OPINION, P8 COMPANIES, P6 INTERNATIONAL, P14 NEW SCHEME AMID TARIFFS & PROTECTIONISM Mahindra & Mahindra offers vehicles on lease for 5 years Fix trade, don't destroy it, warns IMF chief Lagarde EDITORIAL SC asking RBI to see if banks cut rates in line with repo absurd `28,175 cr of govt funds didn’t help Air India, nor will writing off 60% debt. Write off all debt & sell AI MUMBAI, THURSDAY, OCTOBER 11, 2018 FOLLOW US ON TWITTER & FACEBOOK. APP AVAILABLE ON APP STORE & PLAYSTORE WWW.FINANCIALEXPRESS.COM READ TO LEAD VOL. 58 NO. 240, 20 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: 34,760.89 ▲ 461.42 NIFTY: 10,460.10 ▲ 159.05 NIKKEI 225: 23,506.04 ▲ 36.65 HANG SENG: 26,193.07 ▲ 20.16 `/$: 74.22 ▲ 0.17 `/€: 85.37 ▼ 0.25 BRENT: $84.55 ▼ $0.45 GOLD: `31,021.00 ▼ `28.00 WAY FORWARD Kotak-led board to order IL&FS forensic audit first Important for board to know whether funds were siphoned off, and arrive at true value of assets GERMANY FE BUREAU New Delhi, October 10 THE NEW BOARD of Infrastructure Leasing & Financial Services (IL&FS) will commission a forensic audit to get clarity on its operations and the true status of its financials, official sources said. “The forensic audit will be initiated,”theofficialssaid.They addedthatthegovernmentisin the process of appointing independentprofessionalentitiesto conduct the audit. Moreover, the Serious Fraud Investigation Office (SFIO),the officials confirmed, has begun its investigation into the IL&FS crisis and has been asked to do its job with “extraordinary urgency”. The SFIO could submit its findings within a month. IL&FS has already IN THE NEWS Rafale: SC wants decision-making details from govt THE SUPREME Court on Wednesday asked the government to furnish details of its decision-making process in a sealed cover by October 29, sans pricing and technical information, in the `59,000-crore Rafale deal with France for procurement of 36 fighter aircraft, reports fe Bureau in New Delhi. Figuring out IL&FS By and large, the standalone firms had less debt and more profits (` million, 2017-18) Liabilities IL&FS IL&FS group Leverage IL&FS 1,77,574 11,64,472 2.6 IL&FS group 13.1 Net profit IL&FS 5,843 IL&FS group -18,869* Number of entities Annual report Uday Kotak 176 - 251^ 348 *Govt petition to NCLT puts this at `24,000 m; ^Statement 55(a) of the FY18 annual report gives data on 251 companies while 55(b) has data on 176 companies Source: IL&FS Annual Report FY18, Govt petition to NCLT, Uday Kotak media briefing Clearing the haze ■ Independent agencies may be roped in to get a true, complete picture of operations and financials ■ Forensic audit may be initiated, if initial due diligence and audit suggest wrongdoing ■ Expense to be rationalised; some staff layoff expected ■ IL&FS needs around `100 cr a month to stay afloat defaulted on loan obligations of close to `3,500 crore and owes lenders a whopping `91,000 crore. Officials said IL&FS needs an estimated `100 crore a month to remain afloat and the new board will soon find a way to cut expenses. “There are thousands of employees across the nearly 350 companies. The first priority of the board will be to ensure IL&FS is running on going concern basis and then look at paring debt,”officials explained. MOVING AHEAD THE GOVERNMENT on Wednesday cut excise duty on jet fuel to 11% to give relief to the aviation industry that has been hit hard by rising fuel prices and the falling rupee, reports PTI. “Excise duty on ATF has been cut to 11% from 14% with effect from October 11,” a finance ministry notification said. Jet fuel rates this month were at their highest since January 2014. Next step will be reconstituting the board; group CEO Tony Fernandes likely to step down FE BUREAU Mumbai, October 10 Tushar Mehta appointed Solicitor General AFTER NEARLYSIX months of leadership vacuum, AirAsia India will have a new CEO and managing director in Sunil Bhaskaran, who will take charge from November 15, a company statement said on Wednesday. Both Tata Sons and AirAsia Berhad of Malaysia hold 49% each in AirAsia India while chairman S Ramadorai and director R Venkataramanan SENIOR ADVOCATE Tushar Mehta was on Wednesday appointed the Solicitor General (SG), the second highest ranking law officer, almost a year after the post fell vacant, according to an official order, reports PTI. Mehta is at present the Additional SG. Special Feature Voice assistants open the doors to smart homes Amazon’s Echo Dot and Google Home Mini are the most affordable smart speakers and thus the most affordable way to control smart home devices ■ eFE, P13 QuickPicks No Bandhan Bank stake cut plan yet BANDHAN BANK IS yet to submit a plan for the reduction of the promoter shareholding of Bandhan Financial Holdings in the bank to the Reserve Bank of India (RBI) as it continues to look at three options to comply with the central bank's ownership norms for private banks, reports fe Bureau in Mumbai. PAGE 10 Cabinet okays bonus for rly staff THE UNION Cabinet on Wednesday approved productivity-linked bonus (PLB) which is equivalent of 78 days’ wages for 11.91 lakh eligible nongazetted railway employees for 2018-19, reports fe Bureau in New Delhi. The decision will cost the transporter around `2,044.31 crore. The maximum amount payable per eligible employee will be `17,951 for the current year. PAGE 2 Continued on Page 2 ■ Tighter investment norms for pension funds on the cards, Page 2 ● IRAN SANCTIONS Troubled AirAsia India finally gets a CEO after six months Govt cuts excise duty on ATF from 14% to 11% TheboardunderUdayKotak, vice-chairman and managing director,Kotak Mahindra Bank, will meet for a second time in just over a week on Friday.“We are consulting the government and making progress,” Kotak told reporters on Wednesday afterameetingwithInjetiSrinivas,secretary,ministryofcorporate affairs (MCA). Theneedforaforensicaudit was felt especially after it was revealed last week that IL&FS actuallyhadacomplexmazeof 348entities,morethandouble the 169 arms assumed earlier by the ministry. Also,the stressed company is suspected to have underreported its liabilities and stress levels.“If required, differentagenciesmaybehiredto complete this (audit) process within a strict time frame,”the officials said. The government feels that the initial report, prepared on the basis of the information provided by the second-rung official of IL&FS doesn’t provide the full picture. Sunil Bhaskaran is a Tata group veteran hold 1.5% and 0.5%, respectively. Tata Sons plans to buy the stake of Ramadorai and Venkataramanan and take its stake to 51% in the airline. SourcestoldFEthatthenext stepwouldbetoreconstitutethe board,whichislikelytoseeTony India ups imports from Saudi Fernandes, group CEO,AirAsia Berhad,and Bo Lingam,deputy group CEO stepping down. Bhaskaran’s appointment comes at a time when the airline and some of its executives are being investigated for allegedwrongdoingbytheCBI. The agency in May filed a case against Fernandes and AirAsia India over allegations of corruption and breaking rules in obtaining a flying licence. The CBI chargesheet accused the airline,some of its employees and third parties of violating foreign direct investment (FDI) rules for the aviation sectorwhile obtaining the licence, and of allegedly bribing government officials in an attempt to get regulations relaxed to allow AirAsia India to fly international routes. INDIAN REFINERS HAVE sought additional fourmillion barrel of crude oil from Saudi Arabia in November, a move that might partly compensate for any fall in their imports from Iran consequent to the US sanctions on the Persian Gulf country to be effective November 4. India’s oil imports from Saudi Arabia have been to the tune of 25 million barrels per month in recent past. SaudiArabiawasIndia’ssecondlargestsourceofoilimports in FY18,accounting for15% of thecountry’soveralloilimports; Iraqisthetopcrudeoilexporter to India with a 20% share in India’s overseas oil purchases. Continued on Page 2 Continued on Page 2 FE BUREAU New Delhi, October 10 SMARTPHONE SALES Over five days, online retailers hope to sell 10 million units FE BUREAU New Delhi, October 10 IT MAY BE just salesmen talking up sales, but the next five days are tipped to see purchases of mobile phones worth a whopping $1 billion or `7,200 crore. The buying will happen on Flipkart and Amazon, currently hosting big festive season sales. Online channels will see around 42% of the total business in smartphones, which will hog the limelight this festival season. Customers Festival season smartphone projections What’s on offer 55+ brands 450+ models can choose from more than 55 brands and 450 models and will be given sweet deals. These range from price cuts, cashback offers, no cost EMIs to other promotional offers. According to projections by Counterpoint Research, the average selling price of smart-phones this festive season is likely to be higher by 18%. While Counterpoint has not disclosed the volumes, it claims that records will be broken both in terms of volumes and value. Another research agency tech Arc has estimated that 19.1 million smartphones will be sold online out of the total 36 million expected during the October-December period. It also said this would be 53% of the total smartphones sold, first time in the country. Continued on Page 2 Average selling price up by 18% y-o-y Expected smartphone revenue (Oct-Dec 2018) Total: $6.36 bn Online: $3.67 bn Source: tech Arc, Counterpoint Will’s ‘Wah Taj!’ moment Hollywood actor Will Smith poses for a photograph during a visit to Taj Mahal on Wednesday ACTION CONTINUES Supreme Court orders sealing of nine Amrapali properties FE BUREAU New Delhi, October 10 THE SUPREME COURT on Wednesday ordered the sealing of nine properties of embattledrealestatecompany Amrapali after its three directors,who are in police custody, said the “bulky” documents related to the group’s 46 firms were stored there and could not be physically handed over to the forensic auditors. The direction came after the three directors — Anil Kumar Sharma,Shiv Priya and NO LEEWAY ■ SC orders sealing of Amrapali's 9 properties in Noida, Greater Noida & Bihar ■ Only forensic auditors or their authorised representatives can enter these premises ■ Three arrested directors willing to hand over papers of 46 companies from 2007 to 2018 to forensic auditors Ajay Kumar — told a bench comprising justices UU Lalit andDYChandrachudthatthey were willing to hand over all the documents, which are stored at the seven premises in Noida and Greater Noida and also at two locations in Bihar, but the police was unaware about what all documents to seize. The apex court then directed the superintendents of police of Noida/Greater Noida to take the three directorstoallthesevenpremisesin UttarPradesh and seal them in their presence. Continued on Page 2
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