OPINION, P6 ECONOMY, P2 A GULATI & P TERWAY Don’t support agri the dumb way, do it the smart way INTERNATIONAL, P4 SUNIL JAIN IBBI TURNS TWO SEC SETTLEMENT IL&FS employing bureaucrats helped it get better deals, don’t let this hit probe into it Just the threat of IBC process made debtors pay up `1L cr: Sahoo Elon Musk to resign as Tesla chairman, remain CEO NEW DELHI, MONDAY, OCTOBER 1, 2018 FOLLOW US ON TWITTER & FACEBOOK. APP AVAILABLE ON APP STORE & PLAYSTORE WWW.FINANCIALEXPRESS.COM READ TO LEAD VOL.XLIV NO. 182, 16 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 MANAGEMENT WATCH ● LIFELINE Big investors get assertive,vote more IN THE NEWS 2018 monsoon below average RAINFALL IN ANNUAL MONSOON season was below average and less than forecast, the Met department said on Sunday, reports Reuters. Rains were 91% of the long-term average at the end of the July-September monsoon season, compared with an IMD forecast of 97%. ‘Co-op more viable economic model’ PRIME MINISTER NARENDRA Modi said the co-operative model is a viable economic alternative to the capitalist and socialist models, reports PTI. He hailed Vallabhbhai Patel, founder of the Amul dairy cooperative movement in Gujarat, for showing people the importance of the cooperative movement as an economic model. It’s not just on Apollo Tyre’s Neeraj Kanwar, institutional investors voted on 87% resolutions in FY18 vs 13% in FY13 Vox populi FE BUREAU Mumbai, September 30 Extend GPL ESOS to employees INSTITUTIONAL INVESTORS ARE becoming more assertive and increasingly making sure corporate managements heed their views.While traditionally mutualfunds,insurersandpensionplayershavetendedtovote with their feet, in other words simplysellingthestock,theyare nowvoting on resolutions. Compared with just 13% waybackin2012-2013,institutionalinvestorsvotedon87%of the resolutions in 2017-18 and abstainingonjust13%ofthem. The huge reversal in the approach of big financial investorsshouldensurecompanies will be compelled to practicebettercorporategovernance evenifresolutionsthattheyvote against are not defeated. ■ Phoenix Mills FE SPECIALS Vote for (in %) A tale of refurbished products Online players are increasingly focussing on refurbished marketplaces to drive growth this festive season Resolution: Grant ESARs to employees 14 66 24 ■ PVR 77 Source: iiasadrian.com Clean sweep Delhi police commissioner Amulya Patnaik takes part in a 'plogging drive' launched by the NDMC on the occasion of the 4th Anniversary of ‘Swachh Bharat Mission’ at Khan Market in New Delhi on Sunday TROUBLED INDIAN SHADOW bank Infrastructure Leasing & FinancialServices,whoserecent debt defaults sparked concern about contagion in the nation’s financialmarkets,securedalifelineaftershareholdersapproved itsplanstoraisemoneythrough debt and equity. Stockholders green-litIL&FS’splanstoraiseas muchas`15,000crorethrough a non-convertible debt issue, hike the firm’s borrowing limit by 40% to `35,000 crore and increase its share capital to enable a rights offering. Continued on Page 2 23 AIR TRAFFIC More passengers, but airlines can’t raise fares In August, approximately 56.5% of institutional votes went against the resolution to reappoint of Neeraj Kanwar as managing director of Apollo Tyres. The special resolution was defeated as a large share of small investors — 48.8% — also voted against Kanwar’s reappointment. Continued on Page 2 CAUTIOUS STATES Few buyers for solar power, warns Singh SINCE “STATES ARE not very keen on purchasing” solar power even at the lowest price discovered of `2.44 per unit (wind tariff are higher at `2.76 per unit under latest auction), the country’s installed renewable energy capacity might get stranded, Union power minister RK Singh has warned. In a recent letter to finance ministerArun Jaitley, Singh wrote: “If any discom purchases renewable energy at `2.44 per unit, then along with the fixed cost (which they will have to pay thermal stations under PPAs,whether or not electricity is lifted),the total cost per unit would come to `4.04, which is higher than the average price (`3.25/unit) which pay for thermal power.” Continued on Page 2 If any discom buys renewable energy at `2.44/unit (the lowest so far), then along with fixed cost, the total cost would come to `4.04, higher than the average price (`3.25 per unit) for thermal power. Telecom revival boosts prospects INR fall and cost efficiencies to help Tech Mahindra’s margins; ‘Buy’ retained with a revised target price of `970 AN EXPERT group set up by retirement fund body Employees Provident Fund Organisation has pitched for long-term investment in stocks ranging from 5-10 years, reports PTI. The committee said a long-term investment would yield better returns for over six crore subscribers, according to a source. PAGE 2 25 76 Approve ESOP plan ■ INVESTOR, P9 Better returns: EPFO panel for investment in ETFs for 5-10 years 34 75 Grant of ESOP plan Niche start-ups Axio Biosolutions and Advancells have developed solutions for treatment of wounds and diseases THE CENTRE has constituted a panel to review the competition law, an official release said on Sunday, reports PTI. The committee would review "the Competition Act/Rules/ Regulations, in view of changing business environment and bring necessary changes, if required”, the release said. It would also look into international best practices. 86 ■ Glenmark Pharma Medical R&D: From lab to market Govt constitutes panel to review Competition Act Outcome ■ UPL Grant ESOPs to employees ■ eFE, P8 QuickPicks BLOOMBERG Mumbai, September 30 ■ Hinduja Global Solutions ANUPAM CHATTERJEE New Delhi, September 30 ■ BRANDWAGON, P10 Against (in %) Shareholders’ nod to IL&FS plan to raise `15,000 cr — RK SINGH, POWER MINISTER Airlines have added too much capacity thanks to liquidity from sweet saleand-leaseback deals Why have airfares not gone up? Traffic has gone up 20% But airlines have added a lot of capacity 19% Therefore, passenger load factor has been flat Fares on metro routes down up to 10% This comes at a time when ATF is up ARUN NAYAL New Delhi, September 30 WHILEAIR PASSENGER traffic hasgrownsmartlyoverthepast year,airlineshavenotbeenable to raise fares. That’s because they have added too much capacity;analystssaythesweet dealsonaircraftpurchasesthat carriershavecuthaveleftthem flushwith funds. For instance, IndiGo’s domestic passenger traffic increased 27% year-on-year in Q1FY19 but average fares on metro routeswere down up to 10% y-o-y in the same period a year ago.This is when 87.5% 35% the country’s largest domestic carrier added 15% more capacityduring Q1FY19 compared to Q1FY18. Othermajorairlines like Jet Airways and SpiceJet too have been franticallyadding capacity; analysts believe they are afraid of losing market share. Affordable fares haven’t resulted in a significant increase in industrypassenger load factor (PLF) or aircraft occupancy which remained flat at 87.5% in Q1FY19. Analysts point out that airlines when they place a bulk order, they get themselves a hefty discount. On delivery, they pay the manufacturers just some of the cost. Next, they sell the aircraft to leasing companies at the market price and lease it back to themselves. In the process theyfind themselveswith a lot of liquidity. Continued on Page 2 TELECOM Reliance Jio has fewer active users than Vodafone and Idea FE BUREAU New Delhi, September 30 RELIANCE JIO MAY have displaced Vodafone and Idea to emerge as the second largest telecom operator in terms of subscribers at the end of July, but going by the number of active subscribers --- or the visitor location register — the telco lags the two and is in the fourth position. Trai data showed the VLR status (%) 2018 107.21 110 100 94.56 99.42 Idea 103.76 90 92.84 Vodafone 91.27 Reliance Jio 80 70 Airtel 82.50 82.10 Jan Feb Mar Apr May Jun Jul Source: Trai active subscriber (VLR) base of Jio was at 187.3 million at the end of July. This is lower than Bharti's 342 million, Vodafone's 206.4 million and Idea Cellular's 201.3 million. Telecom analyst Mahesh Uppal believes the VLR numbers, which essentially refers to the number of actual users as opposed to the total numbers, is a better measure of popularity. Continued on Page 2 E-TAIL Shoppers from small-town India give festive sales a big time feel ANUSHREE BHATTACHARYYA New Delhi, September 30 WITH THE TOTAL number of shoppers this festive season tipped to jump to 20 million from 14 million last year, eretailers are readying for bigger festive season. RedSeer Consulting believes that consumers from several of India’s smaller cities,especiallyTier II towns, will participate in the purchase.“The festive season sale is an important tool used by e-commerce companies to add new customers.Both Flipkart and Amazon have already rolled out several offers and initiatives to ensure that shoppersfromsmallercitiesflockto the platforms,” Ujjwal Chaudhry, engagement manager,RedSeerConsulting,said. RedSeer Consulting predicts that between them the top two e-commerce players — Amazon and Flipkart—will clock a gross merchandise value (GMV) of around $2.5-3 billion overthe five-dayfestive season sale. This is a jump of almost 67-100% in GMV against the year ago,when the two together had reported a GMV of $1.5 billion. Total gross GMV 2.5- 3 ($ billion) FESTIVE SALE ~1.5 1.05 0.7 2015 Source: RedSeer analysis 2016 Festive day sale 2017 2018 Flipkart’s Big Billion Days sale will be held between October 10-14, while shoppers can shop at Amazon’s Great India Festival between October 10-15. Given the sharp increase expected in the total number of shoppers, the two companies are increasing the capcacityofwarehouses.Amazon has increased storage capacity by 54%to20millioncubicfeetby launching five new warehouses, also known as fulfilment centres, in cities including Gurgaon (part of Delhi-NCR),Mumbai,Kolkata, Bengaluru and Vijayawada. It claims to have 4 lakh sellers on its platform selling 170 million products. Flipkart too has begun to hire temporaryworkforce to ensure on-time delivery.TheWalmart-owned companyhas about 35warehouses across the country. This is also a reason why this year there is a lot of focus on exclusive deals this year with brands across categories to drive sales this festive season, Manish Tiwary, VP, category management,told FE. Continued on Page 2
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