OPINION, P6 NATION, P14 SUNIL JAIN IBC far superior at battling NPAs than UPA-era solutions INTERNATIONAL, P4 A GULATI & S HUSSAIN DEFENCE FDI TRADE WAR Ethanol can replace petrol at only `47 — but `52 fixed as govt forces mills to pay farmers too much Sitharaman: Working with commerce ministry for clarity in numbers Trump ‘likely’ to announce new China tariffs today NEW DELHI, MONDAY, SEPTEMBER 17, 2018 FOLLOW US ON TWITTER & FACEBOOK. APP AVAILABLE ON APP STORE & PLAYSTORE WWW.FINANCIALEXPRESS.COM VOL.XLIV NO. 170, 18 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 LIQUIDATION OF STRESSED FIRMS ● POWER ASSETS Creditors staring at 92% haircut Cloud for agile innovation Cloud business accounts for 23% of IBM revenue, says Shailesh Agarwal, chief strategy officer, IBM India/South Asia ■ INVESTOR, P9 Specialty product execution is key Form 483 with 6 observations for Sun Pharma’s Halol facility highlights the risks in the business; ‘Hold’ maintained ■ INFRASTRUCTURE, P11 Skepticism greets govt proposal The move to fix tariffs before bids are invited for airports needs to be reappraised, say industry stakeholders ■ SCIENCE & TECH, P12 On the plastic highway Road makers turn to recycled plastic for tougher surfaces that should last two-to-three times longer than conventional roads QuickPicks Hindalco to seek shareholders’ approval for raising `6,000 cr HINDALCO INDUSTRIES will seek shareholders' approval for raising `6,000 crore through nonconvertible debentures on a private placement basis at its annual general meeting next week, reports PTI. The company seeks to augment resources for the ongoing capital expenditure, repayment of existing loans, and for general corporate purposes. PAGE 3 DoT awaits clarification on in-flight connectivity norms THE TELECOM department is awaiting clarification from the shipping ministry over area to be covered in the sea for mobile services under in-flight connectivity service before releasing the final rules, reports PTI. In-flight connectivity norms will also cover maritime transport. 2,886 0.4 3,011 580 3,409 As and when fresh default cases regularly come up, the resolution performance of the IBC will look much more impressive. —MS SAHOO CHAIRMAN, IBBI IBBI data, based on inputs from resolution professionals. Bycontrast,creditorsrecovered `49,783 crore, or almost 56% of their admitted claims, from 32 stressed companies where insolvency resolution plans were approved by the National Company Law Tribunal(NCLT)bytheendofJune. Commentingonliquidation, IBBI chairman MS Sahoo told FE:“The not-so-good results in the initial set of cases is no indicationoftheperformanceofthe IBC.As and when fresh cases of defaults regularly come up for being admitted, the resolution performanceoftheIBCwilllook much more impressive.” Continued on Page 2 IFCI sees resolution of NPA cases worth `8,000 cr, Page 2 NON-CORE VENTURE Niti Aayog halts Oil India’s CGD plans THE NITI AAYOG has denied ‘permission’ to state-run Oil India (OIL) to venture into the country’s reinvigorated city gas distribution (CGD) business, arguing that exploration companiesmustfocusontheir core activities given the country’s stagnant oil production. An OIL-HPCL consortium had won bids for two geographical areas (GAs) — Ambala and Kurukshetra in Haryana, and Kolhapur in Maharashtra — during the eighth round of CGD bidding in 2017. Undertheguidelinesissued bydepartment of public enterprises in 2016, a PSU looking to create a JV with other companies needs to obtain approval from the Niti Aayog. The move by the thinktank is at odds with the government’s policyof encouraging integrated oil and gas businesses in the public sectorvia mergers of PSUs to create world-class entities. Last year, ONGC, the country’s largest explorer, acquired 51% in downstream company HPCL under a government directive. Also, oil marketing companies like IOC and BPCL have interests in domestic and overseas explo- Diverse interests Core business Exploration Other interests refining and retail fuel business through subsidiaries HPCL (paid ` 37,500 cr to acquire govt's stake) and MRPL ONGC GAIL Core business Pipelines Other interests LNG, petrochemicals, CGD and exploration (participation in 10 blocks) IOC Core business refining, retail fuel, cooking gas, petrochemicals Other interests has 49% share in crude and product pipeline by length and interest in 19 domestic and overseas exploration blocks, Plans to spend around `,500 cr in FY19 in non-core businesses. ration blocks and crude and product pipelines. The hurdle put by the public-sector think-tank would mean means that residents of the two GAs would have to wait longer to get piped gas connections in their houses and run their cars on compressed natural gas (CNG). Continued on Page 2 Brewing storm Typhoon Mangkhut has made landfall in Guangdong province, China, on Sunday. It is considered equivalent to a Category 5 'intense hurricane' in the Atlantic Page 4 DISINVESTMENT Series of offers to hit market by Nov-end; buybacks in Q4 PRASANTA SAHU New Delhi, September 16 WITH ONLY `9,220 CRORE or a little over 11% of the annual disinvestment target achieved so far,the Centre has lined up a plan to conclude a series of stakesalesbyNovember-end,as it aims to exceed the FY19 disinvestment target of `80,000 crore.The window is critical for stake sales as markets could become feverish in the fourth quarter of FY19, ahead of general elections inApril-May. The Centre is banking on minority stake sales in PSUs such as ONGC and Coal India,a further fund offer under the existing CPSE-ETF, buybacks by a clutch of firms,monetisation of a portion of SUUTI holdings in Axis Bank and ITC, and strategic sales of a some relatively smaller companies. While many IPOs are also being planned,listing of Ircon CHALLENGING TASK `80,000 cr FY19 disinvestment revenue target ~`9,220 cr Disinvestment so far in FY19 compared to `55,335 cr raised/assured (HPCL stake sale) by the same time a year ago Likely ~`20,000 cr Likely from planned OFSs of 5% each in ONGC and Coal India ~`6,000 cr Fresh offers of CPSE ETF ~`815 cr From IRCON and Garden Reach IPOs Other options ~`45,000 cr Sale of a portion of Suuti’s strategic stakes in ITC & Axis Bank. OFSs in NBCC, IOC, HUDCO, BEL, etc; strategic sale of Pawan Hans, etc; likely buybacks by NTPC, NHPC, etc, and about 5 IPOs International and Garden Reach Shipbuilders will materialise later this month. Lastyear,theCentrewasina comfortablepositiononthedis- UDAY DISCOMS Delayed payments by public entities, staggered release of subsidies, Saubhagya drive keep losses high ANUPAM CHATTERJEE New Delhi, September 16 THE REDUCTION OF electricity discoms’ aggregate technical and commercial (AT&C) losses, a key objective of the NDA government’s flagship Ujwal Discom Assurance Yojana(UDAY)fortherevivalof these entities, is hardly keeping pace with the target.While UDAY aims to bring down AT&C losses* (%) Q1 Q1 Q1 FY17 FY18 FY19 PRESS TRUST OF INDIA Mumbai, September 16 UDAY was approved by Union Cabinet on November 5, 2015 *At the end of the relevant period these losses to 15% by the end of the current fiscal,it stood at 23% at the end of June, just a percentage point down from a year ago.In fact,from the level at the end of March 2018 (19.1%), the losses went up, although seasonal variations of demand and collections played a role here. Continued on Page 2 Now, half of Jio’s new subscribers via `500 JioPhone ALMOST 50% OF the new subscriber additions on Reliance Jio’s network have come from JioPhone since July 5, when the price of the 4G feature phone was slashed from `1,500 to `501 by exchanging it with an old feature phone. Though company officials declined to share the sales number of the Jio phone post the reduction in prices, trade channels indicated that between July- August, 10 million handsets have got sold. This takes the cumulative sales of the phone to around 35 million. At the company’s annual general meeting on July 5, Reliance Industries chairman Mukesh Ambani had said that since launch (October, 2017) 25 million Jio phones had got sold. Sources said that since July when the prices of Jio phone came down to `501 through a scheme called Monsoon Hungama monthly subscriber addition Continued on Page 2 Strategic sale of 4 Air India subsidiaries soon, Page 2 AT&C loss reduction lags target States set to miss FY19 despite 15% cap for March-end targets: Icra SELLING POINT RISHI RANJAN KALA New Delhi, September 16 investment front bythis time. ● FISCAL SETBACK 19.1 ■ eFE, P8 250 #136 firms *124 firms whose liquidation value has been fixed FY18 Content IP rights: worth the risk? With high demand for visual content, it may be a wise time to retain IPRs but do content producers concur? JODPL Gupta Coal Rotomac Exports 20.3 Source: IBBI SAURABH KUMAR New Delhi, September 16 ■ BRANDWAGON, P10 Gupta Corp Rotomac Global Gujarat NRE Coke FY17 Roofit Industries 172 50 351 3,430 3,641 3,922 3,927 REI Agro 23.9 8,625 Grand total FY16 FE SPECIALS 52,671# THE RESERVE BANK of India has refused to be part of a highlevel committee headed by the Cabinet secretary which was constituted to resolve stress in thepowersectorasitisnotwilling to relax norms to deal with badloans,accordingtoasource. “The RBI has shown its unwillingness to attend the meeting of the empowered committee to resolve stress in powersector.Theirrepresentatives did not attended first and second meeting of the panel held on August 31 and September 14,”the source said. “Thecentralbankhasgiven its own reasons for its refusal toattendmeetingsofthecommittee.RBI has made its stand clear in courts that theywould not relax the new framework to resolve bad loans.Moreover, RBI is not readyto relax norms for setting up an asset reconstruction company for warehousing stressed projects to prevent distress sale,” the source added. The RBI has maintained its standinvariouscourts,includingtheSupremeCourt,andthe matter is still sub-judice. Aheadofthefirstmeetingof the empowered committee on August 31, 2018, power minster RK Singh had told media personsthattheRBIwasinvited to attend the meeting of the high-level panel. However, no RBI representative turned up. Similarly, no RBIrepresentativewaspresent in the second meeting of the committee held on September 14,2018. The panel was constituted bythegovernment,withrepresentatives from the ministries of railways,finance,power and coal,as well as the lenders having major exposure to the power sector on July 29, 2018, to resolve the stress and revive such assets. 23 CREDITORS, MAINLYBANKS, are staring at the prospect of an average haircut of 92% in 124 of the 136 stressed firms that were facing liquidation under the Insolvency and Bankruptcy Code (IBC) at the end of the June quarter due to theabsenceofresolutionplans to turn them around, according to the data compiled bythe Insolvency and Bankruptcy Board of India (IBBI). The liquidationvalue of the 124 companies has been pegged at just `4,817 crore, whilethetotaladmittedclaims ofcreditors(bothfinancialand operational) stand at `57,121 crore.The liquidationvalues of a dozen others were yet to be determined,althoughthetotal admitteddebtinvolvingallthe 136 stressed firms stood at `57,378 crore, showed the 4,817* ` PRESS TRUST OF INDIA New Delhi, September 16 24.1 TATA STEEL HAS launched an ambitious project to significantly extend the operational life of one of the two huge blast furnaces of its UK's largest steelworks, reports PTI. The project, costing millions of pounds, is expected to take several months. BANIKINKAR PATTANAYAK New Delhi, September 16 Admitted Liquidation value claims 25.9 Tata Steel begins work on blast furnace in UK ` RBI recuses itself from high-level committee (figures rounded off, in ` cr) Claims of financial creditors only 142 AS MANY AS 20 lakh people have joined the modified Pradhan Mantri Jan Dhan Yojana (PMJDY), taking the total number of account holders to 32.61 crore as on September 5, reports PTI. The government earlier this month relaunched PMJDY as an open-ended scheme with higher insurance cover and double the overdraft facility. KEY CASES 341 IN THE NEWS 20 lakh people join modified JanDhan scheme Liquidation value of 124 firms pegged at just `4,817 crore against debt of `57,121 crore; most cases dragging since pre-IBC period READ TO LEAD by Jio has increased. While earlier it used to be around 6-7 million per month, it has now touched 10-12 ILLUSTRATION: ROHNIT PHORE million a month and half of it comes through Jio phones. Apart from reducing the price of the JioPhone the company also added popular apps – WhatsApp, YouTube and Facebook which together have a market share of around 80% — in the phone, to increase its traction amongst users. Before the near 66% reduction in price and addition of popular apps, the phone had notched sales of around 25 million in a span of eight months, which analysts did not see as too high. The reason cited was that it addressed only 20% of the feature phone market as the entry level price `1,500 (refundable security after three years) was seen as too high for this segment. “However, with the price down to `510 it addresses 90% of the market,” analysts said. Ambani has targeted 100 million users for the feature phone in the shortest possible time. Continued on Page 2 FUNDING OF FARM loan waivers,poll-related spending and other populist measures are likely to ensure that states are set to miss their fiscal consolidation targets budgeted at the beginning of the year,says a report. “Given the factors such as funding of crop loan waivers, election-related spending and the flood relief will see the states miss theirfiscal consolidation targets,” Icra said in a weekend note. The states’ fiscal deficit is primarily financed by issuing state development loans (SDLs). In April-August of FY19, gross issuance of SDL contracted by 3.4 % to `1.32 lakh crore, primarily led by a sharp decline in issuance by Uttar Pradesh, Maharashtra and Gujarat. However, excluding these three states,total SDLissuance by the remaining states has grown 14.7% in the first five months of FY19. Icra also estimates that `1.3 lakh crore of SDLs are scheduled to be redeemed in FY19, much higher than `0.8 lakh crore redeemed in FY18. “Given the sharp rise in the redemption amount, and assuming an annual growth of 10-20% over the net SDL issuance of `3.4 lakh crore in FY18, gross SDL issuance may rise to `5-5.3 lakh crore in FY19 from `4.2 lakh crore in FY18,”says the report.
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