OPINION, P8 COMPANIES, P6 INTERNATIONAL, P14 NEWLY CREATED ROLE FASHIONING A DEAL Former Hotstar honcho is Facebook’s new India MD & V-P Idol-led Michael Kors snaps up Italy's Versace for $2 billion EDITORIAL Wrongful prosecution law for Isro-type cases is a good idea UGC circular to mark Surgical Strike Day serves political ends, sets bad precedent MUMBAI, TUESDAY, SEPTEMBER 25, 2018 FOLLOW US ON TWITTER & FACEBOOK. APP AVAILABLE ON APP STORE & PLAYSTORE WWW.FINANCIALEXPRESS.COM READ TO LEAD VOL. 58 NO. 226, 18 PAGES, `7.00 P U B L I S H E D F R O M : A H M E D A B A D , B E N G A L U R U , C H A N D I G A R H , C H E N N A I , H Y D E R A B A D , K O C H I , K O L K ATA , L U C K N O W, M U M B A I , N E W D E L H I , P U N E SENSEX: 36,305.02 ▼ 536.58 NIFTY: 10,967.40 ▼ 175.70 NIKKEI 225: 23,869.93 ▲ 195.00 HANG SENG: 27,499.39 ▼ 454.19 `/$: 72.63 ▼ 0.43 `/€: 85.44 ▼ 0.46 BRENT: $80.56 ▲ $1.76 GOLD: `30,664.00 ▼ `33.00 ROUT CONTINUES Mayhem in markets spills over into manic Monday ASSURANCES FROM THE finance minister and the Reserve Bank of India (RBI) that liquidity would be suppliedifneededleftthemarkets unconvinced as stocks tanked on Monday led by a rout of shares of non-banking financial companies (NBFCs) and banks. Anxiety that liquidity would be scarce pervaded the bond market too and drove up the benchmark yield to 8.1220%. Meanwhile, the rupee lost a good 43 paise against the dollar, ending the session at 72.63 even as crude oil prices hit $80 per barrel. Monday’s mayhem was caused bycontinuing fears liquidity would remain scarce. The tight conditions caused by outflows on account of advance tax payments of Intra-day, September 24 36,305.02 Close Previous close 36,841.60 `/$ 10-year bond yield (%) Intra-day, September 24 72.25 72.47 (Inverted scale) Intra-day, September 24 8.140 72.40 8.120 72.63 72.55 8.100 72.70 72.85 Previous close 72.20 Open Close Bank Nifty 8.080 8.060 Previous close 8.079 Open Close BSE Finance Intra-day, September 24 25,800 25,645.05 Previous close Intra-day, September 24 6,000 5,870.85 25,550 25,596.90 25,300 24,970.35 Previous close 5,850 5,700 5,699.10 5,501.8 5,550 25,050 24,800 8.122 8.099 Open Close `1.3 lakh crore could be exacerbated by further outflows to the tune of `1 lakh crore of CAMPA funds. “These could move to the government’s accountfromthebanks,”Kotak Mutual Fund managing direc- 5,400 Open Close tor Nilesh Shah explained, pointing out the already tight markets could see a further shrinking of liquidity. Already, markets apprehend mutual funds (MFs) might find it hard to sell debt Continued on Page 2 `700-CRORE PAYMENT IL&FS gets part relief from NHAI ROUHAN SHARMA Mumbai, September 24 The government will take all measures to ensure that adequate liquidity is maintained/provided to the NBFCs, the mutual funds and the SMEs. ARUN JAITLEY, FINANCE MINISTER Special Feature Get `15-lakh personal accident cover on car insurance The insurance regulator has directed general insurance companies to raise compulsory personal accident cover for owner-driver of all classes of vehicles to `15 lakh ■ Personal Finance, P13 QuickPicks Monsoon rainfall drops further INDIA'S MONSOON has produced 9% less rain than usual, raising concerns over production of summer-sown crops as rainfall in many key grains’ producing states has been nearly a quarter lower than normal levels, reports Reuters. Meanwhile, the India Meteorological Department (IMD) on Monday said the June-September monsoon rains are likely to start withdrawing from the northwest Saturday onwards. PAGE 12 Essar Power MP taken to NCLT ICICI BANK has moved the National Company Law Tribunal (NCLT), seeking initiation of insolvency proceedings against Ruias-promoted Essar Power MP that runs the 1,200-MW Mahan power plant. The matter will come up for hearing on Tuesday, reports Anupam Chatterjee in New Delhi. The lender's move is under Section 7 of the Insolvency and Bankruptcy Code (IBC). PAGE 6 Dubai’s Careem buys Commut DUBAI'S RIDE-HAILING app Careem on Monday said it has acquired Hyderabad-based bus-shuttle service app Commut for an undisclosed amount, reports PTI. Commut was set up in 2015 by six IIITHyderabad graduates and is operational in the city. Backed by Shell Foundation and 50K Ventures, Commut has served over 70,000 customers and onboarded 400 driver-partners. PAGE 7 IL&FS ON MONDAY said it was unable to service its obligations in respect of commercial paper due on the day. In a filing, the company also said it defaulted on the interest on its non-convertibledebenturesdueonSeptember 22 and 23, both being non-banking days, and was payable on September 24. According to data from Value Research,IL&FS was due to pay `197.29 crore to LIC Mutual Fund as well as make five more payments to Principal Mutual Fundtotalling`73.97crore. But inaslightreversaloffortunesfor the beleaguered company, it is due to receive `700 crore from the National Highways Authorityof India (NHAI) soon. DUES IN DETAIL NHAI in advanced stages of deciding settlement claim IL&FS Transportation Networks (ITNL) has claimed `700 cr Claim relates to cost over-runs for road project in Maharashtra IL&FS was due to pay `197.29 cr to LIC Mutual Fund on September 24 IL&FS is already understood to be behind payments on commercial paper worth approximatelyover`300crore and inter-corporate deposits worth roughly `450 crore. Neithera seniorIL&FS officialnoraseniorexecutivefrom LIC Mutual Fund responded to a query in this regard till the DIVESTMENT TARGET FACEDWITHTHEuphilltaskof mobilising disinvestment revenue in excess of the target of `80,000croreinvolatilemarket conditions,the Centre may sell its majoritystakes in one ortwo PSUs to other PSUs, in what could be a repeat of last year’s ONGC-Hindustan Petroleum Corporation deal.The companies the Centre could divest its stakes in include NHPC (which may be sold to NTPC), SJVN (to NTPC) and GAIL India (Indian Oil/BharatPetroleum).Consolidationofpowerfinancingfirms GoI stake (%) GAIL NHPC PFC SJVN 53.34 73.64 65.61 63.77 PFC and REC is also under consideration, though it is not immediately clear which one will be the acquirer (net worth and market caps of these firms are similar). The Centre’s 73.64% stake in NHPC is worth about `17,565 crore now while its 65.61% equity in PFC is valued at`13,718croreand73.64%in hydropower producer SJVN at `6,904 crore at current market prices.The value of the government’s 53.34% stake in gas marketer and transporter GAIL is about `45,967 crore. Continued on Page 2 Current market value (` cr) 45,967* 17,565 13,718 6,904 Continued on Page 2 ● MSME SECTOR Mega PSU mergers in the pipeline PRASANTA SAHU New Delhi, September 24 time of going to press. IL&FS’ outstanding borrowings are in the region of `91, 000 crore, according to the company’s annual report and approximately `20,000 crore are understood to be due for repayment within a year. Potential buyer IOC/BPCL *The realisation would be lower as the gas pipeline business will be separated before sale NTPC REC NTPC No more GST sops before polls GOING SLOW ■ GoM, which was asked to formulate the relief hasn't met even once, unlikely to give a report to Council on Sept 28 ■ New returns filing system also unlikely during the current government's tenure SUMIT JHA New Delhi, September 24 APERSISTENTSHORTFALLin the goods and services tax (GST) collections has forced the GST Council to move slowly on the plans to give more sops to micro,small and medium enterprises (MSMEs). Till the next elections, the GST structure might not see any major change, sources said, adding that even the newreturn filing system may have to wait till the polls are concluded and the new government assumes office. Continued on Page 2 A flying start A glimpse of the newly constructed Pakyong airport, Sikkim’s first, inaugurated by Prime Minister Narendra Modi on Monday. STRATEGIC MOVE India to reduce oil imports; ‘no effect on fuel supply’ Refiners to tap into inventories instead amid the rising global crude prices, falling rupee FE BUREAU New Delhi, September 24 INDIA’S STATE-RUN REFINERS have decided to reduce theircrude oil imports and use more of their inventories in a bid to curb the rising foreign exchange outflows. Indian Oil Corporation (IOC) chairman Sanjiv Singh told PTI on Mondaythatstaterefinersarelooking at optimising crude oil inventory levels, “without in 94.94 mt 250 Crude oil imports (million tonne) Growth (%, y-o-y) 7.08 5.46 200 150 100 50 0 Crude oil import during April-Aug 2018, up 6.5% y-o-y 85 8 220.43 INDIAN NAVY sailor Abhilash Tomy was rescued from the Indian Ocean near Australia in a multi-nation operation on Monday, three days after he suffered a grievous back injury when a powerful storm hit his boat while he was on a solo race around the world, Navy officials said, reports PTI. Defence minister Nirmala Sitharaman said the commander is "conscious and doing okay". Tomy, 39, who was sailing his boat as part of the Golden Globe Race — a solo sailboat race around the world — drifted in the seas for three days before he was rescued by French fishing vessel Osiris, officials said. His boat was hit by a storm about 1,900 nautical miles from Perth, Australia, on Friday. FE BUREAU Mumbai, September 24 S&P BSE SENSEX Open paper issued by NBFCs and housing finance companies (HFCs)orthatthesewouldneed to be offloaded at a loss. Last week DSP MF was able to sell paper issued by DHFL but only atamuchhigheryieldthanwas earlier expected. The transaction surprised the markets. “The share of non-bank sources in NBFC lending has risen to 74% as of March 2018 and much of it has been shortdatedwithnowamedian 41% due for refinancing in 201819,” Credit Suisse wrote in a report.It pointed out that MFs havebeenakeyproviderofthis liquiditywiththeirexposureto NBFC commercial paper (CP) up threefold since March 2016. MFs now hold an estimated 60% of all NBFC issuances of CPs. Even before that, the several defaults by infrastructure financier IL&FS, which owes lenders a whopping `93,000 crore,had spooked the market which believes NBFCs and HFCs will find it very difficult refinance their loans. Later on Monday evening, the RBI announced open market operations to infuse `10,000 crore of liquidity. 2015-16 213.93 rescued from Indian Ocean 36,924.72 202.85 Assurances fail to assuage fears of tight liquidity; bond yields jump, IN THE NEWS equities and Injured Navy sailor rupee collapse 6 3.04 2 ‘16-’17 ‘17-’18 4 Brent ($/bbl) 80 75 70 65 60 0 anywayaffecting fuel supplies in the domestic market”. Also,ReutersquotedRRamachandran,director,refineriesat Bharat Petroleum Corporation (BPCL)assaying,“Wearelooking atvariousoptionstocontainthe 55 50 April 2, 2018 Sept 24, 2018 costs including reducing our inventory.This will be a coordinated effort among refiners. If needbe,we’lltalktoothercountries fora coordinated effort.” Continued on Page 2
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