,606.58 points, breaking its previous closing record of 37,494.40 hit on Monday. PAGE 11 Capex up, curbs on subsidies help Q1FY18 Q1FY19 Net profit/ loss Ebitda 5,431 67,081 Net sales 3,200 Ebitda margin (%) 12% 1,863 TATA MOTORS ON Tuesday reported a consolidated loss of `1,863 crore for the three months to June,the auto manufacturer’s second-biggest quarterly loss since December 2008. A big chunk of the loss emanated from a foreign exchange loss during the quarter of `1,007 crore. While analysts had flagged a disappointing performance from Jaguar and Land Rover (JLR), the overseas subsidiary turned in much poorer numbers than anticipated, posting a loss of £210 million on the back of a 7% year-on-year fall (` cr) « FE BUREAU Mumbai, July 31 IN THE NEWS Bribe givers to get 7-year jail in under new anti-graft law Report card 59,818 Affected by poor numbers from Jaguar Land Rover on Brexit, diesel worries, China duty 7.5 Consolidated figures Source: Company in volumes and a contraction in Ebit (earnings before interest and tax) margins of nearly 500 basis points.Consolidated revenuesinQ1FY19roseareasonably good 12% year-onyear to `67,081 crore. Tata Motors is now the worst-performing stock in the Nifty in 2018 having lost 38.8% against the Nifty’s gain of7.8%.In2017,thestockhad given up 8.5%.The luxury car maker’s volumes were impactedinChinaandEurope; the management said in a release a proposed duty cut in China had kept consumers away while uncertainty over Brexit and taxes on diesel hit sales in the UK. Additionally, there was a planned stock reduction with dealers in Q1. The automaker’s Ebitda (earnings before interest, tax, depreciation and amortisation) margin came in at 7.5% with the consolidated Ebitda during the quarter at `5,430.66 crore. LOOKING UP PB Balaji, chief financial officer, Tata Motors, said on a call with mediapersons, the company’s profitability target for 2018-19 was being maintained at 4-7%. Balaji said the first quarter was always the weakest for JLR and the company was confident of a better performancefromhereonwith afullrangecominginfromJLR. “The duty in China, due to which customers postponed theirsales,wasunexpectedand moreoverwehadaplanneddestocking,”Balaji said. He said retail demand continues to be strong at 6% and thattheUKmarketwascoming back. Balaji said the company was not expecting a dramatic depreciation in currency. Tata Motors’ standalone performancewasgoodcoming off a weak base of Q1FY18. Cost reduction efforts delivered improved profits in both commercial vehicle and passengervehicle businesses. Continued on Page 2 ● GOING PRIVATE Banking system to strengthen over two years: S&P Global Agarwal bids $1 bn for rest of Vedanta PRESS TRUST OF INDIA New Delhi, July 31 FE BUREAU Mumbai, July 31 INDIA’SWEAK BANKING system will strengthen over the next couple of years as stressed loans are cleared and the capital base expanded by the government’s fund infusion in state-owned lenders, S&P Global Ratings said on Tuesday. In its report titled ‘The Worst Is Almost Over For India’s Banks’, S&P said the ratings on the banks are“more likely to be raised than lowered”in the next twoyears.But weak risk management and internal-control practices limit the potential for considerable upside,it said. “We estimate that Indian banks’ recognised non-performing loans (NPLs) now cover a substantial part of OUTLOOK ■ Stressed loans cleared, capital base expanded by fund infusion in PSBs ■ Ratings on banks ‘more likely to be raised than lowered’ in next 2 years ■ Weak risk management and internal-control practices limit potential ■ Turnaround could be delayed if unexpected NPLs in agri sector weak loans in the system, which comprise about 1315% of total loans,” S&P Global Ratings credit analyst Geeta Chugh said. S&P said a turnaround in the earning performance of India’s banks should take place in fiscal 2020 (ending March 31, 2020). This turnaround could be delayed if large unexpected NPLs materialise in the agricultural sector, where for example government-granted loan repaymentwaivers could hurt credit discipline. The loanagainst-property segment mayalso bevulnerable,it said. “India’sweakened banking system is set to strengthen overthe next couple ofyears as stressed loans are cleared and capital injections from the government shore up eroded capital bases,”S&P said. Banks categorised an increasing proportion ofweak loans as NPLs due to more stringent requirements bythe Reserve Bank of India (RBI) and the government. VEDANTA RESOURCES ON Tuesday made a $1-billion offer to buy 33.47% non-promoter shares which values the company at $3.07 billion. “Under the terms of the offer, Vedanta shareholders willreceive$10.89persharein cash for each Vedanta share,” the company said in a filing to the London Stock Exchange which details its offer first announced on July 2. In addition, the shareholders will be entitled to receive a dividend of $0.41 pershare in respect of the 12 months ended March 31,2018. Continued on Page 2 ● CITIZENS’ LIST No coercive action: SC on NRC Q1 fiscal deficit at 69% of FY19 target; “sound performance,” says govt FE BUREAU New Delhi, July 31 HELPEDBYMEASUREDrelease ofexplicitsubsidies—especially those on urea and micro soil nutrients—andstronger-thanusual tax and non-tax revenues for the first quarter of the fiscal year, the Centre appeared walking the talk on the fiscal front in Q1FY19. ThefiscaldeficitinQ1FY19 came in at `42,9033 crore or 68.7% of the FY19 target, according to the Controller GeneralofAccounts(CGA)data released on Tuesday. Though this appeared to be inconsistent with the fiscal consolidation plan, the situation was much better than during the year-ago quarter when the deficit touched 81% of the annual target for the year. During the initial months of a fiscal,the revenue streams have traditionally been thin, making the deficits look bloated. Going by this, the latest figures aren’t really worrisome(theCentre’sfiscaldeficit for FY19 is budgeted at 3.3% of GDP against 3.5% in FY18). In fact, the Modi govern- `86,988 cr Q1FY19 capex, up 27% over year-ago quarter `18,630 cr less spent on major subsidies in Q1FY19 versus Q1FY18 ment seems to have left strategic room for stepped-up spending during the second half of theyear,in syncwith its electoral aspirations. Budgetarycapital expenditure in the June 2018 quarter, however, stood at `86,988 crore,27% higherthanwhat it wasintheyear-agoquarterand 29% of the full-year target, indicating the continued heavy reliance on public investments for growth amid scarce evidence of a muchawaited recovery in private investments(outputgrowthin capitalgoods,aproxyofinvestment demand, had slowed to 7.6% in May 2018 from 11.9% in the previous month). Department of economic affairssecretarySubhashChandra Garg tweeted: “Sound first quarter fiscal performance. Expenditure at 29% of Budget Estimate with capital expenditurealsorisingby`18,660crore over last year.Tax Revenues at 17.39% of BE higher than last year.Also non-tax.Fiscal Deficit at `4.3 lakh crore lower than `4.4 lakh crore lastyear.” Continued on Page 2 PRESS TRUST OF INDIA New Delhi, July 31 THE SUPREME COURT on Tuesday said there will be no coercive action by authorities against over 40 lakh people whose names do not figure in Assam’s National Register of Citizens (NRC), observing that it was merely a draft. ThetopcourtaskedtheCentretoformulatemodalitiesand the standard operating procedures (SOPs) including timelines for deciding claims and objections arising out of the publication of the draft NRC. Place before the court how do you (Assam NRC) propose to do the exercise of claims and objections as it has to be a fair procedure and the persons aggrieved should be given fair opportunity. — SC BENCH A bench of justices Ranjan Gogoi and RF Nariman asked the Centre to submit the modalities and SOPs before it forapprovalwithinAugust 16. “This court would like to observethatwhathasbeenpublished is only a complete draft NRC, which naturally being a draft cannot be a basis for any coercive action by any authority,” the bench said. It said that the modalities and SOPs prepared by the Centre should be “fair and giving reasonable opportunityto everyone”. Continued on Page 2 Anil Agarwal, Vedanta chairman “Taken together, the offer price and the FY2018 dividend in aggregate represent a total value of $11.30 per share, which on the basis of the announcement exchange rate represents an illustrative premiumofapproximately32.4% totheclosingpriceof647pence per Vedanta share on June 29, 2018,”the companysaid. The company had on July 2 announced its plans to delist by buying out non-promoter shareholders. Continued on Page 2 SPEEDING UP PROCESS NCLT may move cases to other benches SHAMIK PAUL Mumbai, July 31 THE INSOLVENCYAND Bankruptcy Board of India (IBBI) is considering allowing cases admittedbytheNationalCompany Law Tribunal (NCLT) for insolvency proceedings to be shifted from one bench to anothertospeeduptheresolution process, sources close to the development said. In order to avoid piling up of cases at NCLT benches, the IBBI is likely to allow cases to be moved to less busy benches from benches where the number of cases is higher, the sources quoted Transfer of caseswill help to clear backlog at the NCLTbenches Most cases at NCLThave overshot the resolution time frame of270 days Banks have started selling exposure to NCLT accounts because of delays in resolution above said.Typically,the NCLT benches at New Delhi and Mumbai receive far more number of cases compared with other benches such Only 5 of the top 12 accounts have been resolved so far Delay in resolution of larger accounts have held up resolution of the smaller companies Jaipur or Chennai. “This move will help in faster resolution through more efficient utilisation of the resources that are cur- rently available,” a senior bankerwith a large public sector bank said on condition of anonymity. “The resolution process for many of the smallercases is getting held up because of the larger cases. This movewill help in clearing the backlog till the NCLTinfrastructure is adequately expanded,”the banker added. At present, cases admitted by a particular bench of the NCLT are resolved at that particularbench,unless an appeal is filed at the National Company Law Appellate Tribunal (NCLAT) orthe Supreme Court. Continued on Page 2
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