OPINION, P6 ECONOMY, P2 SUNIL JAIN Modi’s elephant looks much fitter, but it still can’t run INTERNATIONAL, P8 T NANDA KUMAR RUPEE’S FALL Q2 PERFORMANCE Proceed with caution on farm loan waivers since a lot of the loans aren’t crop related Have enough reserves to stem undue volatility in forex market: Jaitley Ma Huateng-led Tencent profit down 2%, first fall in nearly 13 years NEW DELHI, THURSDAY, AUGUST 16, 2018 FOLLOW US ON TWITTER & FACEBOOK. APP AVAILABLE ON APP STORE & PLAYSTORE WWW.FINANCIALEXPRESS.COM READ TO LEAD VOL.XLIV NO. 143, 12 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 INSOLVENCY PROCEEDING IN THE NEWS Blast on Shipping Corp tanker; fire doused JSW Steel bid for Bhushan Power is lenders’ top pick THE SHIPPING Corp of India (SCI) on Wednesday said there were two "casualties" following an explosion and fire on its oil tanker MT Desh Vaibhav in the Gulf of Oman, reports PTI. The fire was extinguished and the ship "is in full command", the SCI said in Mumbai. The incident took place on Tuesday around 9.35 am off the Oman coast, it said, without specifying clearly if there were any deaths or only cases of injury. The vessel was en route to Fujairah on the eastern coast of the UAE, and the blast took place in one of its cargo tanks, the national shipper said. EXPRESS PHOTO: NEERAJ PRIYADARSHI SURYA SARATHI RAY New Delhi, August 15 Panel likely to meet over Trai proposal onAug 31 THE TELECOM Commission, the apex decision-making body at the telecom department, is likely to meet on August 31 to discuss the Telecom Regulatory Authority of India’s (Trai) recommendations on spectrum allocation, according to official sources, reports PTI. "The next Telecom Commission meeting is proposed for August 31," an official source said without disclosing the agenda of the meeting. Another DoT source said though the agenda has not been frozen for the meeting, it is likely to take up some of the recommendation made by Trai on spectrum allocation. July sees 11 PE exits worth $376 m: EY report INDIAN PRIVATE equity (PE) funds have returned a significant amount of capital to their investors, with July 2018 recording 11 exits totalling $376 million, says an EY study, reports PTI. There were eight exits worth $352 million in July last year. In terms of number of exits, the open market route led the tally with deals worth $156 million across six exits. Prime Minister Narendra Modi meets schoolchildren after addressing the nation during Independence Day celebrations in Delhi on Wednesday INDEPENDENCE-DAY SPEECH FROM ‘FRAGILE FIVE’TO ‘RUNNING ELEPHANT’ ‘At the UPA’s pace, it would have taken 100 years to give village women LPG cylinders to replace firewood-stoves’ CHECKLIST FOR THE VOTING PUBLIC ■ Up to `5 lakh of free medical treatment to 10 crore families under Ayushman Bharat, from September 25 ■ Manned space mission ‘Gaganyaan’ by 2022 ■ Five crore people lifted out of poverty in last two years FE BUREAU New Delhi, August 15 IN HIS LAST Independence Day speech before the general elections, Prime Minister Narendra Modi reminded voters of just how far India had come from the days of ‘policy paralysis’under the UPA,from a time when the economy was considered one of the world’s Fragile Five, to now, when the International Monetary Fund ■ Around 3 lakh shell companies shut; direct income taxpayers up to 6.75 crore from 3.5-4 crore says India is like an elephant that has started to run. While celebrating the growth in the economyto what hesaidwas“amulti-trilliondollar investment destination”, Modi contrasted the NDA’s achievementswith those of the UPA.If toilets were to continue to be constructed at the pace they were in 2013, he said, it would take decades for all Indi- in 2014; indirect taxpayers to 116 lakh from 70 lakh before GST ■ 6 crore fake beneficiaries of govt benefits removed ■ 13 cr Mudra loans to small entrepreneurs; 4 crore of them never got a loan earlier ■ Housing-for-all, power- for-all, clean-cooking-for-all, water-for-all, sanitation-forall, skill-for-all, health-for-all, insurance-for-all, and connectivity-for-all is government’s new motto anstohaveaccesstoatoilet,one decade more forfull electrificationandmaybe100yearsmore togivewomeninruralareasLPG cylinders to replace firewood. And with the government IN THE AIR Special Feature Microsoft Surface laptop: Best Windows PC money can buy Available for `86,999 onwards and weighing only around 1.25 kg, the Surface Laptop offers enough for you to really enjoy working or just consuming content on this device ■ Gadgets, P9 QuickPicks Ratnagiri refinery: Aramco can’t export fuel without PSU consent SAUDI ARAMCO, the world's biggest oil company, and its partner Abu Dabhi National Oil will have marketing rights for half of the fuel produced by a planned $44-billion refinery in Maharashtra’s Ratnagiri, but can’t export it without first offering to local companies, reports PTI. "They are free to market their share but they cannot export without first offering it to us," said Indian Oil Corporation (IOC) chairman Sanjiv Singh. IOC is leading the domestic refiners in the project. PAGE 5 RIL halts petrol shipments from Jamnagar site RELIANCE INDUSTRIES has declared force majeure on petrol exports from its Jamnagar site, four people familiar with the matter said on Wednesday, causing the profit margin from producing the fuel to jump to its highest since September, reports Reuters. The force majeure follows an unspecified issue at a petrolproducing fluid catalytic cracker (FCC) unit in its exportoriented refinery, two of the people said. Reliance filed a statement to the NSE stating it has shut one of its FCC units and that the unit is expected to restart in two weeks. PAGE 4 unabletotieupallthelooseends in time, Modi said the `5-lakh free medical insurance for 10 crore families — under the Ayushman Bharat scheme — would be launched on the birth anniversary of Pandit Deendayal Upadhyay,September25. Once sceptical of reports by foreign institutes, Modi also referred to anotherstudybyan international agency that said 5 crore people had been lifted out of povertyin India overthe last two years.Apart from juxtaposing this 5 crore number against the 10 crore would-be beneficiaries underAyushman Bharat,Modi also spoke of how his government’s use of Aadhaar had helped weed out 6 crore fake names that used to get government subsidies. Continued on Page 2 LENDERS TO BHUSHAN Powerand Steel have zeroed in on JSW Steel as the most preferred bidder to take over the near-bankrupt company. The Sajjan Jindal-led steelmaker has offered to pay `19,350 crore to lenders of Bhushan Power against their total outstanding of `47,000 crore and `350 crore to the operational creditors in lieu of theiradmitted claims of `700 crore. Bankers present at the 13hour-longmeetingofthecommittee of creditors (CoC) held on August 14 said JSW Steel’s bidwas higherby`2,700 crore than that ofTata Steel and better by `850 crore compared with the UK-based Liberty House’s cumulative offer of `18,850crore.BhushanPower and Steel owed lenders, led by Punjab National Bank, `47,000 crore. The bankers said Tata Steel did not revise its original offer of `16,500 crore for financial creditors though it committed to pay operational creditors `500crore.LibertyHouse’sproposal to pay `18,500 crore to the financial creditors, sources said,was exclusive of the commitment to pay `350 crore to the operational creditors. As per the Insolvency and Bankruptcy Code (IBC) rules, 66% of the lenders need to approve a resolution plan forit to go through. Thereafter, the resolution professional (RP) needs to submit the approved plan to the National Company Law Tribunal (NCLT) for its approval before it takes effect. However, in the Bhushan PowerandSteelmatter,lenders were asked bythe appellate tribunal on August 1 to decide on the most appropriate resolution plan taking into considerationtheirfeasibility.Theywere also directed to leave the decision in a sealed cover until the National Company Law AppellateTribunal(NCLAT)passesan order on whether the late bid submittedbyLibertyHouseinitiallyisvalid ornot. Banking sources said the NEXT STEP ■ CoC to submit resolution plans to NCLAT for direction ■ NCLAT scheduled to hear the matter on Aug 17 ■ Rule says 66% lenders should approve the plan to go through ■ RP to submit the approved bid for NCLT approval CoC will on August 17 submit all three received bids to the NCLAT for its direction before proceeding further. The Supreme Court had on August 10 directed the NCLATto“hear and pass final order as expeditiously as possible” and also asked the lawyers not to seek any adjournment on August 17, the day the appellate tribunal is slated to hearthe case. Should JSW Steel eventually win BPSL, the additional 3.1 million tonnes per annum (mtpa) steel-making capacity would take its total capacityto over 22 mtpa.That would catapult it to the position of India’s largest steel company, outpacing Tata Steel. JSW Steel has already taken over another insolvent firm, Monnet Ispat, through the IBC route. Monnet has an annual capacity of 1.1 mtpa. JSW Steel’s offer to pay out 41% of dues to Bhushan Power’s lenders is the second best offer by any acquirer firm so farafterthe initiation of the IBC-led insolvency process. Tata Steel’s offer to Bhushan Steel’s lenders has beenthebestsinceitinvolveda haircut of just 32%.Lenders to Adhunik Metaliks had to take the highest 92% haircut followedby75%bythelendersof Monnet Ispat. Continued on Page 2 HAM PROJECTS ● STATIONS REVAMP Blackstone evinces interest KNR in talks with in buying Jet Privilege stake Cube, Brookfield DDA puts a spanner in the works BLOOMBERG Mumbai, August 15 ROUHAN SHARMA Mumbai, August 15 SAURABH KUMAR New Delhi, August 15 BLACKSTONE GROUP IS in talks to buy a stake in the loyalty programme of Jet Airways India,the troubled Indian carrierthat’s exploring options to raise cash, people with knowledge of the matter said. The private equity firm has expressed interest in a deal that couldvalueJetPrivilegeatabout `3,000-4,000 crore,according to the people,who asked not to be identified because the informationisprivate.JetAirwayshas beenseekingahighervaluation for the business, which is part owned by the Indian airline’s partner Etihad Airways, one of the people said. Etihad owns 50.1% of the loyalty programme, while Jet Airways owns the rest. The transaction being contemplatedbyBlackstonewouldsee both Jet Airways and Etihad remain investors in Jet Privilege,another person said. Any deal would be dependent on Jet Airways also securingadequatefundingforitsairlineoperations,accordingtothe person.There’snocertaintythe deliberations will lead to an agreement, and other suitors could emerge for a stake in Jet Privilege,the people said. Jet Airways is racing for CASH-RAISING OPPORTUNITY ■ Blackstone Group has expressed interest in a deal that could value Jet Privilege at about `3,000-4,000 cr ■ Etihad owns 50.1% of the loyalty programme, while Jet Airways owns the rest ■ Any deal would be dependent on Jet Airways also securing adequate funding for its airline operations funds as rising crude oil prices andintensecompetitioninthe Indian market eroded its cash amid losses. The carrier on Monday said that it’s been evaluating funding options to meet liquidity requirements “on priority” and proactively working on multiple revenue enhancement and cost-cutting measures. Aspokesman forBlackstone said he couldn’t immediately comment,while a representative forEtihad declined to comment.JetAirways referred to its statement issued Monday,sayingreportsonanymovetomonetise its investment in the loyalty programme are “purely speculative”. Under the loyalty programme, frequent flyers of Jet Airways acquire so-called air miles,either by flying with the airline or spending on cobranded credit cards. Those miles can be accumulated to buyalmosteverythingfromair tickets to clothes and groceries at partner merchants. Membership in the JetPrivilege loyalty programme grew 30% to 8 million customers in the year ended March 31. It posted a profit of `177 crore in the latest financial year, according to Jet Airways’ annual report. Etihad, which owns 24% of the Indian carrier,bought its stake in the loyalty programme in 2013 for about $150 million. Any cash from a stake sale wouldprovidesomerespitefor the Mumbai-based company, which faces `3,120 crore worth of loan repayments due in the year through March 2019,according to Icra. Continued on Page 2 INFRASTRUCTURE DEVELOPER KNR Constructions is in talks with Cube Highways and Canadian asset manager Brookfield to sell its entire stakeinfourofitsroadprojects that were won under the hybrid annuity model (HAM). According to sources, Brookfield and KNRConstructions have signed initial agreements for exchange of information and detailed due diligence. The enterprise value of threeoftheprojects,oncetheir construction is complete, would be about `4,000 crore. However, sources said, for any deal to materialise, KNR would need to offload the projects at a discount, given the construction riskwhichwould have to be borne by the acquirer in the interim. An email sent to KNR did not elicit any response till the time of going to press. Brookfield and Cube Highways also did not respond to queries. In an exchange filing in July,KNRsaid three of its HAM projects have achieved financial closure. KNR has a portfolio of five HAM projects worth `5,611.2 crore with three of the projects already having received sanction letters from banks for finance. Continued on Page 2 KNR Constructions is in talks to sell its entire stake in four road projects ■ Cost of 61-km stretch between Chittoor, Mallavaram, Andhra Pradesh `1,730 cr ■ Cost of 32-km road between Meensurutti, Chidambaram in Tamil Nadu `482 cr ■ Cost of 39-km road from Trichy to Kallagam, Tamil Nadu `1,020 cr ■ Cost of 47-km project in Telangana `1,234 cr WHILE THE RAILWAYS has sweetened the package for private developers seeking to grab its station redevelopment projects,theplanhasrunintoahurdle as the ministry of housing and urban affairs (MoHUA) has asked a Cabinet note in this regard be redone to protect its agency,the Delhi Development Authority (DDA), from any potentialrevenuerisk.Sincethe revamp of the Bijawasan and Anand Vihar stations in Delhi required DDA lands next to the stationsalsotobeofferedtothe developers along with the railways’ own, the MoHUA sought the DDA be assured a share of ‘gross receipts’, instead of ‘net surplus revenue’ as proposed. TherailwaysandDDAaretoget lease rentals from the developers; the railways had proposed sharing the receipts with the DDA after deducting expenses on operationalising the project. With the MoHUA striking the discordant note in an August8letter(acopyofwhich was reviewed by FE) to the rail ministry,the Cabinet lastweek had to defer a decision on the revamped station redevelopment policy. Continued on Page 2 NEW DELHI
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