OPINION, P6 ECONOMY, P2 EDITORIAL NSS data will settle jobs issue soon, use more such surveys INTERNATIONAL, P4 A GULATI & S SAINI FORMAL DATA LATER OIL EXPORTS Nabard data show that doubling farm incomes will now be a lot more difficult Back series GDP figures are not official estimates, says Gowda-led MoSPI Iran says no OPEC member can take over its share KOLKATA, MONDAY, AUGUST 20, 2018 FOLLOW US ON TWITTER & FACEBOOK. APP AVAILABLE ON APP STORE & PLAYSTORE WWW.FINANCIALEXPRESS.COM READ TO LEAD VOLUME XXVII NO. 247, 12 PAGES, `6.00 (NORTH EAST STATES & ANDAMAN `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 TELCOS CAUTIOUS Tepid response likely for spectrum auction IN THE NEWS ONGC repays a third of loan taken to buy HPCL STATE-OWNED ONGC will not sell its stake in IOC and GAIL in the near future as it has used internal resources to repay close to a third of the `24,881 crore loan it had taken to buy HPCL, reports PTI. ONGC had in January received the Centre’s approval to sell its stake in IOC and GAIL India to help fund the `36,915crore acquisition of HPCL. No ATM to be replenished after 9 pm from 2019 NO ATM WILL be replenished with cash after 9 pm in cities and 6 pm in rural areas from next year, reports PTI. Two armed guards will accompany crisp notes in transit as per a new directive issued by the home ministry. ● OIL & GAS Vedanta to invest $2.3 bn in 'near term' Consolidation reduces scarcity of resource; players focused on 4G rollout, even Jio not in a hurry to acquire more frequencies PRESS TRUST OF INDIA Hyderabad, August 19 FE BUREAU New Delhi, August 19 THENEXTROUNDofspectrum auctionsissettowitnessalukewarm response from telecom companies,potentiallydenting the government’s non-tax revenue for the fiscal. This is despitetheTelecomRegulatory Authority of India (Trai) earlier thismonthrecommendingthe reserve price for the auctions and advising the government nottodelaytheauctionprocess. One of the reasons for the possible tepid bidding is that barring the premium 4G 700 MHz and the 5G spectrum in the 3300-3600 MHz band, operators have sufficient spectrum holding bought in previous auctions and also through acquisitionofsmalleroperators. Sincethenumberofplayers in the industry has also come down,the scarcityof spectrum FE SPECIALS Enough bandwidth Telecom operator: Spectrum holdings (MHz) 570 600 200 170 212.5 115 68 84 Reliance Jio* Vodafone India 80 110 59 125 146 157 116 Bharti Airtel 1800^ 900 800 2500 2300 2100 Amway’s art of direct selling Amway plans to invest `1,000 crore in India over a period of two-three years with an aim to bolster its operations ■ eFE, P8 The camera in a new avatar For high-end camera brands, smartphones are emerging as a gateway to serious photography, the tool of which is a DSLR ■ INVESTOR, P9 Q1 results ahead of expectations Sun Pharma’s FY19-20e EPS up 0-5%; TP raised to `555; ‘Hold’ due to execution risks and challenging US scenario ■ INFRASTRUCTURE, P11 Waterways on front burner again With Centre willing to infuse funds, the deadline for Kerala’s inland waterways project has been advanced to Dec’19 ■ SCIENCE & TECH, P12 A bridge too far Crumbling infrastructure is a worldwide problem. Wholesale replacement of elderly bridges will be an expensive exercise QuickPicks is no longer there, which means that there’s enough left for everyone. As regards 700 MHzand3300-3600MHz,the eco-system is yet to be fully developed so these cannot be deployed immediately. Further,currentlyoperators are in the process of rolling out their4G networks on the spectrum they hold. Even for Jio, which has put into use all its spectrum, the utilisation level is only 20% so the company is hardlyinneedtoacquiremore. Top operators have significantly improved their spec- trum footprint via bidding in the priorauctions and acquisition of smaller operators, and they are still in the process of rolling out 4G networks on the existing spectrum. “Participation in auctions may happen once the ecosystem matures and network capacity constraints on the existing spectrum start becoming visible. In our view, that is some time away,” analysts at brokerage Morgan Stanleywrote in their report. Continued on Page 2 BOOSTER BY CENTRE Key ministries raise spending (Actuals as % of annual targets) Q1FY18 Q1FY19 23 Rural development 39 28 29 Home 26 Road and Highways 35 31 37 Agriculture 14 Railways* ` Merchandise exports from job-intensive sectors contract Drop 1.6% in Q1FY19 versus 14.5% rise in total goods exports; sans farm items, fall sharper at 3.5%, high MSPs to hit shipments MERCHANDISE EXPORTS MAY have risen 14.5% in the first quarter of this fiscal, against 8.5% ayearearlier,but the headline numbers mask a disturbing fact: Supplies from labour-intensive sectors dropped 1.6% between April and June to $31.4 billion. In fact, in the two years through FY18, growth in exportsfromemployment-sensitive sectors — such as textiles & garments, gems & jewellery, leather,stone,cement,ceramic, farm, plantation, marine and Exports from job-sensitive sectors falling 14.5 (% change, y-o-y) 10 4.4 5.2 Help from weak rupee limited Rupee still over-valued; REER, export-based weights; Base: 2004-05=100 126 124 121.78 122 3.1 -1.6 2016-17 2017-18 2018-19* Labour-intensive# Total goods *Apr-Jun #Textiles & garments, farm, plantation, marine, gems & jewellery, leather, stone, cement, ceramic and allied products across these sectors 117.52 120 118 116 Apr ‘17 Jun ‘18 REER: Real Effective Exchange Rate Source: RBI Their share in total exports shrinks, too 43.7 41 38.4 (%) (%) (%) 2016-17 2017-18 2018-19* Source: Ministry of commerce *Apr-Jun otheralliedsegments—continued to slow (See chart). Consequently, the share of such sectors in merchandise exports came down to just over 38% in Q1FY19 from close to 44% in FY17,official data showed. Discounting the farm and allied sector, where elevated local prices have rendered exports in certain segments unviable, supplies from other jobs-intensive segments witnessed even a sharpercontraction—3.5% in the three months through June. Continued on Page 2 Continued on Page 2 Final hearing in Cairn arbitration against retrospective tax to begin today, Page 3 EXTRA CAPACITY 33 *Excluding internal & borrowed funds of railways ` NEW WORRY BANIKINKAR PATTANAYAK New Delhi, August 19 Top spenders among Central ministries OF THE TOP ten ministries in terms of spending capacity,six including rural development, roads and highways, agriculture and railways registered handsome increases in expenditure in the first quarter of FY19, reflecting the Narendra Modi government’s priority areas ahead of the general elections next year as also its continuing stress on public expenditure to prop up economic growth. On ayear-on-yearbasis,the budgetary spending increase in theApril-June 2018 quarter was the sharpest for the railways (133%) and the ministry of roads and highways or MoRTH (58.5%). Of course,the relevant sectors also spend substantial amountsraisedviaborrowings from the market and institutional sources (for instance, of the railways’capital spending, over60%isfromextra-budget resources and MoRTH/NHAI gets less than a third of its investible funds from the Union Budget). Among the other ministries which are conventionally high spenders, chemicals and fertilisers, human resource development and Airfares don’t rise despite traffic intensity ARUN NAYAL New Delhi, August 19 ` food & consumer affairs saw their spending decline from a year ago in the June quarter (see chart)— in case of the first two ministries, the curbs being imposed on subsidies (Q1FY18 saw more-thanusual releases of subsidies) led to reduced spending. Expenditure on major subsidies (food, fertiliser and fuel) declined 16% y-o-y in the Q1FY19. Continued on Page 2 ALTHOUGH PASSENGER TRAFFIC has seen a fairly big increase over the past year — up by about 17% —, the keen competition in the sector together with a 15% additional capacity created has prevented airlines from raising fares. Capacity across airlines measured in available seat kilometres is now130 billion kilometres. “Clearly with industry load factors in the high 80s or 90s, the industry is turning away passenger demand at current IndiGo Jet Airways 4.00 3.80 3.8 17.8 Yield (`/km, LHS) 3.6 3.60 3.40 3.20 ASK (bn, RHS) Q1FY19 Yield (`/km, LHS) 5.2 17.5 5.10 15.1 15 14.5 4.50 ASK: Available seat kilometre fare levels but we have no choice but to keep our fares competitive,” Rahul Bhatia, interim CEO, Interglobe Aviation,told analysts recently. 14.7 14.3 16.5 4.90 15.5 4.70 15 Q1FY18 18.5 5.30 13.9 ASK (bn, RHS) Q1FY18 4.7 Q4FY18 13.9 13.5 Source: Companies Consequently, yields have been under pressure as fares have stayed flat or even come down on some routes, Balu Ramachandran, head (distrib- ution),Cleartrip,said.Theaverage spot farewas down byover 10% in the three months to Junewhile in the current quarter it is lower by about 20% year-on-year. Even as top lines are under pressure, costs have gone up thanks to a steep 30% rise in the price of aviation turbine fuel (ATF), which accounts for 40% of an airline’s costs. Besides,thesharpdepreciation of the rupee against the dollar hasmeantseveralcosts—lease rentals, maintenance and repairs — have increased. Continued on Page 2 FILM PRODUCTION Fox Star Studios gaining market share reel by reel THE CLEAN banking drive has started showing result with public sector banks increasingly adopting prudent business approach replacing aggressive lending practices, said financial services secretary Rajiv Kumar, reports PTI. "Gradually, Indian banking system is moving towards new normal that is clean banking," he said. PAGE 2 WHATSAPP CEO Chris Daniels is likely to meet IT minister Ravi Shankar Prasad this week to discuss fake and provocative content on the instant messaging app, reports Rishi Ranjan Kala in New Delhi. The government has been hardening its stance on the content circulated on WhatsApp. PAGE 3 People loading relief goods in a chopper in Thrissur in Kerala on Sunday. The state has been battered by floods and landslides EXPRESS PHOTO: VIGNESH KRISHNAMOORTHY * Includes Reliance Communication’s and SSTL’s spectrum ^Includes only the spectrum acquired through auctions Clean banking is new normal, says Niti Aayog’s Kumar WhatsApp CEO likely to meet IT minister this week Helping hand Idea Cellular PRASANTA SAHU New Delhi, August 19 ■ BRANDWAGON, P10 30 VEDANTA HAS SAID it will be investing $2.3 billion towards capex on its oil and gas activities in the ‘near term’ to increase the reserve base by around 375 million barrels. According to its latest annual report,Vedanta aims to increase production from the current 200,000 barrels of oil equivalent per day to 300,000 boepd over the next fewyears. “In the near-term, we are investing gross capex of $2.3 billion to increase our resource and reserve base by around 375 million barrels. Our rich project portfolio is comprised of enhanced oil recoveryprojects,tight oil and gas projects and exploration prospects.” “As well as boosting production, this investment will generate sustainable employment opportunities, directly and indirectly and bring cutting edge solutions to communityneeds,”the metals and mining giant said. For FY19, it expects to achieve a significant growth in production with total volumes in the range of 220-250 kboepd through executing growth projects, with opex of sub-$7/boe (barrel of equivalent). “We estimate the net capex commitment at $600800 million (for FY19),”it said. Kuldip Kaura, CEO, Vedanta, said the company’s vision was to contribute 50% of the country’s domestic crude oil production by increasing their gross production to 500,000 boepd. “Working towards this goal, we announced growth projects, including enhanced oil recovery, tight oil and gas projects, upgrade of liquid handling facilities and exploration,forwhich keycontracts have been awarded to worldclass partners,” he said. Jan-Aug 2018 (%) 11 11 Fox Star Studios 2 Viacom18 Motion Pictures 2 T-Series 17 *The rankings are indicative and not final 11 9 10 Yash Raj Films 6 1 Sony Pictures 4 Balaji Motion 2 3 Pictures Dharma nil Productions Others 14 17 3 Disney Market share (%) CY16 CY17 16 42 14 4 7 2 Nil 9 35 37 Source: ComScore ANUSHREE BHATTACHARYYA New Delhi, August 19 ASLEWOF releases in the past threeyears — from Neerja,Judwaa 2, Baaghi 2, Jolly LLB 2 to the recently released Sanju — has helped Fox Star Studios gain market share in the film production business. Between January and August this year, Fox Star Studios — a joint venture between the US-based 21stCenturyFoxandStarIndia — has cornered a 16% market share, reveals data from ComScore; its share in CY2017 was 11%.T-Seriesisanothergainer with a share of 9%, while Viacom18 Motion Picture has given up some share. Local box office collections, according to FICCI EY, were around `9,600 crore in 2017 and should grow to `10, 300 crorein2018.VijaySingh,CEO, Fox StarStudios,says the focus is to create two kinds of films — tentpole or franchise-based films such as Baaghi 2,Jolly LLB 2 and high quality concept films that are able to draw audiences to the theatres. Apart from producing its own films, the company has inked several strategic allianceswith other productions firms. For example, Fox Star Studios has a nine-film deal with Karan Johar’s Dharma Productionsandathree-filmdealwith Rajkumar Hirani and Vidu Vinod Chopra. Sanju was the first of the three films to be releasedandearned`344crore at the domestic box office. In 2018, Fox Star will release, among others, Total Dhamaal, Zoya Factor,Drive and Kalank. Apoorva Mehta, CEO, Dharma Productions,says it is important to come up with good ideas. “In a situation where the movie window has shortened,Iwould ratheroffer better content that moves viewers and brings them the theatres for a first day first show experience,”he adds. DharmaProductionsposted a 94% increase in net profit to `31 crore in FY17 against `16 croreinFY16.Itsrevenuesgrew 69% to `430 crore in FY17, compared to `255 crore in FY16,, as per regulatory filings by fetched by Paper.vc. Its big releaseBahubali2clocked`510 crore at the box office in 2017. Continued on Page 2
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