OPINION, P8 COMPANIES, P6 SUPPORT PLAN EDITORIAL Markets feel let down, but RBI right to not hike the repo Forcing oil PSUs to cut prices hit market cap and private firms will slow investments INTERNATIONAL, P14 DEMAND BOOST Etihad to pump $35 million into Goyal-led Jet Airways Lee Kun-hee-led Samsung estimates Q3 profit at record high MUMBAI, SATURDAY, OCTOBER 6, 2018 WWW.FINANCIALEXPRESS.COM FOLLOW US ON TWITTER & FACEBOOK. APP AVAILABLE ON APP STORE & PLAYSTORE READ TO LEAD VOL. 58 NO. 236, 66 PAGES, `10.00 P U B L I S H E D F R O M : A H M E D A B A D , B E N G A L U R U , C H A N D I G A R H , C H E N N A I , H Y D E R A B A D , K O C H I , K O L K ATA , L U C K N O W, M U M B A I , N E W D E L H I , P U N E SENSEX: 34,376.99 ▼ 792.17 NIFTY: 10,316.45 ▼ 282.80 NIKKEI 225: 23,783.72 ▼ 191.90 HANG SENG: 26,572.57 ▼ 51.30 `/$: 73.77 ▼ 0.18 `/€: 84.91 ▼ 0.27 BRENT: $84.46 ▼ $0.12 GOLD: `31,216.00 ▲ `159.00 PREGNANT PAUSE Rupee crashes below 74 as RBI opts not to hike rate Central bank alters stance to one of ‘calibrated tightening’ citing upside risks to the inflation forecasts AMAZING ANDHRA PRADESH A RED initiative appears in today’s edition of Financial Express. This magazine is an initiative of the marketing solutions team of The Indian Express Group and contains content paid for by advertisers. The magazine should be read as an advertisement. IN THE NEWS SC stays order imposing fine on cement firms THE SUPREME Court on Friday stayed the Competition Commission of India's (CCI) order that imposed `6,300 crore penalty on 11 cement firms over alleged cartelisation and asked them to deposit 10% of the amount, reports fe Bureau in New Delhi. The bench stayed the National Company Law Appellate Tribunal's (NCLAT) July 25 order, which upheld the CCI’s August 2016 order imposing around `6,300 crore in penalties on 11 cement manufacturers, including UltraTech Cement, ACC, Ambuja Cement, Ramco Cements and JK Cement, as well as industry body CMA. FE BUREAU Mumbai, October 5 Business bytes Prime Minister Narendra Modi addresses an India-Russia business summit in New Delhi on Friday. Russian President Vladimir Putin and commerce & industry minister Suresh Prabhu were also among those present. Reports on Pages 4, 7, 12 DEFAULT STATUS IL&FS misses payments due for Sept 30-Oct 4 period BLOOMBERG Mumbai/Singapore, October 5 INFRASTRUCTURE LEASING & Financial Services is missing more debt obligations, even as thegovernmentpledgedtoprevent further defaults, underscoring the challenges its new board faces in fixing the firm’s mounting debt problems. IL&FSfailedtoserviceprincipal and interest on loans from banks, inter-corporate deposit and commercial papers totalling `33.9 crore due for the period from September 30 to October 4,it said UPHILL BATTLE ■ IL&FS failed to service principal and interest on loans from banks, intercorporate deposit and commercial papers totalling `33.9 crore ■ Fresh cash infusions would be crucial for the group that’s defaulted on its obligations since June in an exchange filing.The government earlier this week seized control of the conglomerate, which has total debt of $12.6 billion,ousting the erstwhile board of directors. “This amount is peanuts in the big picture, that’s how bad the situation is at the group,” said Rajiv Kochhar, chief executive officerofAvistaAdvisory PartnersinSingapore.“Thereis a huge mismatch in cash flows and people now have to managetheirexpectationsinterms of the recovery prospect.” The newly-constituted board of directors forthe troubled Indian lender met on Thursday and undertook an initial assessment of the firm. Continued on Page 2 IN A TROUGH Special Feature Paris goes electric, but not for everybody The world needs an electric car that has both a good range and is affordable; at the Paris Motor Show, there was none. The focus, instead, was on expensive, luxury EVs ■ Motobahn, P13 QuickPicks India to continue Iranian oil imports after US sanctions IN THE first clear indication of India's willingness to continue trade with Iran despite US sanctions, state refiners have contracted import of 1.25 million tonne of crude oil from the Persian Gulf nation and is preparing to replace dollar payments with rupee trade, reports PTI. Top industry sources said Indian Oil Corp and Mangalore Refinery and Petrochemicals have contracted 1.25 mt of Iranian oil for import in November, when the US sanctions against Iran's oil sector kick in. PAGE 12 Tribunal restrains Nirav Modi from disposing properties THE APPELLATE tribunal against money laundering on Friday directed fugitive diamantaire Nirav Modi and others, accused of siphoning funds from PNB and UBI consortium, not to dispose or create third party interest in their 21 immovable properties, reports PTI. Justice Manmohan Singh, chairman of the Appellate Tribunal on Prevention of Money Laundering Act, said Nirav Modi is "not trustworthy" as he had fled from the country, and banks' right to recover public money has to be protected. PAGE 2 Indian taxation system a hurdle in expansion plans: Rosneft RUSSIAN OIL firm Rosneft on Friday criticised taxation policy in India saying it was a major hurdle in its expansion plans, reports PTI. Rosneft and its partners had in August last year completed a $12.9-billion acquisition of Essar Oil to enter the world's fastest-growing energy market, but have to pay a 20% withholding tax even after paying corporate tax and dividend, the Russian firm's first vice-president for economics and finance Pavel Fedorov said. PAGE 7 Private sector capex lowest since FY08 FE BUREAU Mumbai, October 5 THE SHARE OF private investments in the infrastructure sector has fallen to a decadal low of around 25% in FY18, sharply down from a high of 37% cent in FY08, according to a Crisil Infrastructure Advisory report released on Friday. Private investments,which averaged 37% between fiscals 2008 and 2013, fell by 600 basis points (bps) between fiscals 2013 and 2017 to 31%, which fell a steep 600 bps further to 25% in FY18, as a plethoraofstalledprojectsand stressed assets dampened investor interest and risk appetite. “A material ramp-up in government spending in the past few years has meant the shareofprivateinvestmentsin infrastructure has fallen to a Share of pvt investment has come off a notch lately (` lakh cr) 37.2 Private Total 11.1 8.8 37% 10-year bond yield Intra-day, Oct 5 Intra-day, Oct 3 8.200 8.137 73.25 (inverted scale) 73.50 73.64 8.150 73.77 73.75 74.00 74.25 8.050 Previous close 73.58 Open Close 8.157 Open Close The stance is not necessarily a deferred action but it indicates we are focussed on our mandate of flexible inflation targeting — URJIT PATEL RBI GOVERNOR and Q1FY20, the central bank altered its stance to one of‘calibrated tightening’ citing upside risks to the inflation forecasts.Economists explained that while the earlier neutral stance had allowed for the possibilityofaratecut,thecurrent stance meant rates could stay constant or go up. Govt forced to weigh import substitutes TO ACHIEVE GREATER trade balance by curtailing imports at a time when the rupee is weakening against the US dollar, an inter-ministerial panel undercommerce and industry minister Suresh Prabhu has asked 15 import-sensitive ministries/departments to come up with specific suggestions urgently to increase local production within twothree months. The exercise — touted to be one of the largest ever on “import substitution” — involves various departments, Previous close 8.000 “Thestanceisnotnecessarilya deferred action but it indicates we are focussed on our mandate of flexible inflation targeting,” RBI governor Urjit Patel observed. The governor observed that depreciation of the rupee had been moderate compared with peers. ● RUPEE SLIDE BANIKINKAR PATTANAYAK New Delhi, October 5 8.025 8.100 includingpetroleum,industry, chemicals, heavy industries, IT and electronics, economic affairs, telecoms and coal. Products which come under these 15 departments accounted for close to 80%, or $402 billion, of the country’s annual imports over the past five years through 201718, a senior government official told FE. For instance, the official said, state-run Coal India may have to scale up its production or Steel Authority of India has to produce more steel, to reduce reliance on imports. Friday’s pause doesn’t help consumers since banks have already raised loan rates in recent weeks, since they are paying more for customer deposits.Givenhowthemoney markets have been tight in recent weeks and short-term borrowing rates have zoomed, it is unlikelybanks are going to trim lending rates anytime soon. However, increasingly, banks will be in a better position vis a vis NBFCs as the cost of funds rises. Deputy governor N Viswanathan said more rules could be expected to ensure assets and liabilities of NBFCs are better matched. The RBI governorobserved that outlook forfood inflation is expected to be benign, though the impact of the higher purchase prices for crops is uncertain. RBI has lowered its inflation forecasts by 30-40 basis points for Q4FY19 and Q1FY20. Patel cautioned a fiscal slippage would have a bearing on inflation and crowd out private sector investments. The central bank lowered its growth forecast for Q1FYY20 to 7.4% from the earlier 7.5%. RBI proposes VRR to attract more FPI investments: P10 CAPITULATION FE BUREAU Weakening ` spooks market The Sensex tumbled 792 points on Friday, closing below 35,000 after the rupee fell below the 74-mark for the first time as the RBI kept its key policy rates unchanged S&P BSE SENSEX 35,180 35,097.99 Intra-day, Oct 5 34,376.99 34,910 34,640 34,370 Prev. close: 35,169.16 34,100 Open ONGC 164 162 Close Intra-day on BSE (`), Oct 5 158 146.95 152 Continued on Page 2 140 125 Intra-day on BSE (`), Oct 5 126.80 118.05 110 146 140 IOC Prev. close: 174.80 Open Close 95 80 Prev. close: 140.85 Open Close CHINA HACK REPORT Lenovo, ZTE tumble on overseas sales worries 23.8 FY08-FY12 THE RESERVE BANK of India (RBI)onFridaydecidedtoleave the repo rate unchanged at 6.5%, a move that sent the rupee crashing all the way to 74.2237 against the dollar. The currency markets had priced in a 25-50 basis points hike,believingthatwasneeded to defend the rupee,andwas in keeping with the US Fed’s tightening. Again, although a flat repo should have cheered the stock market, the fear the rupee would weaken further sent the Sensex crashing by nearly1,000 points at one point during the session. Bonds,however,ralliedslightly with the benchmark yield falling to 8.02% post the announcement. While lowering projections for retail inflation in H2FY19 `/$ FY13-FY17 31% Private share (%) Source: NITI Aayog, CRISIL Infrastructure Advisory estimates decadal low of around 25% in FY18,”the Crisil report said. This means that between fiscals 2008 and 2018, there was a massive plunge of 1,200 bps in private investments. Continued on Page 2 REUTERS Hong Kong, October 5 LENOVOAND ZTECorpshares slid on Friday, hurt by worries about overseas sales after Bloomberg reported that the systemsofmultipleUScompanieshadbeencompromisedby malicious computer chips inserted by Chinese spies. In a report published on Thursday, Bloomberg Businessweek cited 17 unidentified sources from intelligence agenciesandbusinessesassaying that Chinese spies had Lenovo Group 6.0 5.5 (HKD) ZTE Corporation (HKD) 15.0 5.7 5.06 14.3 14.2 5.0 13.6 4.5 12.9 4.0 3.5 Prev. close: 5.96 Open 4.08 PM placed computer chips inside equipment used by about 30 companies and multiple US government agencies, which 12.2 11.5 12.64 Prev. close: 14.2 Open 4.08 PM would give Beijing secret access to internal networks. Apple and Amazon.com’s Amazon Web Services (AWS), named as being among the US companies subject to the attack,strenuously denied the report.SuperMicro Computer, which Bloomberg said was the supplier of server boards containing the malicious chips, also denied the report. Britain’s National Cyber Security Centre (NCSC), a unit of Britain’s GCHQ intelligence and securityagency,said it had no reason to doubt the statements made by Apple and Amazon. Continued on Page 2 COMBATING SEXUAL VIOLENCE Congolese doctor,Yazidi activist named Nobel Peace Prize winners REUTERS Oslo, October 5 DENIS MUKWEGE, A doctor who helps victims of sexual violence in the Democratic Republic of Congo, and Nadia Murad, a Yazidi rights activist and survivor of sexual slavery byIslamic State,won the 2018 Nobel Peace Prize on Friday. They were awarded the prizefortheireffortstoendthe use of sexual violence as a weapon of war,the Norwegian Nobel Committee said. “Denis Mukwege is the helperwho has devoted his life to defending these victims. Nadia Murad is the witness who tells of the abuses perpetrated against herself and others,”it said in its citation. “Each of them in their own way has helped to give greater visibility to war-time sexual violence, so that the perpetrators can be held accountable for their actions.” Mukwege heads the Panzi Hospital in the eastern Congolese city of Bukavu. Opened Nobel Peace Prize 2018 winners Nadia Murad (left) and Denis Mukwege in 1999, the clinic receives thousands of women each year, many of them requiring surgery from sexual violence. Muradisanadvocateforthe Yazidi minority in Iraq and for refugee and women’s rights in general. She was enslaved and rapedbyIslamicStatefightersin Mosul,Iraq,in 2014. “Rape in war has been a crime for centuries. But it was a crime in the shadows. The two laureates have both shone a light on it,” said Dan Smith, Director of the Stockholm International Peace Research Institute (SIPRI).“Their achievements are really extraordinary in bringing international attentiontothecrime,”hesaid. Mukwege, a past winner of the United Nations Human Rights Prize and the European Parliament’s Sakharov Prize, performed surgery on scores of women after they had been rapedbyarmedmen,andhecampaigned to highlight their plight. Continued on Page 2
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