OPINION, P8 ECONOMY, P3 INTERNATIONAL, P14 $2-BILLION FRAUD NOOYI'S LAST BIG MOVE Fugitive billionaire Nirav Modi in UK; CBI moves for extradition PepsiCo to buy SodaStream for $3.2 billion EDITORIAL AARgh! Many AAR rulings need to be contested by govt UPA’s GDP grew faster than NDA’s, but we are still paying the price for this NEW DELHI, TUESDAY, AUGUST 21, 2018 FOLLOW US ON TWITTER & FACEBOOK. APP AVAILABLE ON APP STORE & PLAYSTORE WWW.FINANCIALEXPRESS.COM READ TO LEAD VOL.XLIV NO. 147, 22 PAGES, `6.00 (PATNA `6.00, RAIPUR `7.00) P U B L I S H E D F R O M : A H M E D A B A D , B E N G A L U R U , C H A N D I G A R H , C H E N N A I , H Y D E R A B A D , K O C H I , K O L K ATA , L U C K N O W, M U M B A I , N E W D E L H I , P U N E SENSEX: 38,278.75 ▲ 330.87 NIFTY: 11,551.75 ▲ 81 NIKKEI 225: 22,199 ▼ 71.38 HANG SENG: 27,598.02 ▲ 384.61 `/$: 69.83 ▲ 0.33 `/€: 79.72 ▲ 0.09 BRENT: $72 ▲ $0.17 GOLD: `29,381 ▲ `20 Ola marks UK launch with 3 Welsh cities CAB-HAILING SERVICE Ola on Monday started operations across South Wales to mark its UK launch, reports PTI. The Bengaluruheadquartered company began its services in Cardiff, Newport and the Vale of Glamorgan and said it will offer additional transportation options on its platform in the future to provide passengers with greater choice. Special Features How budgeting helps keep family finances in order The goal of budgeting is to identify the loopholes in our income and expense pattern. A few adjustments to our spending habits can help improve our financial situation ■ Personal Finance, P13 QuickPicks Kerala floods declared ‘calamity of severe nature’ THE MASSIVE flood in Kerala has been declared a ‘calamity of severe nature’, the home ministry said on Monday, reports PTI. “Keeping in view the intensity and magnitude of the floods and landslides in Kerala, this is a calamity of a severe nature for all practical purposes,” a home ministry official said. At least 216 people have lost their lives in the rains, floods and landslides in the state where over 7.24 lakh displaced people have been sheltered in 5,645 relief camps. Rains have abated and rescue operations were in the final stages in the state. PAGE 2 NGT sends Vedanta’s plea on Sterlite plant to a panel THE NATIONAL Green Tribunal (NGT) on Monday remitted Vedanta's plea, challenging closure of its Sterlite copper plant at Tuticorin, to a committee headed by a former judge, reports PTI. It said the committee will also include representatives of the Central Pollution Control Board and the environment ministry. The tribunal asked the committee to assume work within two weeks and to decide the matter within six weeks thereafter. It said it will decide the name of the committee head after consulting the probable names. PAGE 6 Pest attack, scanty rains to dent India cotton exports INDIA IS likely to export 7 million bales of cotton in 2018-19, down 30% from an earlier estimate, as scanty rainfall and an attack of pink bollworms are likely to squeeze crop yields, the head of a leading trade body said, reports Reuters. A drop in planting area and the pest attack will limit overseas sales to 7 million bales in the marketing year starting on October 1, down from 7.2 million bales in the current crop year, said Atul Ganatra, president, Cotton Association of India. Lower shipments from India amid rising demand from top consumer China could support global prices. PAGE 12 6.27 21 4 60 FY17 FY18 FY19 28 14 2 8.3 0 0 Direct tax buoyancy 1.5 1.0 0.9 0.9 0.9 FY10 FY11 FY12 FY13 0.9 0 FY14 FY15 FY16 FY17 *As announced by CBDT Chairman Sushil Chandra on February 7, 2018 **I-T returns and non-filers who paid tax under TDS system 2.0 7 1.9 1.3 1.1 0.8 0.6 0.5 0 in 2015-16 to 1.3 in 2016-17 and 1.9 in 2017-18. While all these bearout the howthe note banhelpedexpandthetaxbase, thelatestspurtine-returnsindicate the trend is not only being sustained but accelerated. In the last week of July, the government extended the deadline for filing I-T returns byamonthtoAugust31aftera section of taxpayers and tax practitioners sought more time to comprehend the changes made in return forms. Economic Survey 2017-18 had noted that the total number of “new taxpayers” in the 13 months since demonetisation (November2016-November 2017) were 10.1 million FY14 FY15 FY16 FY17 FY18 compared with an average of 6.2millionintheprecedingsix years. It estimated additional taxpayers of about 1.8 million due to demonetisation-cumGST, roughly 3% of the taxpayer base that existed before. The I-T department in its central action plan for the current fiscal has set a target of adding 1.25 “new taxpayers” (those haven’t paid/filed taxes earlier). While the effective assesseee base (filers and TDS cases) expanded by a whopping 1.7 crore in 2016-17,the surge in e-returns has brightened the chances of a similar or higher rise in the base for2017-18. Continued on Page 2 « 74.6 71.2 228 565 Nifty Mid-cap 100 As on August 20 YOOSEF KP Mumbai, August 20 THE BENCHMARKS MAY be scalingnewpeaksbutthebroad market remains in a trough; morethan70%ofstockswitha marketcapitalisationof`1,000 crore or more have lost value sinceJanuary.Morethanathird of these stocks have lost more than 20%. In fact,the rally in the Nifty hasbeenreallynarrowwithhalf the constituents posting negative returns so farin 2018 even though the index hit yet another high of 11,551.75 points on Monday. Just five companies — Reliance Industries,TataConsultancyServices, Infosys, ITC and HDFC Bank — have between them contributed over 80% of Nifty’s 36 YTD fall (%) 64 7.3 « 53.2 6.13 6 120 35 27.5 ~8* 1.89 0.62 8 5.72 3.43 2.24 180 21 FY16 10 199 584 Cos with `1,000 cr Mcap (793) As on August 20 No. of cos in red % Nifty Small-cap 100 As on August 20 YTD fall (%) 15 85 17.0 « ASPECTACULAR53%increase in the number of income-tax returns filed electronically till July 31 has given the government renewed hope of continuedhigh-pacedgrowthincomplianceandtaxpayerbase,even 21 months after demonetisation.Thegoodsandservicestax (GST), launched in July 2017, seems to have contributed to the government’s project to expand the I-T base to a much higherdegreethanthenoteban itself.Accordingtoofficialdata, e-returns of 3.43 crore were filed between April 1 and July 31, 2018, compared with 2.24 crore in theyear-ago period. Last year saw one of the sharpest increases (28%) in total I-T returns — electronic and otherwise — to 6.74 crore (returns mostly pertaining to 2016-17, the demonetisation year) although the growth in ereturnsbytheinitialdeadlineof July 31 was a just 18%. The effective assessees rose an unprecedented 27.5% to 8 crore in 2016-17 and direct tax buoyancyrose sharplyfrom 0.6 2 0 240 STATE BANK OFIndiahasfired afreshsalvointhebattleofcontroloverUTIevenasthegovernmentandUTI’slargestinvestor, US investment firm T Rowe Price (TRP), are trying to hammerout a peace settlement. InalettertotheUTITrustee Company on Saturday,SBI has asked forthe removal ofAshok KKiniasadirectoronitsboard. Kini heads the UTI Trustee Boardwhich,in linewith Securities and Exchange Board of India (Sebi) regulations for mutual funds, had asked that the four PSU shareholders — including SBI — lower their equity in UTI to 10% each from the present 18.25%.The trustee board also asked for a 12-month extension for Leo Puri who was UTI’s managing director till his term ended on August 13, so that the initial public offering (IPO) process could be completed smoothly. « A SPECIAL CBI court on Monday granted bail to Usha Ananthasubramanian, former MD and CEO ofAllahabad Bank, in connection with the `14,000-crore fraud at Punjab National Bank, reports PTI. Earlier this month, the court had taken cognisance of the sanction granted by the President to prosecute Ananthasubramanian in the case. 3 1 In crore Growth (y-o-y, %) « SUMIT JHA New Delhi, August 20 April 1- July 31 (in crore) Growth (y-o-y, %) 4 CHIRAG MADIA Mumbai, August 20 Effective assessees** Cos with `1,000 cr Mcap (783) As on July 31 No. of cos in red % « Allahabad Bank MD gets bail E-returns Over 70% of stocks with a market cap of `1,000 crore or more have lost value since January « Over 53% increase in e-returns in April-July 2018 compared with IN THE NEWS 18% in the PNB fraud: Former year-ago period Nifty scales a new peak but broad market in a trough « GST imparts a big push to I-T base Fresh salvo by SBI even as govt talks peace WIDE DISPARITY « ● UTI « CHEERING NUMBERS gains of 1,021 points in 2018. What’s worse, small-cap stocks have been badlybruised — 85% of the 100 Nifty Small Cap members are in the red. The share of the 100 Nifty Midcap members that have posted negative returns is slightly better at 64%. Foreign portfolio investors havenotevennibbledatIndian ● LENDING NORMS Consortia to be re-jigged, says SBI chairman Continued on Page 2 RBI STANDS FIRM FE BUREAU Mumbai, August 20 ‘Power sector has chronic defaulters’ ANUPAM CHATTERJEE New Delhi, August 20 IN A STERN rebuttal of the power ministry’s contention that only“external factors”are to be blamed primarily for the high incidence of stress in the power sector, the Reserve Bank of India (RBI) on Monday informed the Allahabad High Court that the industry had seen many “chronic defaulters” much before its contentious February circular. The central bank also said that many private power producers were “suppressing facts” and presenting a distorted view of the potential impact of the circularon them. Under-construction power assets such asAthena Energy’s 1,200 MW Chhattisgarh plant, East Coast Energy’s 1,320 MW Andhra Pradesh unit,Lanco’s 1,320 MW plant in Odisha had been referred to the National Company Law Tribunal (NCLT) before the RBI’s circular that tightened the norms forbad loans recognition and resolution. STRESSED ASSETS Projects 34 Golden girl Vinesh Phogat celebrates after winning the gold medal in women's freestyle 50 kg wrestling at the Asian Games 2018, in Jakarta on Monday. Phogat made history after she became the first Indian woman to win a gold at the Asian Games PTI Capacity 38,870 MW Commissioned 23,550 MW Under-construction 15,320 MW With PPA 20,317 MW With assured fuel supply 17,515 MW The RBI’s circular stipulates a one-daydefault rule on term loans, which means a borrower who misses repayments for 90 days will be treated as a defaulter the very next day. equities this year, selling $360 million worth of equities since January.In contrast local funds have shopped for a record $10 billionworth of stocks. Despitethespectacularrally inthebenchmarks,India’smarket capitalisation in dollar termshasfallenbyabout7%to $2.22trillion.TheChinesemarket has seen a bigger erosion in its market capitalisation of nearly 25%.Among the top 10 equitymarkets bymarket capitalisation, only the US has yielded positive returns with a gain of 6.2% so farin 2018. India remains among the most expensive markets in the world.At38,278.75points,the benchmark Sensex trades at a price-earnings(PE) multiple of 18.9 times to the estimated one-year forward earnings, a premiumof17.3%tothelongtermaveragePEof16.13times. This compares with 8.5 times for the Kospi and 13.9 for the Jakarta Composite. Brazil’s Bovespa and the Shanghai Composite are trading at a price-earningsmultipleof10.3 and9.9,respectively,datafrom Bloomberg show. Jobs FE BUREAU EPFO shows a boom, CMIE a bust While a rise in EPFO payroll reflects new jobs apart from formalisation of the workforce, the CMIE estimates a dip in employment so far in 2018. Both the labourparticipation and employment rates fell in Q1FY19 to their lowest since the first quarter of 2016 at least, according to the think tank. Formal jobs 7,93,308 8,00,000 6,00,000 4,99,677 EPFO data Sept 2017 -June 2018 EPFO 9 mn Continued on Page 2 2017 404 402 400 All jobs Sept 2017 CMIE data 406 2,00,000 0 Persons employed (million) 410 408 4.7 m Formal jobs 4,00,000 CMIE June 2018 398 396 2018 Jan Mar May Jul Sept Dec BANKS ARE NOW looking at reorganising a numberof consortia,State Bank of India (SBI) chairman Rajnish Kumar said on Monday, explaining that consortium lending and multiple banking arrangements had led to significant delays in decision-making. Holdingborrowers,thegovernmentandthecourtsequally responsiblefortheongoingcrisis in the banking system, the SBI chairman said a delayed response bybankerswas one of the factors responsible for aggravating the non-performing asset (NPA) situation. “Many times people ask me who is responsible for the stressedassetsituation.Iwould sayeverybodyisresponsible,be itthebankers,beittheindustry or the borrowers, be it the government and — without inviting contempt of court — even thejudiciaryhasplayedarolein this situation,” the SBI chief observed,citing the example of the Supreme Court’s cancellationof214coalblocksin2014. Kumar said that up until the mid-1990s, banks stayed with consortium banking, going into multiple banking later after industry complained about the slow pace of decision-making. Continued on Page 2 MOBILE PLAY Small screen, big ambitions: Airtel teams up with Zee to go exclusive FE BUREAU New Delhi, August 20 THEAIRTELTV-ZEE5 partnership will see Zee EntertainmentEnterprisesofferingsubscribers of Airtel TV some exclusive content. Punit Goenka,CEOandMD,ZEE,said teamingupwithtelecomoperators was important given their ready-made subscriber base which would allow easier spread of content.This special content is to be provided for threeyears inwhat is an exclu- sive deal signed between ZEE and Bharti Airtel. By offering its users customised content, Bharti Airtel hopes to be able to compete with other players such as Reliance Jio. Data from Google’s Play Store show that Reliance Jio’s Jio TV app has seenahighernumberofdownloadsat100millionuserscomparedwith50millionforAirtel TV. Reliance Jio said in July it would set up its own productioncompanytocreateoriginal web series and short films for JioTV App downloads 100 Sony LIV 50 Million Hotstar 100 Zee5 10 Airtel TV Idea TV 5 50 Voot 50 Source: Google Play Store (Aug 2018) Vodafone Play 5 Jio subscribers. Jio has already acquired stakes in content companies like BalajiTelefilms and Eros International. Airtel TV, on the other hand, has tieups with Balaji and Eros. Analysts say the Zee-Airtel partnership is a symbiotic one. Zee5 todayis among theweakest of apps with downloads of a mere 10 million.That puts it only slightly ahead of Vodafone Play and Idea TV, both of which have downloads of 5 million each.Hotstar,Voot and Sony Liv have higher down- loads at 50 million. Airtel hopes to compete with Jio by accessing exclusive and a bigger library of content. BhartiAirtelCEOGopalVittal had told FE recently that Bharti would primarily aggregate content though it would alsohostafewexclusiveshows. Vittal believes the DNA of a production company is very different and Bharti would need to build such a DNA if it wanted exclusive content. Continued on Page 2
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