TUESDAY, 11 JULY 2017
24 pages in 1 section
MUMBAI (CITY)
~6.00
VOLUME XXI NUMBER 232
THE MARKETS ON MONDAY
Sensex 31,715.64
Nifty 9,771.05
Nifty futures* 9,776.95
Dollar
Euro
~64.53
~73.49
Brent crude ($/bbl) 46.68##
Gold (10 gm)### ~27,695.00
*(July) Premium on Nifty Spot; **Previous close;
# Over previous close; ## At 9 pm IST;
### Market rate exclusive of VAT; Source: IBJA
THE BSE-CMIE TRACKER
1.5 MN JOBS LOST IN
FIRST 4 MONTHS OF 2017
Unemployment rate
Consumer Sentiments Index
(Base: September - December 2015 = 100)
Source: BSE-CMIE
> REPORT ON PAGE 10
AIRTELTO INVEST ~2,000 CR
IN DIGITAL PUSH
Bharti Airtel will be investing ~2,000 crore
over three years to launch various
digital offerings, even as the telco
gears up to launch Voice over LTE
across the country by the end of this year.
Airtel has announced a few initiatives like
allowing postpaid customers to carry
forward their unused data to the next
billing cycle, pooling of a postpaid plan
within a family and providing protection
for smartphones against damage.
Gopal Vittal, managing director and
chief executive, India and South Asia,
Bharti Airtel, said VoLTE trials were on
in five cities and it will be able to
take VoLTE across the country by the
end of this year. 2>
REST OF THE NEWS P8
Seven Amarnath pilgrims
killed in militant attack
Seven Amarnath pilgrims were killed
in a militant attack in Anantnag,
the police said. On Monday night,
militants attacked an armoured
police car, an official said. When the
police fired back, the militants fled,
firing indiscriminately, the official added.
A bus carrying yatris was on the highway
at the time of the incident. The police
claimed the bus driver had violated rules,
which state that no yatra vehicle should
be on a highway after 7 pm.
WE DONT HAVE THE LUXURY TO
GROW ORGANICALLY
RAJIV LALL,
MD, IDFC Bank
PAGE 7
BACK PAGE P24
Remembering
Naresh Chandra
Since Independence,
our country has had a
legion of civil servants
to help administer this
vast and varied land.
But there are only a
handful who have left
their imprint on the national fabric. There
is no doubt that Naresh Chandra
(pictured), who died on July 9 at the age
of 82, was one such outstanding public
servant, SHYAM SARAN writes
Hospitals charging over 500% for angioplasty devices: Maharashtra FDA
Report submitted to NPPA for action
VEENA MANI
New Delhi, 10 July
The National Pharmaceutical Pricing
Authoritys (NPPAs) move to cap the
price of cardiac stents has solved only
half the problem faced by patients.
Balloon and guiding catheters,
essential devices in angioplasty, are
still exorbitantly priced, a study
conducted by the Maharashtra FDA
(Food & Drug Administration) from
December 2016 to April 2017 has
shown. Business Standard has
reviewed the report which has been
submitted to the NPPA for action.
In the supply chain, hospitals make
the highest profits, the study reveals.
For instance, balloon catheters are
being sold by them at over four times
www.business-standard.com
Chg#
355.01
105.25 BACK PAGE P24 COMPANIES P2
5.90
~64.60**
~73.74** GOOGLE SEEKS RBI NOD TO PASSENGER VEHICLE
LOG IN TO DIGITAL PAYMENTS SALES DIP 11% IN JUNE
46.53**
~390.00
PUBLISHED SIMULTANEOUSLY FROM AHMEDABAD, BENGALURU, BHUBANESWAR, CHANDIGARH, CHENNAI, HYDERABAD, KOCHI, KOLKATA, LUCKNOW, MUMBAI (ALSO PRINTED IN BHOPAL), NEW DELHI AND PUNE
Tech glitch halts NSE Amazon gets nod
for $500-million
(%)
trading for 3 hours FDI in food biz
Exchange rules out cyberattack; finance ministry seeks report from Sebi Similar proposals by Big Basket and
Grofers likely to get approval soon
SAMIE MODAK The networkcollapse
Mumbai, 10 July SUBHAYAN CHAKRABORTY & KARAN CHOUDHURY
9:15 am: Brokers New Delhi, 10 July
A
technical complain of NSE cash
glitch at the segment price feeds not In a move that is expected to attract top dollar, the government on
National Stock updating Monday allowed Seattle-headquartered online giant Amazon to
Exchange June 2014: BSE stops trading for open fully-owned brick-and-mortar stores to sell food products in
(NSE), the countrys 9:20 am: NSE says cash three hours India. This is the first foreign direct investment (FDI) proposal for
biggest stock exchange, trading halted due to setting up food-only retail outlets that the government has per-
technical glitch
Dec 2015: NSE halts trading in
held up trade for three F&O and cash segment mitted. It also happens to be the first FDI
hours on Monday in the cash case to get an in-principle clearance after
9:55 am: NSE halts F&O July2016: SingaporeExchange
and derivatives segments. the Foreign Investment Promotion Board
trading shutstradingduetoamalfunction
The problem occurred at the (FIPB) was shut down recently.
beginning of the session when 10:45 am: Exchange Sept 2016: The Australian stock In its January application to the
several brokers complained unsuccessfully attempts market faces its worst disruption Department of Industrial Policy &
stock and index quotes MANIAC to resume trading in 5 years Promotion (DIPP), the American major
were not being updated.
The NSE immediately MONDAY 11:15 am: Second attempt July 4, 2017: A bug shows
had proposed to invest $515 million in
food retail over the next five years. Indian
suspended trading in the to resume trading fails prices of dozens of IT stocks as online grocery stores Grofers and Big
cash segment. $123 a piece on the Nasdaq Basket could be the next to get a go-ahead
Trading was normal 12:30 am: Third attempt July 10, 2017: Along with NSE, for setting up food outlets, making it a
in the futures and options successful; normal the Indonesia Stock Exchange, total of $695 million for the three players.
(F&O) segment but
the NSE halted
trading resumes too, halts trading due to an After much discussion, we have
decided to give approval to Amazons
Note: List doesnt include trading halts
due to sharp fall in markets issue in its market information
operations at 9:55
am. After the two
Sources: BS Research Bureau, Bloomberg distribution system investment proposal, said a senior
DIPP official. An Amazon India
SPEEDING
failed attempts at spokesperson confirmed that the com- UP FDI
INDICES HIT NEW HIGH ON
10:45 am and 11:15 am, trading resumed at pany had received government approval | Amazon, Grofers,
12:30 pm. The NSE cash market segment for food retail.
Big Basket had
GLOBAL CUES
did not function normally due to a techni- In June last year, the government
cal problem at the opening today (Monday) allowed 100 per cent FDI in multi-brand
filed applications
and accordingly was closed. Two attempts food retail. However, the food products with the DIPP to
to reopen the market were not successful have to be produced, processed or manu- open food-only
and finally on the third attempt the market Indian equities climbed a new high on factured in the country. The move till now retail stores
was opened at 12.30 pm in the cash and Monday, tracking positive global markets. The SENSEX had drawn little interest from interna- | Collectively, they
F&O segments. The NSE deeply apologises BSE Sensex closed at 31,715 for the first time, a MOVEMENT tional retail players who had complained had planned to
for the glitch, the exchange stated. gain of 355 points or 1.13 per cent. The National that just having food-only stores was
invest $700 million
Trading was normal on the BSE, with Stock Exchanges Nifty, which resumed trading not a viable option. While 51 per cent FDI
the exchange witnessing nearly three at 12:30 pm after a technical glitch disrupted was allowed in multi-brand retail under | However, clearances
times its average traded volume in the trade, settled at a fresh high of 9,771, up the United Progressive Alliance rule, the were delayed due to
cash segment. Turn to Page 16 > 105 points. The rally was led by information current National Democratic Alliance confusion over FIPB
technology stocks, which saw some short covering government is opposed to it, though the being abolished
after the regulator on Friday banned holders of rules have not been altered.
INVESTORS SHOULD DEAL participatory notes from taking unhedged There have also been delays in com- | Letters in this
WITH MORE THAN ONE exposure in equities and said existing bets must be panies getting approval. After dissolving regard to be
EXCHANGE liquidated by 2020. Asia traded with gains on
Monday, buoyed by the Friday rally in US equities
the FIPB, the decision on who would
approve FDI proposals in its absence
dispatched soon
ASHISH CHAUHAN,
BSE MD & CEO after that countrys jobs report beat earlier delayed the process. Now, administra-
estimates and Chinese inflation data came in line tive ministries are learnt to be fast-tracking the process.
PAGE 12 with forecasts. ASHLEY COUTINHO reports 12 > Many companies have already selected space for stores and
worked out the number of employees they would need. The blue-
print for our offline plan is ready; our back-end is in place, a senior
executive at an online company planning to open physical stores said.
Insolvency heat: Lanco encashes
suppliers bank guarantees
RCOM SEEKS RELAXATION IN
JYOTI MUKUL & SHREYA JAI out whatever money it can get CROSS-HOLDING NORMS
New Delhi, 10 July before insolvency is declared,
said a source. Anil Ambani-owned Reliance Communications (RCom) has sought
The insolvency move of bankers A Lanco spokesperson relaxation in cross-holding norms so that companies can sell equity to
has created a ripple effect in the denied the encashment had existing telecom operators. Under the current unified licencing (UL)
industry with Lanco Infratech, anything to do with insolvency regime introduced in 2013, telecom service providers are barred from
one of the companies in the proceedings. holding either direct or indirect stake in other incumbents providing
Reserve Bank of Indias action The suppliers are for a solar services in the same area. The new rules were put in place to promote
list of 12, encashing bank guar- manufacturing project where healthy competition and end the possibility of cartels. Before the UL
antees of its suppliers. A similar Lanco is the contractor. Lanco regime, telcos were allowed to hold up to 10 per cent
predicament is faced by steel has provided these amounts as stake in other service providers. Due to the change in
cross-holding norms, Vodafone had to sell its 4.2 per
companies whose suppliers and advance to the suppliers but
cent stake in Bharti Airtel in 2015. This isnt the first
LANCO INFRATECH FINANCIALS customers both have rushed
panic messages to them.
progress is lacking for the past 10
months. The total amount of time RCom is seeking such a relaxation. In 2013, it
All figures in ~crore had opposed restraining firms from holding stake in
| 2015-16 | 2016-17 (consolidated numbers)
Business Standard has bank guarantees encashed from
other operators. In a letter to the inter-ministerial
reviewed letters written by the five suppliers is ~3.43 crore,
Lanco to bankers of about half a the spokesperson added. The group (IMG), formed to study the financial stress
56,255.91
OUTSTANDING EXPOSURE in the sector, the company has requested that in
53,891.68
dozen companies for encashing invocation of bank guarantees
(2016-17) guarantees. Most of these sup- is illegal and fraudulent and con- case of a merger of companies, the time
8,334.90
7,510.07
to reach the stipulated cap of 50 per cent
8,146 55,000 pliers like Pentair, Vaas,
Intervalve,KelvionandEmerson
trary to assurances made to sup-
pliers. The suppliers have made should be extended to five years.
2,259
FUND BASED CONSOLIDATED DEBT
273.2
are not very big companies and no violation of the terms and According to current norms, in case of
a merger, companies should fall
3,221 11,000 DEBT the amount of bank guarantees conditionsofthecontractcalling
under the stipulated cap of
Income Totalequity Loss NON-FUND UNDER INSOLVENCY is less than a crore. There may for invocation. This action will
&liabilities BASED PROCEEDINGS be a large number of suppliers. It jeopardise the suppliers finan- 50 per cent within one year.
appears Lanco is trying to take cial position. Turn to Page 16 >
KIRAN RATHEE reports 3 >
Source: Lanco Infratechs annual report
BALLOONING PRICES (in ~)
catheterpricedat~4,534atthetimeof
landingwassoldtoadistributorat~7,532.
the landed price by hospitals. Guiding ThiswassoldtoFortisHospitalat~9,500.
catheters are being sold at over five Manufacturer LANDED DISTRIBUTOR HOSPITAL PATIENT Forthepatient,itwaspricedat~22,000.
times the landed price. The study PRICE PAID PAID PAID Inbothcases,thehospitalmadea
mentions the profit margin for hospitals Biotronik (balloon catheter) 4,229 5,918 7,950 22,000 profitofover200percentand300per
is 472 per cent with respect to landed Abbott Vascular cent,respectively.Thepatientendedup
price in the case of balloon catheters 4,534 7,532 9,500 22,000 paying500percentmorethanthelanded
(balloon catheter)
and 529 per cent for guiding ones. price.Usually,twoballooncathetersare
Theprofitmarginfordistributors Johnson & Johnson 1,425 3,627 5,325 7,550 usedforoneangioplasty.
rangesbetween20percentand211per (guiding catheter) In the case of Johnson & Johnson
centforaballooncatheter,whilefor Alcon Lab guiding catheters with a landed price
guidingcathetersitsbetween64percent 2,737 - 5,500 18,500 of ~1,425, if a distributor got it at ~3,627
(intraocular lens)
and119percent.Formanufacturers, Source: Maharashtra FDA and the hospital at ~5,325; the patients
profitmarginslieanywherebetween bill ran up to ~7,550. The hospital
17percentand120percentforballoon earned a profit of more than 150 per
cathetersand3percentand154percent HealthcareandAsianHeartInstitute distributorandhospital.Inthecaseof devicemakerBiotronik.Whileitlanded cent and the patient ended up paying
foraguidingone. (Mumbai),amongothers. guidingcatheters,morethan47percent inthecountryat~4,229,itwassoldtoa 529 per cent more than the landed
Thestudyhasbeenbasedoninvoices Thesurveyhasfoundthatover70per ofthecostpaidbythepatientistheprofit distributorat~5,918,whothensolditto price of the guiding catheters. One or
from12majorhospitalsinMaharashtra, centofthecostpaidbypatientsfora marginofthethreestakeholders. Fortis at~7,950.Finally,apatientboughtit two guiding catheters are required in
includingFortis(Mulund),Wockhardt ballooncatheteristheprofitmarginof Anexamplecitedisthatofaballoon for~22,000atthehospital. the process of stenting.
Hospitals(Nagpur),Hiranandani threestakeholdersmanufacturer, cathetermanufacturedbyGerman Inanotherexample,Abbottsballoon Turn to Page 16 >
2 COMPANIES MUMBAI | TUESDAY, 11 JULY 2017

STOCKS > Bharti Airtel

415 Topgaineramong
> Divis Laboratories
740 USFDAtoliftanimport
> Shriram City Union Finance
2,620 IDFC,Shriramgroupenter
> Tata Motors
455 JuneJaguarLandRover
> Punjab National Bank
160 Topgaineramong
IN THE NEWS 405.40
400 S&PBSESensexstocks
734.15
700 alertonUnit-IIat
2,367.30
2,520 mergertalks
446.75
445 retailsalesup11percentat
153.25
150 publicsectorbanks
384.65 680.15 Visakhapatnam 51,591unitsYoY 144.15
379.15 385 660 2,487.50 2,420 432.50 435 140
~384.65 PREVIOUS CLOSE ~680.15 PREVIOUS CLOSE ~2,487.50 PREVIOUS CLOSE ~436.80 PREVIOUS CLOSE ~144.15 PREVIOUS CLOSE
646.85 2,349.20 436.80 137.15
370 ~405.40 CLOSE 620 ~734.15 CLOSE 2,320 ~2,349.20 CLOSE 425 ~446.75 CLOSE 130 ~153.25 CLOSE
Jun 2017 Jul Jul Jun 2017 Jul Jul Jun 2017 Jul Jul Jun 2017 Jul Jul Jun 2017 Jul Jul
* OVER PREVIOUS CLOSE 30 7 10 5.40% UP* 30 7 10 7.94% UP* 30 7 10 5.56% DOWN* 30 7 10 2.28% UP* 30 7 10 6.31% UP*
> .

Airtels digital push gets ~2,000 cr

IN BRIEF

Amid Mundra sale talks,

SBI chief meets Gujarat CM To start Voice over LTE protection for smartphones against MyAirtel App so seamless that cus-
Amid buzz over proposed 51 per cent stake sale in the damage. tomers wouldn't have to ring up their
Mundra coal plants of Tata Power and Adani Power, across the country by GopalVittal,managingdirectorand
"THIS IS THE FIRST STEP
TOWARDS TRANSFORMING
call centre. For postpaid customers,
the companies lead lender State Bank of India (SBI)
chairperson Arundhati Bhattacharya met Gujarat the end of this year chief executive, India and South Asia,
Bharti Airtel, said VoLTE trials are on in AIRTEL INTO A DIGITAL
Airtel has launched a slew of services.
In an industry first, starting August,
chief minister Vijay Rupani. According to officials in fivecitiesandthecompanywillbe"able SERVICES PROVIDER. OVER all Airtel postpaid customers will now
the Gujarat energy department, the meeting was a step by KIRAN RATHEE totakeVoLTE"everywhereinthecoun- THE NEXT THREE YEARS, WE be able to carry forward their unused
the lender to convince the Gujarat government to buy stake in the New Delhi, 10 July try by the end of this year. ARE PLANNING TO INVEST monthly data quota to the next billing
two independent power producers (IPPs) Mundra plants. Last The company, which is scrambling ~2,000 CRORE ON PROJECT cycle. Customers can track their usage

T
month, both Tata Power, through its subsidiary Coastal Gujarat he country's top mobile opera- ever since Mukesh Ambani-owned NEXT TO UPGRADE OUR TOUCH and data carried forward on MyAirtel
Power Limited, and Adani Power, had requested state utility tor, Bharti Airtel, will be invest- Reliance Jio entered telecom last year, POINTS AND SERVICES" App. The postpaid customers can also
Gujarat Urja Vikas Nigam Limited to consider options, including ing ~2,000 crore over three is boosting its offerings to retain cus- GOPAL VITTAL create customised solutions for the
buying 51 per cent stake in the ailing thermal power plants. years in the launch of various digital tomers and improve experience. family by adding multiple postpaid
Thermal power plants of the two IPPs, along with others, became offerings even as the telco gears up to As part of Project Next, Airtel will Bharti Airtels chief executive connections to their account, and save
for India and South Asia
unviable when imported Indonesian coal prices rose due to change launch Voice over LTE (VoLTE) across improve its in-store experience by up to 20 per cent. Also, they can pool
in rules in that country. BS REPORTER< the country by the end of this year. redesigning over 2,500 stores across and share their data benefits across all
Airtel has announced a few initia- the country. The company's two next- connections. The telco also introduced
tives like allowing postpaid customers genstoresarealreadyliveinGurugram. are planning to invest ~2,000 crore in version of MyAirtel app, allowing cus- Airtel Secure a digital smartphone
Officers Choice Axis Bank to give to carry forward their unused data to "This is the first step towards trans- Project Next to upgrade our touch tomers to change plans, get real-time protection suite, allowing customers
the next billing cycle, pooling of post- forming Airtel into a digital services points and services," Vittal said. notifications, and others. to protect their smartphones from
largest-selling GMR ~1,330 crore for paidplanwithinafamilyandproviding provider. Over the next three years, we The company also unveiled a new Vittal said the company will make damage.
whisky for 4th year making Goa airport
Officer'sChoicefromAllied TheGMRGroup,whichhas
BlendersandDistillers(ABD)
remainedthelargest-selling
baggedacontracttobuilda
~3,000-crorenew
N LONELY HIGHWAY N Flipkart may
whiskyintheworldforthe internationalairportatMopain
sweeten
Passenger vehicle sales decline 11%
fourthyear,clocking32.3 northGoa,onMondaysecured
millionnine-litrecasesand
alsotheworld'ssecond-largest
fundingworth~1,330crore
fromAxisBankfordeveloping Snapdeal bid
spiritsbrandbyvolume.The
brandissecondtoSouth
theproject. PTI<
AJAY MODI
ON THE ROAD this week
Korea'sSoju-Jinro,whichhas
maintainedthenumberone ONGC Videsh to
New Delhi, 10 July

| June 16
(4.0) Maruti sales outlets to KARAN CHOUDHURY
GRAND TOTAL
spotinvolume,ABDsaid. PTI< bid for Lebanese Domestic automobile sales saw June 17
a muted growth of one per cent | take a leaf out of Nexa New Delhi, 10 July
1,527,049
1,468,263

offshore blocks in June as the passenger vehicle Online marketplace biggie

Grasim Industries to Oil and Natural Gas
sell Grasim Bhiwani Corporation's overseas arm
ONGC Videsh Ltd will bid for
Textiles to Donear offshore blocks in Lebanon's
GrasimIndustries,flagship first oil and gas exploration
companyoftheAdityaBirla and production licensing
(cars, utility vehicles and vans)
segment declined more than 11
per cent. A four per cent growth
in two-wheelers, however,
helped the industry remain in
the green. Sales of commercial
1,796,172 1,818,829 AJAY MODI customers and their changing Flipkart is all set to revise its
(1.26) New Delhi, 10 July profiles. The average age of bid to buy Snapdeal after the
Maruti Suzuki customers is latters board of directors
Maruti Suzuki, the countrys getting lower. Around 10 years rejected the first offer of
(-11.21) largest car maker, is ago, Maruti was known as a nearly $800 million.
launching a three-pronged father's car, he said, adding, The bid which might be
223,454

(-24.56)
198,399

Group,onMondaysaidithas round, oil minister vehicles grew by just 1.44 per (1.44) strategy to spruce up sales and today their products appeal to sent in the next few days
enteredintoashare-transfer Dharmendra Pradhan said on cent, while three-wheelers customer service experience. consumers across different would be close to the
56,890

48,373
56,082

36,491

agreementforthedivestment
ofits100percentholdingin
GrasimBhiwaniTextiles
LimitedtoDoneargroup. PTI<
Mallya fails to
appear before SC
in contempt case
Embattled businessman Vijay
Mallya, who was held guilty of
contempt, on Monday failed
to make an appearance
before the Supreme Court
despite being directed to do
so. A Bench fixed the matter
for hearing on Friday and
sought the assistance of the
solicitor-general. PTI<
Tata-Cyrus row: HC
refuses to hear small
shareholders suit
InarelieffortheTatagroup,the
BombayHighCourtonMonday
overturneditsorderandruled
itcanthearasuitfiledby
minorityinvestors,onbehalfof
allnon-promoter
shareholders,seeking
~41,000croreindamages. PTI<
Monday. PTI<
Sonal Dabral Ogilvy
Indias group chief
creative officer
SonalDabral,whoresigned
fromchairmanandchief
creativeofficerofDDBMudra
Grouplastmonth,hasmoved
toOgilvyandMatherIndia.He
hasbeenappointeditsgroup
chiefcreativeofficerandvice-
chairman,astatementsaidon
Monday. BS REPORTER<
Biocon to address
French concerns in a
quarter: Shaw
Bioconchairmanand
managingdirectorKiran
Mazumdar-Shawhassaidthe
firmwouldtakeremedialsteps
atitsfacilitywithinaquarter
andwouldasktheFrench
regulatortoinspectitagainfor
goodmanufacturingpractice.
FrenchNationalAgencyfor
MedicinesandHealthProducts
Safetyhadconductedthesite
inspections. BS REPORTER<
declined almost 25 per cent. Taking cues from its Nexa sales age groups. The 1,800 sales Snapdeal boards demand of
Data from Society of Indian channel, the company plans outlets would have a lounge a billion dollar, sources close
Automobile Manufacturers to refresh its 1,800 regular and caf for customers and to the board said. They added
(Siam), which captures whole- Passenger Two- Commercial Three- outlets. It also plans to bring demarcated zones for each that if the terms are accepted,
sales of companies to dealers, vehicles* wheelers Vehicles wheelers dedicated workshop for Nexa process of purchase. the deal would be complet-
shows the passenger vehicle cars and introduce a new The company said it would ed within a month or so.
makers dispatched 198,399 *Passenger cars, utility vehicles and vans; industry wholesale data (figures format for True Value, their use technology to help buyers Snapdeal board members
units in June, about 11 per cent within brackets show % growth over same period last year) Source: Siam channel for pre-owned cars. book a test drive, book a car had earlier rejected the offer
lower to the volumes in corre- Maruti had introduced online and even personalise a of $800 million made by
sponding month last year. This the steepest fall in 51 months, shaws) have been weak since Nexa sales network in 2015 to car. It plans to make the Tiger Global-backed Flipkart,
was the first decline in six since March 2013, when sales demonetisation and sales sell premium vehicles and experience of car purchase but sources said talks were
months. But June happens to fell by 13.01 per cent. Most play- declined 25 per cent in June to offer a differentiated paperless and hassle free. still on. The board is unhap-
be an exceptional month as the ers, including Hyundai, 36,491 units. Commercial vehi- experience to buyers. About The revamp would be built py with Flipkart pegging the
industry prepared for the roll- Mahindra & Mahindra, Toyota cles also saw a muted perform- 250 Nexa outlets are around three key areas of valuation nearly $200 million
out of the goods and services and Tata Motors, reported a ance and grew at just 1.44 per operational as of now and technology, design and less, even though Snapdeal
tax (GST) from July 1. decline. Market leader Maruti cent. Within this segment, light they have cumulatively sold experience. By the next cleared the due diligence. The
Wholesales declined last Suzuki clocked a growth of one commercial vehicles grew by 7 about 300,000 cars, including month, 40 outlets would be board is, however, hopeful
month as dealers were not mak- per cent. Siam has not yet per cent to 35,715 units, while Baleno and S-Cross. aligned to the new design Flipkart would reconsider the
ing fresh purchases. The gov- revised its FY18 forecast for pas- medium and heavy commer- We had a positive and the number would go up offer, sources earlier said.
ernment had clarified it would senger vehicle sales. It had pro- cial vehicles registered a drop feedback from customers on to 80 by March 2018. SoftBank, the Snapdeals
give 100 per cent input tax cred- jected a growth of 7-9 per cent. of over 6 per cent to 21,175 vehi- Nexa and there were The company said it would largest investor, has been
it on excise duty and not on Two-wheelers, the largest cles. learnings that we wish to take roll out workshops for cars proactively mediating the
cesses, which together amount automobilesegmentbyvolume, Experts see a growth ahead to our regular sales network, retailed through Nexa. Nexa sale for the past few months.
to 5-6 per cent of the cost of a saw sales expand four per cent for the industry. We expect the Kenichi Ayukawa, managing car buyers have been The board also has repre-
vehicle. Dealers accordingly to 1.52 million units in June. Indian automotive market to director and chief executive servicing vehicles at service sentation from Snapdeal
focused on selling existing Sales of scooters grew over 10 witness growth in several pock- officer, said. centres of regular retail founders Kunal Bahl and
stocks with them to prevent per cent to 497,478 units, while ets in FY18, driven by a good Maruti aims to expand channels. The company plans Rohit Bansal, Nexus Venture
losses, said Vishnu Mathur, motorcyclesgrewover2percent monsoon, lower interest rates, sales to 2 million units by 2020 to have 60-70 Nexa service Partners and Kalaari Capital.
director-general, Siam. to 964,269 units. Rise in rural strong rural economy and from 1.56 million vehicles in outlets in the current financial Snapdeal is also engaged
Passenger vehicle sales had income and prospects of a good smooth implementation of the FY17. year and the number would in separate discussions for
recovered from January after monsoon are driving motorcy- GST pushing automakers to Ayukawa said the aim was go up to 300 by 2019-20, by selling FreeCharge (mobile
being hit during November- cle sales, said Sugato Sen, offer price cuts on vehicles, to be dynamic and build an when Nexa outlets could wallet operations) and
December (owing to demoneti- deputy director- general, Siam. said Rakesh Batra, partner and everlasting relationship with expand to 400. Vulcan Express (logistics
sation). The decline in June was Three-wheelers (auto rick- leader (automotive) at EY India. arm).

Why Air Indias global business sold separately means gold for IndiGo
SURAJEET DAS GUPTA
New Delhi, 10 July
Just a day after the Union Cabinet
cleared a proposal to allow the sale of
government stake in Air India,
IndiGo Chief Executive Aditya Ghosh
wrote to the aviation ministry
expressing his airlines interest in Air
India, primarily its international
business.
However, the market did not take
it well. After the piece of
news pummelled the stock
prices of InterGlobe Aviation,
the company that owns
IndiGo, the promoters were
last week forced to organise an
investors call.
In the hour-long call co-founder
Rakesh Gangwal explained that the
airline was planning to enter the
long-haul international market on a
low-cost model, with or without Air
India. Surely, however, buying out
Air India provided it is viable
would help IndiGo grow the business
faster.
There are many reasons why
IndiGo should want to split the air-
line into two parts, or even more as
Gangwal said. But aviation analysts
are divided on the merit of such a
move; many believe a spin-off would
reduce the number of suitors for Air
India and not fetch the government
the best value for its stake.
What are the key arguments? For
one, Air Indias international busi-
ness has tremendous value; if it is
sold off separately, there might not be
much incentive for suitors to go for
just the domestic business.
According to some estimates, its
international business accounts for
60 per cent of Air Indias revenues,
and about 63 per cent of the avail-
able seat kilometres (ASKM), or seats
multiplied by the number of kilome-
tres a plane flies while deployed in
international skies.
Also, unlike Alliance Air, the
domestic airline that flies to smaller
cities and is losing money, Air India
Express, flying mainly on interna-
tional routes is highly profitable. And,
it is this business that IndiGo has
shown its interest in.
In 2015-16, Air India
Express had a net profit of
~361 crore on a turnover of
~2,909 crore, and an attrac-
tive operating margin of 24
per cent.
It is true that an internal data
analysed by the Comptroller and
Auditor General (CAG) shows that
Air Indias international business is
losing more money than domestic.
But that is because of inefficiencies
in running the business poor util-
isation of aircraft, for instance
which can be fixed by a new opera-
tor.
The deficit on international
routes over the total cost (fixed and
variable) in 2015-16 was ~3,755 crore,
against ~1,759 crore for the domestic
market.
Another inherent advantage that
analysts point out is that the utilisa-
tion of aircraft on international
flights is much higher than that on
domestic flights. That, of course, has
a bearing on cost and margins. Based
on Air Indias own internal targets
on wide-bodied international routes,
the targeted flying time is between 13
hours and 15 hours on international
routes, while it is an average 12 hours
for flights in domestic skies. These
targets for 2015-16, according to CAG,
were not met by the airlines.
There is also a huge value in inter-
national slots, which are either very
expensive a slot was sold at $75
million at Heathrow or just not
available, like in London and New
York. Air India has slots at 18 level-
three airports (cities where there is a
huge shortage of infrastructure and
availability). That is one point that
even Gangwal acknowledges when
he says IndiGos growth will be much
slower if its goes there alone.
Experts also say that bilateral
agreements, unlike domestic skies,
ensure that the number of flights or
competitors on the route are limited
by government permissions. So,
there is limited competition. By com-
parison, there is no such restriction
on domestic routes, except in the
case of shortage of slots in some met-
ros.
Air India, despite all odds, still
remains the largest international air-
line in the country, with a combined
market share (including Air India
Express) of 16.9 per cent. The closest
competitor is Jet airways, which con-
trols 14.5 per cent of the market.
According to experts, the govern-
ment cannot get the full value by sell-
ing Air India in parts. Captain G R
Gopinath, the promoter of the erst-
while Air Deccan who is credit with
bringing the low-cost carrier (LCC)
model to India, says: You cannot
separate the lungs from the heart and
run the business. You will get value
when you sell it in one piece.
The reason is simple: Both
domestic and international busi-
nesses feed on each other. For an
international business to grow, there
needs to be a strong domestic net-
work in many cities and towns to
bring passengers to international
flights. The opposite, similarly, is also
true, as passengers travelling inter-
nationally need a well spread out
domestic network to take them to
smaller cities and towns beyond the
few metros.
For IndiGo, with over 40 per cent
share of the domestic market and
nearly one new fleet to be delivered
every week from next year, there is no
need to acquire a domestic business.
It can increase its share on its own
through its planned capacity
increase. It does not make much
sense for it to pick up a domestic
business with all its problems all
for less than a 13 per cent market
share.
However, for the Tatas, on the
other hand, it may be logical to pick
up the entire business, say experts.
Through Vistara, its JV with
Singapore Airlines, the group clearly
wants to be in the global market, and
be a substantial player domestically,
too. But it has only about 3 per cent
share of the domestic market at pres-
ent, and its international foray is
expected only next year.
So, Vistara for one needs both the
domestic and international business
to support each other. And if SIA is
roped in, it could leverage the inter-
national business even better on the
back of a substantial domestic pas-
senger and network base.
If a west Asian airline was inter-
ested, it would have paid a bigger val-
ue for both of Air Indias businesses
auctioned together. It could use Air
Indias bilateral rights to put in more
flights, from more Indian cities to its
hub that is limited currently
because the government limits
flights, passengers and cities from
where such carriers can fly. But such
a player will also need a strong
domestic business to feed the extra
flights. At the moment, there is a
dependence on code sharing with
others.
There also, meanwhile, are others
like Jitender Bhargava, former exec-
utive director of Air India, who say
the standalone domestic business of
the airline could be attractive to some
companies like SpiceJet, which could
double its market share and become
the second-largest player in one go.
Bhargava agrees that some sub-
stantial restructuring will be needed
because SpiceJet runs on the LCC
model and will need to completely
overhaul the confliguration of seats
in the planes of Air India, which runs
as a full-service carrier. Considering
the Indian market has dramatically
shifted to LCC, no bidder would like
to continue running it separately as
full-service carrier.
As far as IndiGo is concerned, it is
not difficult to understand its interest
in international skies. With a 3.9 per
cent share of the international mar-
ket, it has been a very cautious play-
er, especially after its aggressive move
in Singapore led to a price war with
Singapore Airlines. As a result,
IndiGo had to reduce its flights to the
city.
Air Indias international business
can catapult IndiGo in the top
league, with a market share of
around 21 per cent more than Jet
Airways. Also, it will make its entry
into long-haul flights quite smooth,
with all the valuable routes and slots
already available across markets. Of
course, for the LCC model, it will still
need to make some investments in
tweaking the seat configuration.
.
MUMBAI | TUESDAY, 11 JULY 2017 COMPANIES 3 <

RCom seeks relaxation in Patanjalitopivotawayfrom

brandedfranchiseoutlets
cross-holding norms ARNAB DUTTA
New Delhi, 10 July

A few years ago, Baba

Ramdevs Patanjali Ayurved

Uncertainties cloud
KIRAN RATHEE had disrupted the market
New Delhi, 10 July with its natural-herbal propo-
sition, forcing major fast-mov-

R
eliance Communi-
cations (RCom) has
sought relaxation in
cross-holding norms so that
companies can sell equity to
existing telecom operators.
Under the current unified
licencing (UL) regime intro-
duced in 2013, telecom service
providers are barred from hold-
ing either direct or indirect stake
in other incumbents providing
services in the same area.
The new rules were put in
place to promote healthy com-
petition and end the possibili-
ty of cartels.
Before the UL regime, telcos
were allowed to hold up to 10 per
cent stake in other service
providers. Due to the change in
cross-holding norms, Vodafone
had to sell its 4.2 per cent stake in
Bharti Airtel in 2015.
This isnt the first time
RCom is seeking such a relax-
ation. In 2013, it had opposed
restraining firms from holding
stake in other operators.
In a letter to the inter-min-
isterial group (IMG), formed to
study the current financial
stress in the sector, the Anil
Ambani-owned company has
requested that in case of merg-
er of companies, the time to
With the entry of Jio the competition has been intensified and
incumbent operators have seen a slide in profits as well as revenues
reach the stipulated cap of 50
per cent should be extended to
five years. As per current
norms, in case of a merger,
companies should fall under
the stipulated cap of 50 per
cent within one year.
The existing clauses are
relevant as long as the finan-
cial health of the companies is
in order. However, companies
availing the strategic debt
restructuring (SDR) scheme of
RBI are already under severe
financial duress and for revi-
talisation, need to be treated
differently, the letter by RCom
Tata group, Bharti
Airtel alliance: Report
KIRAN RATHEE
New Delhi, 10 July
Amid reports of a mega
alliance between Tata group
and Bharti Airtel involving
their telecom, overseas
cable, enterprise services
and DTH businesses, there
are a lot of issues that may
have to be addressed.
According to a report by
Bank of America Merrill
to IMG said, a copy of which Lynch, uncertainties remain
has been seen by Business on a host of issues. First, will
Standard. Bharti take on Tatas $4.5-
The Reserve Bank of India billion debt?
in June 2015 had issued the Second, what will
SDR scheme and any of the happen to governments 26
telecom companies availing per cent stake in Tata
the scheme had to be accorded Communications? Lastly,
dispensation as laid out by the delisting of Tata
regulator, the letter said. Communications.
The sector has been strug- The report said Bharti
gling with a debt of about ~4.5 would have a market share
lakh crore. Competition has of 40 per cent in the cellular
intensified with the entry of space if the deal went
Reliance Jio and incumbent through.
operators have seen a slide in We know that
profits as well as revenues. historically Bhartis
acquisition track record in
Indian cellular business with
Aircel 4G spectrum, Videocon,
Telenor, etc, has been
disciplined, the report said.
It, however, said a
possible deal would be
positive for Bharti, subject to
the contours of the deal.
We would also consider
this potential merger to be
positive for Dish TV, as
competition will reduce. We
also consider this to be
eventually positive for Tata
Communications due to
market consolidation,
it added.
ing consumer goods (FMCG)
firms to follow the trend. After
growing by leaps and bounds
during the past five years, now
it seems it is Patanjalis turn to
follow the conventional
FMCG players to hold on to its
success in the coming years.
The firm, which so far has
depended heavily on brand-
ed franchise outlets for
growth, is now looking to
aggressively expand its retail
presence by taking the tried-
and-tested channel distribu-
tion route that FMCG compa-
nies have been relying on for
decades. While it currently
has 5,000 distributors,
Patanjali has set a target of
increasing the number to
25,000 in the next two years.
The move would be crucial to
meet the ambitious target of
annual sales of ~1,00,000
crore by 2020 set by its co-
founder Baba Ramdev.
While we are continuous-
ly increasing our production
capacity, which now stands at
~50,000 crore a year and set to
rise to ~1,00,000 crore in next
two years, it is important that
we expand our retail reach as
well, a company spokesper-
son said.
Patanjali first began
appointing distributors to
make available its products
at reducing dependence on
CONVENTIONAL ROUTE exclusive outlets as the compa-
ny estimates the share of dis-
Distributionreach of major tribution channel to increase
FMCG players and Patanjali to 40 per cent in the coming
Number of outlets (mn) days. Most of the players,
Hindustan including HUL, Nestl, Procter
Unilever 6.0* and Gamble, Britannia, and
ITC, in the ~3,20,000-crore
Dabur 5.0* branded FMCG market in
Nestl 3.5 India, get over 75 per cent of
their sales from conventional
Patanjali 0.8 distribution channel.
* Above Source: Industry The firm has a weak pres-
ence, when it comes to con-
plans to reach 2.5 million out- ventional retail reach in the
lets in the next two years and southern and rural markets,
is inviting interested parties despite the fact that rural mar-
for distributorships. ket generates 40 per cent of
The foreign multinationals sales for most FMCG players.
are dominating the market For deeper distribution,
place with their vast presence Patanjali needs to increase its
across small out- reach and it has
lets. We aim to While it currently great scope for
grab ~1,00,000 has 5,000 that, said Abneesh
crore annually by distributors, Roy, senior vice-
making our prod- Patanjali has president at
ucts available. set a target of Edelweiss Financial
However, unlike increasing the Services.

INSOLVENCY PROCEEDINGS India imports US across millions of mom-and-

pop stores in March 2012. But
its retail reach continues to
them, our profits number to 25,000
are dedicated to in two years. Till
charitable purpos- now it had
While Patanjalis
success so far has
been attributed to

NCLT hears SBIs charge crude for first time remain low compared to peers.
According to industry esti-
es, the spokesper- depended heavily its rapid expansion
son said. on branded of portfolio and a
mates, while products from Patanjali, franchise outlets trend-setting natu-

on Electrosteel Steels
Hindustan Unilever Ltd
(HUL), Dabur and Nestl
reach some 6 million, 5 mil-
lion and 3.5 million outlets,
Rolta offers respectively, Patanjalis retail
reach stands at nearly 0.8 mil-
unlike most of its for growth ral-herbal proposi-
peers in the sector, tion that the brand
gets 70 per cent of has enjoyed so far,
its revenue from its branded analysts say it would not be
franchise outlets Patanjali easy for the firm to touch the
Chikitshalayas, Arogya ambitious target that it has set

to rejig debt lion stores, apart from some

10,000 branded outlets. It now
Kendras and Patanjali Mega for itself by only expanding
Stores. The move is also aimed its retail reach.

of $1 billion
ROMITA MAJUMDAR
ISHITA AYAN DUTT Mumbai, 10 July PRESS TRUST OF INDIA in the east) has narrowed.
Kolkata, 10 July Mumbai/New Delhi, 10 July "Even after including the ship-
Rolta India has offered to issue two ping cost, buying US crude
ThebenchhereoftheNationalLawCompanyTribunal five-year bonds of $500 million each The worlds third-largest oil proved to be very cost compet-
heard the State Bank of India (SBI) plea for insolvency its bondholders in exchange of importer,hassealedafirstdealto itive to us and so we bought one
proceedings against Electrosteel Steels. outstanding debt of around $1 billion, import crude oil from the US and very large crude carrier (VLCC)
Sources said the order on whether to admit the which it struggles to pay owning to the shipment is expected to cargo through a tender from
plea was awaited. "They have heard the case." slowing enterprise business and touch Indian shores in October. the spot (or current) market,"
Last month, the lenders led by SBI of Electrosteel sunken investments in a major The deal, by state-owned Indian he said. Sharma said the com-
had gone to the NCLT for further action under the Indian defence project. Oil Corp (IOC), comes within pany will buy more crude from
InsolvencyandBankruptcyCode(IBC).Thiswasamong The bonds would be in payment- weeks of Prime Minister Modis the US if the market conditions
the 12 cases identified by the Reserve Bank of India as in-kind of 2 per cent, which means visit to the US when President remain favourable for such
the first lot to be referred to NCLT under the IBC. the interest would be paid in Trump talked of his country purchases.
A resolution plan for the company was, at the additional bonds than by cash. The looking to export more energy The IOC move has already
time, already being discussed with the lenders. The rejig announcement helped the stock products to India. led to more pur-
company had proposed to bring new equity, from jump ~7.75 or ~14.54 per cent to close "We have bought 2 The IOC move chases by other
Abhishek Dalmia of the Renaissance group and infu- at ~61.05 on the BSE on Monday. million barrels of crude has already Indian refiners.
sion of another ~1,500 crore as a loan from Edelweiss. The company, which offers oil from North America led to more State-owned Bharat
This and any other proposal that might come up technology solutions, won a comprising 1.6 million purchases by Petroleum Corp Ltd
would be discussed at the NCLT. ~50,000-crore battlefield barrels of US Mars crude other Indian (BPCL) too tendered
Electrosteels debt at the end of 2015-16 was management project jointly with and 400,000 barrels of refiners. BPCL to buy one million
~10,274 crore. To resolve its inability to pay, the public sector Bharat Electronics in Western Canadian too has barrels of crude
lenders had first applied the strategic debt restruc- 2015. The company, which has Select," IOC Director tendered to either for loading on
turing (SDR) rule. This procedure had been intro- invested heavily in the project, (Finance) A K Sharma buy one August 16-
duced by RBI to tackle the issue of burgeoning debt expects payments from the told PTI here. US Mars is a million barrels September 5 or
by allowing banks to acquire control of a defaulting government from 2020 for the heavy, high-sulphur of crude delivery on Septeber
company, by converting loans into equity. Then, milestones it has achieved. grade which will be 26- October 15.But
they were to bring in new promoters, after which It has outstanding bonds of $300 processed at IOCs newest for importing crude
sticky assets were to be upgraded to standard ones. million notes due in 2019, and $200 refinery at Paradip in Odisha. from the US, IOC had to take
First International Group had emerged as the short- million notes due in 2018, which it "Given the current interna- special permission from the
listed bidder but the deal fell through. A series of nego- plans to extend the maturity date tional oil markets where the dif- shipping ministry. "Indian gov-
tiations with other companies followed. Finally, the and reduce coupon rate. ferential between Brent (the ernmentpolicyprovidesforpur-
proposalofDalmiaandEdelweisswasbeingdiscussed, The company said it is in benchmark crude or marker chasesofcrudeoiltobemadeon
when an internal committee of RBI recommended negotiations for a new deal, but has crude that serves as a reference condition that the shipping will
the IBC reference for all accounts debt exceeding not agreed on a final settlement. As price for buyers in western be done by the Indian carriers
~5,000 crore and 60 per cent or more classified as non- of October 2016, it had ~6,221.4 crore world) and Dubai (which serves (the buyer arranging for ships to
performing by banks as of end-March 2016. in outstanding debt. as a benchmark for countries ferry the oil).

Emami Infra to merge Zandu with itself

AVISHEK RAKSHIT
Kolkata, 10 July
Emami Group, the diversified
conglomerate based from this
city, has decided to consolidate
Standard. In the proposed
scheme of merger, ZRL share-
holders will get seven shares of
EIL of a face value of ~2 for every
share of face value of ~100 held
on the date of record. Public
crore from ~27 crore. All these
PROFIT-COST NUMBERS borrowings have been invested
Net income Net profit/loss Finance cost towards acquisition of land and
construction and development
Emami Infrastructure Zandu Realty of projects, including security
deposits provided to joint ven-
136.69
326.63

its realty arm into a single list- shareholding in the merged ture partners, Choudhary told
110.52

161.95

ed entity, to unlock value and
raise funds from the market to
fund its ongoing projects.
Zandu Realty (ZRL) is being
merged into Emami
entity will be increasing, as the this business daily.
promoters share in the merged EILwasuntilrecentlyinloss-
entity will fall to 50.49 per cent, es, on account of inability to
from the current 58.06 per cent complete projects in time, lead-
in EIL. The public sharehold- ing to rise in administrative
23.21

16.81

Infrastructure (EIL). Over the ing will go from 41.94 per cent to overheads. It is now targeting to
11.56
-6.75

years, while ZRL, its subsidiary, 49.51 per cent. complete at least one project
7.05

5.18
1.42
2.32

had stagnated in implementa-
tion of new construction, EIL
has been on a project construc-
tion track and is currently
implementing as many as eight
projects, entailing an invest-
ment of ~4,500 crore. Girija
Choudhary, director and chief
finance officer of EIL, says the
merger will imply a flow of
funds from ZRL into the for-
mer, helping project funding.
The promoters cant give
100 per cent project funding
from their own pockets. From
where (else) is the money going
to come? he told Business
The company says earnings
per share (EPS) is likely to
increase with the merger,
which will lead to an expanded
price to earnings ratio and an
increase in the stocks value.
EIL is developing properties
in Kolkata, Chennai,
Coimbatore, Jhansi,
Bhubaneswar and Indore in its
individual capacity. Two proj-
ects each in Mumbai and
Hyderabad are being executed
in alliance with partners.
Choudhary said while EIL
has been expanding its busi-
ness, ZRL had stagnated over
2015-16 2016-17
All figures in ~ crore
the years, with inventory of
~10-12 crore and no land
reserve. While, EIL has land
parcels of around 800 acres,
sufficing for new constructions
in the next seven-eight years.
We generally intend to
develop projects exceeding a
million square ft, primarily in
Class-B cities (the now-outdat-
ed ranking used the central gov-
ernment). In the coming years,
our growth path will evolve
2015-16 2016-17
Source: Company financial reports
around developing projects
directly. We are open to part-
nering with others if a project is
lucrative," he told this publica-
tion. In the coming years, he
added, most of the growth in
the real estate sector would
come from Class-B cities.
EILs indebtedness is ~1,398
crore and ZRLs is ~11 crore. The
merger will imply ZRLs debts
being taken over by EIL; the lat-
ters net worth will rise to ~214
every year, which will help it
maintain a profit margin.
During 2016-17, EIL posted
~11.6 crore profit, as against the
lossof~6.75croreintheyear-ago
period.AftertheEmamiGroups
flagship company, Emami Ltd,
acquired the stakes of Zandu
Pharmaceutical Works in 2008
for ~750 crore, it had spun off
ZRL as a realty firm. Although
ZRLdevelopedapropertyinthe
Mumbai suburbs, Zandu Sigma
Estate, it didnt undertake new
projects thereafter and EIL
became torchbearer of the
groups real estate wing.
4 ECONOMY MUMBAI | TUESDAY, 11 JULY 2017

I wrote a personal letter to Sartaj Aziz for the You (Centre) opened up the border and let outsiders If govt is so concerned about my meeting
grant of her (Kulbhushan Jadhav's mother) visa enter the state. Now you are asking the state to the Chinese Ambassador, it should
to Pakistan. However, Aziz has not shown the submit a report. Why is the Centre conspiring against explain why three ministers are availing
courtesy even to acknowledge my letter the state when youre elected by the people? Chinese hospitality amid border row
SUSHMA SWARAJ MAMATA BANERJEE RAHUL GANDHI
External affairs minister West Bengal chief minister Congress vice-president Source: PTI
> .

IN BRIEF
No family planning allowance
for govt staff, Cab secy hit too
Taxmen get busy with stiffer target
Adopts multi-pronged strategy to collect of high value cases of ~50 crore and cent, suggesting that more UPHILL TASK:
The central government employees will no 15.7% more direct taxes this year
above. We want such cases to be
decidedearly.Ifthesumistobefreed,
people regularised their unac-
counted income. DIRECT TAX
longer get a family planning allowance and
the Cabinet secretary his monthly DILASHA SETH with global data mining companies
take a decision early. If it needs to be
recovered, that too we should know CBDT
In an unusual move, the
Chairman Sushil
COLLECTIONS
(~ lakh crore)
entertainment allocation. Also gone are the New Delhi, 10 July for information gathering. early, to devise a strategy, said the Chandra got a one-year exten-
diet, haircutting and soap toilet allowances The department has a collection official. The number of surveys and sion this May. This is expected to

A
given to select categories of employees. With head of an uphill collection
the government accepting many of the target for the current
recommendations of the Committee on Allowances (CoA), headed financial year (FY18), the
by Finance Secretary Ashok Lavasa, a raft of grants and allocations income tax department has prepared
made to various sections of government employees have been a multi-pronged strategy to achieve
done away with or revised, an official said. Funeral and cycles 15.7 per cent growth, without any
allowances have been retained and revised. The decision on amnesty schemes that provided a
revising the allowances was approved at a meeting of the Union buffer last year. Theres also been a
Cabinet, headed by Prime Minister Narendra Modi, on June 28 reduction in the rate for the lowest
and formal orders were issued on July 6. PTI< income slab.
The strategy includes litigation
management, disposal of high-value
Now pay taxes, cases, scaling up of searches and
apply for PAN via seizures, strengthening of systems
and investigation teams, and tying
CBDT mobile app
target of ~9.8 lakh crore for 2017-18, up
15.7 per cent, compared with growth
of 14.3 per cent in 2016-17. The rate on
annualincomebetween~2.5lakhand
~5 lakh has been cut to five per cent
from the earlier 10 per cent.
The compliance rate has shown
an improvement after demonetisa-
tion, which will also facilitate higher
collection. Litigation management,
arrears recovery, information gath-
ering and enforcement action will be
the top areas of focus, said a senior
official. The commissioner (appeals)
has been asked to expedite clearance
searches has been scaled up from the help work on a longer term strate-
beginning of the year. People know gy for increasing the tax base, cur- 2015-16 7,48,865
that black (undisclosed) money will rently 55 million. Systems and inves- (Actual) (7.6)
not be tolerated any more. So, we tigation teams were strengthened in
expect an improvement in the a major reshuffle last week involving
compliance rate, added the official. 315 officers.
2016-17
Advance tax paid by individuals The department says it 8,47,097
was 40 per cent higher in the finan- has already identified
(RE)
(14.2)
cial years first, June, quarter. This cases where individu-
could be an after-effect of the als and entities had
demonetisation of high-value cur- attempted to regu- 2017-18
(BE)
9,80,000
rency, with more non-corporates larise their unaccounted (15.7)
recording higher incomes in their money by revising their
books of account. E-filing of returns
up to June for 2016-17 grew by 18 per
returns for
financial years.
the previous % growth (in brackets); RE: Revised
Estimates; BE: Budget Estimates
Source: CBDT

Theincome-taxwingon
Mondaylaunchedanapp

Centre tightens grip on tribunals Latetrains,dirty

thatallowsentitiestracktax
deductedatsource,paytaxes
andapplyforpermanent
accountnumber(PAN).Itwill
alsohelppeoplelinktheir12-
digitbiometricidentifier
AadhaarwithPANcard.The J&Ks debt rises
mobileappAaykarSetu,
launchedbyFinanceMinister
to ~55,358 crore
ArunJaitley,willbeavailable in FY16: CAG
onAndroidphones.Thisisa
veryimportantstepforward
Jammu&Kashmirs(J&K)
totaldebtroseto~55,358
bytheCentralBoardofDirect croreattheendof2015-16,
Taxesandtheprinciple whichwasalittleover60per
reasonbeingtechnologyasa centofitsgrossdomestic
verypowerfultoolbecomes productandclosetofive
anenabler.(Withtheapp) timesofitstaxandnon-tax
mostoftheworktheassessee revenue,aComptrollerand
candischargewithoutany AuditorGeneral(CAG)ofIndia
externalhelpsittingat reporthassaid.Therisein
home,Jaitleysaid. PTI< debtshowsincreasingtrend
ofdependenceofthe
governmentonhighinterest
ratemarketloanstofundits
expenditure,theCAGsaidin
thereport.Theoverallfiscal
liabilitiesofJ&Kstatehas
increasedfrom~48,314crore
attheendofMarch31,2015,to
~55,358croreattheendof
March31,2016,thereport
Over ~57,000 crore fortheyearended
March2016said. PTI<
savings through
DBT: Centre
Thegovernmenthassaveda Govt seeks ~16k-cr
whopping~57,000crorewith loan from JICA for
itsDirectBenefitTransfer(DBT)
schemeunderwhich dairy development
subsidiesaregivendirectlyto Thegovernmenthassought
beneficiaries.TheDBT ~16,027croreloanfromJapan
programme,amajorreform InternationalCooperation
initiativetocheckgraftin Agency(JICA)forvarious
welfarefunds,waslaunched programmestodevelopdairy
bytheUnitedProgressive sectorandmeetrising
Alliancegovernmenton domesticdemandformilk
January1,2013.Itwasaimed andmilkproducts.The
attransferringbenefitsof governmenthassubmitteda
variouscentral-runsocial proposalforavailingloan
welfareschemestothebank fromJICAforDairying
accountsofbeneficiaries.Of throughCooperatives
the~57,029croresavedunder NationalDairyInfrastructure
DBTin2016-17,theLPG Plan,theagriculture
subsidyschemePahal ministrysaidinastatement.
accountedfor~9,769crore. Theproposalisinlinewiththe
Besides,~14,000crorewas governmentsaimtodouble
savedinprovidingsubsidies farmincomeinthenextfive
directlytobeneficiariesunder years.Thetotaloutlayofthe
PublicDistributionSystem. proposalis~20,057crore,the
PTI< statementsaid. PTI<
SAYAN GHOSAL &
SUBHAYAN CHAKRABORTY
New Delhi, 10 July
The recently notified
Tribunal, Appellate Tribunal and
other Authorities (Qualifications,
Experience and other Conditions of
Service of Members) Rules are
yet another example of the Union
governments attempt to regulate
the composition and functioning of
the constitutionally independent
judicial system.
Fulfilling its intentions under the
Finance Act of 2017, these rules lay
down a new structure for appoint-
ment, removal and conditions of
service of members for several
quasi-judicial bodies and tribunals.
Ineffect,theserulesincreasetherole
of the government and bring about
a sweeping change to how these
institutions function at present.
One such tribunal affected by the
rules is the National Green Tribunal
(NGT).FormedthroughtheNGTAct
of 2010 to promote Indias commit-
ment to the Rio Declaration and
resolve issues of ecological impor-
tance, the tribunal has long been
criticised for judicial overreach and
policymaking by the government.
Environmental lawyer Ritwick
Dutta says the Centre has in the past
three years made concerted efforts
to dilute the NGT Act. One such
example is the TSR Subramanian
Committee to review Indias
environmental laws, which had
recommended curtailing of NGTs
powers and proposed critical
changes to environmental statutes.
With the new rules, the Centre
might have finally got what it
wanted. Many have expressed con-
cern for the NGTs independence,
as well as of other tribunals, that act
as justice delivery systems for
important sectors. It affects the
independence and autonomy of the
body to a large degree. Even for the
tribunals, this type of rule-making
ought not to be done, says former
Supreme Court judge Vikramajit
Sen. Others have drawn parallels
DIMINISHING POWERS
Tribunals covered under the Rules
| National Green Tribunal
| Industrial Tribunal constituted |
by the Central Government
| Income Tax Appellate Tribunal |
| Customs, Excise and Service Tax
Appellate Tribunal | National Company Law
| Appellate Tribunal (under
the Smugglers and Foreign | Authority for Advance Ruling
Exchange Manipulators
Act 1976)
| Film Certification Appellate
| Central Administrative
Tribunal
| Railway Claims Tribunal
| Securities Appellate
Tribunal
| Debts Recovery
Tribunal
| Debts Recovery
Appellate
Tribunal
| Airport
with the governments previous
attempts to control selection of
judges to the higher courts through
the National Judicial Appointments
Commission (NJAC) Act of 2014, to
abolish the judges collegium-based
system of appointments. The
Supreme Court struck down the
NJAC as violating the Constitutions
basic structure. The governments
ongoing tussle with the apex
court over the memorandum of
procedure for these higher judicial
appointments and introduction of
the tribunal rules seem to show that
the Centre still wants to continue on
the same lines.
Under the new rules, chairper-
sons, presidents and other members
of the tribunals will be appointed by
the central government on the rec-
ommendationofasearch-and-selec-
tioncommitteeconvenedbythesec-
retary of the ministry or department
Appellate Tribunal
Telecom Disputes Settlement
and Appellate Tribunal
Appellate Board (under the
Trade Marks Act 1999)
Appellate Tribunal
(under the Income Tax Act 1961)
Tribunal
| National Consumer
Disputes Redressal
Commission
| Appellate Tribunal
for Electricity
| Armed Forces
Tribunal
in question. As a result, appoint-
ments of chairpersons and judicial
members of the NGT will now be
made only on the recommendation
of a committee comprising five per-
sons, of which the Chief Justice of
India or CJI (or his nominee) will be
the only member from the judiciary.
Previously, the selection com-
mittee for these appointments com-
prised a judge of the Supreme Court
(SC) and the chairperson of the tri-
bunal, in addition to a government
official. Even the selection of the
NGTs expert (technical) members
can now be done by a five-member
committee which does not include a
single person from the judiciary,
unlike the previous structure involv-
ing two judicial persons.
The criteria for appointment of
these chairpersons, judicial and
expert members of NGT have also
been diluted. Earlier, the chairper-
son of NGT had to be (or have been)
a judge of the SC or a chief justice of
a high court (HC). Now, even a judi-
cial or expert member holding office
for not less than three years or a per-
son with 25 years of professional
experience in law can be selected as
a chairperson. The criteria for judi-
cial members have been relaxed and
holders of judicial offices for 10 years
are also eligible for appointment,
unlike the previous requirement of
being a past or present judge of the
SC or a HC. This means that judicial
magistrates, district and lower court
judges previously appointed by the
government can become judicial
members, unlike before.
The qualifications for heads of
other tribunals have also been
relaxed. Earlier, the chairperson of
the Airports Appellate Tribunal had
to be (or have been) a HC judge who
was appointed after consultation
with the CJI. Under the new rules, a
person with 25 years of professional
experience can be selected as
chairperson and the requirement of
prior consultation with the CJI has
been removed.
The situation is similar with the
appointment of chairperson of the
Telecom Disputes Settlement and
Appellate Tribunal. The minimum
requirement has been diluted from
being a past or present judge of the
SC or a Chief Justice of a HC to
include a person with 25 years of
professional experience as eligible
for the position. Qualification for
appointment asapresidingofficerof
a National Industrial Disputes
Tribunal now includes a district or
additional district judge with three
or more years of experience, from
the earlier requirement of being (or
have been) a HC judge.
Critics say with these changes,
the administrative and functional
autonomy of tribunals could be cur-
tailed, as it is the relevant ministries
that will select the members, who
will in turn have to adjudicate on the
actions of the very same ministries.
More on business-standard.com
stationsthrow
rlysofftrack:Ixigo
WHEN Manduadih-Rameswaram 11.5
WeeklyExpress
TIMING HimgiriSFExpress 9.32
GOES OFF JanNayakExpress 8.90
THE RAILS
(average delay SwatantrataSenaniExpress8.49
in hours) Lucknow-PrayagPassenger 7.38
SHINE JACOB
New Delhi, 10 July
Indian Railways is notorious for delay in train
services. According to a survey by travel search
app Ixigo, the Manduadih-Rameswaram
Weekly Express tops the list of late trains, with
the highest average delay time of 11.5 hours.
Manduadih is in Uttar Pradesh and the train
travels a little more than 2,000 km to
Rameswaram in Tamil Nadu. The survey was
conducted among the 20-odd million cus-
tomers of Ixigo. The other worst-performing
trains include Himgiri SuperFast (SF) Express
from Howrah to Jammu Tawi, with 9.3 hours
average delay time, and the Jan Nayak Express
between Amritsar in Punjab and Darbhanga in
Bihar, with a delay time of 8.9 hours.
The survey also looked at the favourite
railway stations for passengers. Vadodara
toppedthelist,followedbyNagpurandHowrah
stations. Among the lowest-rated stations were
New Delhi, Pune and Kanpur.
In terms of favourite trains, the top three
were the Bikaner-Delhi SF Express, Mumbai-
Jaisalmer SF Express and the New Delhi
Duronto Express. The worst-rated trains were
the Patna-Kota Express, Jharkhand Express
and Seemanchal Express.
AlokeBajpai,co-founderandchiefexecutive
of Ixigo, said: This survey takes into account
the 200,000 user ratings and reviews on our
app.Wenotedthatcleanlinessisveryimportant
for travellers at railway stations, which is why
Tatanagar Junction ranked at the top.
And,RajkotJunctionreceivedverypositive
reviews owing to its high standard of safety.
DavangereinKarnatakastoodoutasthetopsta-
tion, serving good food. Travellers rated the
Bikaner-Delhi SF Express as the cleanest train
and the Ahmedabad-Mumbai Duronto Express
as the train serving the best food.

Business Standard
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No Air Surcharge
Navigating the choppy sea trade route
AsIndia&Chinafaceoff,NewDelhihasbegun WHY INDIA NEEDS TO RUN A TIGHT SHIP
Ocean trading system has more than
400 ports distributed on both shores.
toconsolidateitsoutreachvialandamong Brookings Fellow Dhruva Jaishankar
INDIAS INDIAN | National Perspective | India aims to raise | Geopolitical tussle on notes: The challenges of securing the
Aseancountries.Andbysea,viaportsaspart
Plan prepared to exports and control Ocean as Chinas free passage of trade and energy,
OCEAN INITIATIVE push 400 projects transshipment OBOR and India- ensuring the sustainable and equi-
ofalargereconomicsecurityprogramme | Sagarmala at ~8 lakh crore business and build Japan AAGC vie for table exploitation of fishing and min-
Development larger ports on coasts competing influence eral resources, and managing human-
WHY INDIAN
SUBHOMOY BHATTACHARJEE This is an unnerving statistic and Company set up for and on island nations itarian assistance and disaster relief
New Delhi, 10 July could worsen soon. As a response, the
Centre is mulling the option of setting
providing funding OCEAN IS A operations would be daunting , even if
the Ocean was not so contested.
support to project SPVs HOT SPOT
There is a chart on the Indian Ocean up an integrated response to the Developments of large container
and residual projects
that shows its three stress points Ocean, instead of piecemeal approach | Competing high ports have two spin-offs. It provides a
along with the number of vessels by shipping, the defence ministry and | Need arises as China GDP growth rates in channel for multibillion dollar invest-
which ply on those, that Vijay Sakhuja the Ministry of Earth Sciences. has 30 times more India and China ments, and has a pay-off by earning a
director, National Maritime As Minister for Shipping, Road port capacity spurs demand slice of the expanding business in
Foundation displays. Transport and Highways Nitin than India energy and other commodities. In the
for commodities,
Through those three points, the Gadkari acknowledges India has very absence of large ports, Indias neigh-
Strait of Hormuz, Strait of Malacca little presence in this waterway via especially energy bours like Sri Lanka earn money from
and Bab el-Mandeb Strait, ports, which he wants to berthing large container ships from
about 36 per cent of the correct. The risks are intense, which the cargo is hauled to India via
volume of international oil arising from China. With its smaller vessels. If Gwadar in Pakistan
traffic transits. The Indian expertise to build ports, being built with Chinese money
Ocean,asSakhujapointsout, China is on course to circle comes up meanwhile, it will be one
has begun to get crowded, India with a ring of mega Deputy National Security Advisor more bidders, the report said. and India make such ports a more competition on the sea for India.
with competing actors in the ports that would mimic the ArvindGuptasaysintheinterregnum, While both Sakhuja and Gupta say necessity. The rise in the vital role of India also needs to be present on
race to build ports, since COUNTERING current stress points and India must intensely develop short taking advantage of transshipment is this sea lane is not surprising. In the this sea, as it has vast potential as a
this Ocean is now the main
CHINA'S PUSH shut India even more out of shipping. In other words, develop a more productive than envisaging a past two decades as the growth blue economy. Harvesting all the
international traffic lane for 2n the lucrative business. The fleet of vessels that can have a quick major port, Pritam Banerjee, senior engines of the world economy have oceaniczones of the worldcouldbring
transport of gas, oil and coal. minister is thus, pushing for turnaround, ferrying goods to large director, South Asia, at logistics veered to the shores of the Ocean, it is in improvement in living standards.
The likelihood of disruption is rather development of at least one port sys- ports from Indias ports. This sort of firm Deutsche Post DHL Group, says inevitable the role of it has become As on 2010, the blue economy
high especially around the Strait of temtorivalthetop10.Themostprom- traffic is necessary to build up India can fruitfully develop more than significant than that of the Pacific and contributes 4 per cent to the Chinese
Hormuz (next to Qatar) and from ising one is JNPT, near Mumbai volumes at ports like Chabahar, where one mega port. He points to the the Atlantic Oceans. Consequently, GDP and provides employment of
where India plans to source a high currently at number 32 globally in India and Iran have signed an proposed Mekong-India Economic the engagement with the Ocean has 9.3 million. The comparable figures
percentage of its natural gas. terms of the volume of cargo handled. agreement for India to operate two Corridor as an example of how large stirred up interest among all the for the US are 1.2 per cent and
The ocean is also the zone where While the ministry expects to get close berths. Last week, according to PTI, ports can play their part. littoral states and those beyond. The 2.8 million; for the UK, it is 4.2 and
the largest number of ports is coming by 2021, Sakhuja is more guarded. I the two major Indian conglomerates The plans for the two largest com- most visible manifestation of this 0.6 million. There are as yet no
up among the world oceans. As of am not quite sure if that is achievable have bid for supplying key equipment peting economic zones of the world level of interest is the rapid growth in comparable data for India, but the
now, none of the top 10 port regions of inthenearfuture.Iftheprojectsunder for building the berths at the port. The the Belt and Road Initiative, anchored the number of ports along the Ocean. scope is easy to figure out.
the world is located on the Indian Sagarmala take shape well, it may be shipping ministry plans to expand the by China and the Asia-Africa Growth Theyarecurrently197,ofwhichathird
Ocean.EightofthoseareChina-based. possible to work towards the top 10. financial eligibility criteria to attract Corridor jointly anchored by Japan are under construction. The Atlantic Series concludes
6 WORLD
>
MUMBAI | TUESDAY, 11 JULY 2017 1

IN BRIEF

Samsung heir refuses to Wanda to sell hotels and AT&Ts $85-bn bid
for Time Warner
testify at ex-presidents trial
Samsung Electronics heir Jay Y. Lee has refused to testify at the
bribery trial of former President Park Geun-hye, arguing that
doing so risked affecting his own corruption hearing. Lawyers for
tourism projects for $9.3 bn hangs in limbo
the de-facto chief of the countrys largest corporation invoked an
article in the criminal procedure act that allows individuals to
Chinese conglomerate will sell 76 hotels for $4.9 bn and a 91% stake CECILIA KANG &
MICHAEL J DE LA MERCED
watching the lengthy regula-
tory process with intense
refrain from testimony that may lead to criminal prosecution. Lee in 13 theme parks for $4.4 bn to property developer Sunac China Washington, 10 July interest. Well obviously take a
is undergoing a bribery trial of his own in connection with Park hard look at that, Charles W.
and his appearance on Monday would have marked their first CLARE JIM Through this asset transfer, Wanda At the Department of Justice, Ergen, the chief executive of
encounter since an influence-peddling scandal that led to their Hong Kong, 10 July Commercials debt ratio will be greatly staff members in the antitrust Dish Network, said in a call
arrests. The Samsung heir has been the highest-profile business reduced, all the proceeds will be used to office have been doggedly inv- with analysts in November,
figure indicted in a scandal thats spurred outrage over cosy ties

between government and corporations. Both Lee and Park have
denied bribery charges. A subsequent investigation led to Parks
ouster from office in March, and the election of opposition
politician Moon Jae-in as president in May.
Macron overrules
PM to keep promise
on tax cuts
France will press
ahead with tax
cuts promised by
new President
Emmanuel Mac-
ron, a finance
ministry source said on Mon-
day, despite warnings from the
state audit body about an ^8
billion ($9.1 billion) hole in the
budget. Macron insisted at a
meeting on Sunday that plans
to rein in France's wealth tax
and scrap local property taxes
for 80 per cent of those
currently paying them begin to
take effect in 2018, the ministry
source said, confirming earlier
French media reports. The
president's intervention comes
just days after his Prime Min-
ister Edouard Philippe had
suggested the cuts would be
postponed into 2019 as France
struggles to contain its public
deficit. REUTERS<
Apple to build
second data centre
in Denmark
Apple Inc said
Monday it would
spend 6 billion
Danish crowns
($921 million) on
a new data
centre in Denmark, its second
BLOOMBERG
Wells Fargo to pay
$142 mn for phony
accounts settlement
A California judge has granted
a preliminary approval for
Wells Fargos agreement to pay
$142 million, and perhaps
more, to customers whose
credit scores were harmed by
its employees creating fake
accounts in their names, the
bank said on Sunday. Wells
Fargo has set aside that money
to compensate customers who
are part of a class-action
lawsuit involving claims
regarding consumer or small
business bank accounts, credit
cards or loans, as well as
identity theft protection,
between May 2002 and April of
this year. It plans to begin
reaching out to those affected
customers soon. REUTERS<
Apollo to buy
ClubCorp for
$1.1 billion
Private equity firm Apollo Global
Management LLC said on
Sunday it had agreed to acquire
ClubCorp Holdings Inc , one of
the largest owners and
operators of private golf and
country clubs in the United
States, for $1.1 billion. The deal
comes three months after
ClubCorp announced the
retirement of is CEO Eric Affeldt
and said it had decided not to
C
hinese property giant Dalian
Wanda Group plans to sell tourism
projects and hotels in the country
to Sunac China for $9.3 billion, as it dials
back its theme-park ambitions and brings
down its debt pile.
The sale the second-biggest real
estate deal ever in China according to
Reuters data will help strengthen
Wandas case for a mainland listing after
its property unit delisted from Hong Kong
last year. For Sunac, it would mean own-
ership of a wide portfolio of tourism devel-
opments at a time when it is spending
billions on property and technology
assets.
Wanda said it would offload 91 per cent
of thirteen cultural tourism projects, whi-
ch usually include theme parks and
leisure complexes, and 76 hotels to the
acquisitive Tianjin-based developer
Sunac for 63.18 billion yuan.
After the sale, Wanda will, however,
continue to play a role in operating and
managing the projects.
Wanda, which also has interests in
films and sports, had plans to build at
least 20 cultural projects around China. Its
billionaire owner Wang Jianlin had last
year said his wolf pack of parks would
beat US rival Walt Disney Co.
This (deal) signifies a retreat from
Wandas previous strategy in cultural
tourism, and marks a pivot to an asset-
light strategy, said Qin Gang, senior
researcher at State Information Centre, a
government-linked think tank.
Beijing has been encouraging devel-
opment of cultural theme parks as part of
a local tourism drive, tapping consumers
growing budget for entertainment. There
are over 300 such facilities in China, with
most struggling to turn a profit.
Wandas parks are still under con-
struction, except three that have been
completed. Two that opened in Nanchang
and Hefei last year do not rank in the top
20 by attendance for Asia Pacific, consul-
Wang Jianlin, founder of Dalian
Wanda Group
SNAPSHOT
| Wanda had plans to build at least 20
cultural projects around China
| Wandas parks are still under
construction, except three that have
been completed
| The firm did not give a reason for the
sale to Sunac
| Local business magazine Caixin quoted
Wang as saying the deal would ease the
debt burden on Wandas property unit
| Sunac will pay for this from its cash
pile that stood at over 90 billion yuan
at the end of June
tancy AECOMs 2016 theme park index
shows. The firm, which had earmarked a
more than 300 billion yuan ($44 billion)
investment for its cultural and tourism
projects, did not give a reason for the sale to
Sunac, but local business magazine Caixin
quoted Wang as saying the deal would ease
the debt burden on Wandas property unit.
repay loans. Wanda Commercial plans to
repay most of the bank loans this year,
Wang told Caixin.
Analysts said the lower debt load could
help Wandas plans to list the unit in
Shanghai and to attract a higher valua-
tion. S&P downgraded Wanda Comm-
ercial in December citing rising financial
leverage and slower-than-expected asset
disposal at Chinas largest commercial
developer. Another downgrade would pu-
sh the rating into junk category.
The group has been investing heavily
in entertainment, leisure and financial
businesses and the buying spree has
drawn the attention of Chinese regula-
tors, who ordered lenders last month to
assess exposure to overseas deals by
Wanda, HNA Group, Anbang Insurance
and Fosun.
Wanda has been very active globally,
with deals for US cinema chain AMC
Entertainment Holdings Inc, Hollywood
film studio Legendary Entertainment,
Infront Sports & Media AG and Spanish
soccer team Ateltico Madrid.
Sunac drive
Sunac too has been shopping.
In the past year, boss Sun Hongbin has
led the group on an acquisition spree,
including $2.1 billion for the real-estate
assets of Legend Holdings, parent of PC-
maker Lenovo, and $2.2 billion for a stake
in Leshi Internet, a unit of LeEco a
Chinese Netflix-to-Tesla-like conglomer-
ate. The stake in Wanda cultural and
tourism projects will cost Sunac 29.58 bil-
lion yuan. The price tag for the hotels is
33.6 billion yuan. The firms are expected to
sign an agreement by the end of this
month.
Sunac will pay for this from its cashpile
that stood at over 90 billion yuan at the
end of June, Caixin quoted Sun as say-
ing. It had total liabilities of 168.6 billion
yuan at the end of 2016, versus 64.5 billion
yuan the year before. REUTERS
estigating AT&Ts block-
buster $85.4 billion bid for
Time Warner.
They have deposed the
executives of both companies;
questioned several media,
telecommunications and tech-
nology rivals; and demanded
thousands of pages of confi-
dential documents from
scores of businesses to discern
if the deal would violate com-
petition laws and thus if it
should go ahead at all. But
eight months into the review,
the small army of career
antitrust officials is marching
toward a great unknown.
For one thing, the Justice
Department officials still dont
have a boss who will have the
final say on whether to approve
or block the deal. President
Trumps pick for assistant
attorney general in charge of
antitrust matters, Makan
Delrahim, has been held up in
a logjam of nominees in the
Senate.
And Mr. Trump himself,
who said during last years
campaign that he opposed the
deal, is another wild card. A
senior administration official
said last week that members
of the White House were dis-
cussing how they might use
their perch over the merger
review as leverage over Time
Warners news network, CNN.
All of that has effectively
put into limbo the most signif-
icant business deal before the
Trump administration, a
benchmark for business trans-
actions going forward. In turn,
that has cast a cloud over the
business world, which is
referring to AT&Ts bid for
Time Warner. Its going to be a
big deal. Were certainly going
to have some concerns.
Ergen said that AT&Ts pur-
chase of Time Warner would
spur other cable and satellite
companies to seek deals with
wireless companies and con-
tent firms. People on the side-
lines have to do something dif-
ferent, he said. You can
remain on the sidelines, but
that might be malpractice.
The deal is still expected to
be approved because AT&T
and Time Warner dont direct-
ly compete. But unlike past
megamergers such as Com-
casts purchase of NBCUni-
versal in 2013, this one is poten-
tially trickier from an antitrust
perspective. Thats because
AT&T has a nationwide foot-
print with its wireless and
DirecTV satellite service, and
could use that reach to
demand higher fees from
media companies and other
cable and satellite firms.
The business community
is watching intensely to see
what an antitrust D.O.J. will
look like in the Trump admin-
istration and how much of the
rhetoric from the campaign
trickles down into policy, said
Vivek Stalam, an analyst at
New Street Research. People
are looking at AT&T-Time
Warner as the first indicator of
what that will be like.
As the review process
drags on, business leaders are
not sitting on their hands,
with many continuing to car-
ry out their strategic plans.
2017 The New York Times News Service

Tesla rolls out its first Model 3 Sharif family

in the Nordic country to run
entirely on renewable energy.
Facebook Inc in January also
announced plans to build a
data center in Denmark, only
pursue a strategic trans-
action, after efforts to explore a
sale did not result in any offer
for the entire company. feels Panama
However, the Dallas-based TOM RANDALL
probe heat

its third outside of the United
States. Apple said the data
center would begin operations
in the second quarter of 2019 in
Aabenraa in southern Den-
mark near the German border.
It will power Apples online
services, including the iTunes
Store, App Store, iMessage,
Maps and Siri for customers
across Europe. REUTERS<
Norways Hydro in
$3.2-billion deal for
aluminium firm Sapa
Norwegian metals firm Norsk
Hydro will take full ownership
of aluminium products maker
Sapa by buying a 50 per cent
stake from conglomerate
Orkla, the companies said on
Monday. The transaction
values Sapa, at 27 billion Nor-
wegian crowns ($3.24 billion)
on a debt-free basis. Sapa
will enable us to assume
global leadership, establish a
platform for growth, and
provide responsible oper-
ations and sustainable solut-
ions for the future low-carbon
economy, Hydro Chief
Executive Svein Richard
Brandtzaeg said. While Hydro
itself produces primary
aluminium from scratch, Sapa
cuts, presses and shapes the
metal, making it a key supplier
to aircraft makers, automotive
firms and the construction
industry. REUTERS<
company had kept the strategic
review committee of its board of
directors in place, and had yet
to announce Affeldt's successor.
It has struggled to turn a profit,
as its strategy of boosting its golf
club memberships through
promotions, refurbishments
and acquisitions has proved
costly. REUTERS<
Bain, Cinven to raise
Stada takeover offer
to ^66.25 a share
Stada said buyout groups Bain
Capital and Cinven would
sweeten their takeover offer
for the German generic drug-
maker by 25 cents per share to
66.25 euros after their previ-
ous 5.3 billion-euro ($6 billion)
bid fell through.The private
equity groups will also lower
their acceptance threshold to
63 percent, Stada said on
Monday, after the last offer
secured the support of 65.52
percent of shareholders, short
of the 67.5 percent they had
targeted. Stada shares rose 1.2
percent to 65.30 euros by 0818
GMT, outperforming a 0.4 per
cent rise in the German mid-
cap index. The newest offer is
the latest twist in a takeover
saga for Stada - one of the last
remaining independent
generic drugmakers in Europe
- that has seen management
upheaval and previous failed
offers. REUTERS<
10 July
Its finally here: The Model 3, Teslas
$35,000 electric gamechanger. A single
black Model 3 rolled off the production
line Friday with a serial number all its
own, kicking off a company-defining
six months. The car will belong to Elon
Musk, Teslas CEO and co-founder, who
shared images of it on Twitter over the
weekend.
Tesla has already taken in roughly
half a billion dollars in Model 3 deposits,
at $1,000 apiece, and its proposed ramp-
up schedule would have it rivaling well-
established US market peers like BMW
and Mercedes by years end. The only
thing standing between Tesla and being
the worlds first mass-market electric car-
maker is proving it can build, deliver,
and service enormous numbers of these
vehicleswithout sacrificing quality.
One down, millions more to go. The
production acceleration will be slow at
first. Tesla plans to hand over the keys
to 30 cars at a launch celebration on
July 28. It then envisions building 100
carsless than three a dayfor the
month of August, according to a series
of Twitter posts by Musk last week.
September will bring another 1,500 cars,
and the ramp will build to a rate of
20,000 cars a month by December,
Musk said. Its an aggressive schedule
that will more than double Teslas total
production rate in six months, and then
quintuple it by the end of next year.
If Tesla achieves all of Musks targets,
it will build more battery-powered cars
next year than all of the worlds automak-
ers combined in 2016. US sales under
Musks 2018 targets would significantly
outpace the BMW 3 Series and the
THE CAR OF THE FUTURE
RANGE ACCELERATION SEATING
PER CHARGE
ZERO TO 60 MPH 5 ADULTS
215 MILES IN 5.6 SECONDS
Mercedes C-Class, the best-selling small
luxury cars in the country. Tesla, by tra-
dition, delivers the first new car off the
line to the first customer to pay full price
once the car officially goes on sale.
Musks collection includes the first
Tesla Roadster and the first Model X
but not the first Model S. That trophy
belongs to Tesla board of directors
member Steve Jurvetson, who told the
Chicago Tribune in 2010 that he scored
the first of Teslas flagship sedans by
writing out a check just before a board
DESIGNED TO ACHIEVE WHEELS
5-STAR SAFETY
AUTOPILOT
RATING HARDWARE
meeting and tossing it across the table.
The right to the first Model 3 was won by
board member Ira Ehrenpreis, who
then gifted it to Musk for his 46th birth-
day, on June 28.
Key handoffs will begin in California
and move east, focusing first on employ-
ees of Tesla and Musks SpaceX rocket
company, then on other US reservation
holders who stood in line before the cars
unveiling some 15 months ago. People
who place new orders today wont
receive their cars until the middle of next
PHOTO: TESLA
PRESS TRUST OF INDIA
New Delhi, 10 July
A joint investigation team
that probed the Panamagate
graft case against Pakistan
Prime Minister Nawaz Sharif
and his family has found
glaring disparities between
their known sources of inc-
ome and their actual wealth
in its final report submitted
to the Supreme Court on
Monday, a media report said.
The JIT that investigated
the Sharif familys business
dealings has recommended
that the National Accoun-
tability Bureau open a refer-
ence against Sharif and his
family after the probe panel
found glaring disparities
BODY between their known sources
PRICE
of income and their actual
MIX OF LIGHTWEIGHT
$35,000 ALUMINIUM AND wealth, the Dawn reported.
CHEAPER STEELS The JIT report suggests
that a reference should be
filed against Prime Minister
year, according to Teslas website. Sharif and his sons Hassan
The first drive of a Model 3 test car in Nawaz and Hussain Nawaz,
March. The carmaker will be taking as well as daughter Maryam
things slowly at first, as it looks to avoid Nawaz, under Section 9 of
the disastrous roll-out of the Model X, the National Accountability
which was marred by mis-aligned body Bureau ordinance 1999, the
panels, software glitches, problems with daily said.
the falcon wing doors and spaceship- The JIT has found that the
like seats, and a fleet-wide recall tied to assets of all four respondents
a seatbelt issue. (These faults have large- have been found to be more
ly been addressed, and the Model X is than the sources of their
now the fourth best-selling luxury SUV income in the probe com-
in the US). BLOOMBERG pleted on Tuesday.

Michigans new motor city: Ann Arbor as a driverless-car hub

NEAL E BOUDETTE
Michigan, 10 July
As the world looks ahead to a future of
interconnected, self-driving cars, this
college town 40 miles west of Detroit
has emerged as a one-of-a-kind, living
laboratory for the technologies that will
pave the way.
Here, it is not uncommon to see self-
driving Ford Fusions or Lexus sedans
winding their way through downtown
streets and busy intersections, occupied
by engineers with eyes focused more on
laptops and test equipment than the
roadway.
Soon students and staff members at
the University of Michigan will be
able to get around the engineering
campus on fully automated, driverless
shuttle buses provided by a French
company drawn to Ann Arbor by the
universitysautonomous-car test track,
known as MCity.
An inside view of a self-driving car
And at any time of the day, some
1,500 cars owned by university
employees, businesses and local
residents, and wired up by university
researchers radio their speed and
direction to one another and to
equipment like traffic lights and cross-
walk signals. It is all part of a vast pilot
project run by the university to develop
connected-car technologies that
someday should ease congestion and
make self-driving cars safe.
This combination of research and
testing in a controlled facility like MCity,
and testing on the street in the real world,
on this scale, doesnt exist anywhere else
in the world, said James R Sayer, director
of the University of Michigan
Transportation Research Institute.
Glenn Stevens can attest to that. An
executive with a business organization
that promotes the Detroit areas
autonomous vehicle activities, he
recently met with groups from the
Netherlands, Germany and India.
Were constantly hosting
companies from every continent,
Stevens said. And Ann Arbor is not
alone. Thanks to its long automotive
history, Michigan is the site of a broad
array of research efforts and
development centers that are focusing
on connected cars and autonomous
vehicles. In addition, Michigan has
passed laws clearing the way for
extensive testing on public roads
even for self-driving vehicles that have
no steering wheels and has equipped
more than 100 public highways with
electronics to facilitate testing of
connected cars and self-driving trucks.
The competition to lead in a new era
of self-driving cars is fierce. Silicon
Valley, the Phoenix area and
Pittsburgh are hotbeds, as are
Singapore and Shanghai. In Europe,
researchers have pushed ahead on tests
of platoons of self-driving trucks.
We are doing a lot of tests ourselves
in the Netherlands on connected
vehicles, and are looking at other places
that have the same ambitions, Bram
Hendrix, a representative of a Dutch
auto industry association, said during a
pause in a tour of Ann Arbor and the
surrounding region. We are here to see
and learn so we can collaborate with this
region.
One of the strongest draws to Ann
Arbor is MCity, a 32-acre testing ground
that opened in 2015. It features simu-
lated city streets, intersections and
storefronts where carmakers and others
can test self-driving vehicles in a con-
fined but realistic setting. Dozens of
companies, including General Motors,
Toyota, Honda, BMW and Intel, are
conducting research there in colla-
boration with the university.
Last winter they were joined by
Navya, a French start-up that has
developed a small, autonomous shuttle
bus. Two will go into service at the
university in September in one of the
first trials of a driverless transit vehicle
open to the public. By the end of the
year, Navya plans to begin building its
buses near Ann Arbor.
Henri Coron, Navyas vice president
for sales, said the decision to locate the
assembly plant in Michigan was based
on the strength of support from the
university.
2017 The New York Times News Service
.
MUMBAI | TUESDAY, 11 JULY 2017 ECONOMY 7 <

N IDFC-SHRIRAM MERGER N

We dont have the luxury to grow organically

According to RAJIV LALL, managing director of IDFC Bank, the merger proposal between Shriram Capital and IDFC Group comes from a very strong gut feeling that When we were doing Grama
the relationship would work, no matter the complexities involved in a three-layered deal. Edited excerpts of an interview by Anup Roy: Vidiyal (GV), there was the ques-
tion of integration. GV had 4,000 ANALYSTS RATINGS ON IDFC, SHRIRAM
employees; IDFC Bank had 3,000.
But, we did integrate. Alignment of
GROUP STOCKS
purpose is the most vital and it With the news of a
should come from the top. That merger between
alignment of interest is remark- Shriram group
able with Shriram Group. There is companies IDFC
RAJIV LALL
chemistry. The best decision I and IDFC Bank
MD, IDFC Bank
made in my life is when I married hovering around
Youaregrowingveryfast.You my wife. I proposed to her in four since Friday, analysts
becameabankonlyin2015.Why weeks and weve been married 33 have been busy
suchahurry? years. There are some decisions evaluating the
The reality is that we started with a that are made from an instinct, a potential gains from
very large balance sheet and we feeling of gut. This is how chem-
the deal. While HOW THE RATINGS STAND
startedwithlisting.So,then,thecon- istry works. And, that feeling on
brokerages havent Brokerages/ on
straints under which you have to both sides is very strong.
devise a strategy are different than
altered their ratings Ratings IDFC Bank STFC SCUF
thoseofastart-upbank.Youhaveto WhatdoShriram on the stocks, Nomura Neutral Buy
investors could expect Macquarie
findabalancebetweentheluxuryof
building something at a more
IDFC LTD TODAY IS A SMALL shareholdersget?
The STF has built a phenomenal some action in the
Neutral
STABLE, WITH TWO-THREE PONIES. HSBC Securities Buy
leisurely pace versus diktats of the business by developing a deep rela- coming days. Heres a
Kotak Securities Add Reduce Sell
market. It would have been impos- THE VALUE OF SOME OF THESE tionship with their customers. But, compilation of what
Motilal Oswal Neutral Buy Buy
sibletosatisfyaverystronggroupof
stakeholdersbydoingitcompletely
PONIES HAS NOT REFLECTED they feel handicapped, as they are
unable to offer all the services an
some brokerages who
have commented on
organically. PROPERLY... WERE PROPOSING entrepreneur needs, from banking the deal think about
Some key brokerage ratings on IDFC and Shriram group
stocks in the past three days; SCUF: Shriram City Union
Therefore, inorganic growth, TO BUILD A LARGER STABLE, WITH and finance perspective. You can the stocks
Finance; STFC: Shriram Transport Finance Company
Source: Brokerages
strategically, we believe is the right
response to the challenge we found
SERIOUS HORSES have a business correspondent rela-
tionship such that our savings
ourselvesfacing,ofsatisfyingavery products are now systematically
large number of shareholders as a
listed company.
the bank as part of the NOFHC
(non-operative financial holding
company), provided there is no
on and so forth.

Thoseincludethegovernment,
alsooneofyourshareholders?
Everybody, yes.
duplication of business.
That discretion, our judgment
says,ispossibleifthebusinessispar-
Analystssaythedealwonthelp
growshareholderswealthinIDFC
andIDFCBank.
Thatisnottrue.Whenthediligence
placedbeforeallshareholders.Inthis
deal, what the promoting share-
holders would be getting is exactly
thesameastheminoritysharehold-
ers.Aslongas75percentofallshare-
holders,includingpromotingshare-
sold to the customers of the STF.
Second, with IDFC HoldCo being
the owner of the STF, their cost of
The deal will not give
Piramal back door
funding from the market is going to
come down.
Third, we in the bank have

entry: Vinod Rai

Itisacaseofverydifferent
organisationstryingtomergeina
complexdeal?
We need to systematically commu-
nicatetoyouthatyourperspectiveof
what a bank is, and what a bankers
perspective of what a bank should
be,allneedtochangeintheinterest
of the country and of all stakehold-
ers. We didnt get a banking licence
fromtheReserveBank(RBI)insuch
a competitive landscape only to
buildabanklikeanyother.Wewere
givenanopportunitytobuildanew-
age banking institution that takes
advantage of all the changes in reg-
ulations,thechangesintechnology
that have been brought about to
actually take banking much deeper
into the country.
HowcanyouhaveShriram
TransportFinance(STF)withIDFC
Bankunderthesameroof,given
theRBIrules?
Not true. You have to carefully read
the regulations. Look at the 2016
ones; thats an evolving thing. The
RBI, at its discretion, is now willing
to entertain the idea of some busi-
ness continuing to be held outside
ticularlyfocusedonfinancialinclu-
sion. In that case, the RBI is likely to
be more sympathetic to the idea of
preserving it as a monoline. About
98 per cent of what the STF does is
priority sector loans compliance.
Therefore, we feel the RBI should
look favourably upon our applica-
tion.
Didyoudiscussthismergerbefore
withtheRBI?
We talk to them all the time. So,
nothing that we have communicat-
ed to the market will come as a sur-
prise to them.
IstheRBIfinewiththe
arrangement?
Wecannotassumetheyarefinewith
anything until we get the final
approval. We are going as per their
regulations, as these have evolved.
Howwillyouintegratethetwo
brands?
At the operating level, it would be
IDFC-Shriram. With the RBIs per-
mission, we would like to call the
bank IDFC-Shriram Bank. Shriram
Transport, hopefully, would be
calledIDFCShriramTransportso
is done and the final numbers are
disclosable,wearequitecertainthat
itwouldbeEPS(earningspershare)-
accretive for both shareholders.
IDFCLtdtodayisasmallstable,with
two-threeponies.Thevalueofsome
of these ponies has not reflected
properly because of the holding
companydiscountatthelevelofthe
parent shareholding. We are pro-
posing to build a larger stable, with
serious horses.
The transport finance company
will bring ~1,300 crore of annual
profit, growing at 15-20 per cent a
year, directly to IDFC shareholders.
Therefore, their dividend yield will
definitelygoup.IDFCLtdisgoingto
have very substantial stakes in the
twoinsurancecompanies,whichare
eminently listable and profitable.
Given the valuations of listed insur-
ancecompanies,imaginewhathap-
pens when those valuations are
unlocked.HowcanIDFCLtdshare-
holders lose?
Howwouldyourminority
shareholdersreacttotheproposal?
TheapprovalintheEGM(extraordi-
nary general meeting) for whatever
transaction takes final shape will be
holders,voteforthedeal,wewillhave
the requisite support. So, minority
shareholdersneednotfeeltheyhave
been treated any way inferior to any
other shareholders. No merger is
easy but a lot of the job is about
communication. No jobs are
threatened, everybody gets
accommodated.
WhataboutthePiramalstake?
This is another misunderstanding
that needs clarification. The pro-
moterofShriramCapitalisShriram
Trust. PEL (Piramal Enterprise Ltd)
is not the promoter. And, the bene-
ficiarieswillbeemployeesandthose
employees would be working for
IDFC Group.
Shriramemployeeswillhavea
shareofthemergedcompany
throughtheirtrusts.Whatabout
IDFCemployees?
IDFC people have stock options, a
reasonably good level of stock
options.
Analystssayitwouldtakeabout
fiveyearsfortheintegrationandin
theinterim,bothwontgrowthat
much.
made very significant investment
in very sophisticated technology
in retail distribution. Think of the
data you can collect from the
three-four million customers the SUBHOMOY BHATTACHARJEE
STF has. Gaining access to data - New Delhi, 10 July
it might sound futuristic today -
will democratise access to credit. Vinod Rai, non-executive chairman of
For example, registration under IDFC, is clear the proposed merger with
the GST (the new goods and serv- Shriram group will not provide a back
ices tax). It is much more valu- door entry for Ajay
able than getting some kind of Piramal in the entity to
physical collateral in terms of our hold more shares in the
ability to underwrite. bank than the regulations
provide for.
But,youcouldhavealways The former Comptr-
doneanalliance. oller and Auditor General
We could have but an alliance is a of India told Business
very nebulous thing. The level of Standard, The Reserve
commitment and requirement for Bank of India (RBI) will
seamless data sharing, alignment not allow for any back
of purpose might not be there in an door changes to its regu-
alliance. lations. I am clear on
that. On Saturday, IDFC and Chennai-
based Shriram group announced they
have entered a 90-day period of exclu-
sive talks to work on a merger.
Under the tentative arrangement,
THE SMART INVESTOR IDFC will be the holding company of
The Compass: For Shriram groups the merged entity; Shriram City Union
investors, the marriage isnt Finance, the retail lending arm of
value accretive 12 > Shriram Capital, will be merged with
IDFC Bank, while Shriram Transport
Finance will be a fully-owned sub-
sidiary of IDFC, which will also own 75
per cent of the life and general insur-
ance arms of Shriram Capital.
A key issue in this context will be the
stake Ajay Piramal, chair-
man of Shriram Capital,
will end up holding in
IDFC Bank. Though it will
take time for the share
ratios to be decided, ana-
lysts expect Piramals
stake in the bank to
exceed 5 per cent. Under
the RBI rules, no entity
can hold more than that
in any bank, without
obtaining a prior permis-
sion from the regulator. It is meant to
curb creeping acquisition in the sector
by any entity, as this change in share-
holding could become a regulatory haz-
ard. The RBI rules are very clear. I can-
not discuss any detail at this point but
there will be a road map, which will be
fully in consonance of the regulatory
concerns, he said.

Poor not responsible for high

NPAs, big people are: Naidu
PRESS TRUST OF INDIA
New Delhi, 10 July
Attributing the rise in bad loans
to rich corporates, Urban
Development Minister
M Venkaiah Naidu today said
poor people have track record
of highest repayment and
banks need to focus on under-
privileged.
The outlook of banks is
also changing. It has to change
further. We should not think of
Allayas and Mallyas to give
loans. We should think about
Pollyas in villages and towns to
give loans, he said.
The self help groups, the
poor women in rural areas, the
repayment is 98-99 per cent.
NPAs are not because of poor
people, NPAs are because of big
big people, he said.
The objective of various
government policies is to tack-
le black money, stop and avoid
corruption and ensure the
money reaches the needy.
Centres AI disinvestment
move will be watched: Cong
PRESS TRUST OF INDIA
New Delhi, 10 July
The Congress on Monday
accused the NDA-led Central
governmentofbeinghell-bent
on selling the family silver by
deciding to disinvest Air India,
adding that the development
will be carefully watched.
Congress spokesperson
Manish Tewari (pictured) said
a parliamentary panel has
already asked the government
to come out with facts with
regardtotheapprovalofselling
the national carrier.
This government seems to
be hell bent on selling the fam-
ily silver. A parliamentary pan-
el has already asked the gov-
ernmentwithregardtothefacts
surrounding the simple
approval to sell Air India.
So,therefore,thereisalarg-
Citing example, he said
Mudra is a step in that direc-
tion. The government has been
able to provide loans to over 70
million poor and self employed
under the Mudra scheme.
About 74.5 million entre-
preneurs have been given bank
loans under the Pradhan
Mantri Mudra Yojana as part of
the governments effort to fund
the unfunded. Under the
Mudra Yojana, a loan of up to
~50,000 is given under the
Shishu plan, between ~50,000
to ~5 lakh under Kishore, and
between ~5 lakh to ~10 lakh
under Tarun.
about ~15.4 lakh crore from the econ-
er question as to whether pri-
vatisation of public assets is in
public interest. That is (a) and
(b) if the Government will still
persist, there would be a ques-
tion of evaluation and both
these issues will be watched
very very carefully, he told
reporters.
The Union cabinet had
recently in-principle approved
thesaleofAirIndiaandaGroup
ofMinistersformedtoworkout
the details of the sell-off.
Imbibe spirit of competitive cooperative federalism: PM
INDIVJAL DHASMANA
New Delhi, 10 July
As India tries to improve its
ranking in the Ease of Doing
Business report of the World
Bank from low of 130, Prime
Minister (PM) Narendra
Modi asked states to accord
priority for creating a con-
ducive business climate,
mixing the spirit of coopera-
tive federalism with compe-
tition to attract investment.
And, requested them to
maximise the use of Aadhaar
the citizen identification
system in their pro-
grammes and plans.
In the backdrop of farmer
unrest, the PM also laid
emphasis on agricultural
reforms, including e-nation-
al agri marketing initiatives.
Cash is back; efforts on to push digital, says NPCI
ALNOOR PEERMOHAMED
Bengaluru, 10 July
The National Payments Corporation
of India (NPCI), the designated
agency to drive digital payments, has
admitted that cash had returned
from the low point it had touched
after demonetisation. At the same
time, digital transactions had failed
to meet the targeted 6 billion in the
June quarter.
Prime Minister Narendra Modi
had announced the demonetisation
of old ~500 and ~1,000 notes on
November 8 last year, sucking out
omy. There had been a spike in dig-
ital transactions in the months
immediately following the curren-
cy purge.
It is true that during demoneti-
sation the volume (of digital pay-
ments) grew substantially. During
December 2016 and January 2017 it
peaked; then it came down in
February and March, but started
growing again in May and June.
Even then, the volume is still lower
than what it was December and
January, said A P Hota, managing
director, NPCI, on Monday.
He was addressing a day- from 131st in 2015. interest of good governance.
THE WHOLE WORLD
long conference of state chief Modi stressed on food He said the recent initia-
secretaries on a theme of
TODAY HAS TRUST processing and agricultural tive of a Government e-
States as Drivers for
|IN INDIA, HAS reforms such e-marketing to Marketplace (GeM) for pro-
Transforming India. EXPECTATIONS FROM increase farm growth. He curement would provide
Madhya Pradeshs chief INDIA AND WANTS also spoke on eliminating efficiency, savings and trans-
secretary talked about the TO PARTNER WITH wastage in farm produce. parency in this regard. He
pitfalls of developing too fast INDIA. THIS IS A Asked about the impact asked all states to maximise
on the agriculture front. GOLDEN OPPORTUNITY of farm debt waivers on its use, within a month.
The PM did not mention FOR US fiscal deficits, Panagariya In his presentation at the
the impact of farm debt explained that it was for the conference, Panagariya
waivers on fiscal deficits. NARENDRA MODI Centre to give relaxation to termed under-employment
Prime Minister
However, NITI Aayog offi- states for expanding of the biggest economic chal-
cials stressed that states market borrowing beyond lenge. He called for devising
could not raise their borrow- with India. This is a golden tor event in November, the FRBM levels. The of strategies to make small
ings beyond the limits set by opportunity for us. Ease of where the Centre could Centre itself is conservative enterprises larger and to
the Fiscal Responsibility and doing business should be bring potential investors; about its fiscal deficit tar- shift labour from agriculture
Budget Management (FRBM) accorded top priority and yet, it was for states to attract gets, he said. to industry.
Act, unless the Union gov- would greatly help states in them. On Aadhaar, the PM said Spending on social prior-
ernment agreed. attracting investment. India had improved its use had brought benefits ities such as education,
The PM said: The whole Aayog Vice-Chairman only a notch to 130th place all round and eliminated health and infrastructure
world today has trust in Arvind Panagariya recount- among countries on the leakages. He urged all to could, he said, be raised only
India, has expectations from ed the PM mentioning there World Banks ranking on maximise use of the 12-digit by enhancing economic
India and wants to partner would a food processing sec- Ease of doing business, biometric identifier, in the growth.
transactions even without the pres-
DIGITAL DRIVE ence of point-of-sale machines or
| The NPCI provides nine
smartphones.
The transactions will happen
financial services; it has
been mandated to grow
from all the banks or the wallet com-
panies, so individual targets have
from 3.6 billion transactions been given to the banks and the wal-
last year to 11 billion this year let companies. The government is
tracking on a fortnightly basis with
| The balance will be each of the banks as to what are they
powered by digital wallets doing, added Hota.
the government wants Global players such as Google,
these grow from 1.6 billion Facebook and WhatsApp have shown
transactions to 3.6 billion interest in offering fintech (financial
transactions and debit cards technology) solutions to their cus-
(excluding RuPay) to grow tomers in the country through UPI,
from 3.2 billion to 8 billion but theyve only now reached the
transactions approval stage. The NPCI has written
to the Reserve Bank of India (RBI)
seeking Googles permission to
enable UPI-based transactions just
He added, Cash is definitely the government said demonetisa- cards (excluding RuPay) to grow from two to three days ago.
back, but thats why redoubling tion would help the market grow by 3.2 billion to 8 billion transactions. While these players already have
efforts (to push digital transactions) over two and a half times. The government is bullish in get- hundreds of millions of users in the
is necessary. The NPCI provides nine financial ting all parties to push for digital country, their entry could spell doom
The government has set a target services; it has been mandated to payments, including banks, that had for local players and they could even
of processing 25 billion digital trans- grow from 3.6 billion transactions last initially showed some resistance to compete with banks themselves. It is
actions for 2017-18. In the first quar- year to 11 billion this year. The bal- adopting new technologies. The gov- for this reason the RBI will have to take
ter, about a billion transactions were ance will be powered by digital wal- ernment is also banking on the a holistic view about granting them
done each month. In the previous lets the government wants these adoption of Unified Payments approvals to function in the space, said
fiscal year (FY17), India had logged grow from 1.6 billion transactions to Interface (UPI), Aadhaar Pay and Hota, even though bringing them in
10.2 billion transactions. Sources in 3.6 billion transactions and debit Bharat QR code to enable digital will boost digital payments.
8 REST OF THE NEWS
>
MUMBAI | TUESDAY, 11 JULY 2017 1

IN BRIEF
SC vacates stay and allows
Food prices likely to remain Seven pilgrims
counselling, admissions to IITs lower over next decade: Report killed in militant
The Supreme Court on Monday lifted its stay and allowed counselling
and admission in the IITs, NITs, IIITs and other centrally-funded technical
institutions through the Joint Entrance Examination (Advance)-2017.The
DILIP KUMAR JHA
Mumbai, 10 July
Co-operation and Development
(OECD) and the Food and
developing countries. Food
insecurity and malnutrition in
farmed fish production will be
the fastest-growing protein
attack in Kashmir
bench, headed by Justice Dipak Misra and comprising Justices A M Khan- Agricultural Organisation (FAO) all its forms will nonetheless source among all commodities AGENCIES ful Amarnath Yatris in J&K.
wilkar and M M Shantanagoudar, also directed the institutes to give an

G
lobal food commodity of the United Nations. remain a persistent global analysed in the Outlook. Srinagar, 10 July The attack deserves strongest
undertaking that such error will not be repeated.IITs will have to give prices are projected to The report titled OECD- problem, requiring a coordi- For nearly all commodities, condemnation from every-
an undertaking and develop a mechanism that such mistakes will not remain lower over the FAO Agricultural Outlook nated international approach, exports are projected to remain Seven pilgrims, most of them one, Modi tweeted, adding
recur and ensure that no such situation arises in which bonus marks will next decade compared to pre- 2017-26 foresees per capita according to the report. concentrated in a few supply- women, were killed in a gun- that he has spoken to the gov-
have to be awarded to all the students, the bench said. PTI< vious peaks, with demand demand for food staples rem- Future growth in crop pro- ing countries, which may imply battle that erupted in Kashmir ernor and chief minister of the
growth in a number of emerg- aining flat, except in least- duction is projected to be prin- a greater susceptibility of world on Monday following two mil- state of Jammu and Kashmir
ing economies expected to developed countries. Addi- cipally attained through high- markets to supply shocks. "Real itant attacks on police. and assured all possible help.
RBIs dollar Centre to sell slow down and biofuel poli- tional calories and protein er yields 90 per cent of the prices of most agricultural and The pilgrims were in a bus The Amarnath cave, locat-
purchases rise securities worth cies having a diminished consumption over the outlook increase in maize production fish commodities are expected on their way back from the ed 12,000 feet above sea level
8.8 times ~18K cr on July 14 impact on markets, a report period are expected to come is expected to come from to decline slightly over the ten- Amarnath shrine deep in the in Lidder Valley in Indian
said on Monday. mainly from vegetable oil, sug- increased yields and just 10 per year Outlook period," OECD Himalayas when their bus got Kashmir, is visited by hun-
The Reverse Bank of India (RBI) The Reserve Bank on Monday The replenishment of cereal ar and dairy products, it says. cent from area expansion. Secretary-General Angel Gurra caught in the crossfire in dreds of thousands of pilgrims
continues to be the net buyer of said the government will sell stocks by 230 million tonnes Growth in demand for Growth in meat and dairy said at the launch event in Anantnag town, police said. every year in the months of
US dollars crossing five billion four dated securities for ~18,000 over the past decade, combined meat is expected to slow down, production, by contrast, is Paris. Twelve pilgrims were wou- July and August.
dollars in May from the spot crore on July 14 through auc- with abundant stocks of most with no new sources of expected to come from both As we have seen in the past, nded in the fighting that was Home Minister Rajnath
market, hitting a two year rec- tion.The auction will be cond- other commodities, should also demand projected to maintain larger herds and higher output unexpected events can easily triggered after the militants Singh also spoke to Vohra and
ord. The net purchase for May of ucted using the multiple price help limit growth in world the momentum previously per animal. Milk production take markets away from these attacked a police bunker and Mehbooba. He directed offi-
$5,006 mn was 8.8 times, as method.Up to 5 per cent of the prices, which are now almost generated by China. growth will accelerate when central trends, so it is essential another police party at a cials to ensure foolproof secu-
opposed to RBIs net purchase amount will be allotted for back to their levels before the By 2026, average calorie compared to the previous dec- that governments continue checkpoint. rity is provided.
of $566 mn in April. The last eligible individuals and insti- 2007-08 food price crisis, availability is projected to reach ade, most notably in India and joint efforts to provide stability About 100,000 pilgrims Defence Minister Arun
time that RBIs net purchases tutions as per the scheme for according to the 10-year agri- 2,450 kcal per person per day in Pakistan. It is foreseen that to world food markets, said have already completed the Jaitley termed the attack as
were close to these levels was in non-competitive bidding cultural outlook published by least-developed countries, and aquaculture would dominate FAO Director-General Jos journey to the Amarnath the most reprehensible act
April 2015 when it touched facility in the auction of govern- the Organisation for Economic to exceed 3,000 kcal in other growth in the fish sector and Graziano da Silva. shrine that began late last and said, This incident sho-
$5,431 mn. BS REPORTER ment securities, RBI said. PTI< month and is due to end in late uld add to our determination
August under tight security. to eliminate terrorism.The
Pained beyond words on attack was condemned by oth-
No bilateral meeting Jaitley, NSA, service
took place between chiefs review IOC inks deal with LanzaTech to build refinery the dastardly attack on peace- er leaders as well.

Modi and Xi: China
China on Monday refused to
acknowledge the interaction
between Prime Minister Naren-
dra Modi and President Xi
Jinping on the side-lines of the
G20 summit at Hamburg last
week, insisting that no bilat-
eral meeting took place betw-
een the two leaders. India too
has not described the intera-
ction, which included a hand-
shake, as a bilat-eral meeti-
ng but said that "a range of
issues" were discussed by the
two leaders. PTI<
security challenges
Indias external security challe-
nges, evolving regional power
play as well as threat of terrorism
were on Monday deliberated at
a meeting attended by Defence
Minister Arun Jaitley, NSA Ajit
Doval and the three service
chiefs.The Unified Commanders'
Conference, an annual forum to
take stock of the country's secu-
rity preparedness, is also under-
stood to have discussed the
situation in Jammu and Kashmir
and issues relating to maritime
domain. PTI<
SHINE JACOB
New Delhi, 10 July
State-run Indian Oil Corpo-
ration (IOC) and LanzaTech, a
carbon recycling company,
have signed a deal to build the
worlds first gas-to-bioethanol
production facility in India at
an investment of ~350 crore.
LanzaTech has developed
a gas fermentation process to
make fuels and chemicals.
Instead of sugar and yeast,
the company uses a biological
catalyst to ferment waste gas
emissions. The large volume
of waste gas produced at
industrial facilities such as
refineries cannot be stored or
transported; rather it must be
combusted to generate power.
This power can be carbon-free
and the cost of the renewable
power has fallen below the cost
of coal, accelerating the tran-
sition to a carbon-free grid, an
IOC statement said on
Monday.
LanzaTechs technology
allows refineries to divert
waste gases from the grid, sup-
porting the transition to fully
renewable power while recy-
cling this carbon into liquid
fuels and petrochemicals.
The implementation of the
National Smart Grid Mission,
along with new programmes
for increasing energy capaci-
ties from wind and waste con-
version, are the key elements
of Indias renewable energy
roadmap.
This vision is inextricably
linked to the principle of
need-based consumption
which follows the need to max-
imise on existing resources
and decarbonise everyday
activities.
The ministry of petroleum
and natural gas has highlight-
ed the necessity of increasing
the supply of ethanol-blended
petrol (E10) throughout the
country. Indian Oil is work-
ing to reduce its overall emis-
sion and improve refinery
yields, the statement added.
The ethanol produced from
recycling of gases is expected Sadhus wait in a queue to register themselves for the annual
to save around 70 per cent of pilgrimage to Amarnath cave shrine, at a base camp in Jammu
green house gases. on Monday. PTI: PHOTO
10 ISSUES AND INSIGHTS
>
MUMBAI | TUESDAY, 11 JULY 2017 1

IndiGos absurd bid India and Indian Airlines has been

anything but happy. I can also give
around 10 international examples of
failed takeovers but this would need
> CHINESE WHISPERS

Why IndiGo expressing interest in Air India sounds both bizarre and brave
The letter struck me and several
industry insiders as very odd and did-
nt quite ring true. One, the letter came
within hours of the decision and found
its way happily into the Whatsapp
groups of most aviation reporters in the
country. Surely if there was any serious
intent, both the government and
IndiGo wouldnt want it broadcast the
way it was. Arent buy-outs and
takeovers usually pretty hush-hush?
OUT OF THE BLUE Ghosh might as well have called the TV
channels over and announced his inter-
ANJULI BHARGAVA est over the airwaves.
Second quite uncharacteristic of
IndiGo and its promoters style the
actually see the light of day and if so in
what form. So the speed with which
IndiGo decided to express its interest
seems rather desperate. Its hardly as if
the first guy who expresses interest will
be the chosen one.
So I am assuming someone in the
government came up with the idea of
asking IndiGo to show some interest
possibly to ignite some interest in oth-
ers. After all, if IndiGo is thinking about
it, maybe there is something worth
thinking about.
Anyway, lets for a moment take
IndiGos word for it. On the June 28, it
was interested in acquiring all of Air
the thinking of IndiGo promoter Rahul
Bhatia would find this hard to swallow
since all through Bhatia has main-
tained that he would stick to a single
fleet, low frills model. That has sort of
been the cornerstone on which this air-
line was built.
But then IndiGo already broke ranks
when it decided to add 50 ATRs to its
fleet to go regional. And now it is pro-
posing to buy Air India with its
delightful khichdi of airplanes and
30,000-odd employees including con-
tractual staff to go international.
This brings me to another point.
Whenever an airline in India has so far
another column. Faced with this fact,
what can one say to IndiGo other than
all the best.
I have another question. What
makes IndiGos promoters feel that
there is a market for long haul, no frills
flying (a new unknown creature by and
large) if thats what they are planning
to offer? Yes, there is Air Asia X but
they should note that it is a separately
listed public company with a different
CEO, board and management. Sure,
there are people all over the place try-
ing things out but the model remains
largely unproven.
This brings me to my final question:
If indeed IndiGo sees a future in long
haul no frills, why not just set up a new

L
ast week another strange devel-
opment took place in the avia-
tion sector. The ink had barely
dried on Cabinets in-principle deci-
sion to sell national carrier Air India
when IndiGo president Aditya Ghosh
shot off a letter (the same evening in
fact) to the government expressing its
interest to buy the carrier, waxing elo-
quent on how it was best placed to do
so and so on.
move was highly premature. As anyone
who has been observing governments
can testify, an in-principle decision by a
government is just that and nothing
more. There are several hills, streams
and mountains to be crossed before
Mohammed can actually get to the
mountain. There are no modalities of
the proposed sale as of now. I dont think
anyone and I mean anyone can cur-
rently tell you whether this sale will
India and Air India Express operations.
A few days later after the markets
reacted adversely it had watered that
down to the international operations of
the airline. What on earth does that
mean ? Does it mean the government
should look for a separate buyer for the
narrow bodies?
Anyway, lets not quibble over
details. As I said, its early days yet. But
anyone who has spoken to or followed
taken over another, it has resulted in
disaster. I dont know if readers remem-
ber a small airline called NEPC (it was
doing quite all right on its own). Then
NEPC bought Damania and It was the
last we heard of both. Kingfisher and
Deccan? Both recent history. Jet bought
Sahara, almost became history, was
saved by the skin of its teeth but is still
paying for the mistake. Even the merg-
er of the two government airlines Air
airline? Grow organic. Ask any airline
expert, CEO, analyst, professional and
he will tell you that starting a new air-
line is a much easier task than buying
something that already exists and
needs to be fixed.
And needs to be fixed is of course
putting it mildly in the case of our Guessing game
famed national carrier. Fixing Air India The National Democratic Alliance had
is something I wouldnt wish on my kept everyone guessing about the
worst enemy. name of its presidential candidate. It
had led to much speculation among its
political opponents. Trinamool
Congress office staff and party leaders
at its Kolkata headquarters had held a

Getting the complete picture

pot luck to identify the possible
candidate. Not one of the two dozen
people who participated in the
gathering had got it right with NDA
surprising everyone by announcing the
name of Ram Nath Kovind (pictured).
The use of judgment in the preparation of financial statements is pervasive; Ind-AS forces companies to be foresighted in The TMC members plan to hold a
their conclusions and use financial statements to tell their story as it unfolds or rather before it does similar pot luck to guess the
vice-presidential candidate.

are pliable. That is somewhat the story of worth. There are various decision making
an overall analysis of the impact Ind-AS points before management concludes the
has had on the corporates. To be more best accounting policy choice for its busi- Preparation in full swing
specific, think about these statistics ness. It is important that directors, partic- The presidential election is by secret
derived from a study conducted by Grant ularly the independent directors of com- ballot and party whips don't apply. But
Thornton India of 522 listed companies panies review those decisions and test some regional political outfits still want
who declared their annual financial results them against highest standards of corpo- to guard against cross voting, and to
for financial year 2016-17: on a like-to-like rate governance. ensure that have come up with their
basis with the old accounting standards The use of judgment in preparation own strategies. The Trinamool Congress
applied for the comparative period (FY of financial statements is pervasive and legislators, including its Members of
2015-16), profitability dwindled by a whop- there are innumerable circumstances Parliament, will vote in Kolkata despite
SIDDHARTH TALWAR ping ~13,680 crore or an average 6.2 per where management is faced with multi- the fact that on the day of the voting,
cent. On the other hand, net worth of these ple scenarios to choose from. Ind-AS July 17, Parliament will start its
companies increased by 1.8 per cent as a forces preparers to be foresighted in their monsoon session. The Janata Dal
(United), which has decided to break

T
he Indian economic environment
has seen some rapid changes in the
past half decade. A new corporate
law (Companies Act, 2013) which places
prime focus on corporate governance, a
national indirect tax (GST) regime that has
the potential to converge the whole of India
into one market, a series of steps to curb
black money (demonetisation, benami law,
et al) and a crusade against bad loans
these are only a few of the several reforms
ushered in to create a new India.
In this whirlwind of changes, India Inc
has also taken the first giant leap towards a
progressive financial reporting regime
adoption of Ind-AS or Indian Accounting
Standards, the accounting standards con-
verged with International Financial
Reporting Standards (IFRS).In the past few
weeks, a set of large listed companies have
successfully reported their first annual
financial results as per Ind-AS. Now it is for
the analysts to pull out every weapon in
their armoury and penetrate into this high
quality, yet complex financial reporting
environment.
Mark Twain, the great author said,
Facts are stubborn things, but statistics
result of the transition.
These statistics don't tell the true story
in isolation. One needs to go deeper into
constituents of our very complex economy
to understand what is the message under-
lying the fine print. To illustrate, while cer-
tain sectors like Telecom, Infrastructure,
Logistics, Real Estate and Services have
witnessed 5-10% decline in their net worth,
Manufacturing, Media, Automotive and
Retail have reported a 5-10% increase. What
led to these varying degrees of changes
across the spectrum of corporate India
applying the same set of accounting stan-
dards (Ind-AS)?
A general answer to this question lies in
the way management of these companies
have exercised the accounting policy choic-
es available to them upon transition to Ind-
AS. One of the buzz words in these new
accounting standards is determination of
fair value and that is where lies the crux
of the matter.
Firstly, there are few areas where use of
fair values is optional. For instance, upon
transition to Ind-AS, companies have a
choice to either measure their property,
plant and equipment at fair value or carry
them as-it-is from the old accounting
standards. This single reason contributed
~92,420 crore to the increase in net worth
of listed companies reporting under Ind-
AS. Of this, manufacturing sector alone
has reported an increase of ~65,614 crore
on this account. Companies see this as an
opportune time to get their fixed assets at
values representative of their market
worth in comparison to the historical costs,
which,especially for immovable assets,
lose relevance and reliability with time.
Secondly, and more importantly, the
determination of fair value itself is judg-
mental. However, analysts and investors
should stay assured that these humongous
changes are made by companies with
mandatory disclosures. Flip through the
heaps of notes to accounts and you will
find good amount of qualitative data to
facilitate your decision making. A word of
caution here analysing Ind-AS financial
statements is by no means an easy task
and hence expert advice must be sought
before drawing conclusions.
Another dimension to the use of fair
values lies in the way those fair values are
accounted for, which in turn depends on
how the management evaluates the fea-
tures of an underlying asset or liability. As
an example, certain financial assets are
required or permitted to be carried at their
fair values. The business model of the enti-
ty determines the geography within the
financial statements where those fair val-
ues are recorded in statement of profit
and loss or in other comprehensive
income (OCI). The veracity of this can be
understood from the fact that entities
within the infrastructure sector reported
decrease in their net worth by ~13,196 crore
on account of fair value changes in finan-
cial assets recorded in P&L whereas the
oil and gas sector parked gains of ~26,135 is important that one doesn't overlook
crore due to fair value changes in financial
instruments in OCI (i.e. reserves).Across all
sectors, over 50 per cent of the companies
have elected to carry some or all invest-
ments at fair value through OCI, with both
positive and negative impacts on net
conclusions and use the financial state-
ments to tell their story as it unfolds or
rather before it does. A good example of
this new requirement is the way compa-
nies will account for credit losses or bad
debts. While much of the financial serv-
ices sector will adopt Ind-AS from finan-
cial year 2018-19, the non-financial sec-
tor has given a flavour of this already.
Indian corporates have reported a decline
in their net worth by a staggering ~10,032
crore on account of expected credit loss-
es. Does it mean the old accounting stan-
dards permitted books of account to lag
behind business realities? It's a difficult
question to respond.
Winston Churchill once said, Men
occasionally stumble over the truth, but
most of them pick themselves up and
hurry off as if nothing ever happened. As
one reads Ind-AS financial statements, it
who appeared on a business news
scattered pieces of information which
need to be joined together to see the com-
plete picture.
The writer is a partner at Grant Thornton
India LLP
away from much of the Opposition to
vote for the NDA's candidate, has asked
it's MPs to collect at the residence of
party leader Sharad Yadav and leave
together for Parliament on the voting
day. JD (U) MLAs will vote in Patna.
Restart the machine
For any technology problem
the quintessential solution is restart
the machine. The National Stock
Exchange (NSE) suffered one of its
worst-ever trading disruption on
Monday due to a technical glitch that
halted trading for three hours. While
India Inc wondered how such a
sophisticated and large exchange
could face such a calamity, one broker
channel offered a simple solution.
We often face such technical glitches.
The easiest solution is to restart
computer. If NSE does that, trading
can resume easily, she proffered.

> LETTERS
CONSUMER LIFE

1.5 mn jobs lost in four months of 2017
MAHESH VYAS
About 1.5 million jobs were lost during
January-April 2017. The estimated total
employment during the period was 405
million compared to 406.5 million during
the preceding four months, Septem
ber-December 2017.
These estimates are based on con-
secutive Waves of CMIEs Consumer
Pyramids Household Surveys (CPHS).
These are all-India household surveys
over a sample size of 161,167 households
that included 519,285 adults. The most
recent Wave was conducted over January
through April 2017. This was the first
complete Wave after demonetisation. De-
monetisation began in the middle of the
preceding Wave which was conducted
from September through December 2017.
Capture of the employment/unem-
ployment status of adults began with
the Wave of January-April 2016. We
estimated the employed force at 401
million then. This grew to 403 million
during May-August 2016 and then to
406.5 million in September-December
2016. Then, it fell, 405 million. This is
the total employment in the country
including organised and unorgan-
ised sectors, and agricultural and non-
agricultural sectors.
The workforce (persons greater than
14 years of age) swelled by 9.7 million to
960 million during January-April 2017.
But, the number of employed did not
grow, it shrank. This implies that the
stock of persons to be provided with
employment has increased. While the
number of employed persons has
dropped, the unemployment rate has
also fallen. This is odd and it merits an
explanation. The unemployment rate is
the ratio of the unemployed to the labour
force where the labour force is the sum of
the employed and the unemployed.
While the number of persons
employed fell by 1.5 million, the num-
ber of people who declared themselves
unemployed fell much more by 9.6
million. As a result, the labour force fell by
11 million. This substantial fall in the
denominator is responsible for the fall
in the unemployment rate.
The unemployment rate during
September-December 2016 was 6.8 per
cent (29.6 million unemployed out of
a labour force of 436 million). in January-
April the rate fell to 4.7 per cent (20 mil-
lion unemployed out of a labour force of
425 million). Note that the 9.6 million fall
in the unemployed count is close to the
addition to the workforce. This is like say-
ing that almost the entire new workforce
of January-April 2017 did not offer them-
selves for employment. This is odd. Is
this a seasonal phenomenon?
A longer time-series could help us de-
seasonalise this to understand this phe-
nomenon better. For now, we can make
some intelligent guesses of what might
be at work. September-December is a
busy season as the kharif crop is har-
vested during this period and most festi-
vals fall during these months. 2016 was a
good kharif crop and this could have kept
employment levels high. January-April is
a relatively lean season. Further, demon-
etisation could have had its full impact
during these months while its impact
during September-December was par-
tial. After the demonetisation of
November 8, it was evident to the new
labour force that there was a serious
dearth of jobs. This is evident in the drop
in the labour participation rate. The aver-
age labour participation rate was 46.9 per
cent from January through October 2016.
This average had a narrow range between
48.4 and 45.9 per cent.
In November 2016, it was still the fes-
tive season but, the labour participation
rate fell to a new low of 44.8 per cent. It is
apparent that this was an immediate
impact of demonetisation. This is
because the rate recovered a bit, to 45.2
per cent in the following two months.
The lasting effect of demonetisation
is apparent in the fall in the labour par-
ticipation rate after these two months.
The rate fell to 44.5 per cent in February,
then to 44 per cent in March and 43.5
per cent in April. During January-April
2017, labour participation rate was 44.3
per cent. This was much lower than the
46.9 per cent recorded in the corre-
sponding months a year ago. The drop
in labour participation is in line with
CMIE's observation that new invest-
ments have been falling. For a develop-
ing economy like India, a drop in labour
participation rate is a sign of an eco-
nomic slowdown. Unlike in developed
countries where labour participation is
falling because of structural (ageing)
reasons, India is a growing economy
with a young population. A slowdown
hurts the younger new labour force.
This is already evident. During January-
April 2017, job losses were concentrated
in the younger age-brackets.
The writer is the Managing Director
and CEO, Centre for Monitoring Indian
Economy P Ltd
Another misadventure
Please refer to Tax defaulters beware: I-T
dept initiates plan to prosecute serial
dodgers (July 7) in the Business Standard.
The CBDT has given a proposal to the gov-
ernment for introducing prosecution
before adjudication in the case of serial tax
dodgers. The CBDT does not explain how
the income tax officer signing the prose-
cution order can declare before the court
that he has satisfied himself that that a
case exists on merit that the tax payer
should be prosecuted. When the adjudica-
tion has not been done and obviously the
client has not been heard, on what ground
can the officer come to the conclusion that
the client should be prosecuted?
This idea of the CBDT seems to be
designed for striking terror in the minds
of tax dodgers. But why cannot the adju-
dications be completed? The fact is that
most of the cases fail at the Tribunal, high
court and Supreme Court stages. This is
true for indirect tax also. The minister of
state S S Palanimanickam had given the
data of unsuccessful cases (only 5 per
cent to 10 per cent success in Supreme
Court) before courts in reply to a
Parliament question in the Lok Sabha on
September 5, 2012 in regard to the CBEC
cases and the situation was similar for
CBDT. In the last five years things could
not have improved strikingly.
This noble proposal of the CBDT will be
an absurdity, publicity and atrocity all
combined under one wrapper. All cases
will be set aside at the initial stage only. I
have appeared as a witness in such cases of
prosecution and if I could not satisfy the
court that I had satisfied myself about the
merit of the case, the court would set aside
the prosecution in limine. I know a case of
a public sector bank where the court set
aside the prosecution in limine because
the officer sanctioning the prosecution
confessed to the court that he sanctioned
it under the pressure of the CBI. If adjudi-
cation is not done and prosecution is
launched, then the officer who signs the
prosecution order will be made to look
like a fool in the court. This system also will
most certainly be misused by officers and
political bosses. I know this subject very
well and feel proud that I said no to two
such orders to me, (one in writing and
another oral) for filing prosecution before
adjudication. I hope the government
throws out the proposal of the CBDT.
Sukumar Mukhopadhyay New Delhi
Together they can
This refers to Debashis Basus piece Bad
loans: The bungling and farce continues
(Irrational Choice, July 10). Being a regu-
lar reader of Irrational Choice I am
tempted to take the authors claim that he
could prophecy the current stressed assets
management scenario last year, at face
value. I wish policy makers take colum-
nists more seriously!
I believe the Centre and the RBI are
interested in moving forward in the direc-
> HAMBONE
tion of clearing the stressed assets mess in
the banking sector by doing whatever is
needed to overcome the initial hurdles they
are facing. Action by regulators and gov-
ernments will continue to be subject to
judicial scrutiny and where there is a will,
always there will be a way. One need not get
disheartened by the view taken by Gujarat
High Court over the RBIs selection of top
defaulters. Earlier also, GOI and statutory
bodies in India have got over such issues by
following legally valid procedures.
Just as opening several thousands of
schools has not helped India become 100
per cent literate, the measures taken in
2014 onwards will not extinguish bad
assets of the banking system that fast.
Showering abuses at RBI or discrediting
every initiative by GOI and regulators to
put in place mechanisms to resolve a long
pending problem will improve the read-
ership of a column or a newspaper. But
when a government and the central bank
are jointly making some earnest efforts
to meet the challenges which have arisen
from decades of pampering of the rich
and the powerful by a political system,
efforts to divert attention from the main
menu could easily get exposed.
M G Warrier Mumbai
Letters can be mailed, faxed or e-mailed to:
The Editor, Business Standard
Nehru House, 4 Bahadur Shah Zafar Marg
New Delhi 110 002
Fax: (011) 23720201 E-mail: letters@bsmail.in
All letters must have a postal address and telephone
number
BY MIKE FLANAGAN
 >
OPINION 11
STAY INFORMED THROUGH THE DAY @ WWW.BUSINESS-STANDARD.COM.

Volume XXI Number 232

ILLUSTRATION BY AJAY MOHANTY
MUMBAI | TUESDAY, 11 JULY 2017

Ten days on
Govt must keep GST transition steady and predictable

I
t has been just over a week since the new goods and services tax (GST) sionary policies, including QE, until it sees some
regime was introduced. It has already shown its potential as a transfor- sustained increase in inflation.
mative policy. There has been some disruption, but whether this will For the Fed, the problem is less severe. The US is
swiftly decline or only increase depends upon the governments prob- experiencing somewhat higher inflation than the
lem-solving agility. One major test will come when the digital backbone, the Euro Zone and Japan are, and the Fed has a dual
mandate: Not just price stability, but also full
GST Network, is called on to deal with a large number of simultaneous sub-
employment. Having achieved the latter, it can
missions but that is still some time in the future. declare at least half a victory and gradually start lift-
The GSTs advantages are already becoming apparent. For one, several ing rates.
reports suggest that logistics costs may indeed be on the decline. The cross- But there is another reason why missing inflation
ing points between several states that had featured long queues of trucks have is more of a problem for the Euro Zone. During the
now been made irrelevant. As many as 22 states have removed these barriers bubble years before the 2007 crisis, prices and wages
increased sharply in the Euro Zone periphery, rela-
already leading to significant savings in time and expenditure. This should cas-
tive to Germany, which was plagued by high unem-
cade through the system, making goods cheaper and opening up new business ployment and stagnant wages. Over time, those
opportunities. Of course, the continued success of this depends crucially on economies became uncompetitive. When capital

The inflation
the administration of the tax and of the inter-state checkpoints. If, for exam- inflows suddenly stopped, they could not cope,
ple, all trucks crossing between Maharashtra and Gujarat are checked for requiring them to increase exports.
alcohol, then the queues will rapidly re-develop and the major benefit of the Now Germany is practically at full employment,
but wages are not increasing at much more than 2
GST so far will be lost. It is also up to the state governments to try to maintain
per cent far lower than the 5 per cent rate that pre-

uniform rates; the introduction of state levies might once again cause some
benefits of common national indirect tax rates to be lost. State governments
must crack down on rogue bureaucracies, including transport officers, who
will seek to take advantage of the situation by enforcing long-dormant
rules at such checkpoints. The question of entry taxes imposed by some
urban local bodies should also be examined, as this has the potential to
impede the free flow of goods.
The government must stand ready to address any problems that arise. In
target trap
vailed when Germany last had such low unemploy-
ment (below 4 per cent), nearly 30 years ago. The
resulting lack of inflation is not only contributing to
Germanys very high current-account surplus; it is
The ECB need not reverse course completely, but it could stop the also making it harder for the peripheral countries to
improve their competitive position vis--vis
fight against deflation and start exiting emergency policies Germany.
The ECB must set its monetary policy on the

C
entral banks have a problem: Growth in much
particular, the informal sector is likely to be hit hard. So far, evidence of any of the world is accelerating, but inflation has
difficulties is only anecdotal. But a movement away from small providers to failed to take off. Of course, for most people,
larger, GST-ready suppliers is possible. This might aid in the formalisation of growth without inflation is the ideal combination.
But central banks have set the goal of achieving an
the economy. On the other hand, it might have negative medium-term effects inflation rate of below, but close to 2 per cent, as the
on employment and on entrepreneurship. If so, the government must stand European Central Bank (ECB) puts it. And, at this
ready to introduce remedial measures. Some murmurs of dissent have come point, it is hard to see how that can
in from sectors, such as textiles, which are labour-intensive. It is worth recall- be achieved.
ing that the purpose of the GST is to make it very easy for small companies to Central banks never pretended
pay tax, not to push them out of the economy. If it appears that the latter is hap- that they could steer inflation
directly. But they thought that by
pening, then the government must work swiftly to further simplify compli- providing rock-bottom interest rates
ance requirements and reduce compliance costs. and generous liquidity conditions
Obviously, the government must not add to the confusion. One quick fix in the wake of the 2008 global finan-
could be the swift introduction of a single nodal point to disseminate infor- cial crisis, they could push invest-
mation about the application of the GST, and to respond to queries. There are ment and consumption upward. In
2009, when financial markets were
worries that multiple ministries have issued complex and contradictory advi-
in turmoil and the economy was in
DANIEL GROS
sories even the official GST Twitter handle has been accused of providing free-fall, the US Federal Reserve
misleading information. This can easily be fixed. Clarity from the authorities took matters a step further, initiat-
is essential in an already chaotic environment. ing large-scale asset purchases, or quantitative eas-
ing (QE). The ECB followed suit in 2014-2015, when
deflation appeared (wrongly, in hindsight) to threat-
en the Euro Zone.
The Feds actions certainly helped to stabilise
Bengal on the brink? financial markets. The ECB also claims that its bond
purchases, after financial markets had already nor-
malised, sparked economic growth and fostered
The CM is battling a problem of her own making employment. But the impact ended there.
The tightening of the labour market should have
led to higher wages, which would ultimately trans-
late into higher prices. But this mechanism, the so-
called Phillips curve, seems to have broken down. In
both the United States and Japan, despite low unem-
ployment, wages are not increasing, at least not at
the rate historical experience would indicate. And
the wage increases that <i>are<p>
occurring, such as in the US, are
not having the impact on prices
that one would expect.
The reasons for this are not well
understood. Last year, low oil prices
could be blamed; but, even when oil
prices rebounded somewhat, infla-
tion remained low. Another, more
structural reason is that the prices
of the goods comprising a large part
of the consumer price index tend to
fall over time, because they can be
produced increasingly efficiently
in low-wage countries, particularly in Asia. In addi-
tion, retailers margins are being squeezed, owing to
competition from online shops.
This problem of missing inflation is especially
acute in the Euro Zone and Japan. Because the Bank
of Japan (BOJ) and the ECB have defined success
exclusively in terms of achieving their inflation tar-
get, they are now in a quandary. The ECB, in partic-
ular, now has little choice but to continue its expan-
basis of the Euro Zone average. But it would clearly
be more comfortable if the competitive imbalances
that arose during the boom years were corrected
more quickly, and most European policymakers
would welcome some rebalancing as well.
But the real question is not whether inflation
closer to 2 per cent would be desirable. QE is a poli-
cy for desperate times. Today, the economic envi-
ronment is totally different than it was just a few
years ago: financial markets are buoyant, financing
conditions are highly favorable, the economy is
expanding satisfactorily, with no sign of deflation.
In a recent speech, ECB President Mario Draghi
observed that reflationary dynamics are slowly tak-
ing hold. Taking him at his word, markets immedi-
ately traded the euro up, because investors con-
cluded that, under these circumstances, negative
rates and asset purchases would no longer be war-
ranted. But the ECB quickly denied this interpreta-
tion.
That was a mistake. It makes no sense to contin-
ue with policies designed for a thunderstorm when
the sun is shining again. The ECB need not reverse
course completely, but it could declare victory in
the fight against deflation and start exiting its emer-
gency policies.
Daniel Gros is director of the Center for European Policy
Studies
Copyright: Project Syndicate, 2017

T
he recent communal troubles in West Bengal seven in the past
month, according to the state police should sound loud alarm bells
for Chief Minister Mamata Banerjee. Already battling a crisis over
Gorkha rights in the hills, West Bengal can ill afford flare-ups in
Muslim-majority districts abutting Bangladesh, with which it not only shares
a 2,217-km border but which is being roiled by Saudi-financed Islamic fun-
Other elephants in the room
damentalism. True, the deliberate spread of incendiary fake news feeds via

social media bears a large share of the blame. But Ms Banerjee must surely bear
responsibility for not responding quickly enough to restore law and order
if the police forces were inadequate in quelling a riot by Muslims protesting
against an offensive Facebook post, she could well have agreed to the Centres
offer of central forces. This would have sent out an unambiguous message that
breaches of law and order would not be tolerated.
By allowing the crisis to fester, she has played into the Bharatiya Janata
Partys (BJPs) hands as it focuses on the state ahead of the 2019 elections. In
this, thus, Ms Banerjee is facing the consequences of the ill-advised identity
politics in which she herself has indulged in the past. The absence of com-
munal violence since the Partition riots except the 1964 one in a state in
which 27.5 per cent of the population is Muslim was one of the few achieve-
ments of 34 years of the Left Fronts otherwise deleterious rule. West Bengal
saw no anti-Sikh riots in 1984; nor communal riots after the demolition of the
Babri Masjid in 1992-93, even as other parts of India burned. The question of
illegal immigration from Bangladesh, which the BJP has built up into a sig-
nificant issue, was a non-issue in the state, principally because politicians of
all hues were happy to legalise these cohorts to swell their vote-banks. The
absence of political encouragement meant that communalism was a non-issue
in public life in West Bengal. Ms Banerjee opened the door to these forces.
In her first term as chief minister came the extraordinary decision to pay
a monthly stipend to imams and muezzins of ~2,500 and ~1,500, respective-
ly. This pandering to a particular community provided a useful foothold for
the rising BJP to tap into Hindu disaffection. The Trinamool Congress claim
that Karnataka and Telangana spend more per capita on Muslims than West
Bengal is irrelevant in the circumstances. From a non-existent electoral pres-
ence in 2009, the BJP won two seats in the 2014 Lok Sabha elections, and six
seats in the 2016 Assembly elections. The Trinamool Congress stunning
comeback last year may have caused Ms Banerjees failure to anticipate that
the BJP would inevitably target West Bengal in the run-up to 2019, and low-
intensity communal riots spread through doctored social media feeds are part
of its playbook. In that sense, her community outreach programme to track
social media feeds may be too little, too late.
T
he impending sale of the justly maligned Air service to consumers, ca 2017, in the age of liberalisa- as much as possible. So a decline in service and deliv-
India has caused much excitement. Apologists tion and ease of doing business. ery quality is a result foretold.
for the airline offer lame alibis such as the bur- Wikipedia lists 298 central PSUs. About a quarter of That makes no difference to these relics of a bygone
dens placed by the merger with Indian Airlines and them have a direct interface with final consumers in era. They continue in their indifferent ways. This man-
additional aircraft purchase and say that operations areas such as travel, hospitality, textiles and banking. ifests itself in not just poor service, but also shabby
of the original Air India are still worth saving. That number is misleading, as many subsidiaries of appearance. Air India planes are poorly maintained,
Decades-long personal experi- companies such as Air India and with tatty interiors and non-functioning fixtures,
ence of both domestic and inter- India Tourism Development Cor- matching the surly attitudes and looks of the cabin
national flights of Indias flag car- poration (ITDC) are listed sepa- crew. Public banks, except in a few elite areas, resem-
rier convinces me that such is not rately but all public sector banks ble government offices in appearance and working.
the case. Air Indias standards merit only a single entry. State Most PSUs, already bloated and top-heavy, show
started falling soon after J R D public sector entities and depart- no signs of adopting lean ways of doing business.
Tatas removal as its chairman in mental enterprises are also not in Subordinate staff resist stubbornly any changes, espe-
1978. That process has not bot- this list. We can safely infer that a cially those meant to improve productivity. Personnel
tomed out yet. The less said very large number of government- costs increase. The upper echelons follow the hierar-
about our erstwhile one-choice- owned and controlled bodies are chy-bound government structure. Managers often
suit-all Indian Airlines the bet- directly engaged in providing serv- consider it infra dig meeting aggrieved customers,
ter. The suffocating experience
of passengers of a recent
ET CETERA ices, some essential, to the public
at large.
leave alone seeking their feedback. Complaints are
registered but seldom produce results. Meanwhile,
Bagdogra-Delhi flight is not an SHREEKANT SAMBRANI Therein lies the rub. These enti- losses mount.
exception. ties came into being (or were Consider BSNL. In 2015-16, its revenues were nearly
Air India is in august company. nationalised) in the time of short- ~33,000 crore and losses nearly ~4,000 crore, despite
I have used the Ashoka hotels in places ranging from ages and strict government regulations covering distri- government patronage and universal service obligation
the pre-IT days Bangalore to Shillong and Bhopal to bution of goods and amenities. The maibaap sarkar subsidies. In that year alone, its long-term borrowings
Bhubaneswar, invariably because there were no other took it upon itself to deliver everything, including, liter- increased to ~5,000 crore from ~56 crore. No prizes
hostelries worth staying there in those days. Not one of ally, our daily bread and butter. Rationing supplies and offered for guessing where the funds came from. With a
those experiences was even remotely satisfactory. exercising control bordering on the coercive got comparable turnover of ~36,000 crore in that year, Idea
I got a telephone in 1984 because the then com- ingrained in the PSU operations and became a part of earned a pre-tax profit of ~4,000 crore after providing for
munications minister, the late V N Gadgil, personally their DNA. Public perception of and satisfaction with interest on much higher borrowings. While Idea seeks to
intervened. Those were the bad old days of the licence- their performance affected not their business and cer- consolidate its position through a merger with Vodafone,
permit raj. A generation later, I had to very nearly tainly not their survival. BSNL goes its merry unaccountable ways.
request the intervention of the current minister for And survive many of these entities did well into an T N Ninan persuasively argues that there is no
getting that Bharat Sanchar Nigam Ltd (BSNL) landline entirely changed atmosphere of competitive choice. escape from building state capacity (Be careful what
disconnected. Maintaining accounts and a safe deposit Consumers abandoned their former providers of serv- you wish for, Business Standard, July 8, 2017). But
box in a public sector bank proved so cumbersome that ices in droves as soon as affordable alternatives became surely that should not cover redundant and dysfunc-
we closed these two weeks ago. We opened them 35 available. Neither patrons nor their business have reg- tional enterprises such as BSNL and ITDC. Pulling the
years ago responding to the request of the manager of istered growth with the likes of Air India, BSNL, ITDC, plug on these other elephants in the room would be an
the newly opened branch for a favour, but their closing Doordarshan, interstate buses, among others. Public act of mercy for their hapless customers and the man-
met with complete indifference. banks, too, face the wrath of personal banking clientele. agers of government finances.
Welcome to the wonderland of public sector under- Even when costs of private service are higher, as in
takings (PSU) in the business of providing hassle-free education and health care, people shun public facilities The writer is an economist

Islam and the misguided liberal
BOOK REVIEW
TALMIZ AHMAD
Tarek Fatah describes himself as a secu-
larist and liberal activist. He was born in
a Punjabi family that moved from
Bombay (now Mumbai) to Karachi after
Partition. Canada is now his home
where he has involved himself with dif-
ferent political parties, and challenges
what he sees as the increasing accom-
modation of conservative, even radical,
Islamic trends in Canadian politics.
Mr Fatah does not mince his words:
He sees Muslims mired in a nightmare
of despair and failure, with an addic-
tion to victimhood and suffering from
self-inflicted wounds. He berates
Muslim political and religious leaders
for their lack of honesty, and insists
that it is not Islam that needs to be
revised or reformed, but Muslims rela-
tionship with their faith, commencing
with a thorough review of Islamic histo-
ry without prejudice.
The author distinguishes between
Muslims and Islamists: The first seek the
state of Islam, the state of spirituality,
while the latter seek an Islamic State, a
theocracy built on a gross misunder-
standing and misinterpretation of Islamic
doctrine and history. This book is a robust
corrective, seeking to expose Islamism as
a fascist ideology that is pursuing a
worldwide Caliphate by eliminating or
dominating all infidel non-Muslims.
In this context, Mr Fatah examines
the attempts to set up Islamic theocra-
cies in Pakistan, Saudi Arabia and Iran,
and notes their oppression of their citi-
zens and the bankruptcy of the idea of
the Islamic State. He then provides a
thumbnail sketch of Islamic history over
a hundred pages, pointing out along the
way how the opportunism of political
interests has consistently diluted the
essential spiritual message of the faith.
Mr Fatahs approach is aggressive,
shrill and polemical. This leads him fre-
quently into over-statement, misrepre-
sentation and gross error, so that he is
finally more of a pamphleteer than a
judicious scholar. This seriously weak-
ens what might have been an important
contribution to the debate relating to
contemporary Islam.
While castigating the increasing influ-
ence of rigid doctrines masquerading as
Islamic in Muslim polities, Mr Fatah
fails to note that today every major faith
has a political tendency that is rigid, doc-
trinaire and often violent, and seeks to
influence state order on this basis. All
three Semitic traditions have strong mes-
sianic content, which has been used to
inflict horrendous violence against the
Other based on divine sanction.
Mr Fatah seems to have a simplistic
understanding of Political Islam. He fails
to see its diverse articulations, ranging
from rigidity and literalism to extraordi-
nary moderation and plurality. The pio-
neers of Islamic modernity, Jamaluddin
Afghani, Mohammed Abduh and Rashid
Rida, had very different approaches to
reconciling Islam with contemporary
challenges, one strongly anti-imperialist,
the other moderate and accommodative,
while the third was more conservative,
though all three advocated the need to
reinterpret old texts to make them rele-
vant to modern times.
Mr Fatahs history of Islam is glib and
highly selective. No, Muslims do not dis-
dain the West or reject the
Enlightenment; they rejected imperial-
ism and what the colonies experienced
was not enlightenment but racism,
abuse and exploitation.
Yes, there are racist attitudes among
Muslims, in violation of Islamic tenets;
but, racism is alive and kicking in all
contemporary Christian, Jewish,
Buddhist and Hindu societies.
No, most authoritarian states across
West Asia are not informed by Islam:
they are the product of deliberate west-
ern interventions and manipulations
over the last century. And, republican
tyrannies that emerged from coups de-
tats are secular, not Islamic, in charac-
ter, and generally enjoy western support.
And, no, most Muslims globally do
not support the Islamic State or jihad,
nor do they suffer from a collective
sense of despair and loss of confidence.
While at home, they often live under
authoritarian rulers who subserve west-
ern interests to remain in power, in the
diaspora they are upright and produc-
tive citizens, even though they are
increasingly the targets of Islamophobia.
Mr Fatah spends a lot of space point-
ing out that many beliefs and practices
that are promoted as Islamic do not
enjoy sanction from the sacred texts of
the faith. This is not surprising: Islam is
not monolithic; it is over 1,400 years old
and covers the entire global landscape.
Its texts have been commented on over
centuries by diverse scholars whose
thinking was generally influenced by
contemporary events. Modern-day
movements draw on this earlier scholar-
ship most selectively, largely to imbue
their own beliefs and actions with doc-
trinal approval.
Mr Fatahs ideal is a liberal and secu-
lar order. But, he would have done well
to recognise that these principles are
already under threat in the very soci-
eties that spawned them, societies
where racism, intolerance, violence and
abuse of the Other, often the Muslim,
is now widespread.
The reviewer, a former diplomat, holds the
Ram Sathe Chair for International Studies,
Symbiosis International University, Pune.
A longer version of this review appears on
www.business-standard.com
THE TRAGIC ILLUSION OF AN ISLAMIC
STATE
Tarek Fatah
Kautilya Books, New Delhi
Third Indian Edition 2017
403 pages; ~499
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N BOURSES IN FOCUS N

Indices hit new high on global cues
ASHLEY COUTINHO
Mumbai, 10 July
Indian equities climbed a new high on
Monday, tracking positive global mar-
kets. The BSE Sensex closed at 31,715 for
the first time, a gain of 355 points or 1.13
per cent. The National Stock Exchanges
(NSEs) Nifty, which resumed trading at
12:30 pm after a technical glitch dis-
rupted trade, settled at a fresh high of
9,771, up 105 points.
The rally was led by information
technology (IT) stocks, which saw some
short covering after the regulator on
Friday banned holders of participatory
notes from taking unhedged exposure in
equities and said existing bets must be
liquidated by 2020.
Asia traded with gains on Monday,
buoyed by the Friday rally in US equities
after that countrys jobs report beat ear-
lier estimates and Chinese inflation data
came in line with forecasts.
The underlying sentiment seems
bullish as reforms such as the goods and
services tax and Real Estate (Regulation
and Development) Act have given a lot
of confidence to institutional investors.
Further, we are seeing domestic money
move away from physical assets like real
estate and gold into financial assets, a
positive sign, said Nirmal Jain, chair-
man, IIFL. Foreign and domestic instit-
utional funds purchased $14 billion of
Indian equities in 2017, helping the
Sensex gain 19 per cent in the year-till-
date.
Earnings for the June quarter, Jain
added,werelikelytobeamixedbag.Ast-
ronger recovery in earnings growth was
likely to take shape two quarters later.
Despite concerns on valuations, ana-
lysts believe the market is far from pric-
Investors should deal with
WIN SOME, LOSE SOME stretched, he added. The brokerages
sentiment indicators point to a tactical
more than one exchange
Name Jul 10, 17 % Chg* price or time correction but the bigger NSE had tohalt trading for three hours due toa glitch.
swings in domestic equities will be dic- BSEfunctioned normally.Whatsyour reaction?
GAINERS tated by moves in global equities. If you have two large exchanges, an issue like today
Bharti Airtel 405.40 5.39 Correlations across stocks have plum- (Monday) can be better handled. If one exchange is down,
TCS 2,440.85 4.66 meted to a low, suggesting a big macro people have a choice to trade on the other exchange.
Wipro 268.50 4.64 trade is in the offing. As the global bid on Ultimately, if investors deal with more than one exchange,
stocks is intact, domestic ones will prob- ASHISH CHAUHAN it is better risk management. It is like not putting all your
LOSERS ably outperform, given Indias superior MD & CEO, BSE eggs in one basket.
M&M 1,367.70 -0.54 macro environment. While trading was halted for three
Barring the fast-moving consumer hours at the National Stock Exchange You think traders would spread their bets across both
ITC 333.25 -0.25 goods index, all other sectoral indices NSE and BSE aftertoday?
(NSE), it was business as usual at the
HUL 1,096.75 -0.09 rose on Monday. The BSE IT and BSE BSE, which reported nearly thrice its I dont know. It will have to be seen how it plays out.
*Over previous close TECK indices advanced nearly 3 per
Sources: Exchange/Bloomberg
average daily turnover in the cash
Compiled by BS Research Bureau cent and BSE Telecom moved up near- segment. In an interview, But do you think it is a more prudent strategy?
ly 4 per cent. As many as 28 of the 30 ASHISH CHAUHAN, MD It is always good to diversify. It is better risk management.
Sensex components advanced. In the & CEO of BSE, tells
ing in a multi-year growth cycle, implyi- broader market, there were 1,540 Samie Modak it What could be the fallout of Mondays issue at the NSE?
ng significant upside potential over the advances and 1,112 declines. is prudent for Once the root cause is identified, there will be discussion
next three to five years. Evidence keeps Such buoyancy ahead of the earn- investors to among the regulatory community to ensure that a sim-
building that we are entering a new gro- ings season indicates market partici- deal with more ilar thing doesnt reoccur. That will be the main out-
wth cycle, in which earnings could com- pants are anticipating higher levels. Our than one come. We will have to find ways to make systems more
pound annually at about 20 per cent for position target of 10,000 in the Nifty is exchange as a risk robust. That activity will continue over the next few
the coming five years. Valuations are not intact but finding trades at the current management weeks. To understand the root cause and ensure it does-
signalling excesses. Indian stocks are level requires extra effort. For fresh strategy. Edited nt happen to the exchange again.
attractive relative to US equities, local trades, we suggest waiting for some con- excerpts:
bonds and in line with history on both an solidation or dip in stocks and preferring In 2014, BSE faced a similar glitch and trading had tobe
absolute and a relative basis, said Mo- hedged positions, said Jayant Manglik, halted. Whatwere the subsequent steps taken?
rganStanleyIndiaanalystRidhamDesai. president, retail distribution, Religare After 2014, the BSE took several measures. The tech-
The current mid-cap valuations look Securities. nical advisory committee of the BSE and the
Securities and Exchange Board of India (Sebi) had
done fact-checking and recommended certain

FPIs, MFs pump ~97k cr into markets in 6 months steps. The markets regulator has also issued more
robust guidelines in terms of periodic backups.
BSE has implemented all suggestions of the tech-
nical advisory committee and Sebi.
PUNEET WADHWA &
DEEPAK KORGAONKAR
FUNDS TRACKER (~crore)
Was there any extra load on the BSE as more
traders would have shifted toyour exchange
70,905

NewDelhi/Mumbai,10July
97,705
during the halt of trading on the NSE?
57,880

Foreignportfolioinvestors(FPIs) BSE has extremely high order processing

52,429

anddomesticmutualfundsinv- capacity of around 500,000 orders per second.

35,863

estments in the equity market at It has one of the largest capacities and also is (one
28,811
26,829

~97,705 crore had surged more of the) fastest stock exchange systems in the
21,733

than threefold during the first world. We didnt face any issues in handling the
half (January-June) of the cur- additional trades. the BSE can easily handle 10 times
4,895
-17,114

rent calendar year (CY17). FPIs
invested ~55,908 crore and MFs
another~41,797croreinequities.
Their collective investment was
3.4x higher as compared to the
sameperiodlastyear,whenthey
pumped in a net ~28,811 crore,
shows data from the National
Securities Depository.
The abundant liquidity has
takenthebenchmarkindices,the
S&P BSE Sensex and the Nifty50
ontheNationalStockExchange,
nearly 18 per cent higher, to
become the best performing
marketgloballyonayear-to-date
(YTD)basis.Therallyinmid-caps
andsmall-capshasbeensharper,
with the S&P BSE mid-cap and
small-cap indices surging a little
over 30 per cent.
Of the ~41,797 crore invested
by MFs thus far, ~30,328 crore or
73percentwasinApril-June,the
first quarter of FY18. They have
been net buyers in the equity
segment for a 11th straight
month.Investorshavematured
overtimeandrealisedthatprofe-
ssionallymanagedandwell-reg-
ulatedMFsareasafeinvestment
avenue. That apart, the other
formsofinvestmentrealestate,
gold, etc have lost charm. As a
result, investors turned towards
2008 2009 2010 2011 2012 2013
CY: Calendar year; FPIs and domestic mutual funds investments in the equity market during first half
(January-June) of calendar years
MFs, which then invested this crore in the equity segment fol-
corpus in equity markets, said lowing the victory of the NDA in
Nilesh Shah, managing director, the general election. Observers
Kotak Mahindra Asset Manage- believe India will continue to
ment. Of the total that FPIs inve- attract flows from domestic and
sted in the first half of CY17, foreigninvestors.Therecouldbe
almost a third or ~16,097 crore aberrationsorwithdrawalsinthe
was through subscriptions to near term but this is a normal
IPOs and secondary offerings. part of the tactical shifts in all-
Even then, their half-yearly ocationthatallfundsmakeperi-
investmentthusfaristhehighest odically. India has been, and
since the quarter ended June continues to be, one of the
2014,whentheyinvested~59,521 biggest overweights for global
2014 2015 2016 2017
Source: NSDL
investors, who feel the country
offers a great long-term story.
Themostencouragingfeatureis
thesurgeininflowswehaveseen
from domestic investors. This is
again going to be very healthy
for the markets, since it will
reducevolatilitycausedbyglob-
al factors, said Jyotivardhan
Jaipuria, founder and MD, Veda
Investment Managers.
More on business-standard.com
NSE asks BSE to explain spurt in volumes
SAMIE MODAK
Mumbai, 10 July
The National Stock Exchange
(NSE) on Monday asked the
rival BSE to provide reasons for
the spurt in trading volumes in
its shares. The BSE is exclusive-
ly listed on the NSE.
A total of 663,361 shares of
the BSE were traded on Friday,
13 times more than its previous
four-day trading volumes.
Significantincreaseinvolu-
me has been observed in the
BSE. The exchange, in order to
ensure that investors have lat-
more than what it handled today (Monday).
est relevant information about
the company and to inform the
marketplace so that the interest
of the investors is safeguarded,
haswrittentothecompany,the
NSE wrote to the BSE. In its rep-
ly, the BSE said, We would like
to confirm that there is no such
announcement or price se-
nsitiveinformationwhichispe-
ndingtobeintimated/furnished
by the company to the stock
exchangesconcerningtheoper-
ations/performanceofthefirm.
We wish to reiterate and
clarify that all information fur-
nished by the company is in the
public domainand keep the
stock exchanges duly informed
of all the price-sensitive infor-
mation, it said.
Interestingly, the query
went on Monday, when the
NSE saw a three-hour trading
halt due to a technical glitch.
Many market players said the
BSE could benefit due to the
fiasco at the NSE, as, going
ahead, traders would spread
their bets on both the exc-
hanges. Shares of the BSE on
Monday gained 1.9 per cent to
~1,087. But, the trading volume
was low at just 6,000 shares.

For Shriram groups investors, the marriage isnt value accretive
Street doesn't see synergies for the two Shriram Group firms from the merger with IDFC group
HAMSINI KARTHIK
The mega-merger annou-
nced between IDFC Limited,
IDFC Bank and Shriram
group companies on
Saturday is perhaps the most
ambitious deal announced in
recent times. Terming it a
marriage made in heaven,
Rajiv Lall, CEO, IDFC Bank,
said the deal would create
Indias largest retail bank. Yet,
investors aren't impressed.
Shares of the Shriram Group
twins Shriram City Union
Finance (SCUF) and Shriram
Transport Finance Company
(STFC) were among
the top losers on the BSE,
down over 3-5 per cent on
Monday when the Sensex was
up 355 points or by 1.1 per
cent. Even shares of IDFC
Limited (IDFC) dipped by
over 3 per cent, while those of
IDFC Bank managed to close
in the green.
Scepticism largely circled
on who really benefits from
this mega-merger. There
arent many who think SCUF
and STFC could gain from it.
On STFC, the current con-
tours suggest it would be
merged with IDFC to operate
as its subsidiary. After the
merger, STFC would operate
as unlisted entity and its
shareholders would receive
shares of IDFC in exchange.
But this may not be any good,
say analysts. A key thing to
watch for is, whether share-
holders looking to own a moat
commercial vehicle financing
business would like to hold
shares of a holding company
with stakes in diverse busi-
nesses in non-banking
THE COMPASS
Base=100 sated in terms of a huge pre-
Shriram Transport Finance mium, they should oppose
Shriram City Union Finance the deal.
IDFC IDFC Bank As for SCUF, the concerns
S&P BSE Sensex are clear and pertain to sub-
190
stantial dilution in return pro-
160 file. For a diversified loan book
(gold, housing, auto, personal
130 and SME loans) of ~22,847
crore, SCUF commands a pre-
100
mium at 3.3x price to book
70 value. Return on equity of 12.3
per cent and return on assets
40 of 2.5 per cent is among the
Jul 1,16 Jul 10,17 best in class. According to
Compiled by BS Research Bureau Kotak Institutional Equities,
these ratios may dip to 9.1 per
cent and 1.3 per cent respec-
finance company (NBFC), tively (based on FY18 esti-
banking, asset management mates) after the proposed
and insurance, analysts at merger, explaining Mondays
Motilal Oswal said. Suresh stock price reaction.
Ganapathy of Macquarie Not all is good even for
Capital said unless the share- IDFC. Analysts at Motilal
holders of STFC are compen- Oswal highlight the merger of
STFC and other businesses of
Shriram Capital such as insur-
ance and asset management
would entail more than 75 per
cent equity dilution for IDFC.
Share swap with STFC at cur-
rent market price would make
IDFCs existing shareholders
30 per cent shareholders of
the merged entity, the bro-
kerage said.
Thus, IDFC Bank seems to
be the only beneficiary as a
merger with SCUF would
fast-track its asset side diver-
sification. But then, how this
would benefit in mopping up
low-cost deposits needs to be
seen.
Therefore,withlackofcom-
pelling synergies in the deal for
both parties, the Street isnt too
happy with the transaction.

Setback for Biocons European biosimilar plans

Frenchregulatorsobservationsforthecompanysformulationfacilitieswilldelayproductlaunches
UJJVAL JAUHARI good manufacturing practice
(GMP) certificate. Approvals VALUING BIOCON approval for formulation man-
ufacturing facilities means the
News of regulatory issues
came at a time when the com-
Regulatory concerns for for product launches will start (~ crore) launch timeline remains panywaslookingatmonetising
Biocon increased after the only after a GMP certificate is uncertain. Analysts at Kotak its Trastuzumab filings in the
7,796

French drug authority issued issued. Institutional Equities say all US, too. The audit committee
certain observations following The company said no criti- three biosimilar applications meeting for the oncology prod-
an inspection of the Bengaluru cal observations were made in in the European Union are uct launch is scheduled in July,
2,602

facility. the report after inspections in unlikely to be approved until say analysts, and a favourable
1,319

The pre-approval inspec- March. Corrective and preven- regulators clear the facility. outcome is key for launch visi-
821

tion of drugs and products
sites were related to pending
European marketing authori-
sation applications for
Biocons biosimilars. These
include Trastuzumab (oncol-
ogy drug), Pegfilgrastim (dia-
betes drug) and related
insulin medication Glargine.
With the observations, reme-
dial actions followed by a suc-
cessful re-inspection will
enable the company to get a
tive actions have been submit-
ted to the French regulatory
authorities and these were
being reviewed. The company
also clarified that its device
facility that produces Glargine
Pens has not received any
observations.
The Street was worried
about any escalation of this
and the stock lost more than
nine per cent intra-day, before
it closed at ~321.25, down 4 per
This could take 12-15 months, bility in the US. Analysts at
given the need for plant mod- KotaksaydelayinUSapprovals
Base Biosimilar ifications as well as procedure is likely, though Herceptin
business Trastuzumab
changes. (Trastuzumab) patent settle-
Insulinfranchise Biosimilar The news is a negative for ment gives Mylan and Biocon
US/EU Pegfilgrastim
the Biocon stock. The stock 12 months to get the product
Source: Kotak Institutional Equities
prices had risen significantly approved without hurting
with the progress in biosimi- launch timelines, they add.
cent, on Monday. lar filings by Biocon, in associ- All these uncertainties
The Street was expecting ation with its partners in the will keep the stock prices
early launch of biosimilar US and European Union (EU). under pressure till there is
products in the European The stock had more than dou- more clarity on approvals and
Union and the US. A delay in bled since the start of 2016. launches.
.
MUMBAI | TUESDAY, 11 JULY 2017 THE SMART INVESTOR 13 <

AU Small Finance Bank

soars 51% on debut FY18 earnings to decide
NIKHAT HETAVKAR
Mumbai, 10 July

its stock surge more than 50

AU SMALL
FINANCE BANK
AU Small Finance Bank saw BSE share price in ~
Issueprice
trajectory of equities
per cent on Monday during
its stock market debut. Shares 358.00 541.20
550
India has underperformed other emerging markets and is still among the
of the company ended at ~541, 540
5 most expensive in the Asia-Pacific; earnings must catch up to justify the valuations
up ~183, or 51 per cent over the
issue price of ~358. The stock
530 ICEX gets Sebi nod; to
moved in the range of ~507-
545 on the BSE. On the NSE,
520 HAMSINI KARTHIK
Mumbai, 10 July TAKING ESTIMATES VS ACTUALS (~) go live by Aug-end
Estimates* Actuals

ILLUSTRATION: AJAY MOHANTY

where trading had halted for Indian Commodity Exchange (ICEX), the
STOCK
510

S
three hours, the stock touched tarting this week, India Inc Reliance Capital-anchored national
a high of ~540 and a low of 500 would again gear up for its online derivatives bourse for commodi-
~523.7. Shares worth ~2,075 Open Jul 10, 2017 Close busy quarterly earnings peri- ties, has received approval from the
crore changed hands on the Source: Bloomberg od. The question is if corporate Securities and Exchange Board of India

386.8

384.2

493.2
425.5

425.5
474.1

537.4
441.1
BSE and another ~178 crore on Compiled by BS Research Bureau India would match investor expec- (Sebi) to recommence live trading.
the NSE. tations. With the goods and serv- ICEX stated had successfully com-
The spurt in the shares fol- set up SFBs in September ices tax (GST) taking effect on July FY14 FY15 FY16 FY17 plied with all Sebi-mandated norms pre-
lows huge demand for AU 2015. However, AU is the only 1, the expectations are extremely -12.3 -19.0 -20.8 -13.7 scribed for commodity exchanges. With
Finances shares in its initial asset finance NBFC to receive toned down for the June quarter, Shortfall (%) all requisite approvals, ICEX is poised to
public offering (IPO). The the SFB licence. the first (Q1) of financial year *1-year forward earnings per share estimates
go live by end-August, Sanjit Prasad,
~1,900-crore IPO was sub- AU Small Finance Bank is 2017-18. Analysts at Edelweiss managing director and chief executive
scribed nearly 55 times, with the third SFB to be listed, pre- expect a moderate 12 per cent HOW FY18 EXPECTATIONS HAVE officer, said.
high demand across investor ceded by Equitas Small revenue growth for 225 compa- BEEN DOWNGRADED Last week, ICEX had announced the
segments, particularly insti- Finance Bank and Ujjivan nies under its coverage, while net merger of Ahmedabad-based National
tutional investors. Small Finance Bank in the profit growth might dip by up to Multi Commodity Exchange with
Market players said there previous year. AU has three 2 per cent, on the back of a 262- itself. The exchange has already received
was huge demand from for- major products in its portfolio basis point decline in operating approval from Sebi to launch diamond
eign institutional investors vehicle loans, MSME loans margins. futures contracts the first in the world.
(FIIs) after the IPO created and SME loans. Vehicle loans However, it is essential that at Sources said diamond will remain the flag-
investment legroom. Before comprised more than half of least these lowered targets are met, ship contract for the exchange and it has
the IPO, FII holding in the their assets under manage- to keep Indias position among 739.7 591.8 538.5 been working on many other commodi-
company was at the ceiling of ment (AUM). global equities, especially emerg- ties. "Our focus would be on those com-
49 per cent. Sources said after With an issue size of over ing markets. This is particularly
Apr 1 Apr 1 Mar 31 Jul 10 modities where where India has signifi-
the IPO, the FII shareholding ~1,900 crore, it was one of the important when foreign investors 2015 2016 2017 2017 cant play, it said.
Source: Bloomberg
had dropped to 37 per cent. largest issues to hit the capital such as UBS, CLSA and Credit The exchange has all necessary infra-
At its current stock price, markets in calendar year 2017. Suisse question if Indian equities structure to handle deposits, grading and
AU Finance is valued at nearly This issue received an over- justify their premium valuations, under- tral' for now, though recognising For now, the Q1 expectations sealing, vaulting and deliveries of dia-
five times its adjusted book val- whelming response from var- as earnings growth have remained per- that a big slowing in the rate of have been diluted, particularly for monds as part of its preparation to
ue. Analysts say even though ious categories of investors elusive for over four years in a row. former on a upgrades in the more cyclical parts consumer-oriented sectors due to launch the diamond contracts.
the company has strong asset with an overall subscription In FY14, the Nifty companies year-to-date basis. Therefore, the of the region will inevitably draw the massive de-stocking prior to BS REPORTER
quality and superior track of 55 times. This is testimony were poised to post earnings per brokerage reiterated its under- attention back to India's better introduction of the new indirect
record, the stock is expensive to the strong corporate gover- share (EPS) of ~441; the actuals were weight call on India, adding there structural story. tax regime. The September quarter
compared to its peers. At nance, transparency, systems about ~386. The narrative was the could be continued downgrades to CLSAs Mahesh Nandurkar results might also be turbulent, as
Mondays close, AU Finance and most importantly man- same in FY15, FY16 and FY17. With the calendar year 2017 EPS con- makes a similar observation. As businesses could take a while to
was valued at ~15,384 crore. agement team led by Sanjay earnings growth failing to meet sensus as well. against the historical average mul- readjust. Also, says Vetri > TODAYS PICKS
AU Small Finance Bank is Agarwal, said Ajay Saraf, expectations, the FY18 estimates Switzerland-based UBS was tiple of 14.7x, the Nifty currently Subramanium, group president,
a retail-focused non-banking executive director, ICICI have been cut. In Bloomberg polls, among the first to lower its over- trades at 17.8x, a 20 per cent premi- UTI Mutual Fund, with the tax
finance company (NBFC). It Securities, one of the invest- the FY18 EPS estimate is now ~523, weight rating on India to neutral, um and well above one standard regime itself being complex, it is Nifty
converted itself into a small ment banks that handled the from ~539 as on end-March. And, citing expensive market valuations. deviation, goes his report. Our not possible to price in its impact Current: 9,771 ( Nov fut: 9,774), Target: NA
finance bank (SFB) in April. It IPO along with HDFC Bank, much lower than the initial expec- On our models, India no longer starting price-earnings versus 12- on earnings at the moment. Nifty 50 Stop-long positions at
9,810
was among the 10 entities that Motilal Oswal Investment tation of ~740 at the start of FY15. looks so attractive, though much month forward return analysis Therefore, as the Street is not 9,700. Stop-short
were granted approval by the Advisors and Citigroup Global The Street usually computes its esti- of this on the thematic side is down implies only low single-digit fully pricing in an earnings disrup- 9,720 positions at 9,825. Big
Reserve Bank of India (RBI) to Markets India. mates on a two-year forward basis. to the impact of demonetisation returns over the next 12 months tion, lower than anticipated EPS 9,630 moves could go till 9,875,
The constant downgrade to negatively impacting earnings in and high probability of negative growth would be a drag on equi- 9,540 9,650 and the breakout
earnings has nudged foreign bro- calendar 2018 versus this year's returns. The earnings growth trend ties. With investors already casting has a upside bias. A long
9,450
kerages to take a step back on bounce-back, the report says. also does not appear to be particu- doubt on Indian valuations, partic- Jun 1 Jul 10, 17 9,800c (66), short 9,900c
Indian equities. In a recent report Adding: Unfortunately, the larly attractive, with earnings revi- ularly those abroad, it is important (30) could gain 10-15 if

Cleaning the by Credit Suisse, co-authored by

Sakti Siva, she mentions that India
is part of the expensive four
valuation expansion in India has
taken the country back to looking
less attractive on our fundamental
sions still happening on the down-
side. Hence, valuation comes up as
a key investor concern in most
for India Inc to meet its FY18 earn-
ings target. Another year of failed
earnings promise might not go
9,800 is struck.
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>

corporate universe among Asia-Pacific stocks and an framework. We take it back to 'neu- investor interactions. down well. Nifty Bank
Current: 23,675 ( Nov fut: 23,658), Target: NA
Bank Nifty Stop-long positions at
23,920

Investing in gold bonds makes more sense in GST era

23,575. Stop-short posi-
STREET FOOD 23,720 tions at 23,775. Big
23,520 moves could go till
N SUNDARESHA SUBRAMANIAN 23,320 24,000, 23,300. Upside
bias with resistance at
Two major regulators of the tered office address given at Sales of physical gold now attract 3% SOVEREIGN GOLD Jun 1
23,120
Jul 10, 17 23,800-23,850.
corporate sector the Union the time of stock exchange
ministry of corporate affairs inspection. GST, while there is no cost or tax attached Tranche From
Date of Issue
To
Issue price
~/gram
Traded price#
~/gram % chg >>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>

(MCA) and the Securities and From a reply by junior

Exchange Board of India finance and corporate affairs
to sovereign gold bonds 1st Nov 5, '15 Nov 5, '15 2,684 2,735 1.9 Bharti Airtel
(Sebi) have embarked on an minister Arjun Ram Meghwal 2nd Jan 18, '16 Jan 22, '16 2,600 2,727 4.9 Current price: ~405; Target price: ~414
ambitious process of clean- to the Lok Sabha last RAJESH BHAYANI attractive. 3rd Mar 8, '16 Mar 14, '16 2,916 2,736 -6.2 Price in ~ Keep a stop at ~400
4th Jul 18, '16 Jul 22, '16 3,119 2,749 -11.9 408
ing their respective jurisdic- December, only 78 entities So, should you go for SGBs only and go long. Add to the
tions. were declared vanishing With the ninth tranche of sovereign or there are other options? The 5th Sep 1, '16 Sep 9, '16 3,150 2,750 -12.7 396 position between ~409
While the various regis- companies in all these years. gold bonds (SGBs) issued by the alternative lies in gold exchange- 6th Oct 24, '16 Nov 2, '16 2,957 2,710 -8.4 384 and ~412. Book profits
trars of companies (RoCs) that The ministry had informed Reserve Bank of India (RBI) on traded funds (ETFs). But the 7th Feb 27, '17 Mar 3, '17 2,893 2,700 -6.7 372 at ~414.
come under MCA have dereg- that while 238 companies Monday, investors would be problem is ETFs will have to 8th Apr 24, '17 Apr 28, '17 2,901 2,675 -7.8 360
istered around were referred, wondering if investing in paper purchase physical gold of the 9th Jul 10, '17 Jul 14, '17 2,780 - - Jun 1 Jul 10, 17
100,000 compa- Accordingly, in March 160 of these gold makes sense vis--vis physical same amount and keep it as
#Price as of July 10, 2017 on BSE
nies, Sebi has 1999, it was decided were eventually gold after the implementation of underlying security. This would Source: PIB Compiled by BS Research Bureau >>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>

designated that a CMC, co-
1,088 entities in chaired by the
the defunct corporate affairs
exchanges as secretary and the Sebi Pilot
vanishing com- chief, would be set up informed
panies and to identify and
referred these to monitor the state of
the ministry for affairs of 'vanishing
further process- companies and to
ing. take appropriate
The latter action under the
term is of 1990s Companies Act and
traced. the goods and services tax (GST) lead to a tax of three per cent on
In 2012, then regime. The answer is, yes. purchase of physical gold. Hero MotoCorp
minister Sachin From July 1, sales of physical The ninth issue has been issue price and all past issues are discount if sellers are more than Current price: ~3,731; Target price: ~3,800
had gold entails a three per cent GST. priced at ~2,780 a gram. And, the quoted at a price lower than the buyers . Price in ~
3,870
Keep a stop at ~3,690
Then, there are making charges tenure of these bonds is eight issue price of the bonds. That However, experts are still and go long. Add to the
3,810
Parliament that for jewellery. If you buy a small- years. There are several benefits means bonds are available at a divided over the benefits of SGBs. position between
there were 87 denomination coin, making for investing in gold bonds. Bonds discount on exchange platform. Former RBI governor Y V Reddy 3,750 ~3,770 and ~3,780.
vanishing com- charges range from 6-10 per cent; are sold at ~50 a gram or nearly 1.5 However, the liquidity of listed has argued in his article in World 3,690 Book profits at ~300.
panies. So, in for bars, the charges are lower. per cent discount to the past one instruments are quite thin, and Gold Council's June issue of 'Gold 3,630
about four years, Gold will also attract capital week's average Mumbai gold price many times trading volumes are Investor', that the Sovereign Gold Jun 1 Jul 10, 17
the government gains tax. of 999 purity gold, as declared by not even 100 grams a day, which Bond is issued by the government,
managed to Bonds don't attract the GST or the Indian Bullion and Jewellers implies that there isnt proper its efficacy is untested and, to my >>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>

vintage. Many the Sebi Act trace another making charges, and even on Association. price discovery as well. So it is mind, the benefits to both
that had made nine of these redemption, there is The experience of quite probable that if the buyer government and bond buyers are Coal India
Initial Public Offers of equity 'vanished companies'. The no cost or tax. SGB investors, in order in the exchanges is in not obvious". Current price: ~259; Target price: ~253
(IPOs) vanished after raising government responses to Additionally, you will YOUR MONEY terms of price rise till double-digits, the price could He writes that the governments Price in ~
272
Keep a stop at ~262
money. After a public interest such queries over the years earn 2.5 per cent now, hasnt great. change significantly. That is why current initiatives (regarding gold) and go short. Add to
264
suit by Midas Touch Investors had also suggested that the interest on the initial The current bond some like Chirag Mehta, fund need to be taken further, the position between
Association at the Allahabad number had not increased amount on SGBs. issue is third- manager, Alternative culminating in a comprehensive 256 ~254 and ~255. Book
High Court, the then depart- because of process improve- Considering the cheapest in terms of Investments at Quantum Mutual gold policy that addresses both 248 profits at ~253.
ment of corporate affairs, Sebi ments such as the Companies GST, making charges issue price and the Fund, believe that ETFs are better opportunities and challenges, and 240
and key people in the govern- (Amendment) Act, 2006, and cost of storing cheapest since 2016. in many ways as the investment is that focuses on what gold savings Jun 1 Jul 10, 17
ment decided to devise a through which norms for physical gold on the This points to the available on tap, they are liquid can do for India, rather than
common strategy. incorporation were made one hand, and interest rate fact that gold investments per se and backed by physical gold. whether India can do without gold. DEVANGSHU DATTA
Accordingly, in March stringent by introduction of payment to bonds and availability havent been remunerative in the Hence, prices broadly move in
1999, it was decided that a Directors Identification of dematerilised facility on the past couple of years. Even the sync with gold price, unlike SGBs Target price, projected movements in terms of
Coordination and Monitoring Number (DIN), mandatory fil- other hand, SGBs are clearly more bonds are trading at a discount to which may be quoted at high next session, unless otherwise stated
Committee (CMC), co-chaired ing of all details of directors,
by the corporate affairs secre- etc. Sebi had also tightened
tary and the Sebi chief, would the regulations to monitor
be set up to identify and mon- end-use of funds raised from
itor the state of affairs of 'van- investors.
ishing companies and to take This sudden reference of
appropriate action under the over 1,000 companies to the
SBI to divest 80 million shares in SBI Life via IPO
Companies Act and the Sebi vanishing list gives an impres- SUBRATA PANDA final approval from the Securities ~460 per share.
Act. While the CMC would sion that the CMC-led process Mumbai, 10 July and Exchange Board of India, the SBI Life is a joint venture between
deal with policy-level issues, it has not been functioning as Reserve Bank of India and the SBI and BNP Paribas Cardiff. SBI
had seven task forces under well as it should have. As a State Bank of Indias (SBIs) execu- Government of India. holds 70.1 per cent of the shares,
its umbrella. These groups result, there has been severe tive committee of the central board SBI Life will become the countrys whereas BNP Paribas has a holding of
were supposed to identify under-reporting of vanishing has given the final approval for second private insurer to go for an 26 per cent with KKR (a private equi-
such companies on a regular companies all these years. divestment of 80 million shares in IPO after ICICI Prudential Life ty firm) and Temasek, a Singapore
basis and recommend reme- Many such had in turn SBI Life through an initial public Insurance, which was valued at government-owned investment
dial action to the committee. become the playgrounds of offering (IPO), at a meeting on ~48,000 crore and sold shares worth company, holding the rest.
The committee came up money launderers, entry Monday. ~6,057 crore in its public offer. ICICI For FY17, SBI Life witnessed a 43
with three parameters for operators and other The shares being offered for sale Prudential Life Insurance is current- per cent year-on-year (y-o-y) growth
identifying such companies. unscrupulous elements. It is by the countrys biggest lender will ly valued at ~69,450 crore and its in new business premium at ~10,144
One, those which had not good that the drive against be available at a price that would be share price closed at ~483.85 on the crore, while gross written premium
complied with the listing or undisclosed money, spear- fixed and determined by SBI Life, BSE on Monday. was up 33 per cent y-o-y at ~21,015
filing requirements of a stock headed by the prime minis- SBI, and BNP Paribas Cardiff, in con- SBI Life is expected to raise an crore. Assets held on March 31, 2017,
exchange or RoCs, respec- ter himself, has brought need- sultation with the book-running lead estimated ~7,000 crore from the stake at ~97,737 crore, were up by 22 per
tively, for two years. Two, ed focus on this forgotten managers, the lender said in a state- sale via an IPO. cent over the previous year. Profit The shares being offered for sale by the countrys biggest lender will
where no correspondence mechanism. It is time to trace ment to the BSE. Experts peg the value of SBI Life, after tax stood at ~955 crore in FY17 be available at a price that would be fixed and determined by SBI
had been received by the those task forces which also Last week, SBI Life had submitted the country's second largest private versus ~861 crore in the year-ago Life, SBI, and BNP Paribas Cardiff, in consultation with the
exchange from the company seem to have vanished and its draft papers to the Insurance insurer by market share, around period. book-running lead managers, the lender said in a statement to BSE
for a long while. Three, where put these back on the task. Regulatory and Development ~65,000-70,000 crore. In December SBI Lifes first-year business pre-
no office of the company Authority of India (Irdai) for listing, 2016, its valuation was ~46,000 mium grew by 46.3 per cent y-o-y in equivalent of SBI Life grew by 88.9 grew by 39.6 y-o-y in the same time
could be located at the regis- which has been approved in princi- crore when KKR and Temasek pur- May, according to the Irdai. per cent y-o-y for the 12 months end- frame, according to Edelweiss
ple by the regulator. It is still awaiting chased at 1.95 per cent stake each at The individual annual premium ing May. The ticket size of SBI Life Securities.
16
>
IMPACT MUMBAI | TUESDAY, 11 JULY 2017 1
TEXTILEINDUSTRYWAITSFORFRESH WHILE SEASONAL PROMOTIONS OF GARMENTS WOULD DESPITE THE LOWEST SLAB OF GST ON
STOCKSTOARRIVE CONTINUE, THE DURATION OF THE DISCOUNTS COULD REDUCE COAL, THERMAL POWER WOULD BE COSTLIER

IN BRIEF
Govt says gifts of up to ~50,000 Low-cost garments to get TO PASS ON BENEFITS,
FIRST TABULATE THEM
2-3% cheaper under GST
by employer exempt under GST Experts from law firm Lakshmikumaran & Sridharan help clear
The government on Monday clarified that gifts doubts around the impact of the new indirect tax regime on
worth up to ~50,000 by an employer to its businesses. Edited excerpts:
employees as well as free membership of clubs,
health and fitness centres will not attract goods
and services tax (GST). Also, the services by an
DILIP KUMAR JHA
Mumbai, 10 July RATE IMPACT I am a service provider
having offices in multiple
oriented units (EOUs) under
the new GST regime?
employee to the employer in the course of or in relation to his TheGSTCouncilhadfixedthe states. Under the service tax Dharmesh Dutta,

T
employment is outside the scope of the new indirect tax regime, it he maximum retail ratesat 5 % onready-made regime, I had a centralised Hyderabad
said. Any club, health and fitness centre membership provided by price (MRP) on gar- garmentspricedupto~1,000 billing system. Under the In the excise regime, spe-
an employer to its all employees free of charge will not be subject ments is likely to andat 12% forthoseabove GST regime, should I change cific exemption was given
to GST. The same would hold true for free housing as part of cost- decline by two to three per
thatprice,againstthe my billing system and start from levy of excise duty
to-company package. Commenting on reports of gifts and cent with new arrivals expect- raising invoices from the under the Central Excise
existinguniformcentral
perquisites supplied by companies to their employees being taxed ed in a month, due to a lower local branch? Act, 1944, for removal of
under the new tax regime, the finance ministry in a statement said levy under the new goods and
levyof 7% Jivi Jebaraj, Chennai goods to EOUs. However, no
gifts of up to ~50,000 in a year by an employer to his employee are services tax (GST) than Experts say garments of In the GST regime, serv- such exemption has been
outside the ambit of GST. "However, gifts of more than ~50,000 earlier. above ~1,000 going to ice providers are required to given in the CGST Act/SGST
made without consideration are subject to GST, when made in the Last month, the GST become costlier by 2-3% obtain registration in each Act/IGST Act. Therefore,
course or furtherance of business," the ministry said. While the GST Council had fixed the rates at state where they have a any transaction with EOUs
Experts say discounts and
law does not define gifts, the ministry said for tax purposes gift is five per cent on ready-made place of business. The con- will be treated on a par with
freebies would come down
something that is made without consideration, is voluntary in garments worth up to ~1,000 cept of centralised registra- the Domestic Tariff Area
nature and is made occasionally. PTI< and at 12 per cent for those in the new tax structure, tion is now redundant. If (DTA) transaction. So for
above that price, against the due to a squeeze on the services are entirely example, if registered per-
existing uniform central levy margins supplied from the son supplies goods
Will push hybrid Indian Industries
GST
of seven per cent. And, 18 per Many manufacturers had branch, or the to EOU unit locat-
tech despite high Association sets up cent and 28 per cent on some slowed their production branch plays a sig- ed in the same
rate: Maruti Suzuki 20 GST helpdesks machinery products in the
value chain under GST
activity during the past few nificant role in
supplying the serv-
state, he will
charge CGST and
months due to uncertainty
MarutiSuzukionMonday said In a bid to help businessmen against the earlier rates of up over rates ices, then such a SGST at the rate
itwillcontinuetopushhybrid and industrialists clear their to 25 per cent and up to 35 per branch shall be applicable to such
vehiclesinIndiadespite doubts and confusion over cent, respectively. required to raise For promotional supply of goods. If
unfavourablegoodsand the goods and services tax The textile industry, invoices and schemes using goods are supplied
servicestax.Thecompanysaid (GST), the Indian Industries therefore, is going to benefit proportionate reduction in tribution of the below-~1,000 down in the new tax struc- charge applicable combo packs to EOU unit locat-
itwillcontinuetooffermild Association has established 20 through lower levies on vari- the MRP with the new stocks threshold is at least double ture, due to a squeeze on GST. It is critical with mixed ed in another
hybridversionsofitsCiazsedan helpdesks in Uttar Pradesh, ous products in the garment coming into the market. than that of the above-~1,000 margins. Garments being a to identify the supply, tax state, then such
andmulti-purposevehicle Delhi and Uttarakhand. The value chain, said Kavita Many had slowed their man- types, the average price seasonal product, we need to establishment may need to be supply will attract
Ertigadespitepricesofthe IIA has also created a Gupta, textile commissioner, ufacturing activity during the decline would be two to three clear shelves to accommodate rendering the paid at the IGST. Further, out-
modelsgoingupbyover~1 knowledge bank on its Government of India, on the past few months due to per cent, said Rahul Mehta, fresh arrivals, possible service and the highest rate ward supplies
lakhafterGSTimplementation. website, where businessmen, sidelines of the 65th National uncertainty over GST rates. president of CMAI. through promotions. Hence, establishment from EOU unit will
BS REPORTER< traders and industrialists can Garment Fair organised by These were fixed in June but Rakesh Biyani, joint man- seasonal promotional effort receiving the service to be treated in a similar man-
go through different aspects the Clothing Manufacturers garment manufacturers wait- aging director, Future Retail, would continue. But, the dis- complete the input tax cred- ner and taxes will be levied
of the GST for their query and Association of India (CMAI). ed to see if GST would actual- said: GST would help in ease count period will certainly it chain. on the transaction as appli-
Tax incidence on get a prompt answer from the On textile traders ongoing ly take effect from July 1. of doing business. Instead of decline, due to a fall in the cable. In other words, EOUs
sanitary napkins experts in their inbox. protest, she said, Getting Garments worth below a multi taxation system which average top line and bottom How do I ensure that I pass will be like any other DTA
PTI< familiar with GST is a gradual ~1,000 are going to be cheap- varied from state to state, we line of garment manufactur- on the benefit to consumers unit for the purpose of the
lowered to 12% process, which textile players er by two to three per cent would have a single tax struc- ers. A few years ago, the in accordance with the anti- GST.
Sanitarynapkinswillattracta Govt clears air on would be acquainted with under GST. Above this thresh- ture, beneficial for the indus- industry used to offer dis- profiteering clause under
goodsandservicestax(GST)of12 IGST exemption slowly. old, they're going to become try. Also, compliance would counts occasionally, which the GST? Is there any What will be the fate of trade
percent,ashadelowerthan13.7 The industry is, mean- costlier by the same tune. become easier now. have spread almost across the mechanism prescribed for promotion schemes under
percentintheprevioustax for exporters while, gearing up to pass on Given that the input credit is Experts add that discounts year, hitting the profit, said calculating the benefit due the GST?
regime.Clarifyingonreportsof Clearingtheaironexemption the benefit to consumers with granted under GST and con- and freebies would come Mehta. to the GST? Mohandas Menon, Kerala
taxincidenceonsanitary frompaymentofintegrated Dwarkesh Jhaveri, Mumbai Various trade promotion
napkinsunderGST,afinance goodsandservicestax(GST)by Anti-profiteering clause schemes are under opera-

Thermal power rates to stay under stress

ministrystatementsaid,"Thetax
incidenceonthisitembefore
andafterGSTisthesameorless."
BeforeGST,theywouldattract
concessionalexcisedutyof6per
centand5percentVAT. PTI<
GSTIN display on
signboards must
for businesses
Tradersandbusinesseswill
havetodisplaytheGST
registrationnumberontheir
businesssignboardsandthe
registrationcertificateon
premises.
PTI<
exporters,thefinanceministry
hassaid bigexporterswith
goodtrackrecordcangiveletter
ofundertaking(LUTs) tothe
customs.Ontheotherhand,
smallexporterswillhavetogive
bondtoseekIGSTexemptionon
exportconsignments.After
implementationoftheGST,
exportersraisedtheissueoflack
ofclarityonnormsrelatingto
submissionofbondsorLUTsfor
clearanceofexport
consignmentsandseekIGST
exemption.TheCentralBoardof
ExciseandCustomshas
specifiedtheconditionsand
safeguardsfortheentities.
PTI<
JAYAJIT DASH
Bhubaneswar,10July
Fuel security concerns and additional
investments to be made by thermal pow-
er producers on meeting the latest emis-
sion norms is set to take away the advan-
tage of a lower goods and services tax of 5
per cent on coal.
Despite the lowest slab of GST on coal,
thermal power would be costlier in the days
ahead and, thus, more uncompetitive
against solar power, where rates are falling
to record lows. All coal-based power sta-
tions in the country need to invest ~1-1.2
is a self-policing mecha- tion, including some in the
nism. The anti-profiteering form of target-based incen-
rules notified by the govern- tives, combo packs, buy
ment contain provisions one-get one free schemes,
crore per Mw capacity for installing pollu- 16, the cost of solar energy-based genera- relating to constitution of etc. The GST law mandates
tion control equipment to comply with tionwas~2.42-4aunit;electricityfromcoal- authority, procedure for linking of original invoices
the latest norms notified by based generation was priced at conduct of proceeding, etc. for claiming deduction from
the ministry of environment. Thermal power ~2.63-5.70 a unit. Companies need to tabulate output tax liability in case
The deadline is December this would be costlier Lower GST is clearly not an the benefits arising out of of discount schemes. With
year. High ash content in coal in the days ahead advantage when thermal power the GST on some reasonable respect to combo packs,
affects thermal power plants' and, thus, more producers have to make extra basis and pass them on to there may be implications
emissions. This might lead uncompetitive investments to meet stricter the consumer. The rules do of mixed supply requiring
to further escalation in tariffs against solar emission norms. Most of the not contain any mechanism payment of tax at the high-
(rates), affecting their com- power thermal power plants in the to calculate the benefit or est rate of goods and credit
petitiveness with other con- country are underutilised the basis on which it will be reversal in case of free sup-
ventional and renewable power sources, because of weak power demand and are passed on to the customer. plies. Each of the schemes
goes a report by CARE Ratings. facing acute competition from cheaper needs to be carefully
According to a report of the Central solar power, said a senior official with an What will happen to analysed in order to be GST-
ElectricityRegulatoryCommissionfor2015- independent power producer. transactions with export- compliant.

ECONOMY
>
1

CRISIL SME TRACKER Gold loses > FROM PAGE 1 Insolvency heat: Lanco encashes...
sheen, silver
For car dealers, workshop revenue
can drive profitability falls below Tech glitch In case of steel companies, the
problem of encashment has yet
not ensued but a senior execu-
support price but with the
insolvency investigations,
uncertainty has resurfaced, he
encashed. Lanco had asked
some of these suppliers to
renew the guarantees only

~36,000
halts NSE
PASSENGER CAR AND UTILITY VEHICLE dealer- tive in one of the companies said. recently, alleged the person
ships can boost profitability by shoring up their that is among the large debtors The Lanco spokesperson quoted above.
workshop revenues, an analysis of over 100 such said they have been said there was a apprehension Lanco said bank guarantees
small and medium enterprises rated by CRISIL indi- PRESS TRUST OF INDIA approached both by their ven- among suppliers and cus- worth ~470 crore had been sub-
cates.
Commission on showroom sales from original
equipment manufacturers or OEMs (i.e. car-makers)
and workshop revenues are the two main revenue
Mumbai, 10 July

Falling for the tenth straight

day, gold prices cracked
trading... dors and customers. We have
been paying our suppliers reg-
ularly from the working capital
that is generated. Such pay-
tomers about the Insolvency
and Bankruptcy
Hindustan Power, for which
Code.

Lanco is executing projects, has

mitted by sub-suppliers to the
company which were valid as
on date in respect of various
EPC projects. Review and
streams for these below the ~28,000-mark by The turnover on the NSE on Monday was ~6,256 crore against ments will, however, get stalled sought encashment of Lancos encashment of bank guaran-
dealerships. losing another ~390 per 10 the previous five-day average of ~22,760 crore. The turnover once insolvency is declared. bank guarantee. tees follows a continuous and
Showroom sales com- HIGHER SHARE OF grams at the bullion market on the BSE was ~9,905 crore against its previous five-day aver- The suppliers are, therefore, Lanco has ~55,000 crore due process of review based on
mission includes WORKSHOP REVENUE on the back of weak over- age of ~3,474 crore. worried, said the senior exec- consolidated debt, of which sub-suppliers and project, the
dealer commission on MEANS BETTER In % seas cues amid muted The F&O volume on the NSE was ~3.3 lakh crore, against the utive. Essar Steel, Monnet Ispat, ~11,000 crore is under insol- company spokesperson added.
vehicle sales, finance Operating margin demand from local jew- previous five-day average of ~4.8 lakh crore. The BSE did not Bhushan Steel, Bhushan Power vency. Its lead banker IDBI Lanco recently encashed
payouts, insurance Pat margin ellers. see any meaningful rise in its F&O volume. & Steel and Electrosteel are the recently filed an insolvency ~15.82 crore of bank guarantees
and registration com- 4.00 Silver also dropped Trading volumes, particularly derivatives, got affected. Cash five steel companies that are petition in the National where advances to suppliers
missions, while the below the crucial ~36,000- traders moved to the BSE but derivatives traders couldnt as RBIs list of 12 companies that Company Law Tribunal. were outstanding for up to 18
workshop revenues
3.01 mark by tumbling ~1,220 per volumes trade happen on the NSE, said Deven Choksey, have been identified for insol- Two of Lancos suppliers months, the company
comprise general kg on reduced offtake by managing director, KR Choksey Investment Managers. vency investigation. managed to obtain a stay from spokesperson said. Around 80
servicing and sale of industrial units. The finance ministry has sought a report from the Securities The executive quoted above the Delhi High Court on per cent of the work covered
accessories/ spare Standard gold (99.5 puri- and Exchange Board of India (Sebi). The NSE stopped trad- said they have big companies encashment of bank guaran- under these guarantees per-
parts. 1.50 ty) dropped by ~390 to con- ing this morning, reportedly, due to a technical glitch. Sebi is buying their steel products. tees submitted by them against tains to a supplier for Lancos
Lately, intense clude at ~27,695 per 10 in touch with the NSE and is closely monitoring the situation, They do not want any supply advance payment made by Anpara project that was com-
0.84
competition has com- grams from last Fridays Sebi stated. NSE clarified the halt was not because of a cyber- disruption. In the last one year, Lanco for the supply contracts. pleted in 2011. The supplier
pelled OEMs to cut closing level of ~28,085. attack. A finance ministry official also ruled out hacking. we had seen our businesses In the case of one company, failed to reimburse the amount
costs, including Pure gold (99.9 purity) Many F&O traders were not able to execute their trading improving because of the poli- however, the order came a day Lanco spent on its behalf, the
reducing the dealer <5% >5% also shed by a similar mar- strategies. Several traders are not even registered with the BSE cy measures like minimum after the guarantee was already company spokesperson said.
commissions. As Share of workshop revenue gin to end at ~27,845 per 10 as virtually all derivative trades take place on the NSE, said
such, these dealers
operate in narrow
geographies, which
grams as compared to
~28,235 earlier.
Silver (.999 fineness)
an executive with a foreign brokerage.
Some brokers barred clients from taking intra-day orders on
the NSE and advised them to check price feeds before placing
Hospitals charging over 500% for...
constrains their size and significantly limits their slumped by ~1,220 to finish orders.NSE said all trades executed in cash and the F&O seg- During the study, it was business model, bidding 300 per cent more than what
bargaining power with the OEMs. Also, the trading at ~35,690 per kg from ments ahead of the trading halt would remain valid.The observed that most of the hos- process and the distribution at which they procure. Urinary
nature of operations, without any significant value ~36,910 previously. Globally, exchange said it didnt move trading to its back-up site, which pitals are not procuring bal- methods. In addition to man- bags are sold at a price which is
addition, results in low profitability. This creates the gold prices continued to was normally done during a disaster, hardware failure or loon catheters with proper ufacturing, the cost of a prod- 500 per cent higher.
need for sharper focus on increasing workshop rev- move lower, setting them on connectivity related issues as preliminary assessment indi- invoice purchases, instead uct depends on various factors The trend is the same even
enue. track for a fresh four-month cated a software problem which was expected to be rectified they are providing this drug that include R&D, quality con- for intraocular lenses. The dif-
The analysis reveals that workshop revenue low after a solid US jobs quickly.On Monday, the Indonesian stock exchange sus- notified medical devices to trol, on-going clinical studies ference between the price to
accounts for two to 12 per cent of total revenue of the report last week backed pended trading over issues with its information distribution hospitals with a delivery chal- to ensure product safety, phar- hospital and the maximum
CRISIL-rated dealerships. Dealers with higher share expectations for higher US system. Earlier this month, a bug led to all technology stocks lan, in some cases these are macovigilance, short expiry retail price is somewhere
of workshop revenue had superior operating and PAT interest rates later in quoting at $123 on the Nasdaq. In June 2014, the BSE had to directly supplied to the cath- and unique product packag- between 200 per cent and 300
margins compared with their peers. the year. halt trading for three hours due to problem in its servers.The lab, the report said. This ing result. per cent, says a letter written
As can be seen from the chart, this revenue stream At early trade, gold for matter is being examined by the internal technical team and amounts to violation of the The other companies, by the Maharashtra FDA com-
translates to bigger profit margins and can a give sig- August dropped $2.40, or external vendors. It has been referred to the standing com- Drugs and Cosmetics Act, including hospitals, did not missioner to the central safety
nificant boost to the bottom line. Providing superior 0.2 per cent, to $1,207.30 an mittee on technology, comprising public interest directors according to the study. respond to Business controller.
workshop services can also help dealers retain cus- ounce, on a path for a sec- and technology experts, for review and to approve measures An Abbott spokesperson Standards queries. It was the same situation in
tomers and grow their business. Hence, CRISIL ond straight day of losses. to prevent recurrence, the NSE spokesperson said. The NSE said, Different countries have This is the case in other the case of coronary stents
believes that creating a value proposition by focusing While, silver for is in the process of launching its ~10,000-crore IPO. The different health care systems, essential devices such as oxy- before the NPPA capped its
on customer-centric workshop services will help September slid 1.2 per cent exchange is also dealing with a Sebi investigation into unfair and the price of a product in a gen bags and urinary bags as price. Margins on coronary
dealers remain both profitable and competitive. to $15.25 an ounce, adding access for certain brokers. The NSE has been without a full- specific country is dependent well, Maharashtra FDA has stents were anywhere between
to a 3.5 per cent loss on time head since December 2016. MD and CEO-designate on various factors related to observed. Hospitals sell oxy- 270 per cent and 1,000 per
Friday. Vikram Limaye is expected to take charge later this month. that country, including its gen bags at a price which is cent.
22 BRAND WORLD
>
Branding tea for
the millennial
Chaayos, Chai Point and a host of tea retail brands are
personalising the brew and the experience; hoping to
carve a distinct identity for their labels
T E NARASIMHAN
CHENNAI, 10 July
T
ea chains around the
country are looking to
break free of the legacy
of the product and that of
their older and more estab-
lished counterparts: coffee
retail chains such as Caf
Coffee Day and Starbucks. By
focusing on the tea drinking
experience, labelling tea as a
wellness brew and creating
novelty around a familiar
product, Chaayos, Chai Point
and local shops supported by
the Tea Board are wooing stu-
dents and young office goers.
Founding partner of
Chaayos, a start-up brand that
was set up in 2012 and is pres-
ent in Delhi, Mumbai, Noida
and Gurgaon, Nitin Saluja says
that tea has huge potential
because consumption of tea
to coffee is 30:1. Unlike a cof-
fee shop, customers are likely
to walk into a tea shop more
than once a day and several
times a week. But that is not
the only reason for the enor-
mous potential this space
presents; desire for conven-
ient and comfortable hangout
places and tea being a health-
ier drink are opening the mar-
ket wider.
Romancing the familiar
The tea drinkers market is esti-
mated at around ~33,000 crore,
according to Chaayos and Chai
Point. However, it is largely
unorganised and fragmented;
small roadside stalls account
for 85 per cent of the tea con-
sumption today. On the bright
side, although these stores are
not always the cleanest, the
market has grown at around 15
per cent year-on-year for the
past several years.
The tea retailers say that tea
is a familiar product and in that
sense, there is little to do to
increase awareness about its
use and benefits. However
enhancing the tea drinking
experience can reap big
rewards. Backing their expec-
tations is a Nielsen study on
consumer behaviour (Moving
on up, December 2016). It
says: The most successful
premium products are those
that perform an important job
> THE BS CROSSWORD
ACROSS
8 Only a churl would express
contempt for HM (4)
9 Conceivable I'm able to hold
a gin! (10)
10 Slips into a slight indiscretion (6)
> BS SUDOKU
MUMBAI | TUESDAY, 11 JULY 2017
(Top) At Chaayos,
millennials constitute
over half the customer
base; (Bottom) Chai
Point has a special
product for office
goers, among its
biggest consumers
for which previously
available solutions were unsat-
isfactory or nonexistent.
The price of a cup of tea at
many of the newly opened
retail chains is double that on
offer at the roadside tea stalls,
but that is no barrier if the cus-
tomer can be given a brew and
a space that she wants to come
back to, say the store owners.
Tea chains, however, are quick
to say that they do not com-
pete with roadside stalls, but
are merely meeting a need
that was hitherto unmet.
We did not enter into this
space for creating a luxury or
an indulgence brand. One of
the strongest and daily rituals
here is consuming tea and sev-
eral times a day, says Amuleek
Singh, founder of Chai Point
explaining his brands ration-
ale. Today customers are not
looking at spending only on a
product. They are looking at
the cost of ownership of prod-
uct and experience. That does-
nt mean we are a super pre-
mium brand, we are priced as
a mass luxury brand, Saluja
says. He believes that pricing is
no deterrent to the tea drinker.
11 Calm sentry that is agitated
(8)
12 Broken oval jugs of foreign
derivation (8)
14 Sign of status ? (6)
16 Not this much, certainly ! (4)
17 They appeal to lively children
# 2268
Not the coffee
way
Tea chains in India were
expected to follow in the foot-
steps of coffee chains when it
came to branding their retail
experience. But that did not
turn out to be the best way to
grow, says Saluja. He believes
that coffee drinking was pro-
moted as a sophisticated social
ritual. But tea drinking is more
casual and hence the experi-
ence has to be packaged dif-
ferently. While some tea stores
started out by trying to recre-
ate the look and feel of a
Starbucks, they soon aban-
doned the me-too approach
and opted for a distinct look,
say industry experts.
Saluja believes that the fun-
damental difference between
coffee and tea is that coffee is
all about indulgence and expe-
rience. Customers look to visit a
coffee shop once a week or
month. Tea, on the other hand,
drawscustomersinthreetofour
times a day. But that also means
that the chain has to be cautious
about its price-value offering.
Chaayos says it has a repeat
or rising politicians (5)
18 Pet in Breakfast at Tiffany's
(4)
19 They love an intricate
symphony without you,
without love (6)
21 Out of town - and out of the
country (8)
23 Keep striking about a
container held up by floods
maybe (8)
26 Indent, perhaps - but
canned surely (6)
27 Do the twist together (10)
28 None could make this
matchless (4)
DOWN
1 Dictionary with which we
could offer Lucy a bravo (10)
2 Rebuff the suggestion,of
cutting the fox's tail (5,3)
3 Married one girl, rejecting
church book (6)
4 Intervals quietly employed in
empty talk (4)
5 Notes the date is raised
surprisingly (8)
6 Two-quart bottle
accommodating one sort of
Medium:
Solution tomorrow
HOW TO PLAY
Fill in the grid so that every
row, every column and
every 3x3 box contains the
digits 1 to 9
SOLUTION TO #2267
1
customer rate of around 42
per cent, month on month.
Internationally coffee is con-
sumed more often and by
more people, but not in India.
Also the cheapest cup of cof-
fee at any of the retail stores
costs around ~180-200, which
limits consumption. The oth-
er thing that tea chains believe
turn the tide in their favour is
that the drink is easily accept-
ed as a healthier option, espe-
cially green tea varieties and
the new infusions that new
stores offer.
Personal and convenient
Tea shops want to appeal to
millennial customers, in the
23-35 years age group who,
according to the Nielsen sur-
vey, say that emotional rea-
sons (status, feel-good) res-
onate more sharply with them
(especially in emerging mar-
kets). They constitute nearly
58 per cent of Chaayos cus-
tomer base and Affordablity is
not a challenge, meeting their
demand and being relevant is
the challenge and big oppor-
tunity also, says Saluja.
Relevance calls for con-
venience. Chai Point says that
around 20-30 per cent of its
revenues come from
door deliveries. It
supplies to a large
number of offices
and has customers
in their early 20s
to mid-30s. Chaayos
has 37 cafes and
by the end of this
fiscal, it says it will
be in 70 stores. It
sells close to 500,000
cups a month it says
and wants to go
wider and deeper into
Indian cities.
Relevance also breeds loy-
alty. Many customers come to
a tea caf at least twice a day,
offering the brand several
points of engagement with the
target group and this is some-
thing the tea chains can use to
build loyalty according to
industry analysts.
Loyalty hinges, to a large
extent, on personalisation
and choice. Chaayos offers
a plethora of personalised
options, says Saluja. Plus, he
adds, in the past, tea chains
got it wrong by focusing on
dip tea, which is not the
Indian way at all. Tea chain
owners say that the young
who flock their spaces
today are all modern desis,
extremely traditional in their
habits, way more patriotic and
at the same time agents of
globalisation. Thus, a tea store
is pitched as an Indian way of
doing things instead of bring-
ing a global practice home (as
many coffee chains did when
they first set up shop). That
should keep them coming for
more, the stores hope.
# 2776
antelope during 2,000 (6)
7 A story and bed (4)
13 Plays hard doesn't bother
about the score (5)
15 Not caring for debauchery in
wine-merchant's (3-7)
17 Blindly enter football religion
(4,4)
18 Sailors, outside, sent up for
sharp characteristics (8)
20 Depart in confusion, having
talked feverishly (6)
22 Once this shy and shy,
perhaps (6)
24 Light connection (4)
25 Enter with love and spirit ? (2,2)
SOLUTION TO #2775
> WEATHER TODAYS FORECAST
O
Max/min temperatures in C
NATIONAL
Ahmedabad . . . . . . . . .Partly cloudy 34/27
Aizawl . . . . . . . . . . . . . . . . . . . .Thundery 23/19
Bengaluru . . . . . . . . . . . . . . .Thundery 28/20
Bhopal . . . . . . . . . . . . . . .Partly cloudy 31/23
Bhubaneswar . . . . . . . . Thundery 33/27
Chandigarh . . . . . . . . . . . . . .Thundery 33/25
Chennai . . . . . . . . . . . . . . . . . .Thundery 35/27
Delhi . . . . . . . . . . . . . . . . . .Partly cloudy 35/27
Guwahati . . . . . . . . . . . . . . . .Thundery 27/24
Hyderabad . . . . . . . . . . .Partly cloudy 32/24
Imphal . . . . . . . . . . . . . . . . . . . . . . . . .Rain 24/21
Indore . . . . . . . . . . . . . . . .Partly cloudy 31/23
Kochi . . . . . . . . . . . . . . . . . . . . .Thundery 28/24
Kolkata . . . . . . . . . . . . . . . . . . .Thundery 32/27
Lucknow . . . . . . . . . . . . . . . . .Thundery 29/25
Mangalore . . . . . . . . . . . . . . .Thundery 28/23
Mumbai . . . . . . . . . . . . . . . . . . . . . . . .Rain 30/27
Pune . . . . . . . . . . . . . . . . . .Partly cloudy 29/23
Srinagar . . . . . . . . . . . . . . . . . .Thundery 28/18
Surat . . . . . . . . . . . . . . . . . . . . . .Thundery 31/27
Thirupuram ................Thundery 29/25
.
MUMBAI | TUESDAY, 11 JULY 2017
For media and entertainment,
GST means pain now, gain later
The industry may have to spend more on compliance initially, but it will benefit from improved transparency in the long run
VANITA KOHLI-KHANDEKAR
New Delhi, 10 July
L
ast Monday, over 1,000 cinema
screens in Tamil Nadu downed
their shutters indefinitely. They
were protesting a local body tax of 30
per cent, over and above the Goods
and Services Tax (GST), which came
into effect on July 1. By Thursday, the
state government had agreed to relook
local taxes and theatres
re-opened on Friday.
This is just one of the challenges
Indias ~126,200-crore media and
entertainment industry faces as GST
rolls out across the country. The first
six to eight months will be a challenge.
But the gains in the long term far out-
weigh the initial hardships as GST will
allow us to move from unorganised to
organised sector, says Shrikant Bhasi,
founder and chairman of Carnival
group. It forces us to automate.
Earlier, even small invoices were billed
from the headquarters in Delhi, but
now if the expense is at multiple loca-
tions, it has to be billed from there in
order to get input credit for GST, says
Gautam Sinha, CEO, Times Internet.
Bhasi and Sinha have put their fin-
ger on the first big gain that GST could
bring: transparency and therefore
more revenues. Take, for instance,
cable TV, which covers about 100 mil-
lion of Indias 180 million TV homes
(the rest are DTH and other technolo-
gies). Almost 80 per cent of the esti-
mated ~24,000-crore that cable oper-
ators collect, leaks out of the system.
Just about 20 per cent goes to broad-
casters, making for a structurally
skewed TV business that is abjectly
dependent on ad revenues.
Since GST forces matching of input
and output across the supply chain,
cable operators will have to start show-
ing their revenues and pay taxes on it.
If that happens, it could release any-
thing between ~15,000 and ~20,000
crore into the television ecosystem.
The other gain could be better mar-
gins in several segments. About 30
per cent of our expenses every year
Cinema theatres in Tamil Nadu are worried about local taxes in addition to GST
are VATable. But we never got benefit
of VAT paid on purchases of goods and
equipment for sets. Under GST, we can
set it off, says Sanjay Dwivedi, group
CFO, Balaji Telefilms.
Many of the gains and the chal-
lenges depend on the segment that a
company operates in and its ability to
deal with tedious process and paper-
work associated with GST.
TV is pan India, but radio has
licences that are specifically meant for
certain geographies. So radio will need
to be more compliant, says Uday
Pimprikar, tax partner, EY. For
instance, earlier companies needed to
be centrally registered. Now you need
to have registration in each of the
states you have operations in, says N
Subramanian, CFO, Entertainment
Network India Limited (ENIL). Its
brand Radio Mirchi has 50 stations in
22 states. It will now need to register in
each of these states. This will put pres-
sureonmarginssincecostsgoupespe-
THE TWO SIDES
PROS
| Will bring the unorganised sector into
the organised fold
| Improve transparency; currently only
20 per cent of the money collected by
cable operators goes to broadcasters
cially in small towns which are not big
ad revenue generators. Subramanian
reckons that registering, putting in
people and a framework for GST com-
pliance in each state will add an esti-
mated ~4-5 lakh per person, per
annum to fixed costs at every location.
Multiple registrations also compli-
cate transfer of services among offices
of the same company since under GST
each registration is treated as a dis-
tinct person. Subramanian shares an
example: Imagine a company head-
quartered in Mumbai releases an ad
that ENIL carries across its 22 stations
CONS
| Companies will need to register in each
of the states they operate in
| Newspaper vendors and dealers are
ill-equipped to handle complicated
book-keeping that GST entails
across India. In the pre- GST era, ENIL
would have raised one bill from
Mumbai the city where ENIL is
headquartered. However, now each
station will raise a bill on the Mumbai
office, which, in turn, will raise one on
the client. This creates more than just
procedural issues. If the ad was worth
~1crore,howmuchwasapportionedto
each station was a matter for internal
accounting before GST. Now the tax
authorities could potentially question
why Chennai or Delhi billed, say, only
~10 lakh. Typically, apportioning is
done based on estimates of market
Earlier, even small invoices
were billed from the
headquarters in Delhi, but
now if the expense is at
multiple locations, it has to be
billed from there in order to
get input credit for GST
GAUTAM SINHA
CEO, Times Internet
size and other variables that the tax-
man is not aware of. This could poten-
tially lead to unnecessary litigation.
Then there are newspapers, the
selling of which is a very unorgan-
ised business. The level of literacy,
accounting and book-keeping is low
in dealers. We will have to train them,
says Aloke Poddar, CFO, Prabhat
Khabar. Pimprikar points to film pro-
duction which benefits from the abil-
ity to set off the service tax it pays on
talent and production against GST on
revenues. But this raises another set of
worries. As long as I paid service tax,
it was all right. Now if the artiste does-
nt pay it and file his returns, I cant set
it off. The process has got completely
inter-linked, says Anup Vijai, COO,
Contiloe Films.
This is a genuine worry across the
industry. Much depends on the serv-
er capacity and how robust it is. If it is
not working or if the output credit
doesnt match the input, the differ-
ence will be taxed, adds Poddar. GST
will open a Pandoras box (of issues),
says R K Agarwal, CFO, Jagran
Prakashan.
Sunjoy Wadhwa, chairman,
Sphereorigins, a TV production firm,
sums it up: It will be some time before
we understand the repercussions.
TAKE TWO 23 <
What Brexit could
do to breakfast
BLOOMBERG
10 July
The UKs legendary morn-
ing feast may be a perfect
metaphor for how Brexit
will make British life more
expensive.
Politicians, including
Scottish First Minister
Nicola Sturgeon and Labour
Party leader Jeremy Corbyn,
who have confused Brexit with
breakfast are on to something more
than a phonetic mistake. Ultimately, its what the UKs departure
from the European Union means for the island nation, served up
hot on a plate, according to analysis from KPMG.
British consumers could see the price of a fry-up a classic
English breakfast with ingredients like bacon, sausages, orange
juice, baked beans and mushrooms increase by almost 13 per-
cent. Tariffs would hike up the cost of imports of many breakfast
staples under WTO rules if the UK quits the bloc with no free trade
arrangement or transitional agreement in place.
While a year has passed since the UK voted to leave the EU,
Prime Minister Theresa Mays mantra that Brexit means Brexit
hasnthelpedclarifywhatthefuturerelationshipwiththeblocwill
looklike.MayhasuntilMarch2019tosecureadealwithEuropean
leaders,andnegotiationsareofftoarockystart,withtheEUschief
negotiator Michel Barnier warning last week that a frictionless
trade relationship wont be possible.
Orange juice and olive oil from Spain and Italy would likely
have the biggest price increases at 34 per cent and 30 per cent
respectively, according to the report.
Regardless of the trade deal the UK eventually brokers, house-
holds are already experiencing a squeeze as the pounds fall since
the Brexit vote lifts the cost of all imports, from clothes to com-
puters. Economic growth is starting to cool as wage growth fails
to keep up with inflation.
Our analysis does not even reflect the steep costs consumers
and retailers are already facing as a result of the pound sterlings
devaluation or the costs of any new non-tariff barriers, said Bob
Jones, a director at KPMG.
THE COST OF BREAKFAST
The increase in food costs underWTO tariff
Olive oil 1.08
Butter 83p
Pork Sausages 40p
Bacon 18p
Strawberry jam 18p
Orange juice 14p
Instant coffee 6p
Brown sauce 6p
Chopped tomatoes 4p
Mushrooms 3p
Baked beans 2p
0 1.0 2.0 3.0 4.0 5.0
Source: Bloomberg; p stands for pence
24
>
MUMBAI | TUESDAY, 11 JULY 2017 1

NARESH CHANDRA (1934 - 2017) Google seeks RBI nod to log in to digital payments
Google has sought the Reserve space. because the RBI would like to

Remembering an outstanding civil Bank of India (RBI)s approval

to integrate the government-
promoted Unified Payments
Googles testing is almost
complete and the NPCI is wait-
ing for RBI approval, said A P
take their own time for things
like this. Apart from Google,
social networking giants

servant with affable personality

SHYAM SARAN
Since Independence, our
country has had a legion of
civil servants to help adminis-
ter this vast and varied land.
But, only a handful have left
their imprint on the national
fabric.
There is no doubt that
Naresh Chandra, who died on
July 9 at the age of 82, was one
such outstanding public ser-
vant. His networking skills, his
ability to manage complex
interpersonal relations and to
do all this with an unfailing
sense of humour brought him
to the pinnacle of the civil
service and then beyond.
He leaves behind a formi-
dable reputation, indeed, the
aura of a legend. There are
countless anecdotes of how he
handled complicated situa-
tions and crises, dealt with dif-
ficult, indeed obstreperous,
politicians and smiled through
the rough and tumble of
Indias raucous democracy.
My first encounter with
Naresh Chandra was during
the years 1990-92, when he
was Cabinet secretary and I
was joint secretary in the
Prime Ministers Office. In the
saga of Indias economic crisis
and the subsequent reform
and liberalisation process that
spanned the early 1990s, his
name does not figure too often
but I was witness to the critical
support he provided to Prime
Minister Narasimha Rao and
his government, in enabling
and implementing some truly
radical measures.
The Indian bureaucracy
has the means to frustrate
even the most accomplished
agent of change. Yet, if it is so
motivated, it can make things
happen, finding the antidotes
to the very road blocks it often
cites from the complex rules
and procedures which are its
privileged domain. What
Naresh Chandra was able to
do was to help navigate this
complex bureaucratic land-
scape to make the reforms
possible. In performing this
indispensable role, he was
always a voice of caution,
mindful of the big picture yet
capable of extraordinary bold-
ness when necessary.
Watching him operate was an
education for me and other
younger colleagues in the civ-
il service.
Naresh Chandra had a
most engaging personality. In
all the years I had known him,
I never heard him raise his
voice and his maximum level
of anger was a furrowed brow
and a puzzled frown as if the
matter was one of inexplica-
bility rather than obduracy on
the part of the offender. He
had an unhurried and
sonorous way of speaking to
all matters, interspersed with
a gentle laugh and often a con-
stant bemusement over
human fallibility, including
his own. And, yet he com-
manded respect and even rev-
erence from his interlocutors,
both high and low. People
responded to his call because
they had confidence in him
and his judgement. His occa-
sional frown achieved more
results than an angry dressing
down would have.
Naresh Chandra made a
very smooth transition to the
world of diplomacy and it is a
tribute to him that members
of the foreign service tribe,
who will at best only tolerate
intruders into their charmed
circle, eventually welcomed
him as one of their own and
one of the more accomplished
ones at that. He was undoubt-
edly one of our better ambas-
sadors to the US (1996-2001)
and is best remembered for
the skill and aplomb with
which he weathered the crisis
spawned by Indias nuclear
tests in 1998. He handled the
highs and lows of the rela-
tionship with the US with
unflappable calm, deploying
his formidable networking
abilities to mobilise every con-
stituency in the US to support
India. My colleagues who
served with him have only
praise for the manner in
which he handled a most dif-
ficult assignment and, above
all, the congenial atmosphere
he maintained, inspiring
them to give their best.
My latest association with
him was when Naresh
Chandra was serving as chair-
man of the National Security
Advisory Board (2011-2013)
and later as head of the Task
Force on Internal Security. I
was a member of the Board
under him and later succeed-
ed him as chairman. Once
again I was witness to his deep
commitment to transforming
Interface (UPI) with its Hota, managing director a of Facebook and WhatsApp are
Android Pay application, the National Payments also in discussion with NPCI to
marking its entry into Indias Corporation of India (NPCI). integrate UPI within their chat
fast-growing digital payments Let me not give any timeline messengers. BS REPORTER
Indias national security set-
up, his willingness to put the
spotlight on our vulnerabili-
ties and to bringing his
immense experience to bear
on our search for practical
solutions. He encouraged the
Board to articulate a national
security doctrine for India,
emphasising his belief that the
modern state must have a
whole of government
approach to the challenges it
confronts. This is also what he
tried to put in place when
chairing the Task Force on
Internal Security. But in sev-
eral interactions I had with
him thereafter, he was disap-
pointed that these efforts had
only resulted in piecemeal
measures and the usual cher-
ry-picking response from the
government. Even this disap-
pointment was expressed with
mild annoyance and a gentle
laugh.
Naresh Chandra will be
remembered as one of Indias
finest public servants, with an
impeccable record of out-
standing service to his coun-
try. May his soul rest in peace.
The writer is a former foreign
secretary. He is currently senior
fellow, Centre for Policy Research,
and a member of its governing
board

CEA, NITI member differ on Universal Basic Income

ARUP ROYCHOUDHURY
New Delhi, 10 July
Two of the governments top
economists took opposite views
on how the Universal Basic
Income (UBI) idea for the poor
should be implemented. Chief
Economic Adviser Arvind
Subramanian said it should not
be an add-on to existing subsi-
dies and social programmes;
NITI Aayog member Bibek
Debroy said it should be imple-
mented additionally to existing
schemes.
These views were made at a
day-long event here on the UBI
on Monday. While Debroy
spoke at a session in the morn-
ing, Subramanian had to skip
the event because of work in
the finance ministry. His
slideshow on the topic was pre-
sented by an aide.
Subramanians presentation
reiterated points he has made
on the UBI earlier, including in
his 2016-17 Economic Survey. It
also stressed that current
subsidies,includingtheimplic-
it middle class subsidies, cost
about two-three per cent of the
gross domestic product.
The presentation also stated
A quasi-universal UBI of ~650
per person per month (70 per
cent of the population receiving
thebenefits),willcostabout5per
centoftheGDP,hisslidestated.
Subramanian also proposed
alternativescenariosfortheUBI,
suggesting benefits for women
(half the cost), urban citizens (a
third the cost) and for vulnera-
ble groups, including widows,
pregnant mothers, the old and
the infirm, would cost less than
1 per cent of the GDP.
Reiterating statements from
the Economic Survey,
Subramanians statement said
the UBI was an idea supported
by both ends of the ideological
spectrum but it should not be
an add-on to the existing gov-
ernment programmes.
He said that it remained a
powerful idea and that the time
is ripe for a serious discussion if
not implementation.
Finance Minister Arun
Jaitley has said earlier this year
that the UBI can only be imple-
mented if it replaced all other
subsidies.
At the event on Monday,
NITI Aayogs Debroy suggested
have all the existing programs
and then implement the UBI
additionally. Debroy said the
concept of the UBI had emerged
as a response to the problem of
huge expenditure in delivery
and other leakages.

Retired SC
judge who
gave Singur
verdict
among Oppn
V-P choices
ARCHIS MOHAN
New Delhi, 10 July

Retired Supreme Court judge

VGopalaGowda,whoruledin
favouroffarmersintheSingur
land acquisition case last year,
is among the names being
considered by the Opposition
as its joint candidate for the
vice-presidential election.
In August 2016, an apex
court division bench headed
by Gowda passed the famous
Singurjudgment,orderingthe
West Bengal government to
return nearly 1,000 acres of
land acquired for the Tata
Nano plant to the original
owners.
The 18 opposition parties,
including the Janata Dal
(United), are scheduled to
meet on Tuesday morning
to discuss and announce the
name. Gowdas name is
being discussed within vari-
ous opposition parties at a
time when they plan to raise
the issue of farmer suicides
and agrarian distress vocif-
erously in the upcoming
monsoon session of
Parliament.
There have been sustained
peasant protests in Madhya
Pradesh, Maharashtra and
RajasthansinceMay-end,par-
ticularly after five farmers
were killed in police firing in
Mandsaur on June 6.
In a rare instance of agree-
ment, bitter political rivals the
Trinamool Congress and the
Communist Party of India
(Marxist) are said to have
agreed on Gowdas name.
Gowda hails from Karnataka,
and the Congress and the
Janata Dal (Secular) are also
looking at the Karnataka
Assembly polls, scheduled for
May 2018. While the Mamata
Banerjee-led Trinamool had
protested against the Singur
land acquisition, the CPI (M)
had later accepted that there
were mistakes in the handling
of Singur.

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