OPINION, P8 ECONOMY, P2 INTERNATIONAL, P14 NEW ROLE TRADE TRUCE Expenditure secy AN Jha is new finance secy China has agreed to cut tax on US-made cars, tweets Trump EDITORIAL Monetary policy won’t work till RBI gets food CPI right Weak rural wage growth a drag on pvt spending in Q2FY19; need to fix pvt capex, liquidity PUNE, TUESDAY, DECEMBER 4, 2018 FOLLOW US ON TWITTER & FACEBOOK. APP AVAILABLE ON APP STORE & PLAYSTORE WWW.FINANCIALEXPRESS.COM READ TO LEAD VOL.IX NO. 226, 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: 36,241.00 ▲ 46.70 NIFTY: 10,883.75 ▲ 7.00 NIKKEI 225: 22,574.76 ▲ 223.70 HANG SENG: 27,182.04 ▲ 675.29 `/$: 70.46 ▼ 0.87 `/€: 79.79 ▼ 0.63 BRENT: $61.41 ▲ $2.70 GOLD: `30,664.00 ▲ `424.00 ALL-EQUITY MERGER Horlicks boost for HUL drinks cart 1,800 IN THE NEWS Shares in demat form: Sebi moves deadline to Apr 1 SEBI ON Monday extended the deadline for transfer of shares of listed companies only in demat form to April 1, reports PTI. The extension comes after taking into account representations from shareholders. The initial deadline was December 5. Special Features Don’t let market volatility put a stop to your SIP Before embarking on equity investments, be sure that market movements will not make you emotionally weak or create doubts about the objective of the investments ■ Personal Finance, P13 Stock’s correction makes risk-reward favourable The worst case scenario of subsidy sharing by ONGC has been priced in; crude recovery and gas price hike could boost earnings; upgraded to ‘Buy’ ■ Investor, P13 QuickPicks Manufacturing sector activity touches 11-month high in Nov 1,700 7,542.85 7,625 1,779.9 7,500 7,375 1,775 1,725 Intra-day on BSE (`), Dec 3 7,750 Previous close 1,753.60 Open 7,260 7,250 7,125 Close 7,000 Open Previous close 7,269.95 Close LOCAL & GLOBAL ■ HUL to merge GSK Con- ■ Also gets contract to sumer Healthcare India with itself in deal worth `31,700 cr distribute GSK's OTC and oral care brands ■ 4.39 HUL shares for ■ Unilever to acquire 82% each GSK Consumer Healthcare share ■ HUL gets brands like Hor- licks, Boost, Viva & Maltova Apart from the merger of HUL with GSK CH India, the transactionhastwootherparts, which is global in nature and transacted through HUL’s parent firm,Unilever.One is acquisition of 82% stake in GSK Bangladesh and the other is acquisition of certain other commercial operations in 20 stake in GSK Bangladesh ■ Also buying GSK's otherAsian countries. While Boost,Viva,and Maltova are Indian brands, Horlicks is a global brand, which will now be owned by Unilever and be available to HUL. Continued on Page 2 ■ GSK to buy US drugmaker Tesaro for $5.1 bn, Page 14 IL&FS ex-officials can’t sell assets THE MUMBAI BENCH of National Company Law Tribunal (NCLT) on Monday passed an order barring nine former officials of IL&FS Group from selling or pledging any of their personal assets. Acting on an application by the ministry of corporate affairs (MCA) that was based on a preliminary report by the Serious Fraud Investigations Office (SFIO), the NCLTbench, after a marathon three and a half hours hearing, directed former officials Ravi Parthasarathy,Hari Sankaran, Arun Saha, Vibhav Kapoor, K Nominal GDP growth (%, y-o-y) 12 Old series (Base: 2004-05) Real GDP growth (%, y-o-y) Mundle panel Mundle panel 10 (Base: 2011-12) New series (Base: 2011-12) 8 19 New series 16 6.4 6 13 12.3 13 10 2005-06 2013-14 5 4 2 2005-06 UPA’s nominal growth higher than NDA’s Nominal GDP (Annual average growth, %) UPA NDA Real GDP ■ SFIO says modus operandi was to keep holding firm financially viable through unsustainable, pyramidal funding ■ Ever-greening of loans provided to group firms ■ Ever-greening of loans also to Ind-Bharath Group, Gayatri Group, A2Z Group Ramchand,RC Bawa,Mukund Sapre, Pradeep Puri and S Rangarajan to also disclose theirmovable and immovable properties, including bank accounts in India and abroad. Continued on Page 2 Old series ICICI Bank, the country's third-largest lender by assets, raised its marginal cost of funds-based lending rates (MCLR) by 10 basis points (bps) across tenures, reports fe Bureau in Mumbai. Its one-year MCLR now stands at 8.8%. The MCLR for other tenures ranges between 8.55% and 8.75%. The revised rates came into effect on Saturday. One-year MCLRs at ICICI's larger peers, State Bank of India (SBI) and HDFC Bank, stand at 8.5% and 8.7%, respectively. PAGE 10 2013-14 7.74^ Mundle panel 15.44^ 10.55 14.88^ Mundle panel 8.03^ 7.35 New series New series 6.7* 7.35 Old series 15.04* 10.55 *For nine years up to FY14; ^for 10 years up to FY14; NDA period (FY15-FY18) the UPA period. For its part, the Mundle panel retained the deflator used in the old series (2004-05 base year) to compute real GDP, while under new series, a different deflator was used factoring in updated retail and BORROWED FINERY wholesale price inflation data for each segment. Continued on Page 2 ● CASH CRISIS REC to largely tap market to make `19k-cr PFC purchase Sign that such deals exert pressure on public debt; REC’s cash surplus is only `1,770 crore PRASANTA SAHU New Delhi, December 3 AS PART OF its plan to meet the fiscal deficit target for FY19,the government is looking at asking some large PSUs to purchase its stakes in other state-owned entities, but this sort of ‘disinvestment’ would entail a much higher level of public borrowing than the deficit numberwould reflect. In what could be a repeat of ONGC-HPCL deal last year, Rural Electrification Corporation (REC) may be nudged to acquire the Centre’s 65.64% stake in Power Finance Corporation (PFC). However, since REC’s current cash surplus is just`1,774crore,itwouldneed to raise a big amount from the markettofundtheacquisition, which at current market prices isseentobe`16,800croreplus Dwindling surplus Liberal payouts Cash in hand (` cr) Dividend payout ratio (%)* 91.5 100 2016-17 2017-18 85 5,000 4,000 3,000 2,000 REC 78 70 1,000 0 53.5 55 40 REC PFC a likely premium. For the sale of the Centre’s HPCL stake to ONGC last year, referencevaluationwasata14% premium, which fetched the Centre a whopping `36,915 crore. The upstream oil firm financed the deal with market borrowing of `25,000 crore.If thepremiumiskeptatthesame level and assuming the market prices are same as today when the deal materialises laterin the year,the government could get nearly`19,000crorefromREC’s purchaseofitsstakeinPFC. On Monday, the PFC stock closed at `96.85, up 12.16% from the previous close. PFC 45 FY15 FY16 FY17 FY18 *% of paid up capital; adjusted for bonus share issue of 1:1 in Sept 2016, which doubled the paid up capital Analysts feel such deals between PSUs are not markedly different from budgetary borrowings by the Centre and could hence put pressure on bond yields. With its finances under stress and an obligation to sustain the public spending momentum, the Centre has linedupplanstoraiseamassive `1.7 lakh crore via the extra budgetary resources (EBR) in the current fiscal, up 110% from FY18. Continued on Page 2 ■ Relief to power plants: Ball now in CERC court, Page 2 EXPRESS IT AWARDS Qatar to leave Opec, focus on gas as it takes swipe at Riyadh ICICI Bank hikes MCLR-based lending rates by 10 bps GDP (Annual average growth, %) UPA NDA THE COUNTRY'S manufacturing sector activity improved in November and touched an 11month high as new order flows encouraged companies to lift production amid strong demand conditions, a monthly survey said on Monday, reports PTI. The Nikkei India Manufacturing Purchasing Managers' Index strengthened from 53.1 in October to 54.0 in November, signalling the strongest improvement in the health of the sector in almost one year. PAGE 2 QATAR ON Monday said it was quitting Opec from January to focus on its gas ambitions, taking a swipe at the group's de facto leader Saudi Arabia and marring efforts to show unity before this week's meeting of exporters to tackle an oil price slide, reports Reuters. Doha, one of Opec's smallest oil producers but the world's biggest liquefied natural gas exporter, is embroiled in a protracted diplomatic row with Saudi Arabia and some other Arab states. PAGE 12 Old series commercial operations in 20 other Asian countries NCLT ORDER FE BUREAU Mumbai, December 3 Deflated growth? 22 3,573 INWHATCAN betermedasthe largest deal in the consumer space market, the country’s largest FMCG firm, Hindustan Unilever,on Monday said it will merge GlaxoSmithKline ConsumerHealthcareIndia(GSKCH India) with itself for a transactionworth `31,700 crore. The all-equity merger deal includes an exchange ratio of 4.39 HUL shares for each GSK CH share, along with GSK’s entire operations of nutrition business,whichincludeshealth drinks like Horlicks,Boost,Viva, Maltova,andcontracttodistributethelatter’sover-the-counter and oral care brands like Senodyne,EnoandCrocin.Following the issue of new HUL shares, Unilever’sholdinginHULwillbe diluted from 67.2% to 61.9%. 1,825.9 1,825 1,750 FE BUREAUS Mumbai/New Delhi, Dec 3 Glaxosmithkline Consumer Healthcare THE VARIATION IN gross domestic product (GDP) data for the UPA era under the old and new series, released last week, is much less pronounced in nominal than in real term. This suggests the controversy surrounding the sharp cut in the UPA-era growth rates was perhaps stoked by the use of different deflators across data points — the old series with 2004-05 base year; the new series with 2011-12 base and the Mundle panel estimates — to compute the real GDP. In fact, at 15%, the revised average nominal GDP growth rate during the UPA era (for nine years through FY14) is marginally higher than 14.9% calculated under the old series for 10 UPA years. Of course, the Mundle panel had calculated even higher nominal GDP growth rate (15.4%) for 553 A RED initiative appears in today’s edition of Financial Express. These pages are an initiative of the marketing solutions team of The Indian Express Group and contain content paid for by advertisers. These pages should be read as an advertisement. Intra-day on BSE (`), Dec 3 1,850 Little gap between old & new data for UPA 4,490 INDIAN NAVY DAY Hindustan Unilever FE BUREAU 1,774 HUL to merge GSK Consumer Healthcare with itself; Unilever to acquire stake in overseas assets Nominal GDP FE BUREAU Bengaluru, December 3 IT’s all about ideas FROMTCSANDInfosys,Google to Microsoft and Flipkart to Paytm, they’ve all been part of theExpressITawards.Thistime around in what is the sixth edition of the competition, the entries once again poured in from all corners of India Inc. From heavyweights to minnows, more than 400 companies tried their luck, making it harder than ever for the jury — chaired by Mohandas Pai, for- mer CFO, Infosys, and ably assisted bySharadSharma, former R&D head at Yahoo and cofounder iSPIRT, Ravi Gururaj, chairman Nasscom Product Council, and Sid Pai — Siana Capital.Theteamspent the better part of a day poring over the presentations.While knowledge partner PWC hadwhittled down the list to some 50 odd names, it was nonetheless a daunting task for the jurors. But it’s been a well-fought contest and the winners, whose names will be announced on Wednesday, December 5, have reason to be proud. Indeed,thejurymemberstested the business models across a range of parameters — how sound the idea was,how workable itwas and howscalable. Over the years the competitionhasthrownupsomehidden gems;smallstart-upsthatcould one day become unicorns.The contest has remained popular given the nine categories allow virtuallyeverytechfirmtotryits luck.Themostpopularcategory has been innovation, though thistimetheFintechandMobility categories also attracted a largenumberofentries. Continued on Page 2 No free food for most Jet economy passengers PRESS TRUST OF INDIA Mumbai, December 3 CASH-CRUNCHED JET AIRWAYS has decided to do away with complimentary meals for economyclasspassengerstravellingondomesticroutesunder two more fare categories as the airline looks to trim costs. Therevisioninfareofferings will be effective for tickets booked from December 21,for travelstartingJanuary7,JetAirways said in a release on Monday.The carrier currently offers fivefareoptionsintheeconomy class — light,deal,saver,classic and flex — for customers booking flights on domestic routes. “In addition to the light and deal categories introduced earlier, Jet Airways will offer two morecategoriesundereconomy travel saver and classic,” Jet Airways said in a release.The latest revision in complimentary meals would be available only for economy passengers who booked their tickets under the flex option,the release said. Continued on Page 2
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