OPINION, P8 COMPANIES, P6 INTERNATIONAL, P14 Q1 PERFORMANCE BLOG POST Narendran-led Tata Steel’s profit more than doubles Saudi interest sparked effort to take Tesla private: Musk EDITORIAL Govt does well on IBC, GST, DBT but little for industry Dump the convoluted e-tail policy, allow FDI in multi-brand retail & everyone will benefit MUMBAI, TUESDAY, AUGUST 14, 2018 FOLLOW US ON TWITTER & FACEBOOK. APP AVAILABLE ON APP STORE & PLAYSTORE WWW.FINANCIALEXPRESS.COM READ TO LEAD VOL. 58 NO. 192, 32 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: 37,644.90 ▼ 224.33 NIFTY: 11,355.75 ▼ 73.75 NIKKEI 225: 21,857.43 ▼ 440.65 HANG SENG: 27,936.57 ▼ 430.05 `/$: 69.93 ▼ 1.09 `/€: 79.53 ▼ 0.65 BRENT: $72.64 ▼ $0.17 GOLD: `29,674.00 ▲ `197.00 For tax-savings related investments, check the tenure, rate of returns and taxability of the returns. Since these are for the long-term, look at the compounding benefits ■ Personal Finance, P13 QuickPicks Retail inflation in July slows to nine-month low of 4.17% RETAIL INFLATION fell to a nine-month low of 4.17% in July on account of a slowdown in the prices of vegetables and fruits, showed government data released on Monday, reports PTI. Based on the Consumer Price Index (CPI), inflation for June has also been revised downwards to 4.92% from the earlier estimate of 5%, according to Central Statistics Office (CSO) data released on Monday. Its previous low was in October 2017 at 3.58%. PAGE 2 Govt policies to blame for power sector crisis: RBI EVEN AS a parliamentary panel, and to some extent the finance ministry, have pressured the RBI to relax its February 12 circular mandating a oneday default trigger for resolution of stressed assets exclusively for power projects, the RBI has virtually blamed the government for the current crisis in the sector, reports fe Bureau in New Delhi. In a letter to the power ministry last week, the RBI cited preferential treatment to state-owned power utilities as one of the reasons behind the stress. PAGE 2 Amazon India units get fresh funds of `2,800 crore US-BASED E-COMMERCE giant Amazon has infused fresh capital of `2,800 crore into two of its Indian business units, reports Anushree Bhattacharyya in New Delhi. It has put in `2,700 into its Indian unit Amazon Seller Services, according to data sourced by business intelligence platform Paper.vc. Another `100 crore has been infused into Amazon Retail. The funds have been put in by US-based Amazon.com along with its Singapore-based entity Amazon Corporate Holdings. PAGE 6 22.97 2017 $ 0.10 1.0 Jan Feb Mar Source: Bloomberg Apr May 2018 movement had been sharp because it had reacted to the movesinthedollarandthelira. “Since it was the first day and the market was positioned neutrally to the rupee last 0.38 1.62 2.63 1.43 2.11 0.94 -2.0 0.80 0.42 0.0 -1.0 -3.0 Debt Equity 0.21 2.0 2.02 3.0 8.01 June July Aug* *Uptill August 9 month, the move was dramatic. However,we expect the currency should settle down,” Mehta observed. He pointed out that India’s economy was in far better shape than those Rupee is still ninthstrongest among top 30 currencies. Withdrawal of unprecedented levels of monetary accommodation is expected to cause outflows of capital from emerging markets Neelkanth Mishra, MD, Credit Suisse India Continued on Page 2 A weakening rupee will stoke inflation and with price pressure rising, bond yield will also go up. In such a situation, if a company wants to raise money, the borrowing costs will be higher. BANIKINKAR PATTANAYAK New Delhi, August 13 EVEN THOUGH A task force on e-commerce has suggested that up to 49% foreign direct investment (FDI) be allowed in e-tailers holding inventory of locally produced goods, the Department of Industrial Policy and Promotion (DIPP) is unlikely to rush into effecting such a change. Currently,upto100%FDIis allowedine-commercemarketplaces via the automatic route but no foreign investment is allowed in e-tailers holding inventoryofgoods,exceptinthe retailing of domestically-produced food items. The DIPP — the nodal department to formulate FDI policies for the retail sector — has no plan to ease the existing policies for e-tailers as of now,a seniorofficial told FE.So even if the next draft policy on e-commerce suggests such a relax- ■ ON THE DAY she was to retire, Usha Ananthasubramanian, former chief executive and managingdirector(MD)ofPunjab National Bank (PNB), was dismissed from service in connection with the $2.2-billion fraud at the state-run lender. Ananthasubramanian,who wasshiftedtoAllahabadBankas itsMDlastyear,wasatthehelm of affairs at PNB for about 21 monthsthroughMay2017.She had also served as the executive director (ED) of the second-largest public-sector lender from July2011 to November2013. Her dismissal could set a precedent and signals the governmentcouldtakesuchtough calls against other senior public-sectorbanksalreadybooked by investigative agencies once they are either convicted of fraudorhavehadincriminating NOT IN A HURRY ■ DIPP has reservations on hurriedly changing FDI policy, given sensitivity attached to retail trade ■ Even if next draft ecommerce policy suggests allowing inventory model, it may not guarantee a policy change ■ Task force suggests up to 49% FDI in etailers holding inventory of locally-produced goods; founder has to be a resident Indian ation,itdoesn’tguaranteeapolicy change automatically, he added.This is because the DIPP is learnt to have had its reservationsonsuchapolicyrelaxation, given stiff opposition by brickand-mortarstoresandsensitivityattached to retail trade. Asforretailpolicygoverning brick-and-mortar stores,while 100% FDI is allowed in singlebrand retail via the automatic route,in multi-brand retailing, up to 51% of FDI is permitted, subjecttogovernmentapproval. Only in trading — including through e-commerce — of locally produced food products is up to 100% FDI allowedwith government permission. The task force headed by then commerce secretary Rita Teaotia last month suggested thatFDIintheso-calledinventory model be allowed. However, in such a case, the founder/promoter of the ecommerce player has to be a resident Indian, with its management controlled byIndians and foreign equity would also not exceed 49%,it had said. Continued on Page 2 Usha Ananthasubramanian evidence against them to suggest theircomplicity. In May,Ananthasubramanian,alongwithtwoPNBEDs,KV BrahmajiRaoandSanjivSharan, were divested of power by their respective boards on a directive bythefinanceministry,afterthe CentralBureau of Investigation (CBI) named them in its first charge sheet on the biggest fraud in the country’s banking history,involvingjewellersNirav Modi and Mehul Choksi. However, she continued to be an employee ofAllahabad Bank. A source said the dismissal from service would pave the wayforthe CBI to initiate prosecution of Ananthasubraman- FE BUREAU Data realisations decline The telecom price war will bruise incumbents this fiscal with industry AGR dropping 6-8% y-o-y on falling data realisation. But volume growth may cap the damage. Data usage per user soars 17x.… (GB) 6.8 However, data …with videos having the highest realisation plummeted 95%... share… (%) 4.9 22 20 1.3 6 Others 17 Social Media 9 40 68 (Paisa) 22.9 Continued on Page 2 NPAs worth `8,706 cr put on sale since ICA signing: P10 ● SOLAR CELLS Govt drops safeguard duty as HC re-cites stay FE BUREAU New Delhi, August 13 Continued on Page 2 Continued on Page 2 1.6 1.2 Note: Data usage is per subscriber per month; P: Projected Source: CRISIL Research, Nokia MBIT Index ● ENDGAME Bhushan Power CoC to pick winning bid today THE COMMITTEE OF creditors (CoC) of Bhushan Power and Steel are scheduled to meet on Tuesday to select the most preferred bidder for the bankrupt company as the deadline for submitting revised quotes ended on Monday midnight. The three companiesinthefrayareTataSteel, JSW Steel and the UK-based Liberty House. Both Tata Steel and JSW Steel on Monday declined to comment on whether they had submitted theirrevised bids ornot till the time of going to the press. OnAugust 10,the Supreme Court had on a petition of Tata ian in relation to the PNB case. It’s not immediately clear if Sharan and Rao have also been dismissed.Anothersource said a decision to dismiss Sharan has been taken and the fate of Rao will be decided soon. The bankers were charged underSection409oftheIndian Penal Code for criminal breach of trust and Section 420 of the IPC for cheating and Section 13(2) of the Prevention of Corruption Act for causing wrongfullossestothebankandcriminalbreachoftrusttothepublic. Steel refused to stay the the National Company Law Appellate Tribunal’s (NCLAT) order thathadallowedsubmissionof revisedbids.Theapexcourthad directed the NCLAT to “hear andpassfinalordersasexpeditiously as possible” and also asked the lawyers not to seek any adjournment on August 17, the day the appellate tribunal is slated to hear the case. Therequestforsubmittinga revised bid was made by JSW SteelbutcontestedbyTataSteel. TheNCLAT’sAugust1order had said that the CoC will consider and evaluate the revised bids and identify the highest bidder. 7.6 Video streaming 2016 2018 FE BUREAU New Delhi, August 13 Position held: MD, Bank of Maharashtra AN EMBARRASSED FINANCE ministryonMondaysuspended the implementation of a safeguard duty on imported solar cells as the Orissa High Court last week reiterated via an interim order an earlier direction in this regard, which the ministry apparently did not heed.The court, hearing a writ petition against the imminent duty filed by local solar plant developers,had barred the government from imposing it till August 20,but the government went ahead and slapped the 25% impost on July30. The duty on cell imports, analysts had said,could potentiallyraise solarpowertariffs by 50 paise per unit and have significant implications for the country’s ambitious renewable capacityaddition programme. The ministry’s tax research unitsaidinanotetocustomson Monday: “Vide notification … dated the 30th July, safeguard dutyhas been imposed on solar cells whether or not assembled in modules or panels... The undersigned has been directed to state that in compliance to theinterimdirectionsissued by the Hon’ble High Court of Orissa..,it has been decided not to insist on payment of safeguard duty,forthe time being..” Browsing 18 Loans to Pune builder Ravindra P Marathe Hard call 0.4 DIPP unlikely to rush to allow FDI in inventory model Melwyn Rego Positions held: DMD, IDBI Bank; MD, Syndicate Bank FE BUREAU New Delhi, August 13 DK PANT, chief economist at India Ratings E-COMMERCE ■ Loan to firms of Sivasankaran Positions held: MD, IDBI Bank; MD, Indian Bank FY19P FPI flows into equity and debt ($ bn) PRONAB SEN, former chairman, NSC Four tips for selecting tax-savings investments Aug 13, 2018 Jan 1, 2018 While expansionary part of weak rupee (higher exports) is unlikely to be much, the cost-inflation effect can be quite significant. If the monetary policy is tightened further, we will have one more contractionary step. Special Features Turkish lira Base value=100 0.80 50 0.21 60 BOOKED IN OTHER FRAUD CASES Kishor Kharat FY18 70 ■ Nirav Modi fraud Sanjiv Sharan KV Brahmaji Rao Position held: ED, PNB FY17 S African rand ALSO NAMED IN CBI CHARGESHEETS FY16 THE COUNTRY'S fuel demand rose 7.3% in July, driven by a sharp rise in petrol and diesel consumption, reports PTI. Fuel consumption in July totalled 17.05 million tonnes, compared with 15.88 million tonnes in the same month last year, data from the Petroleum Planning and Analysis Cell (PPAC) of the oil ministry showed. The rise comes on the back of a 8.6% growth in June, when demand totalled 17.99 million tonnes. Indian rupee 80 FY16 Country’s fuel demand increases 7.3% in July Indonesian rupiah 90 1.93 THE RUPEE ON Monday tumbled against the dollar,ending the session at 69.9287, an alltime low. The immediate reasonforthesharpfallinthecurrency was the strengthening dollar — the Dollex at one point during the daywas trading at 96.522, a level not seen in the past one year. Moreover, the fall in some emerging market currencies such as the Turkish lira,which hassofarlostawhopping45% since January, also appears to have affected the sentiment. There was no confirmation on whether the Reserve Bank of India (RBI) intervened in the markets on Monday. Jayesh Mehta, managing directorand treasurer,Bank of America, said the rupee’s Chinese renminbi 100 FE BUREAU Mumbai, August 13 FORMER LOK Sabha Speaker Somnath Chatterjee passed away at a private hospital in Kolkata on Monday morning following multiple organ failure, a senior hospital official said, reports PTI. He was 89 and is survived by his wife, a son and two daughters. Chatterjee was suffering from a kidneyrelated ailment and was admitted to hospital in a critical condition last Tuesday. Malaysian ringgit 110 Fate of two PNB executive directors, already divested of power, hangs in balance FY17 120 2.04 IN THE NEWS Former LS Speaker Chatterjee dies ALL FALL DOWN 1.47 Fall in emerging market currencies affected sentiment; no word on Reserve Bank of India intervention of most emerging markets. Neelkanth Mishra of Credit Suissesaidhedidnotexpectany meaningful rupee-specific weakness, saying the Indian currency was merely tracking the dollar index. “The withdrawal of unprecedented levels ofmonetaryaccommodationis expected to cause outflows of capital from emerging markets,”Mishranoted,addingthat the impact of a reversal of the flows to the EMs over the past decadewouldbefelttheleastin India afterChina. While the rupee has lost 8.7% in 2018 so far, the Chinese renminbi has depreciated by5.5%.The movement in the currency came as a surprise since foreign flows till August 10 have been positivewith foreign portfolio investors (FPIs) buying close to $900 million worth of debt and$ 407 million worth of equities. MV Srinivasan, vice-president, Mecklai Financial Services, pointed out that while one section of the market expected the rupee to hit 70 against the dollar, some believed the RBI would step in with a dollar bond issuance. Former MD dismissed on the day she was to retire FY19P Rupee slides to lowest ever close on Turkish lira shock PNB FRAUD FALLOUT FY18 CONTAGION FEARS DEBIT CARDS Paytm rules the roost in the virtual world but lags in real life SHRITAMA BOSE Mumbai, August 13 GIVEN HOWEVERYdepositor gets a digital debit card,Paytm PaymentsBankhasinlessthan a year of its launch notched up a large outstanding debit card user base. Reserve Bank of India (RBI) data show the mobile walletto-payments bank entity had 39.12 million outstanding debit cards at the end of May. For perspective, private- sector majors HDFC Bank and Axis Bank had 24.94 million and 23.15 million debit cards in circulation at the end of May. To be sure, most of these these are physical debit cards. The numbers at Paytm gain significance amid reports the RBI has asked Paytm Payments Banktostopenrollingfreshcustomers and made observations aboutitscustomeron-boarding processandadherencetoKYCor know-your-customernorms. While Paytm’s debit card State Bank of India Punjab National Bank Bank of India Bank of Baroda Canara Bank ICICI Bank Paytm Payments Bank Central Bank of India HDFC Bank Andhra Bank Total for 66 banks Data on debit cards Number of cards 282,976,998 63,582,649 53,915,764 53,166,018 45,129,796 42,509,897 39,123,059 30,063,158 24,939,721 24,741,870 925,108,766 Volume of transactions PoS (m) ATM (m) 97.39 352.75 12.89 23.14 11.60 31.03 15.85 19.12 10.26 21.54 37.04 31.98 1.20 0.57 4.81 11.27 41.32 33.71 6.04 8.69 352.12 748.04 Source: RBI base tops that of some large banks, their usage is far more limited. In May 2018, Paytm’s debit cards were used to make just 1.2 million transactions at point-of-sale (PoS) terminals; the ATM transaction count was even lowerat 0.57 million. In contrast, HDFC Bank’s debit cards clocked 41.32 millionPoStransactionsand33.71 millionATMtransactionsinthe same month. Axis Bank debit cards were used for making as many as 23.05 million PoS transactions and 23.74 million ATM transactions in May. Indeed, Paytm’s debit-card usage metrics fall short of even those at state-owned Central Bank of India (4.81 million PoS transactions,11.27millionATM transactions) and Andhra Bank (6.04 million PoS transactions, 8.69 millionATM transactions) whichhadfewerdebitcardsoutstandingattheendofMaythan the payments bank. Continued on Page 2
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