OPINION, P8 COMPANIES, P6 RENU KOHLI Air traffic volumes are not a leading indicator INTERNATIONAL, P14 EDITORIAL INFRA PUSH NO OUTSIDERS ALLOWED If govt levies were lowered for HELP, lower them for Enhanced Oil Recovery schemes too Splitting GAIL not on govt agenda, says oil minister Pradhan Malaysian PM Mahathir bans foreigners from $100-bn property project MUMBAI, TUESDAY, AUGUST 28, 2018 FOLLOW US ON TWITTER & FACEBOOK. APP AVAILABLE ON APP STORE & PLAYSTORE WWW.FINANCIALEXPRESS.COM READ TO LEAD VOL. 58 NO. 204, 18 PAGES, `7.00 P U B L I S H E D F R O M : A H M E D A B A D , B E N G A L U R U , C H A N D I G A R H , C H E N N A I , H Y D E R A B A D , K O C H I , K O L K ATA , L U C K N O W, M U M B A I , N E W D E L H I , P U N E SENSEX: 38,694.11 ▲ 442.31 NIFTY: 11,691.95 ▲ 134.85 NIKKEI 225: 22,799.64 ▲ 197.87 HANG SENG: 28,271.27 ▲ 599.40 `/$: 70.16 ▼ 0.25 `/€: 81.50 ▼ 0.52 BRENT: $75.98 ▲ $0.16 GOLD: `29,869 ▲ `308 EXPRESS PHOTO: RENUKA PURI RBI’S FEB CIRCULAR Allahabad HC refuses relief to power assets 34 38,870 stressed Commissioned: power projects 23,550 (MW) Under construction: Company has withdrawn its FY19 guidance; cut in earnings estimates for FY19/20e owing to high uncertainty on FY19 earnings; TP revised to `12; valuations are cheap ■ Investor, P13 QuickPicks Diesel price hits record high of `69.46, petrol gets closer to `78 DIESEL PRICES hit a record high of `69.46 per litre while petrol rates inched towards the `78-a-litre mark on Monday after a fall in the rupee made imports costlier, reports PTI. The price of diesel was increased by about 14 paise a litre and that of petrol by 13 paise, according to price notification of state-owned fuel retailers. The hike pushed diesel price to its highest level ever (`69.46) in Delhi. In Mumbai, the fuel now costs `73.74 a litre. Companies Act: Panel suggests restructuring corporate offences A GOVERNMENT-APPOINTED panel to review the penal provisions under the Companies Act and examine decriminalisation of certain offences has suggested restructuring of corporate offences and an in-house adjudication mechanism so that courts get more time to deal with serious violations, reports fe Bureau in New Delhi. The 10-member panel, headed by ministry of corporate affairs secretary Injeti Srinivas, submitted the report to finance and corporate affairs minister Arun Jaitley on Monday. PAGE 2 Rupee plummets to new closing low of 70.16 THE RUPEE on Monday retreated sharply to hit a record closing low of 70.16 against the dollar, plunging by 25 paise despite a huge rally in equities amid easing worries over near-term monetary policy tightening by the US Fed, reports PTI. On August 16, the local currency had tumbled to a historic intra-day low of 70.40 before closing at a lifetime low of 70.15. It has been hit by several factors including a swelling CAD, surging global crude prices and lukewarm exports growth. PAGE 10 High court says the Centre could direct RBI to provide special dispensation to them under Section 7 of RBI Act SC to hear RBI's plea seeking transfer and clubbing of all cases challenging its February circular to the apex court on Tuesday effectonnon-performingassets of banks. “There won’t be any impactonprovisioning...Everythingisalreadyrecognised,” SBI chairman Rajnish Kumartold a TV channel a few hours before thecourtpronounceditsruling. The recast plans initiated by SBI is under what is called the Samadhan scheme, where sustainable debt levels of the assets are determined and up to 51% of the equitybeing put up for sale with a chance for existing promoters to redeem their stakes at a later stage. Samadhan projects are thosewithatleastpartialpower purchase agreements and certain fuel linkages.While large plants like GMR(Chhattisgarh) Energy (1,370 MW), Essar Mahan (1,200 MW), Prayagraj Power (1,980 MW), KSK Mahanadi (2,400 MW) and Jaypee Power Ventures (1,820 MW)werepartofthescheme,it was not immediately clear on whichoftheseprojectsconsensushasbeenreachedbylenders. Banks’ exposure to the seven Samadhan scheme projects is around `68,000 crore, ofwhichSBI’sis`17,000crore. Inthecaseofatleastadozen projects, the insolvency proceedings have already started. Under-construction power assets such as Athena Energy’s 1,200 MW Chhattisgarh plant, East Coast Energy’s 1,320 MW Andhra Pradesh unit and Lanco’s 1,320 MW plant in Odisha are among these. Continued on Page 2 SALE OF 5% STAKE Govt readies ONGC OFS PRASANTA SAHU New Delhi, August 27 `80,000 cr FY19 disinvestment target THE CENTREWILLlikelysell a 5% stake in the country’s largest oil explorer ONGC in what could be one of its largest disinvestment exercises in the current fiscal.At current prices (the ONGC stock closed `176.20onMonday),thestake sale may fetch the exchequer `11,300 crore. The department of investment and public asset management (DIPAM) held roadshows in the US last week to reachouttopotentialinvestors for the proposed offer for sale `9,220 cr Proceeds from disinvestment so far in FY19 `11,300 cr Projected receipts from up to 5% stake sale in ONGC The Centre is banking on a clutch of OFSs such as in Coal India, Indian Oil and PFC; strategic sales and IPOs this year JUNE QUARTER Jet in `1,323-cr loss FE BUREAU Mumbai, August 27 JET AIRWAYS ON Monday postedahuge`1,323-croreloss for the June quarter against a profit of `53.50 crore in (` cr) Q1FY18 Net revenue Q1FY19 Ebitda Net profit/ loss Q1FY18.The private sector airline’s revenues grew just 6.4% year-on-yearto`6,010.46crore withyieldsunderpressureinthe highlycompetitive market. The airline has been facing serious cash flow issues and is understood to have weighed salarycuts.Thecompanysaidon Monday it would focus on raising fresh funds,partly by monetising its 8.5-million-member JetPrivilegeloyaltyprogramme and attempt cost-cutting measures to save `2,000 crore over the next twoyears. Continued on Page 2 (OFS) of the government’s stake in ONGC. The exact quantum of equity to be offloaded is,however,yet to be decided, a source said, adding that it could be 3-5%. While the government achieved the largest ever disinvestment revenue of `1 lakh crore last fiscal, receipts have been subdued this fiscal — only `9,220 crore has been collected so far, half the amount garnered by the same time frame last year. The target for this year is `80,000 crore. Continued on Page 2 Flying green Union ministers Suresh Prabhu, Nitin Gadkari, Dharmendra Pradhan and others after the landing of a SpiceJet flight running on biofuel — the first in India — at Delhi Report on Page 6 airport on Monday. The flight took off from Dehradun. ECONOMIC ACTIVITY Growth to beat estimates: FM FE BUREAU New Delhi, August 27 NOTWITHSTANDING EXTERNAL HEADWINDS such as high crude oil prices and a spillover impact of a global trade war, the government is looking at achieving economic growth higher than predicted by many in the current financial year and India could become the fifth largest economy (surpassing the UK) next year, finance minister Arun Jaitley said on Monday. India’s GDP grew 6.7% in 2017-18,down from 7.1% in 2016-17, as private investments and consumption remained subdued.The economy, however, grew at a seven-quarter high of 7.7% in the final quarter of last fiscal, helped by higher government spending and investment. India last fiscal became the world’s sixth largest economy, surpassing France, according to a World Bank report. Addressing from here the annual general meeting of the Indian Banks’Association held in Mumbai via video conference, the minister said “sacrificing the fundamen- 5,75,900 Insolvency Code has redefined creditorlender relationship. The need now is to expedite the process. The government's ability to spend on infrastructure has improved due to increase in assessee base as well as tax collections — ARUN JAITLEY, FINANCE MINISTER tals for temporary spurt in growth is not desirable”, emphasising on“growth with fiscal prudence”. Continued on Page 2 SURBHI PRASAD Approx. value of delayed projects (in ` crore) 4,64,300 CITY Total: Pune 57,000 2,00,000 NCR 1,26,000 2,10,000 MMR 2,34,000 13,000 Kolkata 7,300 8,900 Hyderabad 5,500 10,000 Chennai 39,000 Bengaluru Adani nears GMR power plant buy `5,800 cr 95,000 Total: DEBT-LADEN total amount GMR Chhattisgarh Energy owes to lenders MMR has the most number of delayed residential units among major cities, followed by NCR Total residential units running behind schedule* ● NUMBERS AND THE DEAL Realty check Despite Rera, projects face big delays Source: ANAROCK Suzlon Energy logged a weak performance in Q1FY19 (GW) and banks’ exposure of `1.75 lakh crore — would now take the insolvency route.Analysts estimate resolution under thisprocesscouldresultinhefty haircutsofupto70%forbanks. Sources said the HC order won’t have any incremental -1,323 Capture ratios, upward and downward, are a relatively straightforward mechanism to evaluate a fund’s historical performance during bull rallies and corrections ■ Personal Finance, P13 Banks’ exposure to the seven Samadhan scheme projects is around `68,000 crore, ofwhich SBI's is `17,000 cr Assets that may be recast under Samadhan scheme: GMR (Chhattisgarh) Energy, Essar Mahan, Prayagraj Power, KSK Mahanadi, Jaypee Power Ventures 53.5 Capture ratios: What they say about mutual funds Under construction: 58,463 88.1 Special Features 51,183 20,317 6,010 FOREIGN DIRECT investment (FDI) in India grew 23% to $12.75 billion in the April-June quarter of 2018-19, according to official data, reports PTI. The foreign fund inflows in AprilJune 2017-18 stood at $10.4 billion, data released by the Department of Industrial Policy and Promotion (DIPP) showed. Operational without PPA: With PPA: 5,649 IN THE NEWS FDI growth rises 23% in Q1 Operational with PPA: 66,485 15,320 ANUPAM CHATTERJEE New Delhi, August 27 WITH THE ALLAHABAD High Court on Monday not giving them a special waiver from the Reserve Bank of India’s (RBI) February12circular,promoters of most among the 34 identified stressed power projects could lose ownership of the assets,while bankers including StateBankofIndia(SBI)seemed to have built a consensus on restructuring at least seven to eight of these accounts. Underthecentralbank’scircular, lack of a restructuring plan by Monday would set in motioninsolvencyproceedings against the debtors. With the court refusing to set it aside (it said the Centre may direct the RBIforaspecialdispensationfor the sector),a large chunk of the 34 projects — with a combined capacity of about 39 gigawatts Outstanding debt of these projects (` cr) Total capacity: -1018 Banks say recast plan ready for 7-8 projects, insolvency route for some two dozen, up to 70% haircut seen 6,500 28,000 *Launched before or during 2013 `3,800 cr to be taken over by Adani after the deal `1,400 cr non-funded liabilities to be assumed by Adani too BLOOMBERG Mumbai, August 27 BILLIONAIRE GAUTAM ADANI’S energy unit is nearing a deal to acquire a 1,370megawatt thermal power plant backed by GMR Infrastructure, according to people with knowledge of the matter. Adani Power will take over about`3,800croreofloansout of a total of `5,800 crore that GMR Chhattisgarh Energy owes,saidthepeople,whoasked nottobeidentifiedbecausethe information is private. Adani Power will also assume nonfunded liabilities of about `1,400 crore,the people said. India’s central bank has been looking to restructure stressed loans that have alreadypusheddozensofcompanies into bankruptcy. The Reserve Bank of India is attempting to clean up more than $210 billion of soured debt on bank balance sheets and has previously asked lenders to take about 40 large defaulters to bankruptcycourt lest overdue borrowings slow growth in Asia’s third-largest economy. In February, it introduced new rules and a timeline for delinquent loans to be recast. Continued on Page 2 MOVIES AND MORE Bharti’s Netflix tie-up shows entertainment is serious business FE BUREAU New Delhi, August 27 WITH COMPETITION IN the telecom space moving to content,thecountry’slargestoperator BhartiAirtel is building its arsenal to take on Reliance Jio, which currently has an edge in the entertainment segment. On Monday, the company entered into a pact with USbased Netflix under which select Airtel postpaid and VFiber home broadband plans willreceiveathree-monthNetflix subscription for free. Netflix currently has three monthlysubscriptionpackages —`500(basic),`650(standard) and `850 (premium). Though Airtel will disclose the plans eligible for this promotional offershortly,sources saidthatinpostpaiditcouldbe the `499-649 monthly packs which are quite popularand in broadband the `1,000 monthly pack. This would be quite competitive since currently under Vodafone’s pact with Netflix,a two-month free offer is applicable only to the `999 monthly postpaid plan. Telco-OTT packs Wynk, Amazon Prime Video, Airtel TV (Hooq, Eros, Sony Liv, ALT-Balaji, ZEE5and Hotstar) and three months’ exclusive access to Netflix Vodafone Play (ZEE5, ALT Balaji, Eros Now, Hooq, Hungama,ABP, Pogo) and Amazon Prime Video, two months’ exclusive access to Netflix Jio app including JioTV — 400 channels besides Hotstar Source: Company websites Airtel said that after the three-month free offer is over, users will be able to pay for the subscription of Netflix as part of their postpaid mobile and broadband bills. Further, Netflix and Airtel have also partnered to promote Netflix content and give AirtelTVusersatasteofNetflix content through a dedicated row on the Airtel TV app. Two years ago, Airtel had partneredwithNetflixwherein it had introduced a hybrid settop-box for its DTH services where apart from TV channels userscouldviewNetflixcontent also.However,therewasnopromotional rate forsuch content. Such telco-OTT pacts are increasingly becoming popular and turning into one-stop places for consumers to view all content as they then do not have to download the individual OTT apps. Even the OTT companies find dealing with telcos attractive, the reason being that telcos make it attractive to consumers to use their apps. Continued on Page 2
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