OPINION, P8 MARKETS, P10 EDITORIAL Instead of encouraging seed-tech, govt further cuts Monsanto’s royalties INTERNATIONAL, P14 CHANDRA BHUSHAN SYSTEM BREAKDOWN MARCH 25 EVENT Swachh Survekshan celebrates myopic waste management, not sustained efforts Former RBI governor Rajan says capitalism is 'under serious threat' Apple's new video service set to rival Netflix, Prime NEW DELHI, WEDNESDAY, MARCH 13, 2019 FOLLOW US ON TWITTER & FACEBOOK. APP AVAILABLE ON APP STORE & PLAYSTORE WWW.FINANCIALEXPRESS.COM READ TO LEAD VOL. XLV NO. 10, 24 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: 37,535.66 ▲ 481.56 NIFTY: 11,301.20 ▲ 133.15 NIKKEI 225: 21,503.69 ▲ 378.60 HANG SENG: 28,920.87 ▲ 417.57 `/$: 69.71 ▲ 0.18 `/€: 78.48 ▲ 0.11 BRENT: $66.98 ▲ $0.40 GOLD: `32,033 ▼ `77 RCOM DUES TO ERICSSON BOEING CRISIS DEEPENS 737 MAX 8 groundings Lenders refuse to part with `266-cr I-T refunds spread across the globe ● TOUGH TIMES BSNL fails to pay Feb salary to 1.76 lakh employees FE BUREAU New Delhi, March 12 STATE-OWNED TELECOM FIRM BSNL,which has been in the red for the past more than five years, failed to pay February salaries to its around 1.76 lakh employees due to financial constraints. This is the first instance of the company defaulting on salary payments underlining the tough times for it ahead. The employees’ union has written to telecom minister Manoj Sinha urging that the government release funds to the company to pay the salaries as well as revive the ailing firm. The employees have also been holding demonstrations. Around 55% of BSNL’s revenues goes towards payment of wages, and while the company’s wage bill increases annually by 8%, its revenues are stagnant. Continued on Page 2 France, Germany, Turkey, Italy, Ireland and the Netherlands fall in line behind the UK, the first European country to ban the flights European aviation authority EASA is poised to ground the jets across the region Boeing and the US FAA left isolated a day after their 'airworthiness' comment Nations like Australia, Singapore, China had already barred Max; LatAm, Africa, West Asia did too FE BUREAU New Delhi/Mumbai, March 12 BENJAMIN KATZ, CHRISTOPHER JASPER & IRENE GARCÍA PÉREZ London, March 12 BOEING STAGGERED INTO a deepening global crisis as governments around the world grounded the company’s bestselling jet oversafetyconcerns after a second deadly crash. The UK blocked flights on Tuesday by the 737 Max plane until more information becomesavailableaboutwhyan Ethiopian Airlines aircraft plunged into a hillside near Addis Ababa, killing 157. Germany,France,the Netherlands, Itlay and Ireland took similar steps. A blanket ban from the EuropeanUnionAviationSafety Agency is likely to follow,said a personfamiliarwiththematter. The global rush to halt flightsisleavingBoeingandthe Federal Aviation Administration isolated a day after they expressedconfidenceinthejetliner’s airworthiness. JurisdictionsincludingChina,Australia and Singapore had already grounded the Max, as had airlines from Latin America to Africa and West Asia. But the spread of the ban to Europe deals a major blow to Boeing as it grapples with the aftermath of theAfrican tragedy. “I’m watching this unfold with an element of astonishment and bemusement,” said Sandy Morris,an analyst at Jefferies in London.“What we’re lookingathereisalmostarebellionagainsttheFAA.You’renow lookingatAmericanandSouthwest and asking, can you really still operate this aircraft?” THE US WILL mandate that Boeing implement design changes by April that have been in the works for months for the 737 MAX 8 fleet after a fatal crash in October but said the plane was airworthy and did not need to be grounded afterasecondcrashonSunday. An Ethiopian Airlines 737 MAX 8 bound for Nairobi crashed minutes aftertake-off on Sunday, killing all 157 WHILE AS MANY as 12 countries have so fargrounded Boeing 737 Max aircraft after one such plane belonging to Ethiopian Airlines crashed on Sunday leading to concerns about passenger safety, the Indian aviation regulator, Directorate General of Civil Aviation,seems to be in awaitand-watch mode. Max in India SpiceJet Jet Airways 12 5* *all grounded over lease dues aboard and raising questions about the safety of the new variant of the industry workhorse, one of which also crashed in Indonesia in October,killing 189 people. Thoughittightenedcertain normsonMonday,itisstilldiscussing the matter with the regulators of other countries and waiting for the cue from the US Federal Aviation Administration. InIndia,SpiceJetandJetAirways flyBoeing 737 Max but at the moment the five aircraft of Jetisgroundedduetonon-payment issues. SpiceJet has 12 such aircraftwhich are flying. Continued on Page 2 INDU BHAN & SURYA SARATHI RAY New Delhi, March 12 THE STATE BANK of India -led Joint Lenders’ Forum on Tuesdaytold the National Company LawAppellateTribunal(NCLAT) Reliance Communications (RCom) should pay Ericsson on its own without saddling its past liabilities on lenders.The lender refused to release the `266 crore worth of incometaxreturnsthatRComwantsto use to paythe Swedish telecom equipmentmaker.Seniorcounsel Neeraj Kishen Kaul,appearing for SBI, argued the money didnotbelongtoRCom.“RCom should pay Ericsson, but not at ourcost,”he said. “An ‘errant’ firm is wanting public money from the Retention andTrustAccount formed in 2017, that is prior to initiation of any IBC proceedings against it, to clear its debts. No encumbrances can be created onthetaxrefundof`260crore received in this account on ORDER, ORDER ■ The SC on Feb 20 held RCom chairman Anil Ambani, 2 others guilty of contempt ■ It said if RCom failed to pay within 4 weeks the three executives will be sent to jail ■ RCom moved NCLAT seeking release of its `266-crore tax refund towards Ericsson which only the lenders have a lien. You gave undertaking to the SC and NCLAT,” Kaul told a NCLATtwo-memberbench led by justice SJ Mukhopadhyay. Kaul also argued the Supreme Court has held the three Reliance firms guilty of contemptforwilfullyanddeliberately not paying `550 crore plus interest and also having breached the undertakings giventotheapexcourtandalso to the appellate tribunal.“The SC has nowhere said that the money will come from the Retention and Trust account. You (Reliance firms) are conveniently trying to pass on your liability on us as you are being guilty and your chairmen will havetogotojail,”hecontended. The NCLAT observed that the insolvency plea against RCom cannot commence until the settlement with Ericsson attains finality. “Entire due amounthastobepaidwith full interest. We are aware that RCom wilfully defied undertakings and went against the SC orders,”the bench said. However, it wondered how SBI would be able to recover its moneyif RCom goes into insolvency.“You will get nothing if insolvency process starts.Will banks’ stand on I-T refunds be valid if IBC proceedings against RCom start? Where will be the RBI guidelines and the RetentionandTrustAccount?IBCsays you save the companyfrom liquidation and have a resolution plan.Whether your arguments will lie before the insolvency court? Can these arguments be advancedbeforeus?It’snotalitigationoramoneyrecoverysuit. All these orders are under the IBC,”the bench noted. Continued on Page 2 Continued on Page 2 US to mandate design changes DAVID SHEPARDSON Washington, March 12 India waiting for cue from US regulator Say RCom should pay on its own without saddling liabilities on banks Continued on Page 2 URGENT FUNDING Special Feature This is an era of technology blossoming all across Samsung’s DJ Koh says the time has come for tethering various technologies with 5G at the heart. With 5G coming in, 2019 will be the turning point technologically ■ eFE, P13 QuickPicks Sebi lifts foreign investment limit in corporate bonds THE SEBI on Tuesday withdrew the 20% limit on investments by foreign portfolio investors in corporate bonds of an entity, reports PTI. It said the restriction is being withdrawn in accordance with a circular issued by the RBI. In June last year, the Sebi had mandated that no FPIs shall have an exposure of more than 20% of its corporate bond portfolio to a single corporate. However, the RBI in February lifted the restriction in view of market feedback. To give effect to the directions of the RBI, the regulator said provisions of its June 2018 circulars "stands withdrawn with immediate effect". PAGE 10 E-comm policy: Stakeholders seek review of data sharing rules IN THE first meeting after the department for promotion of industry and internal trade (DPIIT) came out with its draft e-commerce policy, some stakeholders last week asked the government to relax the data storage rules to allow a company to share data at least with its group companies, reports Banikinkar Pattanayak in New Delhi. The draft policy says “sharing of such data with third party entities, even with customer consent, is barred under the policy”. In the absence of a clear-cut definition of the third party, this will mean Amazon India won’t be able to share data with Amazon Inc. PAGE 2 M&M arm to buyAurangabad Electricals for `876 crore AUTOMOTIVE COMPONENT supplier Mahindra CIE Automotive's (MCIE) board of directors on Tuesday approved the acquisition of Aurangabad Electricals (AEL), reports fe Bureau in Mumbai. The acquisition will be done by acquiring 100% of AEL's equity shares for an enterprise value of `875.6 crore which includes a future deferred payment estimated upto `62.2 crore. AEL's acquisition will help MCIE to enter aluminium die-casting business, strengthen its presence in twowheeler segment and diversify its customer base. PAGE 6 Etihad puts Goyal’s call on hold MANISHA SINGHAL Mumbai March 12 THE ETIHAD BOARD is believed to be in two minds on extending an interim funding of `750 crore to Jet Airways, ahead of regulatory approvals to the bank-led resolution plan fromthecivilaviationministry, Securities and Exchange Board ofIndia,CompetitionCommission of India and the overseeing committee of the Indian Banks’Association. The airline’s board, which met in Abu Dhabi on Monday to take a view on the interim funding sought by Jet’s promoter-chairman Naresh Goyal, has however, officially Double whammy FE BUREAU Inflation rises, IIP growth slips Retail inflation rose to 2.57% in February, reversing January's 19-month trough of 1.97%. Industrial production grew just 1.7% in January, against 2.6% in December. Food deflation bottomed out? (% change, y-o-y) 8 Core CPI 5.4 6 CPI 4 2.57 2 CPI food -0.66 1.7 0 -2 -4 Jan 2019 Feb 2018 Feb 2019 Base effect weighs on IIP growth (%, y-o-y) 10 7.5 8 6 4 2 0 Jan 2018 Source: MoSPI notcommunicateditsposition so far. In response to an email queryon the subject,an Etihad spokespersonsaid,“EtihadAirways does not comment on rumour or speculation.” With Etihad not taking a quick decision on providing an interim funding of `750 crore based on which banks would have released a matching amount as part of theirresolution plan,Jet is set to face even more troubled times. Greet before meet UPA chairperson Sonia Gandhi, Congress president Rahul Gandhi, former PM Manmohan Singh and other senior leaders at Sabarmati Ashram in Ahmedabad ahead of the party's working committee meet on Tuesday EXPRESS PHOTO: JAVED RAJA Continued on Page 2 ● STAKE DILUTION ● TERRIFIC TUESDAY RBI says yielding to Kotak’s plea would undermine its autonomy Indices stay on upward trajectory SALONI SHUKLA Mumbai, March 12 THE RESERVE BANK of India (RBI) is warning that its authority could be undermined if courts rule against it in a case involving a major private-sector lender. KotakMahindraBank’slegal petition against the Reserve Bank of India’s objection to the method used by the founder to pare his stake in the lender, if granted,wouldweakenitsregulatory authority, according to the RBI. Billionaire founder UdayKotak,whocurrentlyholds 30% of the bank, has missed multiple milestones to reduce his stake in the lender,as mandated bythe central bank. The RBI required his holding to be cut below 20% by December. The private lender is asking thecourttoapproveitsissuance of preference shares as awayto dilute its founder’s stake and is arguing that the central bank’s demandsareagainstthepublic interest.The preference share salehasalreadybeenrejectedby the RBI. with data.Already advertising growthhasoutpacedsubscription growth and is expected to comprise 52% of the total pie by 2021,”says the report. TV industry grew from `66,000 crore to `74,000 crorein2018,agrowthof12%, ofwhichadvertisinggrew14% to`30,500croreandsubscription grew 11% to `43,500 crore. Television viewing householdsroseto197million, a 7.5% rise over 2016. THE BENCHMARK INDICES continued its upward momentum as amid expectation of a second term for the Narendra Modi-led government and resurgence of foreign investors buying boosted investor sentiment. Since October 26, the broader Nifty50 has rallied close to 13%, of which six firms — Reliance Industries, HDFC Bank, Axis Bank, ICICI Bank, HDFC and Infosys — contributed nearly60% to the index gain of 1271.2 points. The foreign portfolio investors (FPIs) have bought Indian equities worth over $1.3 billion in the last five sessions, taking this year’s tally close to $ 4 billion,a big swing from last year’s outflows of $4.2 billion. On the other hand, between January and now, the domestic institutional investors (DIIs) sold shares worth $59.3 million, Bloomberg data showed. Continued on Page 2 Detailed report on Page 11 Continued on Page 2 FICCI FRAMES ‘M&E industry to grow past `2.35-lakh-cr mark by 2021’ PRESS TRUST OF INDIA Mumbai, March 12 THE MEDIA AND entertainment (M&E) industry is expected to cross the `2.35lakh-crore mark (around $33.6 billion) by 2021, clipping at 11.6% annually, says a report. According to a Ficci-EY report, the industry stood at `1.67 lakh crore ($23.9 billion) in 2018, growing 13.4% over 2017. “While TV will remain the largest segment, growth is expected to come from digital that will overtake film entertainment in 2019 and the print by 2021,” says the report released at the annual industry summit Ficci Frames on Tuesday. Of the 570 million Internet users, around 2.5 million use only digital media and eschew the traditional media, according to the report which forecasts that this digital-onlycustomer base is slated to double to 5 million by 2021. “Digital consumption will ILLUSTRATION: ROHNIT PHORE grow, and monetisation avenues will see innovation to meet customer demands and one big growth driver will be OTT players on the back of telcos bundling their offerings FE BUREAU Mumbai, March 12
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