OPINION, P8 COMPANIES, P6 INTERNATIONAL, P14 EDITORIAL SEBI AUDIT MEDIA REPORT Singh brothers used funds diverted from RFL to pay off debt Secret girlfriend’s brother sold Bezos texts to tabloid for $200,000 Time to disqualify candidates who have criminal records With virtual Aadhaar, UPI and now cardless ATMs, India’s digital prowess is impressive NEW DELHI, WEDNESDAY, MARCH 20, 2019 FOLLOW US ON TWITTER & FACEBOOK. APP AVAILABLE ON APP STORE & PLAYSTORE WWW.FINANCIALEXPRESS.COM READ TO LEAD VOL. XLV NO. 16, 24 PAGES, `6.00 (PATNA `6.00, RAIPUR `7.00) P U B L I S H E D F R O M : A H M E D A B A D , B E N G A L U R U , C H A N D I G A R H , C H E N N A I , H Y D E R A B A D , K O C H I , K O L K ATA , L U C K N O W, M U M B A I , N E W D E L H I , P U N E SENSEX: 38,363.47 ▲ 268.40 NIFTY: 11,532.40 ▲ 70.20 NIKKEI 225: 21,566.85 ▼ 17.65 HANG SENG: 29,466.28 ▲ 57.27 `/$: 68.96 ▼ 0.43 `/€: 78.31 ▼ 0.46 BRENT: $67.84 ▲ $0.30 GOLD: `31,952.00 ▲ `227.00 TAKEOVER TUSSLE Mindtree spurns L&T’s overtures Engineering major says proposal not a hostile takeover; Mindtree says cultures of the two firms don’t match Mindtree L&T 980 1,380 Intra-day on BSE (`), March 19 IN THE NEWS SC ex-judge PC Ghose appointed India's first Lokpal FORMER SUPREME Court judge Justice Pinaki Chandra Ghose was on Tuesday appointed the country's first Lokpal, the anti-corruption ombudsman, according to an official communique, reports PTI. Former Sashastra Seema Bal chiefArchana Ramasundaram, ex-Maharashtra chief secretary Dinesh Kumar Jain, Mahender Singh and Indrajeet Prasad Gautam have been appointed nonjudicial members of Lokpal, it said. Justices Dilip B Bhosale, Pradip Kumar Mohanty, Abhilasha Kumari and Ajay Kumar Tripathi have been appointed judicial members. EVEN AS LARSEN and Toubro (L&T) on Tuesday tried to play down the nature of its move to take over technology firm Mindtree,promotersofthelatterrefused to budge from their stand, terming the move hostile,unprecedented,and unexplainable. They maintained that the culture of the two companies are not aligned. Addressing newspersons on Tuesday, L&T MD & CEO SN Subrahmanyan said what they are trying to do is with pyaar(love)andwillcontinueto look at it as something they are doing from dil (heart). Hewas speaking a dayafter L&T announced that it has entered into a definitive share purchase agreement (SPA) with VG Siddhartha and his related entities — Coffee Day Trading and Coffee DayEnterprises — to acquire 20.32% stake in Mindtree at `980 per share, aggregating to approximately `3,269 crore,and stating their intention to acquire up to 15% of the share capital in on-market purchase and make a further open offer of 31% for `980 a piece respectively, valuing the total trans- 978 1,370 970 960 943 940 1,373.95 1,356.75 1,360 1,350 950 930 FE BUREAU Mumbai, March 19 Intra-day on BSE (`), March 19 Prev close 962.50 1,340 Open Close Mindtree’s five questions to L&T ■ Why not build an independent IT business of your own? 1,330 Prev close 1,378.85 Open Close L&T's take on acquisition ■ Denies the acquisition is a hostile takeover ■ Do you want to be remembered as the first Indian IT firm to mount a hostile takeover? ■ Mindtree enhances contribution of services to overall business portfolio ■ Why do you wish to demolish value as clients migrate in this takeover battle? ■ Accelerates Group’s digital footprint ■ What will you be left with if great minds at Mindtree leave? ■ Opportunity to create long term-value for L&T and Mindtree shareholders ■ What message are you giving to honest start-ups in this country? ■ ROE neutral in short term, accretive in medium and long terms action at about `10,700 crore. The deal will be funded through L&T’s balance sheet.In FY18,L&Thad a standalone net worth of `49,174 crore and totalborrowings(bothshortand long terms) of `10,561 crore and over`8,500 crore in cash. Maintaining an accommodativetone,Subrahmanyan said: “Obviously when the promoters/founders over a period of time find that one of the important initial investor or promoter is moving out and wantstoplacehisstakeholding in anotherhouse,there are certainemotionalitiesandtrepiditions involved...that’svisible as we see it. But business is business, emotions do play a part, but emotionalities have to be overcome aswe go forward.” However,thepromotersand founders of Mindtree —Krishnakumar Natarajan, Subroto Bagchi, Parthasarathy NS and Rostow Ravanan who together hold13.32%stakeinMindtree, andhadonMondaytermedthe L&T move “attempted hostile takeover bid of Mindtree by Larsen &Toubro a grave threat” to the organisation, reiterated that they will continue to oppose the takeoverattempt. Vivo’s focus is on being a long-term successful player Vivo’s Nipun Marya says the Chinese mobile brand is always looking to introduce game-changing features, such as higher-quality cameras and smarter AI services ■ eFE, P13 RBI, NCLAT spar over who takes call on banks SURYA SARATHI RAY New Delhi, March 19 LASTWEEK,THEReserveBank of India (RBI) stood firm before the Supreme Court, defending itsFebruary12circularwhichis aimed at imparting efficiency to the process of resolving stressed loan accounts of corporates.OnTuesday,thecentral banktookitsdeterminedbidto fully safeguard its role as the regulator of banking companies further, by urging the National Company Law AppellateTribunal(NCLAT)tomodify its two orders issued in February,which directed banks and financial institutions not to declare the accounts of the beleaguered infrastructurefinancing firm IL&FS and its over300 group firms as NPAs. RBIcounselGopalJaininsisted that no order can be passed restrainingbanksfromcomplying with the prudential norms issuedundertheRBIActandthe banking regulationAct. Continued on Page 2 India upgraded to ‘overweight’ NO END TO TROUBLES Jet down to 41 planes; pilots threaten strike from April 1 Govt holds meet to review situation as airline continues to ground more aircraft FE BUREAU Mumbai, March 19 THINGS ARE FAST deteriorating for troubled carrier Jet Airways with lenders and stakeholders yet to formalise a funding plan as a key player, Etihad,isstilltocomeonboard. On Tuesday, Jet submitted to theDirectorateGeneralofCivil Aviation (DGCA) a curtailed flight schedule of 603 domestic and 382 international per week, a decline of 77% from 4,200 weekly flights it operated about two months ago. The schedulewas arrived at after a review meeting was heldbetweentheDGCAandJet Airways officials in New Delhi. According to the assessment madebytheaviationregulator, the airline has only 41 aircraft of its original 119 fleet, available for operations, which is a Topping the charts Research by FE BUREAU RIL crosses $125 bn in mcap Reliance Industries (RIL) has surpassed the $125-billion mark in market capitalisation, becoming the first Indian firm to do so. As ofTuesday, there are only 70 companies globally that boast of an mcap of over $125 billion, Bloomberg data show. 140 RIL Mcap ($ billion) 126.54 120 Continued on Page 2 GOLDMAN SACHS RATING Special Feature ● IL&FS CASE 100 86.88 80 60 Mar 19, 2018 Mar 19, 2019 Source: Bloomberg Why is the airline's revival plan stuck ■ Key player Etihad is still not on board, preventing any interim fund infusion by banks ■ An interim fund infusion of `750 crore is required by Etihad after which the banks will infuse a matching contribution reduction of 65%. Tuesday’s meeting by the DGCA was held on the directions of civil aviation minister Suresh Prabhu to review the grounding of planes by Jet, advance bookings by the air- FE BUREAU Bengaluru, March 19 SOUTH KOREAN AUTOMOBILE major Hyundai Motor on Tuesday said it is investing $300 million in ride-hailing service provider Ola, identifying India as the centrepiece in its strategy to gain leadership in global mobility market. The investment will be jointly made by group firms — Hyundai Motor Company and Kia Motors Corporation — and under a tripartite agreement with Ola, the companies will jointly develop the PAYMENTAND gift card technology firm Pine Labs on Tuesday said it has signed a deal to acquire peer firm Qwikcilver for $110 million or about `750 crore, reports PTI. The transaction has been funded from the firm's cash reserves and additional funding from existing investors, it added. "According to market estimates, gift, as a category, is growing at a high double-digit rate annually. “Qwikcilver's technology and market expertise will help us scale up this business and are delighted to welcome it into Pine Labs," Pine Labs CEO Vicky Bindra said. PAGE 7 Oil prices rise to 2019 highs on Opec cuts, US sanctions OIL PRICES rose to new 2019 highs on Tuesday, supported by supply cuts from Opec and falling output from Iran and Venezuela due to US sanctions, reports Reuters. Brent crude oil futures were up 16 cents at $67.70 a barrel at 1415 GMT, having earlier risen to a 2019 peak of $68.20, their highest since November 2018. US West Texas Intermediate (WTI) futures were at $59.47 per barrel, up 38 cents from their last settlement. They also rose on Tuesday to their highest since November 2019 of $59.57 a barrel. PAGE 12 Xiaomi enters digi payment space, expands handset manufacturing CHINESE SMART device maker Xiaomi on Tuesday announced its foray into the digital payments segment with the launch of MiPay app and expansion of its mobile manufacturing, reports PTI. "We have introduced our innovative MiPay service for our consumers in India. MiPay serves as the ultimate solution to a variety of consumer payment needs, hence empowering millions of users with access to digital payments. Thus, acting as an equaliser providing a seamless experience across all smartphones," Xiaomi India COO Muralikrishnan B said. PAGE 7 FE BUREAU Mumbai, March 19 GOLDMAN SACHS HAS upgraded India back to ‘overweight’ from ‘marketweight’ as the Indian market has been witnessing a ‘catch-up’ rally amid expectation of a potentiallystable government at the Centre. The foreign brokerage expects Nifty to hit 12,500 level in the next 12 months,up from its previous target of 11,700. Goldman Sachs had downgraded India to ‘marketweight’inSeptember,citing MSCI India vs MXAPJ Feb 2019 near-term risks related to macro factors and earnings, stretched valuations and election-related uncertainties. The latest target implies about 6.5% upside from the index’s record high of 11,738.50 points. “On a full calendar-year basis, we expect earnings growth in India to pick up to 16% this year and 14% next year, which should drive Nifty’s outperformance,” the brokerage said in a note dated Monday. Continued on Page 2 FE BUREAU New Delhi, March 19 sion of Max purchases in a tradedealwouldmarkanother setback for a company that’s reeling from a crisis of confidenceoveritstop-sellingplane, which accounts for almost a third of its operating profit. Chinese airlines made up about 20% of 737 Max deliveriesworldwide through January,according to Boeing’swebsite. China Southern Airlines has 16 of the aircraft, with another 34 on order. THE GST COUNCIL on Tuesdayallowed builders to choose between the old and new GST regimes for projects that will remain unfinished as on March 31, removing the fear among these firms that they might lose accumulated input tax credit forunder-construction projects. The new GST rates of 5% forregularprojects and 1% for affordable housing — as against the old rates of 12% and 8%, respectively — along with denial of ITC would, however, will be applicable to allprojectswhereconstruction commences on orafterApril 1. At its 34th meeting, the councilalsoapprovedaformula for utilisation of ITC based on the extent of completion of buildings and for bookings alreadymade.Adeveloperwould need to reverse ITC if excess credit has already been used. However, in case ITC already usedislowerthanallowed,itwill be protected and can be used to offset the GSTliability. For builders opting to continue with existing rates (12% for regular houses and 8% for affordable housing),for underconstructionprojectsthismechanismobviouslywon’tapply. Continued on Page 2 Continued on Page 2 Great wall of anger Traders burn Chinese goods during a protest in New Delhi on Tuesday against China’s move to block a bid in UN to designate JeM chief Masood Azhar as a ‘global terrorist’ Continued on Page 2 China may exclude Boeing Max from trade deal with US CHINAIS LOOKING at excluding Boeing’s troubled 737 Max jet from a list of American exports it would buy as part of atradedealwiththeUS,people familiarwith the matter said. Boeingjetswerefeaturedon adraftlistofAmericanproducts China would buy to reduce its trade surplus with the US, the people said, asking not to be identified discussing private electric vehicles (EVs) ecosystem and fleet services for global markets. Under the partnership, the three firms will also aim to develop EVs and charging infrastructure customised for the Indian market,the companies said in a joint statement. This will be the biggest combined investment till now by the two automobile companies. The development highlights Ola’s increasing focus on electric mobility. Units under construction: Builders can pick old or new GST rate SAFETY WORRIES BLOOMBERG Beijing/Washington, March 19 Continued on Page 2 ■ Related reports on Page 6 ● MATTER OF CHOICE 95 Pine Labs to acquire peer firm Qwikcilver for `750 crore line and subsequent cancellations and refunds to be made available to the passengers as per existing norms. Hyundai, Kia add $300 m to Ola money 105 Dec 2017 Source: FactSet payment and finalisation of revival plan by this month’s end ● EYE ON EV MARKET Nifty vs MXAPJ 85 ■ They are demanding ■ There are complaints by passengers of increasing cancellations & refunds apart from safety issues MSCI India/Nifty performance vs MXAPJ 90 been paid for the past three months and the firm had promised to clear dues by March end ■ Curtailment of flights by Jet will lead to fare hikes due to capacity shortage 100 QuickPicks ■ The pilots have not Why has DGCA intervened ($, rebased to 100) 115 110 Why are pilots threatening to stop flying deliberations. Now, safety concerns are pushing China to examinewhethertocutthe737 Max from the list altogether or replace it with other Boeing modelsafterthecrashofaplane operated by Ethiopian Airlines led to the aircraft being groundedworldwide,theysaid. A reduction in aircraft purchases could make it harderfor China to fulfil an offer it’s said to have made to pare its $300billion-plusannualgoodstrade surplus with the US over six years,and potentiallydelayany ■ The 737, which first entered service in late 1960s, is the industry’s best-selling model and Boeing’s top earner ■ Chinese airlines made up about 20% of 737 Max deliveries worldwide through January overall agreement between the twocountries.Worthbillionsof dollars and a key US export, planes would likely be a key component of any commitment by China to buy more American goods, along with soybeans,meatandnaturalgas. China’s ministry of commerce,whichisinchargeofthe nation’s trade talks with the US, didn’t immediately respond to a request for comment.A Boeing representative declined to comment. For Boeing, China’s exclu-
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