OPINION, P8 COMPANIES, P6 INTERNATIONAL, P14 FLIGHT PLAN ATTACK MODE Focus to be on costs to boost profitability: GoAir CEO Vrieswijk Trump blames China for stalled talks with North Korea EDITORIAL Maharashtra right to discourage water guzzlers like sugar Sadly, DeMo is not the only govt policy driven by morality instead of economics NEW DELHI, FRIDAY, AUGUST 31, 2018 FOLLOW US ON TWITTER & FACEBOOK. APP AVAILABLE ON APP STORE & PLAYSTORE WWW.FINANCIALEXPRESS.COM READ TO LEAD VOL.XLIV NO. 156, 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: 38,690.10 ▼ 32.83 NIFTY: 11,676.80 ▼ 15.10 NIKKEI 225: 22,869.50 ▲ 21.28 HANG SENG: 28,164.05 ▼ 252.39 `/$: 70.74 ▼ 0.15 `/€: 82.72 ▼ 0.40 BRENT: $77.62 ▲ $0.48 GOLD: `30,099.00 ▲ `51.00 PTI MERGER CLEARED DOWNWARD SPIRAL Vodafone, Idea set to be Vodafone Idea How long-term investors can navigate volatile markets Long-term investors should not react too much to price movements when the markets are volatile as it will harm their portfolios in the long run ■ Personal Finance, P13 QuickPicks US says no automatic waiver to India for arms deal with Russia THE PENTAGON has ruled out an automatic waiver for India from the punitive US sanctions over its weapons purchase from Russia, saying Washington has concerns over the nearly $5billion missile defence system deal, ahead of the first 2+2 talks in New Delhi, reports PTI. India is planning to buy five S-400 Triumf missile air defence systems from Russia. PAGE 17 India pitches for ratings upgrade by S&P, cites macro stability INDIA ON Thursday made a strong pitch to Standard & Poor’s (S&P) for a ratings upgrade, citing improving economic growth prospects, fiscal discipline, stabilisation of the goods and services tax regime and broader macroeconomic stability despite elevated oil prices and a depreciating rupee, reports fe Bureau in New Delhi. PAGE 2 BSE to launch F&O contracts on Bharat-22 Index from Sept 3 THE BSE will introduce futures and options (F&O) contracts on Bharat-22 Index from September 3, reports PTI. The Bharat-22 Index, comprising shares of 22 companies, is a blend of shares of key central public sector enterprises, publicsector banks and blue-chip private companies such as Larsen & Toubro, Axis Bank and ITC. 55.55 70.75 and reputational risks from independent enquiries into loans given by ICICI Bank under Kochhar’s watch. These investigations, IiAS noted, could materially and adversely impact operations and financial performance.“In such a scenario, her presence on the board of ICICI Securities, while legally compliant, exposes the company to the same risks and the possibility of legal and regulatory sanctions,”it said. Continued on Page 2 STATE BANK OF India (SBI) has completed the sale of its `2,261-crore exposure to Bombay Rayon Fashions (BRFL) to JM Financial Asset Reconstruction Company (ARC) for `900 crore, according to persons familiar with the development. The lenderhas taken a 40% haircut on the transaction but ishopingforanupsidefromits 29% equity stake in the company. SBI has received `840 crore in cash while the remaining `60 crore is in the form of security receipts redeemable over three years. 68.83 70.74 65.00 70.00 75.00 Aug 28, ‘13 Aug 30, ‘18 nearly 10% since January and is the third-worst performing currencyinemergingmarkets. Forex expert Jamal Mecklai said it was possible the rupee could fall further and added companies would be advised to hedge their forex liabilities.“It’s becoming difficult to assess the situation,” Mecklai said. Meanwhile,theyield on the benchmark bond rose to 7.93%, 2 basis points (bps) over Wednesday’s close of 7.91%. Continued on Page 2 ● GST RETURNS New system unlikely before next elections SUMIT JHA New Delhi, August 30 Hudco Continued on Page 2 20 JSW Energy Continued on Page 2 SBI offloads Bombay Rayon debt SHRITAMA BOSE Mumbai, August 30 60.00 Bank (`13 crore). Lenders had recast BRFL’s debt under the corporate debt restructuring scheme. Other than SBI, a couple of lenders hold equity stakes in the company. The resolution of the BRFL exposurecouldhavebeeninitiated under the recently signed inter-creditoragreement (ICA), but bankers said the guidelines were awaited.“SBI did want to resolve the account under ICA, butsomeoftheotherbanksdid not want to take that route till the operating guidelines for lead lenders were issued,” a bankerexplained. 40% HAIRCUT Chanda Kochhar, ICICI Bank MD & CEO 55.00 Inverted scale THE ROLL-OUT OF the new simplifiedreturn-filingsystem for the goods and services tax (GST),whichwastokickinfrom January2019,mayget delayed further and, most probably, beyond the tenure of the current government.According to sources, even though the Narendra Modi government wants to implement the systembeforethegeneralelection, that maynot happen given the time needed to complete the elaboratetestingproceduresto make the system foolproof. Officials have been asked not to precipitate a repeat of the glitches faced by the originally conceived triplicate returns system that has never been fully implemented. Since the January deadline for the newsystem —whichwill automatically produce monthly returns based on supply data uploaded and inward supplies accepted—isdifficulttobemet and the announcement of the election is expected by March, the government might have to reconcilewiththeneedtodefer it further rather than risk a problematic system close to elections,sources said. GMR Infrastructure Close (BSE) 70.35 With the rupee plunging to a record low of 70.86, half the stocks on the BSE are available for a dollar. Of 2,957 stocks that traded on Thursday, 1,468 stood at less than `71 apiece. ■ Page 10 ■ SBI received `840 crore in cash ■ Remaining `60 crore to be in form of security receipts redeemable over three years ■ SBI still running sale for exposures of BoI, Allahabad Bank & Karnataka Bank Even as a part of the loan exposure has been sold, SBI, as the lead lender, is currently running a sale process for the exposures of Bank of India (`127 crore), Allahabad Bank (`108 crore) and Karnataka FLIGHT OF FANCY India among five countries shortlisted for Uber’s air mobility concept NANDAGOPAL RAJAN Tokyo, August 30 IMAGINE COMMUTING FROM Mumbai airport to CST or from Gurgaon to Central Delhi in just 10 minutes.Well, that is exactly what Uber is envisioning for urban transport in the coming years with UberAir, its concept for urban airmobility.OnThursday,Uber announced India as one of the fivecountriesshortlistedforits air mobility solution along with Japan, France, Australia and Brazil. One city from this shortlist could end up being the third location where Uber Air flights will take to the skies — Dallas and Los Angeles were the first two cities named. While Uber launched its Elevate programme in 2016, last year the ride sharing company announced its intention to launch flight demonstrations of UberAir in Dallas-Fort Worth/Frisco Texas and Los Angelesin2020withcommercially trips starting as early as 2023.At the UberElevateAsiaPacific summit in Tokyo on Thursday, the ride sharing companyreiterated that itwas looking beyond cars to solve ILLUSTRATION: ROHNIT PHORE ■ BrandWagon, P13 Half of BSE stocks available for $1 FE BUREAU Mumbai, August 30 ICICI SECURITIES ON Thursday said the results of the voting on the reappointment of ICICI Bank MD and CEO Chanda Kochhar as a director on the board would be announced within 48 hours even as media reports said the biggestshareholderICICIBank hadvoted in favourof Kochhar being reappointed. The annual general meeting of ICICI Securitieswas held on Thursday and the meeting was chaired by Vinod Kumar Dhall, an independent director,in the absence of chairperson Chanda Kochhar. Proxy advisoryfirm IiAS had advised investors to vote against Kochhar’sreappointment.“We believe she should be reappointedontheboardonlyafter allthechargesagainstherhave beencleared,”thefirmwrotein a note. The firm pointed out that ICICI Bank had, in a recent US Securities and Exchange filing, highlighted the possibility of increased regulatory scrutiny YOOSEF KP Dish TV India For LG, with more than 20,000 retail touch points, the key objective is to launch products which enhance consumer lifestyles, says Amit Gujral ICICI Sec vote may favour Kochhar Going cheap 34.5 ‘Consumers value-conscious more than price-conscious’ IT minister Ravi Shankar Prasad poses for a photo with Google CEO Sundar Pichai at the search giant’s headquarters in California on Wednesday ■ Page 7 Adani Power Continued on Page 2 `/$ THE RUPEE ON Thursday slipped to a yet another record low of 70.84 against the dollar in intra-day trade before staging a slight recoveryto end the session at a fresh closing lowof 70.73. While some of the weakness in the currency was attributed to dollar purchases by state-owned banks, dealers aresomewhatperturbedatthe fairlysharp fall in the currency over the last few days. For one, the dollar index — the Dollex — has not strengthened this week and was actuallytrading lowerin the region of 94.52 on Thursday, down from 94.77 on Monday.Again, while foreign funds have been selling stocks, at $344 million across four sessions, the amount is notverylarge.In the bond market foreign investors remained net buyers for an amount of about $560 million tillAugust 29.OnWednesday they bought bonds for a small amount. The rupee has now lost Tech talk 48.7 smooth as it will be burdened with a combined debt of around`1.07lakhcrore,which according to Bank of America Merrill Lynch would constrain theircapex at around `14,000 crore for the next couple of years. In contrast, the annual capex of Bharti Airtel is at around `24,000 crore. Analysts said that since the merged entity will be constrained in terms of capex infusion due to its high leverage, it may find it difficult to hold on to its high Arpu (average realisation per user) data subscribers because it would not be able to beef up its 4G IDFC Bank 460 m+ 69 Total subscribers ANNUAL GENERAL MEETING Special Features ` `15,400 crore Central Bank of India THE SUPREME COURT on Thursday reserved its judgment on a batch of petitions seeking that a seven-judge bench review its 2006 verdict which had put conditions for granting quota benefits for job promotions to SC/ST employees, reports PTI. The Centre and various state governments have also sought reconsideration of this verdict on various grounds. Capex: 49.85 IN THE NEWS SC/ST quota for jobs: Apex court reserves verdict `13,813 crore Idea Cellular WITH THE NATIONAL Company Law Tribunal (NCLT) on Thursdaygivingitsapprovalto the merger of Vodafone and Idea Cellular, the decks have beenclearedforthetwotonow function as a single entity. An announcement of the date from which the new entity by the name of Vodafone Idea Limited will start functioning will be made as early as Friday. The final seal of approval from the NCLT came after the two cleared their dues with the department of telecommunications (DoT) last month.After the DoT approval the two were required to report to the NCLT that all processes were complete, thus seeking the tribunal’sfinalnodforthemerger. Though the merged entity would be the country’s largest telecom operator with total revenues of over `80,000 crore, 400 million customers, 35% subscriber market share and 41% revenue market share,thegoingwillnotbevery Ebitda: 60.9 FE BUREAU New Delhi, August 30 `81,600 crore TUSHAR GOENKA Mumbai, August 30 IDBI Bank A RED initiative appears in today’s edition of Financial Express. This page is an initiative of the marketing solutions team of The Indian Express Group and contains content paid for by advertisers. This page should be read as an advertisement. Revenue: NHPC A SPECIAL REPORT ON LOANS Idea-Vodafone merged entity Having lost nearly 10% since January, it is the third-worst performing EM currency 24.95 High debt will constrain capex making it difficult for the merged entity to retain market share network in comparison to Bharti Airtel and Reliance Jio. “The Vodafone-Idea merged entity will find itself constrained to invest in the business on account of high leverage,” brokerage firm Credit Suisse noted in a recent report. It said Idea’s stagnant 3G/4G subscriber base at 1.1 million net increase on-quarter, which is way below a monthly run-rate of 3 million adds for Bharti and 9 million for Jio,is worrisome. “In spite of sharp cost cuts, we do not see annual merged entity’s Ebitda (earnings before interest, taxes, depreciation and amortisation) crossing `16,000 crore for the next three years. Net debt is high (`93,000 crore) after Indus sale, 8.5x FY19 Ebitda). We believe interest payouts will eat into more than half of Ebitda generated,allowing little room for capex. At a time when peers (with lower revenues) are investing much largeramounts,this could lead to market share loss for the merged company,” Credit Suisse noted. Similarly, Bank of America Merrill Lynch noted that the merged entity would be vulnerable to market share losses as both Jio and Bharti, which areaheadofVodafoneandIdea indatainvestment,arelikelyto poach their customers. Rupee drifts to new record low the problem of congestion in the fast growing urban areas across the world. Eric Allison, head of aviation programmes at Uber,said in pursuit of its first international launch market, where you will be able to push a button and get a flight, Uber is announcing a shortlist of five countries where Uber Air can immediately transform transportation and take our technology to new heights. Uber Elevate has also designed and released the first example of future routes for Uber Air flights for Delhi,Tokyo, Mum- bai, Seoul, Sydney and Taipei. UbersuggeststhatjustinDelhi NCR Uber Air will be able to save about two hours everyday for commuters. Uberchiefoperatingofficer Barney Harford said his company was no longer about just cars but would be an urban mobility player in every sense of the term.“Uber is looking to theskytounlocknewopportunities for urban residents,” he said, calling it the boldest steptoradicallyimproveurban transportation. Continued on Page 2
The Financial Express (FE) is a business paper that’s closest to the people who are in the business of business. From business policies to market trends to new developments, The Financial Express comes packed with incisive news on every relevant issue.