OPINION, P6 COMPANIES, P4 MARKETS, P10 SHARDUL SHROFF EDITORIAL PNB SCAM DRAFT FRAMEWORK Given IBC ordinance, alternative insolvency platform needed Delhi may be facing huge Covid-19 bed shortage; it must junk testing rules, call Army to add beds Court allows confiscation of Nirav Modi's assets RBI proposes major changes in securitisation norms NEW DELHI, TUESDAY, JUNE 9, 2020 FOLLOW US ON TWITTER & FACEBOOK. APP AVAILABLE ON APP STORE & PLAYSTORE WWW.FINANCIALEXPRESS.COM READ TO LEAD VOL. XLVI NO. 85, 12 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: 34,370.58 ▲ 83.34 NIFTY: 10,167.45 ▲ 25.30 NIKKEI 225: 23,178.10 ▲ 314.37 HANG SENG: 24,776.77 ▲ 6.36 `/$: 75.54 ▲ 0.04 `/€: 85.44 ▲ 0.32 BRENT: $41.87 ▼ $0.43 GOLD: `45,887 ▲ `189 UNLOCK 1.0 ● UP 60 PAISE Prices of petrol & diesel hiked for second straight day Businesses limp back to action Malls, offices and religious places reopen in several states, but things far from normal FE BUREAU New Delhi, June 8 OIL MARKETING COMPANIES raised retail fuel prices of auto fuels forthe second dayin a row on Monday, ending a monthlong hiatus,to cope up with the gradual rise in global oil prices. Diesel now costs `70.59 a litre in Delhi and petrol at `72.46, against `69.39 and `71.26, respectivelyon Saturday. “No dailyprice change in the last two months is disappointing and our confidence in ‘deregulation’has declined further,”analysts Nomura had said. Petrol and diesel in Delhi remained unchanged from March 16 to May 4 while the price of the Indian basket of crude has fallen 23.5% to $23.38 per barrel in the same period. Retail fuel prices had risen in Delhi on May 5, reflecting the hike in state VAT, and have remained unaltered since then. “In our view, the decision to not change prices may have been done at the insistence of the government, as the latter likely wanted to further increase excise duty,” Nomura noted. FE BUREAUS New Delhi/Mumbai/ Kolkata/Bengaluru, June 8 COMMERCIAL ESTABLISHMENTS LIKE malls, restaurants, shopping centres, and office complexes on Monday reopened across most parts of the country after two-and-a half-months as part of the government’s Unlock 1 measures. Though by no means it was Delhi-NCR Mumbai `4 Premium 50 Sell 100 Shares 100 Shares Call option AS MANY AS 8.7 lakh or 58% of the registered national-permit trucks plied on Indian roads on Monday, up from 4.5 lakh (30%) on May 8,in what indicates a steady improvement in interstate commerce. This also corroborates other signals of resumption of economic activities such as the steady improvement in arrivals of farm produce in mandis, rise in GST e-way bills generated on Goods and Services Tax Network (GSTN) portal and the increasing throughputs at ports. Malls, restaurants & other establishments reopened Mall and restaurant owners are expecting higher footfalls over the weekend Shops in key market areas ofDadar, Colaba and Kurla also opened for business Offices allowed with 70% attendance Continued on Page 2 ESSENTIAL COMMODITIES Falling markets: Time to exercise your put option BUY FE BUREAU New Delhi, June 8 Kolkata Corporate offices in BKC & lower Parel started functioning Special Features Strike Price 58% national permit trucks back on roads Continued on Page 2 Most malls and restaurants opened, but business was thin Continued on Page 2 55 business as usual but certainly it pointed towards businesses limping back to normalcy. While malls in Delhi-NCR sawvery thin crowds,Mumbai saw high traffic as corporate offices in the Bandra-Kurla Complex (BKC) and lowerParel started functioning with 10% attendance. Shops in key market areas of Dadar, Colaba and Kurla also opened for businesses. Even as the lockdown remains in force till June 30,the Maharashtra government, as part of the phase-wise reopening of the economyand public activities under‘Mission BeginAgain’, has allowed private offices to resume work with 10% of staff. As stock markets crash due to Covid-19 impact, investors can use put option to generate income and protect their portfolios from a sudden market sell-off ■ Personal Finance, P9 State Bank of India’s NPAs continued to go down Income reversal, high provisions behind miss on earnings in Q4; -5/2% change in FY21/22e PAT; ‘Buy’ retained given franchise strength and undemanding valuations ■ Investor, P13 QuickPicks World Bank says India’s economy to shrink 3.2%, S&P sees 5% cut INDIA'S ECONOMY will shrink by 3.2% in the current fiscal, the World Bank said on Monday as it joined a chorus of international agencies that are forecasting a contraction in growth rate due to the coronavirus lockdown halting economic activity, reports PTI. S&P Global Ratings also said the Indian economy will shrink 5% in the current fiscal, saying the fiscal stimulus worth 1.2 % of GDP will not be enough to provide significant growth support. SBI reduces MCLR by 25 basis points, effective tomorrow THE COUNTRY'S largest lender, State Bank of India (SBI), on Monday announced it will reduce marginal cost of fund based lending rate (MCLR) by 25 basis points across all tenors from Wednesday, reports PTI. The one year MCLR has been revised to 7% from 7.25%, the bank said in a release. This is the 13th consecutive cut in the bank's MCLR. The bank also announced to reduce its external benchmark linked lending rate (EBR) as well as repo linked lending rate (RLLR) by 40 bps from July 1. PAGE 10 Focus on prompt testing: Govt to 45 civic bodies in 10 states THE UNION health ministry on Monday asked officials of 45 civic bodies across 38 districts in 10 states, which are witnessing a surge in Covid-19 cases, to focus on house-to-house surveys, carry out prompt testing and undertake active surveillance measures to contain the infection and reduce mortality, reports PTI. The 38 districts are from Maharashtra, Telangana, Tamil Nadu, Rajasthan, Haryana, Gujarat, Jammu and Kashmir, Karnataka, Uttarakhand and Madhya Pradesh. Price-surge rider stymies foodstuff deregulation PRABHUDATTA MISHRA New Delhi, June 8 IF THE KEY foodstuff ‘deregulated’ from the Essential Commodities (EC) Act show ‘extraordinary price rise’, the government could still impose stock limits and other restrictions on them, the relevant Ordinance issued last week said. The rider could stymie the objective of spurring private investments in agriculture value chain, including in the capitalintensive warehousing and cold- chain infrastructure,analysts said. Announcing a clutch of much-needed reforms aimed at boosting value addition across the agriculture value chain, Finance minister Nirmala Sitharaman last month said food items including cereals, edible oils,oilseeds,pulses,onions and potato will be deregulated from the six-and-a-half-decade-old EC Act — this seemed to mean besides deregulating production and sale, the government will also cease to impose stock limits concerning these products, including for the processors and other value chain participants.Along with this,the min- Stock limits could still be imposed, if there is 100% rise in retail prices of horticultural produce and 50% in prices of nonperishable agri foodstuff Price rises will be computed ‘over price prevailing immediately preceding 12 months, or average retail price oflast 5 years, whichever is lower’ Experts say the condition will virtually undo reforms and even undermine new central law on inter-state trading isteralso announced a newCentral law for inter-state trade to improve market access forfarmers and anotherone to facilitate contract farming. The President last week issued there separate Ordinances to give effect to the proposals. Continued on Page 2 ● POST-PANDEMIC BOOST Vietnam ratifies free trade pact with EU REUTERS Hanoi, June 8 VIETNAM RATIFIED Afree trade agreement with the EU on Monday that will cut or eliminate 99% of tariffs on goods traded between the Southeast Asian country and the bloc, and provide Vietnam with a muchneeded post-pandemic boost. Deputies in the national assembly,which nearly always ratifies government proposals, voted by over 94% in favour of the European Union Vietnam Free Trade Agreement (EVFTA). Expected to take effect in July,it is the EU’s second deal with a member of the Association of Southeast Asian nations (Asean) after Singapore,and one of few with a developing country. Vietnam will have a transition period of up to 10 years for some imports, such as cars. It will open up Vietnam’s services, including post, banking and shipping and public procurement markets,align some standards and protect EU food and drinks, such as French champagne orGreek feta cheese,from imitations in Vietnam. Continued on Page 2 BACK TO USUAL, ALMOST Devotees pay obeisance at Golden Temple on the first day of reopening of religious places after a countrywide lockdown, in Amritsar on Monday; many areas in Mumbai (right) witnessed traffic jams as several shops and offices restarted operations in the city EXPRESS PHOTOS: RANA SIMRANJIT SINGH & DEEPAK JOSHI L-G OVERRULES CM ● BAD DEBT ‘Anyone can get treatment in Stressed assets: Govt Delhi; test asymptomatic too’ considers PRESS TRUST OF INDIA New Delhi, June 8 Cumulative deaths LT GOVERNOR ANIL BAIJAL on Monday overruled the two controversial orders of the AAP government on reserving Delhi government-run and private hospitals in the Capital for Delhiites and allowing Covid-19 test of only symptomatic patients, saying anyone can get treatment in the city and the asymptomatic too should be examined. The move may trigger a confrontation between the AAP dispensation and the L-G office. The two orders were issued by the L-G in his capacity as the chairman of the Delhi Disaster Management Authority. In his first order, Baijal made it clearthat the Supreme Court has invariably held in several successive judgments that ‘Right to Health’is an integral part of ‘Right to Life’under Article 21 of the Constitution. The L-G said all government, private hospitals and nursing homes and clinics situated in Delhi have to extend medical facilities to all Covid-19 patients coming formonitoring and treatment without anydiscrimination of being resident or non-resident of Delhi. new class of fund Delhi's death estimates As per Delhi medical bulletin 12 473 523 11 556 Daily deaths 9 606 22 650 25 708 Average daily deaths for 5-days 47 16 May 31 June 1 June 2 June 3 June 4 June 5 How many Covid-19 deaths does Delhi have? ISHAAN GERA New Delhi, June 8 DO 16 PEOPLE die of Covid complications every day in the Capital, or is it 47? The controversy over how many deaths actuallyget reported in the Capital takes a new turn when you study the data; in the past, media reports had suggested that hospitals were declaring more deaths than the government. The discrepancy can be seen by comparing the daily deaths reported in the government’s medical bulletin as well as the cumulative deaths. Ideally, adding the daily deaths to the previous day’s cumulative death should give the new cumulative total. The daily bulletin reports 473 cumulative deaths on May 31, and this rises to 708 on June 5; over five days an average of 47 deaths per day. The bulletin shows 12 deaths as having taken place on June 1,11 on June 2,9 on June 3, 22 on June 4 and 25 on June 5, taking the total to 79. Continued on Page 2 Kejriwal in self-quarantine, to be tested for Covid today DELHI CHIEF MINISTER Arvind Kejriwal has gone into self-quarantine after developing sore throat and fever, and will get himself tested for Covid-19 on Tuesday, officials said on Monday. They said the CM,who is also a diabetic, was feeling unwell since Sunday afternoon. “He has mild fever and sore throat since Sunday afternoon. As advised by doctors, the chief minister will undergo Covid-19 test on Tuesday morning,” officials said. SIDDHARTHA SINGH New Delhi, June 8 INDIAIS CONSIDERING a new category of alternate investment fund which will focus on acquiring stressed assets from banks and shadow lenders, a move aimed at resolving some of the highest bad debt in the world. The fund will be allowed to buy stressed assets directly from the banks and non-banking financial companies, people with knowledge of the matter said, asking not to be identified as the matter is not public. At present, investors can only access bad loans through securities issued by asset reconstruction companies,but the newfund category will allow them to do so directly. This will give foreign investors, including global hedge funds, easier access to the mountain of local bad debt. Prime Minister Narendra Modi has been spearheading efforts to kick-start the economy and a significant part of this is based on increased lending by the banks which opens up the risk of a further rise in bad debts due to the virus outbreak. Using an alternate investment fund to buy bad debt from banks would help lighten the burden of banks as theygrapple with what was the world’s worst bad loan ratio even before the pandemic virtuallyhalted economic activity. Continued on Page 2 DEMAND PICKS UP HARD TIMES Hyundai ramps up production in India Mall owners reluctant to drop rents, enter into revenue-sharing pacts R RAVICHANDRAN Chennai, June 8 HYUNDAI MOTOR INDIA (HMIL) has silentlyramped up production to more than 1,000 cars a day,responding to a pick-up in demand forits latest launches, the new Creta, new Verna and Venue, sources in the know told FE. That’s a five-fold jump in production at India’s largest car exporter and second largest car manufacturerwhich was rolling out just 200 cars when production resumed in earlyMay. Persons familiar with developments at the Korean carmaker’s India subsidiary said it was running two shifts with an employee count of approximately 7,500 to 8,000 that included official staff at the factory. While permanent ASMITA DEY New Delhi, June 8 workers number a little over 2,250,the rest are official staff, contract workers and technicians.This compares with a workforce of little over15,000 employees in the pre-lockdown period in March. Operations will be scaled up to match customer demand, a company spokesperson said,adding that enquiries forthe more popular models were rising. Continued on Page 2 UNRELENTING LANDLORDS MAY force many more retailers to shut shop just as has happened with Full Circle bookshop and Cafe Turtle in New Delhi’s tonyKhan Market.Feware willing to drop rentals, though some mall owners have eased the load for retailers by allowing them to stretch payments over a longer period. Others have waived the rent forthe period of the lockdown but are unwilling to get into revenue-sharing agreements. Retailers have been hoping to invoke force majeure clauses that would exempt them from paying rentals during the lockdown period but some legal experts have opined the clause maynot applythere is no “permanent damage to the store or goods in the store nor is there any permanent restriction of physical access to the store.” Sanjiv Mehra, president, Khan Market Traders’ Association said the lease agreements of some stores had expired and new agreements could not be worked out. “We have said landlords should grant tenants whatever discount they can afford. Owners too have financial commitments,” Mehra said. Continued on Page 2
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