OPINION, P8 COMPANIES, P6 STAKE PURCHASE Shareholders voting against Apollo Tyres’ Kanwar is good news Govt does well to scrap the MCI, now to move on the new medical regulatory system SUNDAY SHOW KKR, Blackstone look at $3-bn deal for Ajay Piramal-led Shriram EDITORIAL INTERNATIONAL, P14 Hacker to live-stream attack on Zuckerberg’s Facebook page NEW DELHI, SATURDAY, SEPTEMBER 29, 2018 FOLLOW US ON TWITTER & FACEBOOK. APP AVAILABLE ON APP STORE & PLAYSTORE WWW.FINANCIALEXPRESS.COM READ TO LEAD VOL.XLIV NO. 181, 18 PAGES, `10.00 (PATNA `9.00, RAIPUR `10.00) P U B L I S H E D F R O M : A H M E D A B A D , B E N G A L U R U , C H A N D I G A R H , C H E N N A I , H Y D E R A B A D , K O C H I , K O L K ATA , L U C K N O W, M U M B A I , N E W D E L H I , P U N E SENSEX: 36,227.14 ▼ 97.03 NIFTY: 10,930.45 ▼ 47.10 NIKKEI 225: 24,120.04 ▲ 323.30 HANG SENG: 27,788.52 ▲ 72.85 `/$: 72.49 ▲ 0.11 `/€: 83.96 ▲ 1.04 BRENT: $82.38 ▲ $0.66 GOLD: `30,296 ▼ `279 FE BUREAU New Delhi, September 28 THECENTREONFridaysought to calm the bond market by announcing that it will trim its gross market borrowing for the secondhalfofFY19by`70,000 crore,taking the borrowing for the full year to `5.35 lakh crore againstthebudgeted`6.05lakh crore.Instead,itwillreducebuybacksandtaptheNationalSmall SavingsFundmoreaggressively to finance fiscal deficit, economicaffairssecretarySubhash Chandra Garg said. Some analysts expect the move to have a marginal positive impact on the bond market that has been on fire this year. The yield on benchmark 10-yearG-secscouldremainin the 8-8.1% range in the short term, they said. The yield settledat8.02%onFriday,having shot up as much as 70 basis points in 2018 and dealing a deadly blow to banks’ profitability that had held almost Taking stock FE BUREAU BoB shares hit 5-year low The Bank of Baroda stock slipped below the `100 mark to hit a five-year low on Friday, ahead of its board meeting to consider the Centre’s proposal to merge Dena Bank and Vijaya Bank with itself. Report on Page 10 250 200 150 100 50 0 98.71 Sept 30, 2013 99.50 Share price on NSE (`) Sept 28, 2018 What the govt plans (` lakh crore) Budget estimate Revised estimate 6.05 5.35 3.9 3.9 2.88 (H1) 2.47 (H2) Gross Net Market borrowing While gross market borrowing is cut by `70,000 cr, the Centre plans to raise `37,000 cr via extra-budgetary resources (taking the total EBR to ` 1.7 lakh cr in FY19) to fund education infra and Swachh Bharat mission 42% of outstanding government securities by June. However,giventhatthegovernment may resort to undeclared extra-budgetary resources (EBRs) to fund spending (a recent FE analysis suggests the Centre plans to raise an additional `37,000 crore via EBR in FY19 to finance education infrastructure and Swachh Bharatmissionalone),theactual impact of the government’s market borrowing remains INFIBEAM AVENUES lost 71% of its market value on a single day after a WhatsApp message raised concerns about the online iPhone and iPad retailer’s accounting practices, reports Bloomberg. The message was sent a few months ago by an analyst to some clients and resurfaced on WhatsApp on Thursday. PAGE 10 IRCON International shares make tepid debut on bourses IRCON INTERNATIONAL made a tepid debut on the bourses on Friday, reports fe Bureau in Mumbai. The stock debuted at `410.3, 13.6% below its issue price of `475 on the BSE. The shares closed at `416.65 after hitting an intra-day high of `464.6 and a low of `410.30. PAGE 10 ■ IL&FS’ consolidated debt pile is `91,000 cr; liabilities over `1 lakh cr has not invested any money in the firm since 2013.OnAugust 29,the IL&FS board approved a Continued on Page 2 Related reports on Page 7 Continued on Page 2 Extra tax likely to support Kerala FE BUREAU New Delhi, September 28 THE GOODSANDServicesTax (GST)CouncilonFridaysetupa committee of seven state finance ministers to examine the legality and recommend themethodologyforlevyingan ‘additionaltax’toraiserevenue for floods-ravaged Kerala. The Council also reviewed the GST revenue collections by the states at its 30th meeting, and found that though collections have improved marginallyin the current finacialyear, the states’overall GST revenue deficitisstillaworrisome13%. Finance minister Arun Jaitley hinted that the overall GST revenue (Centre and states) this year might be short of the nearly `13.2 lakh crore overall (GST+compensation cess) target. Continued on Page 2 Gradual progress GST returns filed till due date (% of eligible taxpayer base) 50 54 51 Revenue shortfall 68 for all states 66 65 64 64 62 63 61 61 July '17- March '18 16% 36 April '18- Aug '18 13% Jul 2017 Sept Nov Jan 2018 Mar May *Shortfall measured against 14% y-o-y July revenue increase from base of FY15-16 Marching on Prime Minister Narendra Modi with defence minister Nirmala Sitharaman and Rajasthan CM Vasundhara Raje after inaugurating the 'Parakram Parv', an exhibition to commemorate the second anniversary of the surgical strikes, in Jodhpur on Friday ● NON-COMPLIANCE Bandhan Bank barred from opening new branches FE BUREAU Mumbai, September 28 IN THE SECOND instance of regulatory action against a private bank promoter for not complying with shareholding norms,the RBI has asked Bandhan Bank to stop opening new branches while also freezing chief executive officer Chandra ShekharGhosh’s salary. Earlierthisyear,the RBI had rejected Kotak Mahindra Bank founder Uday Kotak’s bid to bringdownhispersonalholding in the bank to under 20% by issuingperpetualnon-cumulative preference shares. In a notification to the exchanges,Kolkata-basedBandhan Bank said,“Since the bank was not able to bring down the shareholding of non-operative financial holding company to 40% as required under the licensingcondition,generalpermission to open new branches standswithdrawnandthebank can open branches with prior approval of RBI,and the remuneration of the MD & CEO stands frozen at the existing level,till furthernotice.” The bank said it is taking necessarysteps to complywith the licensing condition to bring down the shareholding of the holding company in the bank as per the regulatory and shall continue to engage with the RBI in this behalf. Continued on Page 2 NEERAJ KANWAR Apollo may cut salary to win over shareholders FE BUREAUS Mumbai/New Delhi, September 28 CORPORATE WATCHERS BELIEVE the special resolution to reappoint Neeraj Kanwar as managing director of Apollo Tyres could be put before shareholders again. The special resolution was defeated at the last meeting. They said the MD’s remuneration might be reduced to placate shareholders. Over 56% of the institu- Mar 28, ‘18 Sept 27, ‘18 % chg « WhatsApp message causes India iPhone retailer to plunge 71% ■ On August 29, IL&FS board okayed `4,500-cr rights issue « IN A landmark judgment that will further 'gender equality’, the Supreme Court on Friday allowed entry of women of all ages in Kerala's Sabarimala temple, reports fe Bureau in New Delhi. It held the ban by the temple preventing women and girls between 10 and 50 years (menstruating age) from entering the shrine, is derogatory, illegal and unconstitutional. PAGE 17 ■ LIC looks at raising its 25.3% stake rightsissueof30croresharesat `150 each, proposing to raise about `4,500 crore.The rights issue is proposed to be completed bythe end of October. Also, on Friday, sources confirmed the Reserve Bank of India met with representatives of the company’s two largest shareholders — LIC and Orix Corporation of Japan — to decide on the revival of IL&FS and the future course of action. Deputy governors NSVishwanathan and MK Jain met with the shareholders, according to sources, but further details could not be ascertained. GST COUNCIL MEET QuickPicks SC says Sabarimala temple open to women of all ages BELEAGURED INFRA FINANCIER IL&FS’ biggest shareholder, Life Insurance Corporation (LIC) on Friday said it is open to increasing its 25.3% stake in IL&FS by subscribing to the planned `4,500-crore rights issue. LIC said the Mumbai-based firm should be able to recover `60,000 crore by selling its assets. IL&FS has a consolidated debt pile of `91,000 crore and total liabilities in excess of `1 lakh crore. VK Sharma, chairman, LIC, told a television news channel, theinsurer,whichhasaninvestment of `2,000 crore in IL&FS, KEY POINTS 36,324 Continued on Page 2 To raise up to `50,000 crore extra from NSSF and cut buybacks massively FE BUREAU Mumbai, September 28 32,969 THETATAGROUPretainedthe iconic Taj Mansingh Hotel in Lutyens’Delhi in an auction by the New Delhi Municipal Council(NDMC)onFridayafter years of litigation at doubled licence fees,an official said. The fiercelyfought auction withrivalgroupITC,whichwas also bidding for the hotel, began at 11 am and ended at 4 pm. The auction was pending since the lease had expired in 2011 and the Tata group was operating the property on a temporary extensions. The lease for the hotel will be granted to the group for 33 yearsatdoublethelicencefees. “Tata group’s Indian Hotels Company (IHCL) has retained the property at a licence fee of `7.03 crore per month,including GST or 32.5% of the gross turnoveroftheproperty.Earlier, they were paying `3.94 crore per month as licence fees,” a seniorNDMC official said. Failing to auction the luxury hotel in two attempts,the NDMC had last month decided to relax the eligibility criteria for bidders and reduce the minimum number of bids required. hazy, said some analysts.Also, manyremainedconcernedover the sticky oil prices that could inflate the fuel subsidy (FE has estimated that if the crude prices and the rupee remain around the current level for the rest of the fiscal, the subsidy requirement would increase by over`12,000 crore or50%). Garg said on Fridaythe Centre would borrow `2.47 lakh crore in the second half of this fiscal, against `2.88 lakh crore in H1. However, net borrowing will remain unchanged at `3.9 lakhcroreinFY19(`2lakhcrore inH1and`1.9lakhcroreinH2). “Revenue mop-upwill be as per budget estimates.As for expenditure, even after factoring in (spendingdueto)theminimum support price programme and Ayushman Bharat, we believe expenditurewillbeontrackand there is no need to revise fiscal deficittargetfromthebudgeted 3.3% forFY19,” Garg said. This means if the government sticks to its commitment ofmeetingthefiscaldeficittarget,itwillhavetoshunpopulist misadventures in the build-up to the 2019 general elections unless it resorts to spending cuts orraise fundsvia EBR. LIC open to subscribing to planned IL&FS rights issue 12,685 PRESS TRUST OF INDIA New Delhi, September 28 Centre to borrow `70k cr less in H2 ROAD TO RESOLUTION 15,754 Tata defeats ITC to retain Taj Mansingh EYE ON BOND MARKETS « ● NDMC AUCTION 10.2 Mcap (` cr) tional investors and 49% of the retail shareholders voted against the resolution to extend Kanwar’s tenure beyond May 2019 over concerns about his high compen- 19.5 Sensex sation. Kanwar, a part of the promoter family, had sought around `68.4-crore compensation going forward. During FY18, the total remuneration paid to Kanwar amounted to `44.6 crore, a 45% increase over the previous year. This was when the company’s profits were down 34% year-on-year. The ratio of this remuneration to the median employee salary at Apollo Tyres was 940x. Neeraj, along with his father and chairman of the company Onkar Kanwar, received`94.2croreinFY18as salaries which were 13.1% of the net profits. Continued on Page 2 FALSE STATEMENTS Tesla chief Elon Musk sued by SEC in move that could oust him THE NEW YORK TIMES September 28 ELON MUSK, TESLA’S chief executive,was accused by federal regulators on Thursday of misleadinginvestorswithfalse public statements,a move that could force him out of the company’s leadership. At issue is Musk’s declarationonTwitterlastmonththat he had “funding secured” to buy out the stock of the electric-car maker. The prospect created a firestorm on social media and in the markets that sent Tesla’s shares soaring. In a lawsuit filed in federal court in New York, the Securities and Exchange Commission accused Musk of committing fraud by making false public statements with the potential to hurt investors. The suit seeks to bar Musk, This unjustified action by the SEC leaves me deeply saddened and disappointed. I have always taken action in the best interests of truth, transparency and investors. — ELON MUSK TESLA FOUNDER & CEO who is also Tesla’s chairman, from serving as an executive or director of publicly traded companies like Tesla. Such a punishment is one of the most serious remedies the SEC can impose against a corporate executive. The case is likely to send shock waves across corporate America and could lead to a reevaluation of how companies use Twitter to communicate with the investing public. The SEC said Musk “knew or was reckless in not knowing” that his statements were false or misleading.“In truth and in fact,Musk had not even discussed, much less confirmed,keydeal terms,including price, with any potential funding source,” the SEC said in its lawsuit. Continued on Page 2
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