OPINION, P8 COMPANIES, P6 FLYING HIGH EDITORIAL Govt must ease FDI rules, issue NRI bonds to save ` Fix NCLT, NCLAT delays fast, Essar Steel sale still stuck a year after NCLT took it up INTERNATIONAL, P14 TARIFF TRIGGER SpiceJet to start dedicated air cargo services from Sept 18 Xi-led China vows to respond if US takes new steps on trade NEW DELHI, TUESDAY, SEPTEMBER 11, 2018 FOLLOW US ON TWITTER & FACEBOOK. APP AVAILABLE ON APP STORE & PLAYSTORE WWW.FINANCIALEXPRESS.COM VOL.XLIV NO. 165, 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 READ TO LEAD SENSEX: 37,922.17 ▼ 467.65 NIFTY: 11,438.10 ▼ 151 NIKKEI 225: 22,373.09 ▲ 66.03 HANG SENG: 26,613.42 ▼ 360.05 `/$: 72.45 ▼ 0.71 `/€: 83.85 ▼ 0.56 BRENT: $77.73 ▲ $0.90 GOLD: `30,402 < > `00 — FOREIGN AID NRI bonds soon to control rupee rout Import duties on certain items may go up, excise cut in fuels ruled out IN THE NEWS CPSE ETF: New PSUs may replace GAIL, EIL, CCI ASTHE RUPEE touched an alltime low of 72.67 against the dollar in early trade on Monday,hitting stocks and driving up bond yields, a concerned government is considering floating non-resident bonds and steps to narrow the current account deficit (CAD) to propupthedomesticcurrency, according to senior officials. The NRI bonds could be announced “at short notice”, one official said. Although the country has adequate foreign exchange reserves to deal with volatility in the currency market, other options may also be announced, said one of the officials.“More measures will betaken,ifrequired.Itiswrong to say the Reserve Bank of India (RBI) lacks reserves to deal with the rupee’s fall,” he said, adding that both the finance ministry and the RBI are closely monitoring the situation. Analysts saw the RBI intervening to stem the rupee’s slide on Monday too. While the size of the NRI bond issue is still unclear, a Bank ofAmerica Merrill Lynch report last week said the RBI THE FINANCE MINISTRY is likely to replace GAIL, Engineers India (EIL) and Container Corporation with new PSUs in the CPSE exchange-traded fund (ETF) since the government holding in these companies has fallen below 55%, reports PTI. Three PSUs or more would be included and the number would depend upon the value of the scrip and the corresponding weightage in the ETF basket. CBI's extradition request against Nirav's brother THE CBI HAS moved an extradition request to bring back Neeshal Modi, brother of fugitive billionaire Nirav Modi’s, reports PTI. The request was sent to the home ministry on Friday. Also, the ED has sent Interpol a reminder about its application seeking a red corner notice against absconding jeweller Mehul Choksi. Trade war jitters Rupee dives, bonds rise, stocks tank 8.2 The rupee on Monday hit a fresh record low of 72.67 against the dollar in intra-day trade before closing at 72.44. On the other hand, the benchmark bond yield rose to 8.16%, its highest level since 2014. Also, the stock market fell more than 1% to close at threeweek-low levels. 7.4 8.0 FE BUREAU 8.158 7.962 7.8 7.6 66 68 10-yr bond yield (%) Jun 11, 2018 Sept 10, 2018 67.428 (Inverted scale) 72.445 70 72 74 Jun 11, 2018 -1.25 0 -2 -4 -0.28 -2.78 Dec 30, 2016 Aug 31, 2018 Source: Bloomberg $ BOND Sept 10, 2018 40,000 37,922.17 38,000 could issue such bonds worth $30-35 billion in the Decemberquarter.These are typically forex deposits raised from NRIs at attractive rates for three to five years, with some lock-in and an implicit central bank guarantee. Analysts have said instead of using up forex reserves, India should raise money via NRI bonds as it did in 2013. Bank ofAmerica Merrill Lynch chief economist Indranil Sengupta has argued that a $3035 billion issuance would change investors’ perception of the rupee and help stabilise it. He pointed out that all the three NRI issuances (1998, 2000 and 2013) had staved off contagion in the past while an interest-rate defence had only partial success in one case — when Bimal Jalanwas RBI governor.In 2013,when the rupee hit 68.85 after the taper tantrum talk bythe US Federal Reserves,the RBIwas forced to launch the maiden NRI bonds and mopped up $30 billion with a three-year maturity. 32,000 QuickPicks BSE plea for new power exchange THE BSE, along with ICICI Bank and PTC India, has sought a licence from power market regulator CERC to set up a new power exchange, reports fe Bureau in Mumbai. The power sector has of late emerged as the source of much of the stress in the banking sector. A number of projects have failed to repay their loans to banks and other financial institutions because of a lack of power purchase agreements or other hurdles. PAGE 10 Monsoon below normal in Aug THE COUNTRYWIDE monsoon saw the highest rain deficiency of the season in August, as per IMD data, reports PTI. Ironically, in this month a large part of Kerala was submerged and many other states received “excess” rainfall. In the third consecutive month of rainfall deficiency, August recorded 92% of the long period average after 95% in June and 94% in July. PAGE 12 STEEL MAJOR ARCELORMITTAL will up its bid for Essar Steel to `42,000 crore andwill also settle its dues of `7,000 crore to Uttam Galva and KSS Petron, to stay ahead of rival bidder Numetal, sources close to the development said. The Lakshmi Mittal-promoted steelmaker’s move comes after the National Company Law Appellate Tribunal (NCLAT)saidlatelastweekthat Arcelor’s bid would be eligible only if it clears the dues of Uttam Galva and KSS Petron. `37,000 cr is Numetal's second bid offer which is considered eligible by the NCLAT 34 (MW) The appellate tribunal askedArcelorMittaltoclearthe dues by September 11 while ruling that Numetal’s second bid for an amount of `37,000 crore was eligible. Bhan in New Delhi. It said in its petition that the NCLAT has applied differentyardsticksfordifferentbidders.The matter is being mentioned for early hearing on Tuesday morning. The tribunal had approved rival Numetal’s second bid. BHARAT BANDH Operational without PPA: 51,183 Under construction: 58,463 THE MADRAS HIGH Court on Monday gave temporary impunity to RKM Powergen’s 1,440 MWstressed powerunit at Chhattisgarh from any action under the Reserve Bank ofIndia’sFebruarycircularthat seeks to fast-track insolvency processfordefaultingprojects. The day,however,also sawfour firms — Essar Power, GMR Energy,KSKEnergyandRattan India Power — withdrawing their petitions from the AllahabadHighCourt,seekingsim- ilarrelief;thesecompaniesmay now join a group of firms that had approached the Supreme Court earlier, seeking joint hearingoftheircasesofsimilar import.Theapexcourtisslated to hear the matter onTuesday. The RBI circular requires lenders to file insolvency petitions against several stressed power units before the National Company Law Tribunal (NCLT) byTuesday. The Allahabad HC had on August 27 refused to set aside the circular. Continued on Page 2 Meanwhile, a meeting of the committee of creditors (CoC) of Essar Steel remained inconclusive on Mondayprobably because lenders were awaiting dues of `7,000 crore to be paid byArcelorMittal. While the company had earlier said it would repay the dues only if it was allowed to take control of Essar Steel, the NCLAT insistence it must repaythe loans to be eligible to bid forEssarSteel means it had no choice if itwanted to stayin the race. Continued on Page 2 ● PROFITEERING Normal life hit in some states, some reports of violence NAA finds HUL dealer guilty SUMIT JHA New Delhi, September 10 Operational with PPA: 66,485 38,870 is the amount Essar Steel owes to its lenders, including lead bank SBI is the amount ArcelorMittal owes to Uttam Galva and KSS Petron. Only after repayment of dues will it become eligible to bid NCLAT order: Arcelor moves SC ARCELORMITTAL ON Monday moved the Supreme Court against the NCLAT order that asked it to first clear dues of `7,000 crore of firms it was previously associated with by September 11 to be eligible to bid for bankrupt Essar Steel,reports Indu `49,000 cr `7,000 cr Outstanding debt of these projects (` cr) stressed power projects ANUPAM CHATTERJEE New Delhi, September 10 Investors should not only look at whether a firm is debt-free or debt-heavy but also nature of the industry, business model and its potential to survive in the long run ■ Personal Finance, P13 SHAMIK PAUL Mumbai, September 10 Relief to 1 project, 4 more join SC plea Sept 10, 2018 Should you invest in a debt-free company? Continued on Page 2 ArcelorMittal ups the ante in the race for Essar Steel POWER NPAs Sensex Jun 11, 2018 ICICI BANK ON Monday filed an insolvency case against Jaiprakash Associates before the Allahabad bench of the National Company Law Tribunal (NCLT), which issued notices to the latter seeking a reply by September 17 when the matterwill be heard next. The company owes around `1,260 crore to ICICI Bank. ICICI Bank had filed an insolvency case in the NCLT after Reserve Bank of India last monthrejecteditspleatomake an exception in the case of JP Associates as banks had finalised a restructuring plan andalsopartlyimplementedit. Once an insolvency plea is admitted,a resolution professional is appointed to complete the resolution process within 180 days. BIDDING BATTLE Continued on Page 2 36,000 35,483.47 34,000 $ $ NRI Bond Total capacity: `/$ Special Feature Debt 0.36 2 FE BUREAU New Delhi, September 10 Net FPI inflows in $ billion Debt Equity 4 ICICI Bank moves NCLT against JP Associates FE BUREAU New Delhi, September 10 FPIs turn net sellers in 2018 6 ● INSOLVENCY CASE Former Prime Minister Manmohan Singh, Congress president Rahul Gandhi, senior party leader Sonia Gandhi and NCP's Sharad Pawar at a 'dharna' during the 'Bharat Bandh' protest against fuel price hike and depreciation of the rupee, in New Delhi on Monday PTI PRESS TRUST OF INDIA New Delhi, September 10 NORMALLIFEWAShitinsome statesMondaywithofficesand educational institutes closed and vehicles off the roads during an opposition sponsored “Bharat Bandh” which was largely peaceful, barring some incidents of violence. A three-year-old girl died in Bihar’s Jehanabad district whichtheBJPallegedwasdueto delayinfindingavehicletotake her to the hospital. Train serviceswere affected in Odisha. The bandhwas called by21 opposition parties led by Congress president Rahul Gandhi. It was kick-started at Rajghat where Gandhi offered holy water from his Kailash Mansarovar yatra. He then accompanied opposition leaders then marched to Ramlila Maidan from Rajghat. InstateslikeKerala,Karnataka, Bihar, Odisha and Arunachal Pradesh life was hit by the shutdown, but Uttar Pradesh, West Bengal and Mizoram remained largelyunaffected. Former PM Manmohan Singh said it was time for all opposition parties to shed theirdifferencesandmoveforward unitedly “to save” sovereignty and democracy. The BJP dubbed the bandh as an attempt to spread rumourand confusion among the masses and said people will “puncture the grand alliance balloon”floated bythe opposition party. In New Delhi, offices, schools and colleges in opened attheirregulartimedespitethe bandh. Traffic was affected in DaryaganjandaroundRamlila Maidan due to the protest. In Odisha, train services were disrupted in manyplaces as Congress workers blocked railway tracks to enforce the bandh. At least 10 trains were cancelled. Continued on Page 2 Govt rules out excise duty cut as petrol, diesel prices hit new highs, Page 12 A JAIPUR-BASED DEALER of Hindustan Unilever (HUL) products has turned out to be the first business in India to have been held guilty of not passing on the benefit of reduced tax incidence to consumers in the foods and services tax (GST) regime. The National Anti-profiteering Authority (NAA) has found that while the GST on skincare product Vaseline was reduced to 18% from 28% on November 15 last year, one Sharma Trading Company increaseditsbasepriceinorder to keep the selling price the same as before and thereby denied the consumer the benefit of the tax cut. The dealer/HUL will have to be deposit the extra amount collected from the consumers in a designated fund; the dealer will also have pay a fine for the lapse. In its previous four orders, the authority had exonerated the businesses accused of profiteering as it didn’t find merit in the complaints.In the latest order,however,the NAA found the dealer has profiteered to the extend of `5,50,370 on account of increased base price charged between November 15,2017, and January 31, 2018. “NAA has significantly increased the tax compliance risk for all companies, stockists and their distributors, especially FMCG companies,” said Rajat Mohan, partner at AMRG & Associates. Continued on Page 2 CHANGE OF GUARD Spotlight on Alibaba CEO Zhang as Jack Ma starts retirement countdown REUTERS Beijing/Shanghai, September 10 UNLIKE HIS CHARISMATIC boss,JackMa,AlibabachiefexecutiveDanielZhangisn’tusually one to grab the limelight, let alonemakekungfumovieswith superstars ordance in public. Little is known outside the company about Zhang, a softspoken accountant who goes under the epithet “Xiaoyaozi” at work — the name of a character from a Chinese martial artsnovelliterallymeaningthe “free and unfettered one”. But he will have to step out from the shadows after Ma said he would leave his role as chairman in September 2019, handing Zhang the reins of his $420-billion tech giant. “We don’t know much about(Zhang)eventhoughhe’s been CEO for a while, because he’s by nature a very low-key person,low-profile.He’s happy to not be in the limelight,”said DuncanClark,managingdirectoratBeijingtechadvisoryBDA Alibaba founder Jack Ma (left) with CEO Daniel Zhang and author of “Alibaba: The House that Jack Built”. The handover of power, the first such transition for any of China’smajortechfirms,willsee Zhang,46,elevatedtothetopof asprawlingempirethatspansecommerce,payments,fast food delivery and brick-and-mortar retail.Zhang,wholeadsAlibaba’s investor calls with polish stemming from his years at global auditors Arthur Andersen and PricewaterhouseCoopers, has been CEO since 2015. Hisfingerprintsareonsome ofthecompany’smostsuccessful moves: He was a key architect of Alibaba’s “Singles Day”, theNovember11eventthathas become the world’s largest online shopping festival. Alibaba has added around $200 billion to its marketvalue since he became CEO, and has now posted nine straight quarters of revenue growth above 50% while investing in food delivery and offline retail, and pushing into SoutheastAsia. Continued on Page 2
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