OPINION, P8 EDITORIAL COMPANIES, P6 India’s CAD is now worrying, funding it won’t be so easy INTERNATIONAL, P14 C BALDING COST REDUCTION STRESSED OUT China can no longer depend upon debtfinanced growth if interest rates rising TruJet in talks with Goyal-led Jet to sublease up to 7 ATRs Tearful Musk says past year the ‘most difficult and painful’ NEW DELHI, SATURDAY, AUGUST 18, 2018 FOLLOW US ON TWITTER & FACEBOOK. APP AVAILABLE ON APP STORE & PLAYSTORE WWW.FINANCIALEXPRESS.COM READ TO LEAD VOL.XLIV NO. 145, 18 PAGES, `10.00 (PATNA `9.00, RAIPUR `10.00) 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: 37,947.88 ▲ 284.32 NIFTY: 11,470.75 ▲ 85.70 NIKKEI 225: 22,270.38 ▲ 78.34 HANG SENG: 27,213.41 ▲ 113.35 `/$: 70.16 ▼ 0.27* `/€: 79.82 ▼ 0.11* BRENT: $72.31 ▲ $0.88 GOLD: `29,361.00 ▲ `0.00 *Prv close EXPRESS PHOTO: TASHI TOBGYAL RESOLUTION UNDER IBC Creditors recover `50,000 crore Average haircut 44%; recovery in 32 cases; despite some problems, new system far superior, say analysts IN THE NEWS Conditional import of petcoke allowed CAPEX PLAN ONGC is spared new impost 47.9 39.7 37.3 `32,077 cr 10.9 ONGC's capex target for FY19 0 2016-17 THE GOVERNMENT HAS dropped a plan to ask ONGC to resume sharing its fuel subsidy burden if the Indian basket of crude breaches $70 a barrel. Animminentreintroductionof the practice that was discontinued in FY16 was threateningtohitthestate-runhydrocarbonproducer’sall-important capex plans,especially since its surpluscashhadgotdepletedby `12,000 crore due to its `37,000 crore acquisition of Expended by ONGC to buy govt's 51% stake in HPCL, 68% or `25,000 cr of the amount raised via borrowings 59.2 2015-16 SAURABH KUMAR New Delhi, August 17 `36,915 cr Share of oil subsidy* borne by upstream companies** (%) 2014-15 Government drops plan to resume subsidy burden on upstream firm 2013-14 A SECTION of Air India’s pilots have threatened to stop operations if their flying allowance dues are not paid immediately, in a communication to Air India's director of finance on Friday, reports PTI. Alleging that while the salaries and perks of other employees are paid in full albeit with a delay, the same for the pilots and cabin crew are "ignored", despite the fact that flying allowances of these two licensed categories of employees form a major chunk of their salaries. Family members of former prime minister Atal Bihari Vajpayee at his cremation at Smriti Sthal in New Delhi on Friday as President Ram Nath Kovind, PM Narendra Modi and other dignitaries look on. Report on Page 16 2012-13 Air India pilots threaten to stop ops over dues Bidding adieu 2011-12 INDIA ON Friday allowed import of petcoke for use as feedstock in some industries, sending shares of cement manufacturers higher, reports Reuters. Cement companies, which account for about threefourths of the country's petcoke use, were impacted by petcokerelated policy flip-flops, which began with a Supreme Court judgment banning use of the fuel in and around New Delhi last year. The Directorate General of Foreign Trade said shipments for use as feedstock in certain industries were allowed. FE BUREAU New Delhi, August 17 *Under-recoveries of oil marketing companies made good by budget subsidy and discounts by upstream players **ONGC, OIl India and GAIL (India) Hindustan Petroleum Corporation(HPCL)lastlastfiscalunder a government directive. An ONGC official told FE, “We have stated our position (that ONGC is not in a position `1,013 cr Surplus cash at end-FY18 as against `9,511 cr in FY17 to share the subsidy burden) and the government has understood it.” Thepetroleumministryhad reportedly planned to reap a ‘windfall’ by telling ONGC and Oil India, another state-run firm,topayatax,probablyinthe form of a cess, that kicks in the moment oil prices cross $70. The Indian basket of crude oil averaged $73.47 per barrel in July2018andwasat$69.79per barrel onAugust 17,2018. ONGC is also seeking a waiver from the twin obligations of buying back its own shares and issuing bonus shares in the current fiscal. A zero-debt company till FY17, ONGC borrowed about `25,000croreinMarch2018to fund the purchase of 51% in HPCLwhileitalsodippedintoits reserves and surplus.After the transaction, ONGC’s surplus cash depleted to a little over `1,000 crore at FY18-end from over`9,500 crore at FY17-end. Continued on Page 2 BACK SERIES DATA Special Feature Ride-sharing: ‘Peak car’ and the end of an industry In Germany—which is the birthplace of the modern automobile— heavyweights like Daimler, BMW and Volkswagen are anticipating the day when people stop owning cars ■ Motobahn, P13 QuickPicks Markets rally on robust buying; Nifty ends at lifetime high THE BENCHMARK Sensex soared over 284 points on Friday while the NSE Nifty finished at a fresh lifetime high on the back of robust gains in FMCG, metal and banking stocks amid positive global cues, reports PTI. Brokers said sentiment got a lift on uninterrupted buying by domestic institutional investors. PAGE 10 Apollo ties up with Microsoft for cardiovascular disease risk score AS PART of Microsoft’s Artificial Intelligence (AI) Network for Healthcare initiative, Microsoft India and Apollo Hospitals announced the launch of the first AI-powered cardiovascular disease risk score application program interface, designed specifically to predict the risk of cardiovascular disease among the Indian population, reports fe Bureau in Hyderabad. Reporting of GST, GAAR details in tax audit report deferred THE REVENUE department on Friday deferred implementation of a reporting norm for tax auditors wherein they were required to furnish details of the GST and general anti-tax avoidance rules till March 31, 2019, reports PTI. The I-TAct requires prescribed persons to furnish the tax audit report along with the prescribed particulars in Form No. 3CD. Mundle panel report shows little change to UPA growth FE BUREAU New Delhi, August 17 A COMMITTEE SET up by the NationalStatisticalCommission (NSC)hasestimatedtheaverage annual GDP growth during the 10 years of the two successive UnitedProgressiveAlliancegovernments (2004-2014) at 8%, upfrom7.5%computedearlier. Whilethiscomparesfavourably with average GDPexpansion of 7.4% per year during the four years(FY15-FY18)oftheNarendra Modi government, the elevatedfiscaldeficitsandinflation rates during the UPA tenure would have made the highgrowth trajectory unsustainable,analysts said. UPA (Average GDP growth, y-o-y) Old series New series FY05-14 7.5 8 How they stack up (Annual average, %) UPA* NDA# 8 7.4 8.1 4.6 Growth Fiscal deficit 4.8 3.8 CPI inflation *FY05-14; #FY15-18 The Sudipto Mundle panel on real sector statistics came out with back series data on national income for the years prior to 2012-13, with the revised base year 2011-12. When the Modi government announced the new series in 2015 changing the base year from 2004-05, it did not release the new-series data for the period prior to 2011-12. Under both series, growth under UPA had plunged since FY11. According to the new series, the GDP growth fell from a peak of 10.8% in FY11 to 7% in FY12 and further to 5.5% in the next year. Continued on Page 2 CREDITORS HAVE RECOVERED `49,783crore,oralmost 56% of their admitted claims, from 32 stressed companies where insolvency resolution plans were approved by the National Company Law Tribunal (NCLT) by the end of June,showed data compiled by the insolvency regulator. Despite the average 44% haircutthatthecreditorsingeneral had to take in these cases, analystssaidtheInsolvencyand Bankruptcy Code (IBC) has performed much better than the earlier system where the recovery process was strenuous and yielded too little.Of course,the headlinenumbersaregoodprimarily because of Bhushan Steel,whichaccountedforclose to 64% of the total claims by these 32 firms and an equal amount in recovery. Financial creditors, such as banks,havemanagedtorecover `47,768 crore, or a little over 55%oftheirclaims,showedthe Total admitted claims `89,402 cr Total liquidation value Total resolution amount No of cases resolved 32 `20,969 cr `49,783 cr *For both financial and operational creditors Key cases (Data for financial creditors only, ` crore) Admitted claims Resolution amount Bhushan Steel 56,022 35,571 Electrosteel Steels 13,175 5,320 Orissa Manganese & Minerals 5,389 310 Kohinoor CTNL Infra 2,528 2,246 Kamineni Steel & Power 1,509 600 MBL Infra 1,428 1,597 Sree Metalik 1,287 607 Source: IBBI data, based on submission of resolution professionals data by the Insolvency and Bankruptcy Board of India, compiled on the basis of the inputs provided by resolution professionals(RPs).Operational creditors—includingrawmaterial suppliers — have received `2,015 crore, making up for 61% of their claims. Financial creditors, expectedly, made up for the bulk (96%) of the total claims admitted byRPs. “The IBC is way better than the earlier system, where recovery used to take a lot of time,andwherevera one-time SPECTRUM PRICE settlement took place, the amount was usually not more than 20-30%. Also, many stressed firms were allowed debt restructuring,which further worsened their state of health. In contrast, the IBC stipulates a time-bound resolutionofdefaultcases,whichis good,”saidManojKumar,partner and head (M&A and insolvency resolution services) at consultancyCorporate Professionals Capital. Continued on Page 2 ● NBCC, HUDCO RCom gets relief from apex court Govt may sell 10% via OFS route FE BUREAU New Delhi, August 17 FE BUREAU New Delhi, August 17 THE SUPREME COURT on Friday stayed a telecom tribunal orderaskingRelianceCommunications to pay the difference between the price for spectrum in the 800 MHz band in 2013 and its auction price in 2015,as the company is in the process of selling part of its spectrum to Reliance Jio Infocomm. A bench led by justice RF Nariman while seeking responsefromthedepartment of telecommunications stayed the Telecom Disputes Settlement and Appellate Tribunal’s August 3 orderthat upheld the validity of Clause 8 of Guidelines for Trading of Access Spectrum by access service providers which meant RCom needed to paythe difference in the price of spectrum bought inMarch2013anditsauctiondetermined price in 2015 if it is putting the spectrum for trading. Sistema Shyam Teleserviceshadacquiredspectrumin the 800 MHz in eight circles in 2013 which came at reserve BREATHING SPACE price as there were no other takers for it. In 2015 auction the price of 800 MHz rose because there were other takers for it considering that it is used for 4G services. THE CENTRE ISconsideringto sell up to 10% in realty firms NBCC and Housing and Urban Development Corporation (Hudco) via an offers for sale (OFS), in what could fetch the Centre over `2,400 crore at current market prices. Whiletheprocessislikelyto be initiated shortly to appoint merchant banks to prepare groundwork for the transactions, the timing of the OFS would be decided later depending on market conditions, officials said.At current marketprices,a10%stakesale in Hudco could fetch about `1,100 crore while a similar stake sale in NBCC could garner a little over `1,300 crore. In May last year, the Centre hadsoldabout10%stakeinthe initial public offering of Hudco to mop up `1,207 crore at an issue price of `60 per share. Hudco’s share price rose 1.19% to close at 55.25 on the BSE on Friday.However,theNBCCshare closed 1.33% down at `74.25. Continued on Page 2 Continued on Page 2 ■ Sistema Shyam had ac- quired spectrum in 800 MHz in 8 circles in 2013 ■ Price for 800 MHz spectrum rose in 2015 auctions ■ In 2015 RCom & Sistema merged ■ After this announcement, DoT amended trading guidelines asking for differential price to be paid ■ Since RCom is trading its spectrum to Jio, DoT asked for differential amount ■ SC has put a stay on it FLIGHT PLAN After taking off domestically, Udan to spread wings internationally ARUN NAYAL New Delhi, August 17 THE REGIONALAIRconnectivity scheme or Udan (Udega DeshkaAamNagrik),whichhas been in operation on domestic routesformorethanayearnow, is likely to be extended on the international circuit covering neighbouring countries, but permits will be given to only domesticcarriersandnotinternational ones at the start. Sources in the civil aviation ministry told FE that though international carriers have evincedinterestintheproposed Udan scheme for overseas routes, the domestic carriers have opposed it and the ministry also thinks that initially only domestic carriers should be allowed to participate in it. “There could be an argument for a level playing field forallairlines.Butthethinking is to start with domestic airlines only.It could be domestic carriers nowand international players can join in later.We are really moving fast on international Udan and the bidding couldbeheldsometimeinSep- International Udan Only domestic airlines to participate Bidding likely in Sep-Oct Assam, Andhra govts express interest VGF to be provided by state govts temberorOctober,”a civil aviation ministry official said. Udan is basically a subsidised travel scheme where fares for a specified number of seatsiscappedandthegovernment provides a viability gap funding(VGF)tothecarriersto make up for the below-market pricing. The aim is to connect smallerplaces through airnetwork by using under-served and unserved airports. Now the government is thinking of extending the scheme on overseas circuits — connecting some smaller domestic centres with countries in the neighbourhood. The Assam government was the first to evince interest to fly passengers to Asean countries from Guwahati by offering financial support. Now,Andhra Pradesh has also approached the ministry to connect Vijayawada to cities like Singapore and Dubai. SpiceJet has shown interest in flying on new international routes under the Udan model. At present, low-cost carrier AirAsia is operating daily flight services to Kuala Lumpur from Bhubaneswar with a subsidy fromthestategovernmentona per-flight basis. The airline couldaddmoreroutesfromthe state capital to Colombo in Sri LankaandBangkokinThailand. This is solelyon the initiative of the Odisha government. Continued on Page 2
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