OPINION, P8 COMPANIES, P6 INDRANIL SEN GUPTA NRI bonds will help stabilise ` better than tariff hikes COMPANIES, P7 EDITORIAL UNDER THE SCANNER OVERSEAS PRESENCE Forget hiking gold import duties, just get the gold bond right to lower imports I-T dept inspects books of Naresh Goyal-led Jet Airways Ritesh Agarwal-led OYO makes UK market foray NEW DELHI, THURSDAY, SEPTEMBER 20, 2018 FOLLOW US ON TWITTER & FACEBOOK. APP AVAILABLE ON APP STORE & PLAYSTORE WWW.FINANCIALEXPRESS.COM READ TO LEAD VOL.XLIV NO. 173, 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 SENSEX: 37,121.22 ▼ 169.45 NIFTY: 11,234.35 ▼ 44.55 NIKKEI 225: 23,672.52 ▲ 251.98 HANG SENG: 27,407.37 ▲ 322.71 `/$: 72.39 ▲ 0.58 `/€: 84.56 ▲ 0.66 BRENT: $78.57 ▼ $0.46 GOLD: `30,722.00 ▼ `15.00 Change (% y--o-y) 1.86 Import Export Items that see import spikes ‘Steel, iron and products’ imports (Jan-Aug, 2018, % growth in quantity y-o-y) ‘Long products including structures’ (April-August, 2018) $7.35 billion Wire rods 17.55 Continued on Page 2 12.79 Gold schemes yet to succeed in a big way Galvanised 9.36 steel up 24.3% y-o-y Mop-up* (` cr) Source: SteelMint 2015-16 1,318 2016-17 requests seeking comment. Shares of Indian steel companies jumped after the news. In afternoon trading,JSWSteel was up 3.3%, while Tata Steel and Jindal Steel and Powerrose by more than 2%. State-runSteelAuthorityof India also rose by more than 2%. The broader Nifty metal index rose as much as 2.2%,its biggest gain in nearly a week. The government last week announced a slew of steps aimed at stemming a steep decline in the rupee. Thecurrencyhitarecordlow of 72.99 on Tuesday,making it Asia’s worst performer amid a widening trade deficit and an emerging market selloff. It strengthened slightly on Wednesday on talk of central bank selling of the dollar, but is still downmorethan13%thisyear. 3,451 2017-18 (RE) 5,000 2018-19 (BE) 5,000 Schemes were launched in Nov 2015 *Sovereign gold bond, gold monetisation and Indian gold coin PRABHUDATTA MISHRA New Delhi, September 19 EVEN AS ARRIVALS of the kharif 2018 crop have started in key markets and prices of freshpulsesseemdepressedby 30-35%, the government is offloading its old lentil stocks in the market at 15-20% losses as it prepares itself for purchasing the newcrop at the higher minimum support prices (MSPs). For Nafed, the designated procurement agency for pulses and oil-seeds, the current sales are inevitable as it has to make room for storage of new crop, but in the process, it could end up offering a windfall for profithungry traders, leaving both the farmers and consumers in the lurch. It is only to be expected that traders who buy the old stocks from Nafed now Procurement* by Nafed (lakh tonne) Pulses Oilseeds Sales (` cr) 1,934 2,641 *kharif and rabi crops of 2016 and 2017 will sell these to the same agency when it undertakes MSP operations for new crop shortly, raking in big moolah. (Pulses MSPs for kharif 2018 are 4-25% higher than in the year-ago season). According to the data reviewedbyFE,Nafed’saverage price realisation from sale of moong from last kharif season is `4,762.67/quintal, down 15% from an MSP of `5,575/quintal at which the stockswere purchased byit.So a trader who now buys last year’s moong stocks from Nafed will have the option of selling the same to Nafed in a few weeks at `6,975/quintal, the MSP for the new season, Express photo: NIRMAL HARINDRAN With new laws, sky is limit for drone-tech start-ups Start-ups such as HuviAir and Skylark Drones see more clients lining up to use drones to collect data once the DGCA norms for flying drones come into effect in December ■ eFE, P13 Continued on Page 2 QuickPicks Sebi issues clarification on ICICI Bank settlement application THE SECURITIES and Exchange Board of India (Sebi) on Wednesday in a statement clarified that ICICI Bank and its CEO Chanda Kochhar have filed replies to showcause notices issued by the regulator, reports fe Bureau in Mumbai. The markets regulator further clarified that Sebi has not received any settlement application from ICICI Bank or from any other entity related to the matter. The markets regulator had issued a showcause notice over violation of disclosure norms related to the conflict of interest in business dealings of Kochhar’s husband Deepak Kochhar with Videocon Group. BSE, NSE get nod to launch commodity derivatives LEADING STOCK exchanges BSE and NSE have received markets regulator Securities and Exchange Board of India’s (Sebi) approval to launch the commodity derivatives segment from October 1, reports PTI. Sebi last December announced that from October 2018, the country would have a unified exchange regime wherein stock exchanges would be allowed to offer trading in commodities derivatives. BSE will conduct mock trading in live environment for the segment on Saturday. Larger rival NSE had conducted a similar session on September 1. PAGE 12 CBI scrutinises India’s largest law firm in PNB fraud probe INDIA'S LARGEST law firm, Cyril Amarchand Mangaldas (CAM), is being scrutinised by federal agents after they seized documents related to the $2-billion fraud at state-run Punjab National Bank from CAM’s premises in February, a lawyer representing the government and a police source told Reuters. CAM declined to comment on its relationship with Nirav Modi, who is on the run overseas. Its spokeswoman, Madhumita Paul, said the firm "strictly follows the legal best practices and does not comment on matters that are subjudice or are under investigation”. PAGE 7 PSU insurer walks out due to high losses CHIRAG MADIA Mumbai, September 19 ANEAR FIVE-FOLDincreasein claims since the current phase of Rajasthan’s Bhamashah insurance scheme started (see graphic), amid allegations of large-scale fraud by hospitals, has resulted in PSU insurance firm The New India Assurance (NIA) Companywalking out of the scheme. While officials of NewIndia in Mumbai and Jaipur refused to comment, Naveen Jain who heads Rajasthan’s State Health AssuranceAgency(SHAA) said, “This is illegal as they are violating the Insurance Act”. He added, “Overnight contract cannot be breached andwe are Claims (` cr) 100 100 80 75 60 50 40 0 25 23.3 Dec 2017 0 Dec 2017 Sep 2018* Sep 2018* *Extrapolated for 30 days based on data till Sept 12, 2018 tonnes of pulses and oilseeds procured at MSPs from farmers in 2014-18 versus 8 lakh tonne in 2011-14 ■ Bank guarantee for Nafed's procurement operations `45,450 crore for this fiscal, from `200-250 crore four years earlier and make a huge profit of over 40%. Clearly, a vicious cycle has beencreatedwhereneitherthe farmer nor the consumer benefits but only the large traders do. The odd situation exposes not only bad economics of the government’s open-end procurement policy but also its lack of efficacy when it comes to achieving the objective of ensuring remunerative prices to farmers. With limited storage infrastructure, Nafed is unwittingly driving down the market prices as it offloads stocks and inflating its own procurement costs. Continued on Page 2 ● RBI MOVE FE BUREAU Mumbai, September 19 `12,000 crore in a 6:4 ratio. According to sources, the cap on premiumwill be applicable for both the trust and insurance models for the scheme. A notification in this regard is expected shortly. Since two-thirds of 30 states on board have opted for the trust model, the ultimate burdenontheexchequercould be higher, a state government official said. THE RESERVE BANK on Wednesday relaxed external commercial borrowing (ECB) norms for a certain category of firmsandallowedIndianbanks to market rupee-denominated (masala) bonds,giving effect to stepsannouncedbythegovernmentlastweektostimulatecapitalinflowstopropuptherupee. Eligible companies in the manufacturing sector will now be allowed to raise ECBs up to $50 million or its equivalent with minimum average maturity period of one year, against the earlierperiod of threeyears, the RBI said. While many experts feel it might take some time for ECBs under the new policytobeaccessed,somelarge playersunabletogetfundsfrom domestic banks might start using this route in the coming months. They said the move could trimhedgingcostsofmid-sized firms and also enable them to raise money for a short period, with the scope to roll it over, if required. Firms could also tap the overseas market more frequently and be in a better position to retire high-cost, longterm ECBs through short-term cheaperloans. Continued on Page 2 Continued on Page 2 Bollywood flavour Actors Anushka Sharma and Varun Dhawan with The Indian Express deputy editor Seema Chishti at the Express Adda in Mumbai on Wednesday ● MODICARE Premium to be capped at `1,110 PRASANTA SAHU New Delhi, September 19 Continued on Page 2 Incurred claim ratio (%) 111.9 125 120 20 taking measures....” Incurred claims ratio (ICR), ortheratioofclaimstothepremium received, were 90% in the first year of the scheme in 2015-16 and rose to 176% in 2016-17. Following this, New Indiaraisedthepremiumfrom `370perfamilyto`1,263.ICR rose from 40.5% in December 2017 to 118.8% in the first 12 days of September 2018. New India’s letter of September 14, 2018 says SHAA has violated the contract by withholding `106.74 crore of premium due to it — the premium was deducted as New Indiahadnotallowedclaimsof this amount. BIGGER ROLE ■ 64 lakh metric Easier ECB norms may boost capital inflows BHAMASHAH Special Feature 14.56 Procurement Disposal Balance stocks 7.61 THE GOVERNMENT IS consideringamulti-prongedapproach to trim gold imports, which includes plans to make the monetisation scheme more attractive and also easier to adopttoinducehouseholdsinto parkingtheiridleholdingswith banks,a seniorofficial told FE. The interest on gold parked with banks under the scheme could now be raised from up to 2.5% (which varies depending onthetenure).Thefinanceministrymayalso raise issuances of sovereigngoldbondsandtweak features to shift a portion of investment demand to “paper gold”totrimphysicalpurchases. Nafed offloads old stocks of lentils at 15-20% losses, to purchase kharif 2018 crop shortly at much higher MSPs 22.17 « 2.65 -33.4 118.76 INDIA'S LARGEST lender State Bank of India is in the international bond market to raise nearly $500 million in green bonds, making it the maiden issuance for the lender, reports PTI. The tenor of the bonds is expected to be five years and the notes are to be issued by the bank's London branch. THE STEEL MINISTRY has proposed increasing the effective importdutyonsomesteelproducts to 15% from current rates ranging from 5% to 12.5%, according to two sources and a governmentdocumentreviewed by Reuters, as the country looks to support the rupee. The proposal is a part of a broadergovernmentplantocut “non-necessary”importstostop an outflow of dollars that has sent the rupee to record lows. “The broader message is to address the trade balance but wewill tryto promote‘Make in India’ by encouraging domestic (steel) production,”said the source, who declined to be named ahead of a possible decision. The source said there was no certaintythat the proposed dutywould be imposed. Steel and trade ministry officialswere expected to meet on Wednesday to discuss the proposed import steps but the talks did not take place, one of the sources said, without giving details. The steel and trade ministries did not respond to 6.1 40.49 SBI to raise $500 m via green bonds « THE UNION Cabinet on Wednesday approved an ordinance to ban the practice of instant triple talaq, with law minister Ravi Shankar Prasad saying there was a "compelling necessity" to bring the measure as instances of 'talaq-e-biddat' continued unabated despite the Supreme Court striking it down, reports PTI. Under the proposed ordinance, giving instant triple talaq will be illegal and void and will attract a jail term of three years for the husband. REUTERS New Delhi, September 19 million tonne (April-July FY19) « IN THE NEWS Ordinance to ban triple talaq gets Cabinet nod Steel ministry for 15% duty on some products, up from 5-12.5% now BANIKINKAR PATTANAYAK New Delhi, September 19 Traders eye 40% windfall as govt sells in depressed market 43.7 Govt mulls raising steel import duties Fresh push to gold schemes likely PRICE SUPPORT FOR PULSES 5.04 ● IMPORT CURBS 48.74 SUPPORT FOR RUPEE THE CENTRE WILL likely cap annual premium outgo for the ambitious Pradhan Mantri Jan Arogya Yojana (PM-JAY) at `1,110/family, to provide `5lakh-a-year health cover to 10.74crorehouseholds.TheNiti Aayoghadearlierestimatedthe premium at `1,000-1,200. Between them, the Centre and states will share the scheme’s estimatedannualcostofaround HOW COSTLY A COVER? ■ PM-JAY to be launched by Prime Minister on Sunday ■ Cost to the Centre estimated at `4,000 crore for FY19 ■ 30 states have joined the scheme, 2/3rd opted for trust model, actual costs by them may be higher DEAL COUNTER Samara-Amazon combine acquires Aditya Birla’s More retail chain FE BUREAU Mumbai, September 19 AMAZON.COM INC AND INDIAN private equity firm Samara Capital have bought Aditya Birla Group’s food and grocery retail chain ‘More’ for an enterprise value of around `4,200 crore. More is the country’s fourth largest retail chain after Future Group’s Big Bazaar, Reliance Retail and DMart. The board of Aditya Birla Retail (ABRL) on Wednesday gave its approval to the deal as per which private equity fund Samara Capital acquired the majority 51% in ABRL, while Amazon’s investment arm, Amazon.com NV Investment Holdings, bought the balance 49%,sources said. An Aditya Birla Group spokesperson confirmed that the deal has been signed but declined to give any further details. When contacted, an Amazon spokesperson declined to comment. Thedealneedstobecleared Samara Capital has acquired 51% while Amazon.com the balance 49% ■ No FDI issue as Samara fund is sponsored & managed by Indians ■ Existing management team to continue to run More ■ More which has 575 stores will expand faster now ILLUSTRATION: ROHNIT PHORE by the Competition Commission of India. Samara’s investment is through its alternative investment fund, Samara AIF, and since it is sponsored and managed by Indians it will be considered a domestic investment according to the rules, sources said. As perthe country’s foreign direct investment rules, 51% FDI is allowed in multi-brand retail while 100% FDI is allowedincash-and-carryventures. The deal will help ABRL clearits debt of around `4,000 crore as on March 2018. With the acquisition, the new owners of More will expand its chain which had got stalled due to the company'shighdebt.Itislikelythat 100-150 stores will be set up everyyear.Currently More has 575 stores. Sources said that the existing management team will continue to run the company. 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.