OPINION, P8 MARKETS, P10 INTERNATIONAL, P14 EDITORIAL UNDER PRESSURE MUSK MOVE Das-led RBI faces trouble getting banks to reduce rates Tesla to raise prices, backtracks on closing most stores SBI’s rate move is a small disruption of the banking industry ECI's new norms are laudable, but for any meaningful change, implementation will be key NEW DELHI, TUESDAY, MARCH 12, 2019 FOLLOW US ON TWITTER & FACEBOOK. APP AVAILABLE ON APP STORE & PLAYSTORE WWW.FINANCIALEXPRESS.COM READ TO LEAD VOL. XLV NO. 9, 18 PAGES, `6.00 (PATNA `6.00, RAIPUR `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: 37,054.10 ▲ 382.67 NIFTY: 11,168.05 ▲ 132.65 NIKKEI 225: 21,125.09 ▲ 99.53 HANG SENG: 28,503.30 ▲ 274.88 `/$: 69.89 ▲ 0.27 `/€: 78.58 ▲ 0.11 BRENT: $66.48 ▲ $0.74 GOLD: `32,110 ▼ `13 ● UNPAID DUES HSBC Daisy moves apex court against tribunal order INDU BHAN New Delhi, March 11 OFFSHORE INVESTORS LED by HSBC Daisy Investments (Mauritius) and other minority shareholdersonMondaymoved the Supreme Court against the National Company Law AppellateTribunal(NCLAT)orderthat deferred hearing on its contemptpetitions“sixtimes”over anallegeddefaultinpaymentof `230 crore against Reliance Infratel and its promoter Anil Ambani.A bench led by justice RFNarimanrefusedtointerfere in the case, but said that it has “no doubt that the NCLAT will take up the case”on March 27, the next date of hearing. As per the consent terms of the agreement between Reliance Infratel, HSBC Daisy and others, recorded by the NCLAT in its order dated June 26, 2018, the Anil Ambaniowned firm was to pay the amount within a period of 180 days.After the expiry of the sixmonth period,HSBC Daisy and other nine minority shareholders holding 4.26% stake in RelianceInfratelhavefiledcontemptpleasagainstAnilAmbani and other officials of Reliance Infratel, the unit that houses RCom’s towers and fibre assets. HSBCinitsappealbeforethe SC said the NCLAT had been adjourning the contempt petitions despite the firm having intentionallyandwillfullycommitted breach of their undertakings before the NCLAT. Continued on Page 2 RCOM-RJIO DEAL NCLAT pulls up SBI for painting rosy picture Says lender gave a false impression transaction would fetch about `37,000 crore FE BUREAU New Delhi, March 11 THE NATIONAL COMPANY Law Appellate Tribunal (NCLAT) on Monday admonished State Bank of India (SBI), saying the lender had given a false impression that the RCom-RJio deal would fetch about `37,000 crore. The NCLAT bench wondered why should there not be proceedings against the lender for painting a rosy picture of RCom. “SBI created false impression, gave a rosy picture before us,” the twomember NCLAT bench, headed by chairperson SJ Mukhopadhyay observed. The appellate tribunal said the country’s largest lender had“clappedwith RCom”or,in other words, worked with the telecom player. “You (SBI) have failed. JLF has failed. No sale took place. You clapped with RCom and claimedthatyouwouldrecover around`37,000crorefromsale to Jio.You cited losses of crores per day.You failed and nowwill seek to recover`260 crore,”the bench observed. The appellate tribunal pulled up SBI for not releasing ORDER, ORDER Feb 4, 2019 NCLATdirected RCom not to sell, transfer its movable and immovable property without its permission May 30 NCLAT halted insolvency proceedings May 22 Feb 20 RCom moved NCLAT challenging NCLT order SC asks RCom to pay Ericsson's dues within four weeks orAnil Ambani will be jailed May 15, 2018 Feb 25 NCLT, Mumbai admitted Ericsson's insolvency plea against RCom the `260-crore income tax returns lying with it, which could be used by RCom to pay Swedish telecom equipment makerEricsson.The benchwas hearing a plea by RCom seeking the tax refund be released in favour of Ericsson. The release would help RCom to clear a part of its its `550-crore dues to Ericsson. The Supreme Court had, on February20, held RCom chairmanAnilAmbani and two others guilty of contempt for violating its order by not paying dues of `550 crore to Ericsson. The apex court had said that they would face a three-year jail term if the company failed to pay up within fourweeks. It also reminded the lenders that once the corporate insolvency resolution RCom moves NCLAT, seeking direction to SBI to release `260 crore I-T refund towards Ericsson process (CIRP) begins, lenders would not get the `260 crore since it would go to the corporate debtor. The NCLAT had earlier halted insolvency proceedings against RCom after the case was admitted by the Mumbai bench of National CompanyLawTribunal (NCLT) on May 15, 2018. The apex court had on October23 asked RCom to clear the dues by December 15,2018. RCom has already deposited `118 crore with the Supreme Court. Moreover, it hasaskedlenderstoreleasethe theincometaxrefundsof`260 crore directly to Ericsson. The company is planning to raise `200 crore to pay Ericsson `550 crore including interest. Prashant Ruia, StanChart move NCLAT against NCLT order FE BUREAU New Delhi, March 11 THREE DIRECTORS OF the erstwhile board of Essar Steel on Monday approached the National CompanyLawAppellateTribunal (NCLAT) against a lower bankruptcy court order that allowed takeover of the company by ArcelorMittal. Standard Chartered Bank also approached the appellate tribunal against the order. The three directors of Essar Steel are Prashant Ruia, Dilip OommenandRajivBhatnagar. The matter was mentioned before a two-member bench headed by chairman justice SJ Mukhopadhaya, which asked it to be listed after the Ahmedabad bench of the National Company Law Tribunal (NCLT) posts its full written order. On Friday, the Ahmedabad bench of the NCLT had approved the lenders’ plan to let global steel giant ArcelorMittal take over the debt-ridden Essar Steel. Continued on Page 2 ROUGH WEATHER Goyal seeks urgent funding of `750 crore from Etihad To step down as chairman and will have no executive role; his stake will come down to 17% from current 51% Jet's revival plan so far... ■ Etihad to infuse `1,600-1,900 crore resulting in its shareholding at 24.9% FE BUREAU New Delhi, March 11 JET AIRWAYS CHAIRMAN Naresh Goyal has sought an urgent funding of `750 crore from its equitypartnerEtihad, citing “the very precarious” position of the airline following the lingering cash flow issues which got amplified after the forced grounding of over 50 of its planes. In a letterto theAbu Dhabibased carrier’s group chief executiveTonyDouglas,Goyal saidtheairlinehasalsosecured thego-aheadfromthecivilaviation ministry to pledge its sharesinJetPrivelegeforsecuring the interim funding. The airline holds a 49.9% stake in the loyalty programme, while the majority is with Etihad. The Etihad board met in Abu Dhabi on Monday to dis- ■ `750-crore fund infusion by Naresh Goyal family leading their shareholding to 17.1% Four ways to ride out volatility in the market Reacting emotionally to sudden shifts in the market has negative consequences. Investors must build their portfolio with an equitable mix of equity, debt, gold and real estate ■ Personal Finance, P13 ■ A New investor shall infuse `1,600-1,900 crore resulting in a shareholding of 20% cuss the resolution plan.However,the outcome of the meetingwas not known till the time of going to the press. “I nowlook forward toyour support and cooperation in saving the airline by an urgent fund infusion of `750 crore by early next week, so that a matching contribution from banks is also disbursed, as per theresolutionplan,”Goyalsaid QuickPicks DGCA issues more safety steps for flying B737 MAX planes THE DGCA on Monday issued additional safety instructions to SpiceJet and Jet Airways for operating Boeing 737 MAX planes, reports PTI. The pilot commanding the aircraft should have at least 1,000 hours of flying experience, according to the DGCA directions. A day after a 737 MAX aircraft crashed in Ethiopia killing 157 people, the DGCA said interim safety measures are being taken with inputs available at this stage. It has also asked the airlines to ensure various requirements are complied with by engineering and maintenance personnel with respect to 737 MAX planes. Related report on PAGE 6 US software firm Ebix offers to buy Yatra for $336 million US-BASED SOFTWARE firm Ebix on Monday said it has offered to acquire Yatra Online, the parent company of online travel firm Yatra.com, for $336 million (over `2,345 crore), reports PTI. The company has sent a letter to the Yatra Online board outlining the offer to acquire 100% of the outstanding stock of Yatra Online for $7 per share on a debt-free basis. Ebix also said that it reserves the right to reduce its offer at its discretion if it does not receive a positive engagement response from the Yatra Online Board in a timely manner. Yatra could not be immediately reached for comment. PAGE 7 NBCC to deliver flats to Jaypee Infra homebuyers in 3 years IN A big relief to Jaypee Infratech homebuyers, state-owned NBCC on Monday said their flats would be delivered in less than three years from the date its plan was approved at no extra cost, report Surya Sarathi Ray & Rishi Ranjan Kala in New Delhi. This is in accordance with the resolution plan for the bankrupt Jaypee Infratech. The company had earlier said it would make the delivery within four years. Sources present in the meeting said NBCC chairman and managing director AK Mittal along with senior officials also said its top priority would be handing over the flats to the homebuyers. PAGE 7 ` ■ Naresh Goyal promoter group's shareholding is subject to a cap of 22% in the letter dated March 8. OnFebruary14,theairline’s board had approved a debt recastplanwherebythelenders would become the largest shareholders in the airline by convertingthedebtintoequity at a nominal price of `1. The same was approved by the shareholders on February 21. Continued on Page 2 ED files fresh chargesheet against Nirav Modi PRESS TRUST OF INDIA New Delhi, March 11 PM Kisan Farmers Those eligible^ benefited* (%) (in lakh) Laggards MP 0 (75.6) Rajasthan 0 South side story (From left) Padma awardees Prabhu Deva, Bangaru Adigalar, Shankar Mahadevan, A Sivamani and V Mohanlal, in New Delhi on Monday Report on Page 15 (47.48) W Bengal 0 (69.69) Karnataka 0 Bihar 0.8 Shares ● PNB SCAM Slow PM-Kisan rollout in most Oppn-ruled states MANY STATES THAT figure prominently on India’s agriculture map seem to have shown little efficiency or alacrityin completing the necessary formalities to ensure their farmers the income support announced by the Centre under the PM-Kisan scheme. AsonMarch9,only2.6croreor just 21% of the 12 crore-plus ‘small and marginal farmers’ in the country received the first tranche of `2,000 each in theirbankaccountsunderPMKisan,while the plan is to take the benefit to all the target population by March-end. Curiously, among the laggard states are Oppositionruled Madhya Pradesh, Rajasthan, West Bengal and Karnataka where the scheme has practically not been rolled out at all. Among the NDA states, Haryana (82%) and Gujarat (73%) have done very well while Bihar (0.8%) and debt of the company into 11.4 crore equity shares of `1,000 crore resulting in a shareholding of 29.5% Continued on Page 2 PRABHUDATTA MISHRA New Delhi, March 11 ■ Lenders to convert ■ Lenders to infuse equity POLITICAL SCHEME? Special Feature ` ● ARCELOR TAKEOVER (69.77) (159.15) Top performers Haryana 82.04 (11.17) Gujarat 73.29 (36.34 Punjab 72.9 (3.61) UP 46.46 (221.08) Andhra 42.58 (75.5) *As of March 9, 2019; ^Number of small and marginal farmers The scheme is tagetted at over 12 crore ‘small and marginal farmers’ (with land holdings of 5 acre or less) Maharashtra (12.7%) have barely managed to cover much ground. Continued on Page 2 NARROW GAUGE Investors big losers in most stocks Nearly 70% of stocks with a market capitalisation of `1,000 crore or more have been in the red in the last one year. Of the 725 companies in this universe, 38% have lost more than 20% of their value. The rally in the Sensex is very narrow being driven by a handful of stocks such as RIL, HDFC Bank, Axis Bank and ICICI Bank. The four have contributed about 3,000 points or 80% to the Sensex rally of 3,747 points in the last one year. Detailed report on Page 10 FE BUREAU S&P BSE Sensex 38,000 37,121.22 37,054.1 37,000 36,000 35,000 34,000 33,000 Sep 19, ‘18 Mar 11, ‘19 THE ENFORCEMENT DIRECTORATE has filed a fresh chargesheet against PNB scam accused Nirav Modi under the anti-money laundering law, officials said on Monday. Theysaidthechargesheetor the prosecution complaint has been filed before a special Prevention of Money Laundering Act (PMLA) court in Mumbai. This is a supplementary charge sheet against the diamantaire and few others and the agency has recorded additional evidences gathered in the case and attachments made,they said. Further details about the contents of the chargesheet are awaited. The development comes two days after a British daily reported that Nirav Modi, accused in the $2-billion Punjab National Bank (PNB) scam, is living in a swanky 8-million pound apartment in London's West End and is now involved in a new diamond business. The ED had said on March 9 that the UK’s home secretary has recently referred India's request for extraditing the tainted businessman to a court for initiating legal proceedings against him. The ED had filed thefirstchargesheetinthiscase in Maylastyear. Continued on Page 2 CASH RECOVERY Banks open to big haircuts as they rush to sell bad loans before March end SHRITAMA BOSE Mumbai, March 11 BAD-LOAN ACCOUNTS PUT up forsale bybanks so farin the Marchquarterhaverisentoover `27,000croreaslendersrushto make cash recoveries ahead of the close of the financial year 2018-19. In their anxiety to close out deals, they have been willing to take fairly large haircuts, executives at asset reconstruction companies (ARCs) said.Forinstance,CentralBank’s reservepriceforAlokIndustries suggests an 84% haircut and IDBI's reserve price for RCom implies a 55.5% haircut. Banks are demanding 100% cash payments through ARC sales to try and ensure theirprovisioningburdendoes not go up.“We are selling NCLT exposures in cases where we get cash ,” an executive with a mid-sized public-sector bank (PSB) said. “We are making it clear to buyers that we want the cash in 60 days,”he added. However, a cash deal often means taking a biggerhaircut. Account/Bank (` crore) Exposure RCom Bank of Baroda Bhushan Power & Steel Central Bank of India Alok Industries Central Bank of India Reserve price 1,838.16 1,550.07 NA 709.5 197.63 1,251.1 RCom/Reliance Telecom IDBI Bank 1,055.66 Bhushan Power & Steel United Bank of India 883.72 Source: Banks 470 NA NPA Aseniorexecutivewith anARC pointed out that compared to even 12 months ago, dealmaking today was happening much faster. “Banks that have gone throughtheNCLTprocesshave at times got only 60% of what we were offering because they preferred cash,” he explained. Delays in resolution through the Insolvency and Bankruptcy Code (IBC) route may have also forced their hand, sectorwatchers point out. Among the large exposures that have been put on the block are Bank of Baroda (BoB) and IDBIBank’sexposurestoRCom — `1,838 crore and `1,056 crore, respectively. The other large accounts which banks are trying to sell are those of BhushanPower&SteelandAlok Industries.InMarchalone,Central Bank of India and United Bank of India have put on sale accounts worth a total `7,777 crore,of which these two assets account for`4,438 crore. Continued on Page 2
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