OPINION, P8 ECONOMY, P2 INTERNATIONAL, P14 EDITORIAL IL&FS SUSPICIOUS PACKAGE Despite the sharp hike, still too few rich pay tax. Average tax yield of 12.4% too low House panel to quiz RBI governor Urjit Patel on November 12 Suspected explosive device found at George Soros' home CHANDRA BHUSHAN India has a lot to learn from Beijing on pollution-control PUNE, WEDNESDAY, OCTOBER 24, 2018 FOLLOW US ON TWITTER & FACEBOOK. APP AVAILABLE ON APP STORE & PLAYSTORE WWW.FINANCIALEXPRESS.COM READ TO LEAD VOL.IX NO. 193, 18 PAGES, `6.00 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: 33,847.23 ▼ 287.15 NIFTY: 10,146.80 ▼ 98.45 NIKKEI 225: 22,010.78 ▼ 604.04 HANG SENG: 25,346.55 ▼ 806.60 `/$: 73.57 < > 0.00 `/€: 84.30 ▲ 0.27 BRENT: $78.21 ▼ $1.62 GOLD: `31,909.00 ▲ `302.00 — RBI holds ground, no easing of PCA rules yet IN THE NEWS Kraft agrees to sell Complan to Zydus KRAFT HEINZ has agreed to sell a portfolio of Indian businesses, including children’s milk drink Complan, to Zydus Wellness, people with knowledge of the matter told Bloomberg. Zydus, which is a unit of Cadila Healthcare, could announce a deal as soon as this week, according to the people, who asked not to be identified because the information is private. Zydus has been discussing a value of about $625 million and is in talks to raise private equity funding to cover about half of the purchase price, one of the people said. A representative for Kraft Heinz declined to comment. A representative for Zydus didn’t immediately respond to a request for comment. Board discusses liquidity crunch faced by NBFCs, NPA issue; to meet again in Nov FE BUREAU New Delhi, October 23 THE BOARD OF the Reserve Bank of India (RBI) is learnt to have discussed the issue of relaxing the so-called prompt corrective action (PCA) framework in a much-watched meeting on Tuesday, but no relief on this front was approved. It also deliberated upon steps to ease credit flow tonon-bankingfinancialcompanies (NBFCs) in the wake of the crisis at Infrastructure Leasing and Financial Services (IL&FS) and persisting concerns about the elevated stressed assets with publicsector banks (PSBs). “No relaxation in the PCA framework has been agreed upon in the meeting,”a source told FE. The board is expected to meet again soon in Novemberto discuss issues,including the liquidity crisis. Acceding to the demand of several stressed PSBs, the No relief in sight While finance ministry favoured easing PCA rules, in sync with bankers' demand, RBI stuck to its guns on no relief 11 of 21 PSBs are under PCA; together they make up for 30% of deposits and 29% of advances of all the PSBs PCA banks face curbs on expanding branches; need to maintain higher provisions; management compensation is capped and in certain cases, they are stopped from lending Next RBI board meet may review liquidity issue in NBFCs again More steps likely to ease liquidity crunch, apart from RBI's decision last week to raise lending ceiling for NBFCs finance ministry has made a case for easing the “stringent” PCAframework to enable PSBs to lend more freely at a time when NBFCs are facing a liquidity crunch.The PCA framework is aimed at nursing sick banks back to health through certain tough conditions set for them. Financial services secretaryRajivKumarandeconomic affairs secretary SubhashChandraGarg,whorepresent the ministryon the board, are learnt to have argued that a relaxation under the PCA would not only give the stressed PSBs headroom for growthbutalsoenablethemto lend more and support the efforts to ease liquiditycrunch being faced by NBFCs. Asmanyas11ofthe21public-sectorbanks(PSBs)areonthe RBI’s watch list for strained finances, two of which — Dena Bank and Allahabad Bank — evenfacerestrictiononlending. These stressed banks make up for30%ofdepositsand29%of advances of all the 21 PSBs. As many as 11 of the 21 public-sector banks (PSBs) are on the RBI’s watch list for strainedfinances,twoofwhich — Dena Bank and Allahabad Bank—evenfacerestrictionon lending. These stressed banks make up for 30% of deposits and 29% of advances of all the 21 PSBs. Continued on Page 2 NO SHOW Special Features ELSS can help you earn higher long-term returns As ELSS fund managers invest the money for at least three years, they can take long-term calls. That reduces volatility, increases consistency and returns improve ■ Personal Finance, P13 Rajasthan rides the digital wave with Raj Net A strong IT backbone is being put in place for delivery of various e-governance services to citizens even as it plans to launch Bhamashah State Data Centre ■ eFE, P13 Another miss, IL&FS defaults cross `4k cr FE BUREAU Mumbai, October 23 IL&FS, ON TUESDAY, said it has defaulted on `348 crore of debt thatwas due in three separate repayments on October 19,20 and 22,taking the total amount in missed repayments till date to `4,272 crore. Prior to this latest default, IL&FS had defaulted on principal and interest on loans from banks,inter-corporatedeposits and commercial papers totalling `3,761 crore till September 28 and a further `33.9 crore between September 30 and October 4. (According to exchangefilings,itdefaultedon another `130 crore between Missed repayments QuickPicks Exxon,Rosneft to build LNG plant with Japanese, Indian partners RUSSIA'S ROSNEFT and US ExxonMobil plan to build an LNG plant in a consortium with Indian and Japanese partners, spreading the estimated $15 billion cost, two sources familiar with the talks said, reports Reuters. The four companies — Rosneft, Exxon, Japan's SODECO and India's ONGC Videsh — are partners in the Sakhalin-1 group of fields that will supply the gas, but Exxon and Rosneft had initially planned to build the LNG plant without the other consortium members. PAGE 6 SC gives RCom time till Dec 15 to clear dues to Ericsson India THE SUPREME Court on Tuesday gave debt-ridden Reliance Communications time till December 15 to clear the pending dues of `550 crore to Swedish telecom equipment manufacturer Ericsson India, reports fe Bureau in New Delhi. A bench led by Justice Rohinton Nariman while granting more time to clear the dues, as sought by the Anil Ambani firm, said that this is the last opportunity being giving to the Indian company. PAGE 6 Supreme Court imposes restrictions on firecrackers THE SUPREME Court on Tuesday ruled out a blanket ban on manufacture and sale of firecrackers, but restricted its use to tackle concerns of deadly pollution, reports fe Bureau in New Delhi. It suggested manufacture of “green crackers” with low emission and decibel standards, community cracker bursting in major cities and a freeze on the production of series crackers. PAGE 2 IL&FS & group companies Till Sept 28 (` crore) 33.9 3,761 Sept 30-Oct 4 130 Oct 5-16 348 Oct 19-22 Till date 4,272 Source: IL&FS, BSE filings October5 and October16). Subsequently, in September, IL&FS Financial Services, the group’s lending arm, was barred from tapping the commercial paper (CP) market till the end of February 2019 as it has failed to repay various maturing CPs. According to data from PrimeDatabase,IL&FSneedsto repay`1,806croreinnon-convertible debentures,bonds and CPs between now and March 2019.The next repayment on CPs that is maturing is for an amount of `30 crore to be paid by IL&FS’ roads arm, IL&FS Transportation Networks (ITNL),on November9. Uday Kotak, non-executive chairman of IL&FS,on October 1 had suggested it would not be possible for the new board to immediately fix the repayments crisis at the company, given its whopping `91,000crore debt burden and the multiple repayments that are scheduled. OnOctober22,IL&FSsaidit has appointed two financial advisers,Arpwood Capital and JM Financial Consultants, to conductavaluationsexerciseof its assets.According to sources, once this is done,the boardwill draw up a list of assets to disposeinordertogeneratefunds. ● ASTHANA PROCEEDINGS ICICI BANK Law firm pulls back clean chit for Chanda Kochhar Maintain status quo, Delhi HC tells CBI FE BUREAU Mumbai, October 23 EXPRESS NEWS SERVICE New Delhi, October 23 AS THE BATTLE between the two top officers of the Central Bureau of Investigation (CBI) raged, the Delhi High Court Tuesday directed the agency to maintain“status quo”until October 29 on proceedings against its special director Rakesh Asthana who sought directions for no coercive steps and quashing of an FIR lodged against him in connection with a case of alleged bribery. “Donotdisturbtheequilibrium today,” Justice Najmi Waziri said, adding that “the petitioner (Asthana) is before the court now”. Asthana has been at loggerheads with CBI director AlokVerma,and both have levelled serious charges at each other. Continued on Page 2 ICICI BANK ONTuesdaysaid a leading law firm has taken down a 2016 report exonerating the bank’s former head Chanda Kochharfrom charges of nepotism and conflict of interest with regard to loans given to the Videocon Group. The law firm in question is understood to be Cyril Amarchand Mangaldas. In a notification to the stock exchanges, ICICI Bank said the then chairman of the board of directors of the bank had engaged a law firm for conducting an inquiryinto the allegations made against Kochhar in a 2016 media report. All concerned parties cooperated with the inquiry and furnished necessary records,documents and statements.The lawfirm submitted its report in December 2016 stating that it had found no evidence of nepotism and conflict of interest on the part of Chanda Kochhar Kochhar and the matter was treated as closed. As similar reports accusing Kochhar of malfeasance surfaced in March 2018, the bank’s board issued a statementexpressingconfidencein her. “Subsequent to additional whistle-blowerallegationsand further information made availabletotheBank,theBoard of Directors determined the need for a fresh inquiry,which REVISED OFFER Arcelor increases bid for Essar Steel to `42,000 cr MITALI SALIAN Mumbai, October 23 Original offer ARCELORMITTAL HAS AGREEDtomakeabiggeroffer of `42,000 crore for the debtladen Essar Steel, following negotiations with lenders to the company, senior bankers have indicated to FE. So far, the offer included a `35,000-crore upfront payment to lenders apart from a `8,000-crore equity infusion into the company. The revised offer agreed to between the Lakshmi Mittalpromoted ArcelorMittal and bankers now includes an Revised offer Upfront to lenders Upfront to lenders `35,000 cr Infusion into company `39,500 cr Working capital reserves ~`2,500 cr `8,000 cr ` BOARD MEET Equity infusion into company `8,000 cr Odisha Slurry Pipeline Infrastructure ~`2,500 cr upfront payment of `39,500 crore to bankers. In addition,shouldArcelorMittal get control of Essar Steel, it will return to the lenders approximately`2,500 crore of working capital, a senior banker at a state-run bank that has exposure to Essar Steel,explained. Continued on Page 2 Architectural marvel The Hong Kong-Zhuhai-Macau Bridge is lit up in Hong Kong on Monday. The world's longest cross-sea bridge, with a total length of 55 km, was declared open on Tuesday Continued on Page 2 was announced on May 30, 2018. Further, the Bank informed the law firm about the said developments,whereupon the law firm expressed that its earlierreportwould no longerbevalid,”ICICIBanksaid on Tuesday. Kochhar stepped down as managing director (MD) and chief executive officer(CEO) of ICICI Bank earlier this month. Former Supreme Court judge B Srikrishna has been appointedtoconductaninvestigation into the charges against Kochhar with respect to the loan given to the Venugopal Dhoot-owned Videocon Group. In 2012, ICICI Bank had extended a loan of `3,250 crore to the Videocon Group. After the loan was granted, NuPowerRenewables,which is run by Kochhar’s husband Deepak Kochhar,received `64 crore from Videocon’s promoter through a series of investment vehicles, allegedly as quid pro quo. ● CASH CRUNCH Jet Airways seeks loan moratorium, fresh funds BLOOMBERG Mumbai, October 23 JET AIRWAYS HAS approached banks for a moratorium on loans and asked for fresh funds to ease a cash crunch, according to people with direct knowledge of the matter,addingtosignsthecarrier is sliding deeper into trouble. The airline has already grounded about a dozen planes as part of a review of its network aimed at reducing unprofitable domestic routes, said one of the people, who asked not to be identified because the plans aren’t public.The Mumbai-based carrier isalsostudyinglayingoffmore employees in non-core areas, the person said. The moves show India’s biggest full-service carrier — unprofitableinnineofthepast 11 years — is struggling for survival as two-cent fares in one of theworld’s most expensive places to buy jet fuel negate the gains from a surge in domestic passenger numbers. Banks, having suffered setbacks from lending previously to failed Kingfisher Airlines, had earlier rebuffed Jet Airways with their reluctance to extend additional loans to the company. The carrier is continuously evaluating commercial viability of its operations and will make announcements on specific measures, a spokesman for the company said in an emailed statement. Continued on Page 2 COUNTERPOINT DATA Xiaomi leads with 27% smartphone market share; Sept sales up 5% PRESS TRUST OF INDIA New Delhi, October 23 SMARTPHONE SALES IN India grew 5% to an all-time high of 44 million units in the September quarter, driven by strong shipments by handset vendors ahead of the festive season,accordingtoareportby Counterpoint Research. In the reported quarter,the smartphone segment contributed to half of the total handset market (88 million), with brands like Xiaomi, Sam- sung,VivoandOPPOrecording their individual highest-ever shipments in a single quarter, it said. The shipments grew 24% on a sequential basis. Xiaomi led the tally with a 27%marketshare,followedby Samsung (23%), Vivo (10%), Micromax (9%) and OPPO (8%) during the third quarter. The report said Micromax made a comeback among the topfivebrandsforthefirsttime in two years on the back of a recent order it bagged from the Chhattisgarh government Market share 27 22 23 23 July-September 2017 July-September 2018 (in %) 10 8 Xiaomi Samsung Vivo Source: Counterpoint Research 9 6 8 8 Micromax Oppo alongwith Reliance Jio. But its shipments are likely to decline following completion of the order, the report said. “Even though the quarterstartedmodestly, smartphone shipmentspickedup and reached an alltime record due to strong sell-in by brandsinAugustand September,” Counterpoint Research analyst Anshika Jain said. She addedthatkeybrandskickedoff their festive campaigns early thisyearbylaunchingnewmodelsasearlyasAugust,whichgave themampletimetoprepareand align with festive season sales across online channels. “The record shipments happened at a time when the rupee has hit a recordlowagainsttheUSdollar. Thisisalreadyimpactingsupply chainsandproductplanningfor the brands,” she said. Continued on Page 2 Related report on Page 7
The Financial Express (FE) is a business paper that’s closest to the people who are in the business of business. From business policies to market trends to new developments, The Financial Express comes packed with incisive news on every relevant issue.