ECONOMY, P2 TELECOM SECTOR Hackett-led Ford goes local, aims for bigger slice of market FOLLOW US ON TWITTER & FACEBOOK. APP AVAILABLE ON APP STORE & PLAYSTORE WWW.FINANCIALEXPRESS.COM READ TO LEAD VOL. 58 NO. 264, 10 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 Actuals-BE gap (%) FY15 24,42,213 23,92,213* 21,46,735 19,78,060 17,73,269 17,77,477 FY16 20,000 Telecom FY17 FY18 30,000 FY19 GST *Likely ILLUSTRATION: SHYAM KUMAR PRASAD would be in line with the budget. Unlike the UPA government which had resorted to heavy expenditure reductions to keep the fiscal numbers from going awry,the NDAgovernment hasn’t messed up with its original budget estimates much. Except in the FY15, when it retained the interim budget set by the UPA and had later to undertake a big (`1,50,000 crore or 8%) reduction in the budget size, the NDA has ensured that the overall budget estimate is not visiblydifferent from the original projections. “The ministries or departments which are laggards in spendinginthefirsthalfofthis year may see budget cuts,” an official said. Ministries which arelaggingbehindinspending include telecom,food process- ing and sports, which spent only 30-40% of their annual budget in H1FY19. The defence ministry,which spent 57% of its budget of `4.04 lakh crore in H1, however, could also end up spending a few thousand crores less than budgeted for the full year. On the revenue front, the Centre may see a shortfall of `20,000-25,000 crore on the disinvestment front (against Continued on Page 2 MSP PACKAGE 5G services launch: DoT mulling introducing more bands AIMING TO leverage the latest developments in the telecom sector to offer services like self-driving vehicles, robotic surgery, etc under the Digital India mission, the Department ofTelecommunications (DoT) is considering offering frequency bands like 24 GHz, 27 GHz, 31 GHz, etc for launching fifth-generation, or 5G, services, reports Rishi Ranjan Kala in New Delhi. Globally too countries have offered multiple bands for 5G services. The US, which is expected to roll out 5G first, has identified bands in 27.5-28.35GHz and 37-40GHz for 5G, while the UK has identified 26-28GHz and the EU 24.5-27.5GHz. PAGE 2 Kerala-Isro space tech park likely to go live from June THE KERALA government is readying to set up a Nano Space Technology Park, with technical support from the Indian Space Research Organisation (Isro), reports M Sarita Varma in Thiruvananthapuram. A memorandum of understanding on this will be signed soon. The state Cabinet has given the goahead for the Kerala Government's space park initiative with Vikram Sarabhai Space Centre, the rocket science node of ISRO, sources in the Kerala chief minister’s office told FE. The facility is likely to start functioning from June 2019. PAGE 2 Qatar turns to royals in their 30s to manage $320-bn fund TWO QATARI royals in their 30s have been entrusted to run the country’s $320-billion gas riches as the Gulf state turns its attention to technology deals, reports Bloomberg. Qatar’s ruler on Sunday named his younger brother deputy chairman of the Qatar Investment Authority, and another relative and foreign minister as chairman. The moves come less than a month after the QIA appointed Mansoor bin Ebrahim Al Mahmoud as chief executive officer, replacing an older royal. The fund has largely been reluctant to dabble in venture capital and technology investments, until recently. PAGE 4 (Botad, Bhavnagar,Gujarat) 13,524 116.42 5,220 Cotton (Suratgarh, Rajasthan) -9.59 3,073 Soyabean (Ujjain, MP) 1.36 Paddy (Burdwan,W Bengal) 1,552 -11.31 Maize (Davangere, Karnataka) 1,330 -21.76 Bajra (Dausa, Rajasthan) 1,514 -22.36 Jowar (Kekri, Ajmer, Rajasthan) Moong (Kekri, Ajmer, Rajasthan) Sunflower (Yadgir, Gulbarga, Karnataka) Urad (Kota, Rajasthan) -24.73 1,829 4,750 -31.9 -32.2 3,653 -41.14 3,296 Source: Agmarknet portal MSPs for this kharif and the PM-AASHA, a stronger price support scheme, farmers are still being denied re- ● DEMAND REJECTED munerative prices for their produce. The procurement mechanism is yet to be up and running in most states. The average mandi price of common variety of paddy, for instance, is about `1,536/quintal now against `1,612 in the first week of OctoberinBurdwan,WestBengal, India’s largest rice producer. Groundnut prices have also declined to `4,425/quintal as on October 31 from `4,650 on October 1 in Deesa mandi of Banaskanth,Gujarat, accordingtoagmarknetportal. The average mandi prices of the 5 crops mentioned above were 8-35% below their respective MSPs last month. An analysis of price data also showed that the average rates of seven crops including jowar, bajra, maize, urad and moong were 10-41% below MSPs in October. Continued on Page 2 No ordinance to resume Goa mining FE BUREAU Mumbai, November 7 THE CENTRE HAS turned downademandfromGoaminers for resumption of the miningactivityinthestatethrough anordinance,amovethatcould hitthecountry’sminingoutput growth. The“miningandquarrying” sector had reported flat growth(0.1%)inthefirstquarterof this financialyear. The Supreme Court had in CLOSETO 78%ofthetotal347 equity mutual fund schemes have registered negative returnsinthelastoneyear,with over106 schemes giving negative returns of more than 10%. A number of the worst-performing funds are infra sector fundswithHSBCInfrastructure Fund reporting a negative return of 35.83%, data from Value Research shows. PSU funds have also per- SURYA SARATHI RAY New Delhi, November 7 Februarythisyearquashed the stategovernment’s2015order granting‘secondrenewal’of88 iron ore mining leases in the state. The apex court had also directed to stop all mining operations, with effect from March 16, on the ground that the second renewal was given to those mines in violation of its previous directions. Continued on Page 2 (` cr) Mar 31, ‘17 Outstanding Mudra loans Gross NPAs Mar 31, ‘18 Gross NPA ratio (%) 4.83 6.15 Source: Micro Units Development & Refinance Agency (Mudra) by the relatively better asset quality profile of small loans which are disbursed under government schemes in a target-based fashion. For instance,formerReserve Bank of India (RBI) governorRaghuram Rajan warned against ambitious credit targets in a note to the parliamentaryestimates committee on bank NPAs, adding that they could be the source of the next banking crisis. “Credit targets are sometimes achieved byabandoning appropriate due diligence,creating the environment for futureNPAs.BothMudraloans aswell as the Kisan Credit Card (KCC),whilepopular,havetobe examined more closely for potential credit risk,” he had observed. The value of loans outstanding under KCC stood at `4.33 lakh crore on March 31, 2018, marginally lower than `4.35lakhcroreayearago,RBI said in response to an RTI query. The central bank said it did not have information on NPAs in the KCC category. YEARLY PERFORMANCE 78% of equity schemes give negative returns Performance of equity schemes `% % reporting negative returns Return as on October 29, 2018 Source: Value Research Total number of schemes 347 0.58 QuickPicks PRICES OF 12 among the 14 kharif crops have ruled below theirminimum support prices (MSPs) since arrival of the summer crop began more than a month ago, and in case of five of these crops namely paddy, tur, groundnut, niger and ragi, the prices have been on a continuous decline through the season. While the 12 crops’ prices in key mandis in October were on an average 8-40% lower than the respective MSPs, the five crops are now being sold 5-9% lower than in the first week of last month. Only cotton and sesamum are costlier to wholesalers than their MSPs (see chart). Despite a 4-52% rise in Market price against MSP (%) Average mandi price (Oct 1-31) `/quintal Sesamum 91.35 For those with an older iPhone 6s or 7 this is a good upgrade to consider. But the price at `99,900 is not easy to accept. So it makes more sense to wait till iPhone XR is out, and then take your pick ■ Gadgets, P8 MISSING SUPPORT? THE SHARE OF gross nonperforming assets (NPAs) in outstanding Mudra loans eased to 4.83% at the end of FY18 from 6.15% a year ago, according to data with Micro Units Development & Refinance Agency (Mudra). The value of outstanding Mudra loans as on March 31, 2018 was `2.02 lakh crore, of which loans worth `9,770 crore were classified as NPAs. On March 30, 2017, the value of outstanding Mudra loans stood at `1.38 lakh crore, of which loans worth `8,502 crore had turned bad, Mudra, a subsidiary of Small Industries Development Bank of India (Sidbi) said in response to a right to information (RTI) query. Loans worth `5.72 lakh crore had been disbursed between the launch of the Pradhan Mantri MudraYojana (PMMY) in April 2015 and March 2018.In a bid to further push disbursements under the scheme, the finance ministry in May tied up with 40 entities, including Flipkart, Swiggy, Patanjali and Amul, for extending loans to small entrepreneurs under the Mudra scheme. According to the ministry, 74% of Mudra scheme beneficiaries are women, while peoplefromtheScheduledCastes/ Scheduled Tribes (SC/ST) and Other Backward Classes (OBC) categories have availed 36% of loans. The NPA figures for Mudra loans are much better than those for banks’ micro, small and medium enterprises (MSME)portfolios.Delinquencies on account of MSMEs rose to a high 13.08% for publicsector banks’ (PSBs) at the end ofMarch2018,comparedwith 12.56% in March, 2017, FE had reported on November 5. Not everyone is convinced 21.61 iPhone XS: A premium phone that still leads the pack PRABHUDATTA MISHRA New Delhi, November 7 « « The start-up, which has two electric scooter models—Ather 450 and Ather 340—has its entire inventory for 2018-19 sold out, notching up 60008000 bookings by June ■ eFE, P8 Farmers find price support elusive SHRITAMA BOSE Mumbai, November 7 2.01 Revving up the electric mobility game with Ather Energy 78.39 Special Feature Value of outstanding loans on March 31 was `2.02L crore, of which `9,770 cr were NPAs % reporting positive One year % reporting loss of more than 10% Two years 19.31 24.78 FY14 ~25,000 Disinvestment 4.90 FY13 0.2 0.2 0.2 Nil 0 16,44,761 5,00,000 8.4 17,94,892 10,00,000 5.5 16,65,297 15,00,000 6.1 15,63,485 20,00,000 (` crore) 2 21,42,667 25,00,000 19,74,855 Actuals target of `80,000 crore) as many of the transactions planned for the year including ONGC-HPCL type deals are nowhere near implementation. No concrete proposal has yet come from the administrative ministries such as power, renewable energy and petroleum ministry in this regard. Last year, ONGC’s purchase of Centre’s 51% stake fetched `36,915 crore, helping it garner a record `1 lakh crore disinvestment revenue. Tax revenues are also not doing that well. Net tax receipts (post refunds and devolution to states) grew just 7.5% in H1FY19 as against 19% required to raise the budgeted amount for the full year. The monthly gross (pre-devolution)GSTrevenue(excluding cess) for the Centre to meet its budget estimate is a little over `54,000 crore. Asagainstthis,itgotanaverage of around `39,000 crore in April-October.Although some improvement in collections is nowseen(OctoberGSTrevenue forCentrewasaround`49,000 crore), the revenue gap is too wide to be bridged in the next five months. Mudra loan NPAs ease to 4.83% from 6.15% a year ago 30.55 ITS EFFORTS TO keep public spendingrobustnotwithstanding,theCentremayhavetotrim the annual budgetaryexpenditure for the current financial year by `50,000 crore, or 2% from the estimated level, and the axe could fall primarily on defenceandsomesocial-sector spending. Trimming of the budget to meet the tough fiscal deficit target of 3.3% of the GDPforFY19hasbeennecessitatedbecausenon-taxrevenues could be significantly below budgettargetanduncertainties over indirect tax receipts, even though the government’s public assertions so far have been that the aggregate tax receipts Initial target (BE) (` crore) Likely revenue shortfalls SOME RESPITE 97.98 PRASANTA SAHU New Delhi, November 7 Centre's budget spending 8.65 DESPITE THE reduction in diesel prices by around `2 per litre in the second half of October 2018, truck rentals for the month across the country's trunk routes increased by 1.1% over the rates in September, according to the Indian Foundation of Transport Research and Training, the apex body which tracks the truck industry, reports fe Bureau in Mumbai. Move a small digression from NDA’s practice of not cutting budgetary expenditure; shortfall seen in disinvestment, telecom and GST receipts « « « « « « « « Diesel price cut fails to reduce truck rentals Budget size may be cut by `50k cr 14,09,422 WATER HEATER brand Racold suddenly shut its Pune plant in Chakan with effect from November 1, reports Geeta Nair in Pune. Racold Thermo is the whollyowned subsidiary of Italy's Ariston Thermo Group, which manufactures the Racold brand in India. Ariston is a €1.57-billion company which generates 90% of its sales outside Italy, with Asia contributing 20% of the sales and accounting for 25% of its employees. Ariston had acquired Racold in the 1990s to enter the Indian market. FISCAL OBLIGATION 14,90,925 IN THE NEWS Water heater brand Racold shuts Pune plant 9,770 MUMBAI, THURSDAY, NOVEMBER 8, 2018 8,502 Tax terrorism is an old issue, but the service tax appeals case takes it to a whole new level 202,113 India needs Basel+ norms as default rates here are higher INDIA FOCUS Data has become the most deciding factor, says RS Sharma EDITORIAL COMPANIES, P5 138,209 OPINION, P6 % reporting more than 10% Three Years formed poorly as have small cap funds in the last one year. The infrastructure sector saw its categoryaverage return at a negative 18.62%, with all the 23schemesreportingnegative returns. Over the past year the Nifty Small Cap index has fallen by more than 28.3% while the Nifty Mid Cap index has lost 12%. All the 36 mid and small cap equity schemes have given negative returns in the last one year. Continued on Page 2 FARM EXPORTS IN SLOW LANE Growth slows in H1FY18, MSP hike could hit export prospects further FE BUREAU New Delhi, November 7 FARM EXPORTS, WHICH had seen a big spike and showed potentialoffurtheracceleration duringtheUPA-2government’s period, have lost some of that momentum under NDA’s watch. While the shipments were hit during the initial years of NDA partly due to subdued world trade, the latest trend is not encouraging either despite global commerce improving. After a 15% rise last fiscal, growth in India’s farm export value slowed down to just over 2% in the first half of 2018-19, as demand fora host of items— including marine products and non-basmati rice — remained subdued,showed official data. Exports of farm and allied productstouched$18.6billion in H1FY19, against $18.2 billion a year before,according to the data by the agrixchange portal under the Agricultural and Processed Food Products Export Development Authority (APEDA). The data capture over 95% of the total exports in this segment.Theslowdown could worsen further once the fullimpactofthegovernment’s sharphikeofupto52%inminimum support prices (MSPs) of variouskharifcrops—aimedat ensuringfarmersatleasta50% profit over costs — are felt.That will make local products more uncompetitive in the global market.Onlylastfiscal,thefarm exports had reversed a threeyearslide to record a rise. In volume term, 26 of the top 40 items that make up for Farm exports remain subdued ($ billion) 2012-13 2013-14 2014-15 2015-16 2016-17 2017-18 41.2 42.8 38.7 ! 32.1 33.4 38.2 2017-18 (H1) 18.2 2018-19 (H1) 18.6 Source: AgriXchange portal of APEDA over 90% of total agricultural shipments registered a rise in the April-September period, against 27 a year before.While the rise in the outbound shipments of farm items exceeded a 10% expansion in the overall merchandise exports in FY18, it trails a 12.5% increase in goods exports in the first half of this fiscal. The marine products segment,whichwas a prime driver offarmexportgrowthinrecent years,dropped 7% to $3.47 billion in H1. While basmati rice exportsrose6%to$2.12billion, those of non-basmati declined 7.6% to $1.56 billion. Buffalo meat — the third-largest farm item that had registered a near 3%riseinvalueinFY18,despite acrackdownonillegalabattoirs inUttarPradeshlastyear—witnessed only a slight increase in export value to $1.89 billion in H1FY18. Once touted to have the potentialtobealong-termdriverofIndia’sgoodsexports,the agriculture and allied sector was periodically bugged down by elevated domestic prices in times of a global commodity crash — caused by plentiful supplies and a demand slowdown — and periodic curbs on exports of certain items. Continued on Page 2
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.