09
Tuesday
October
2018
mumbai
www.dnaindia.com
Sensex
34474.38 97.39 p
Gold 10 gram 31165.00
US $ 74.07 0.30 p
news in numbers
moneyedit IL&FS vendors on verge of bankruptcy, projects stall
India says
yes to Iranian
crude
O
il minister Dharmen-
dra Pradhan’s state-
ment that India will
continue to import crude
oil from Iran brings cheer
to the otherwise dim retail
market in the country. The
bold move in the face of
the US sanctions will defi-
nitely help India bring
down its average purchase
cost of crude and thus, the
retail price of oil.
Iran, the third-largest
oil supplier for India, sold
22.6 million tonne (mt) in
2017-18. This year, India
was planning to import
around 25 mt, but leading
refiners such as Reliance
Industries and Nayara En-
ergy (formerly Essar Oil)
have stopped buying
while many others are
scaling down imports.
As per reports, Indian
Oil Corp and Mangalore
Refinery and Petrochemi-
cals Ltd together have
placed an order for 1.25 mt
crude from Iran. The US
sanctions against the
Gulf country, starting No-
vember 4, will block all
payment routes, and India
will not be able to use its
traditional route to pay in
euros via European bank-
ing channels. This has led
to the two countries dis-
cuss options in rupee.
Earlier, a rupee pay-
ment route had been made
operational and Iran used
to pay back in rupee to set-
tle for wheat and other
goods imported from India.
At a time when Brent is
trading at near $85 per bar-
rel, Iranian crude will save
India from dollar outflow,
check the country’s grow-
ing current account deficit
and prevent rupee fall.
inside 
Markets
GRupee drops 30 paise,
closes at 74.06/$ P2
companies
GMR settles with PE
companies P3
Start-up inc
The wonder kid CEO P6
ST smart
‘128 IPOs garner
$5.24 bn till Aug’
As many as 128 initial
public offerings (IPO)
garnered $5.24 billion
this year until August
and going forward the
IPO momentum is ex-
pected to improve in the
coming months, says an
EY report. According to
the India IPO Market In-
sight report by EY, the
IPO activity in the third
quarter this year regis-
tered a significant de-
cline vis-a-vis the corre-
sponding period last
year. Only three IPOs
were launched on BSE
and NSE in the third
quarter of 2018 versus 11
public offerings in the
same quarter of 2017.
‘Vacuum exists in
funds allocation’
Former Reserve Bank of
India governor Y V
Reddy said that there is
an institutional
‘vacuum’ with respect to
the allocation of funds to
states. He said a formula
based body like the
Finance Commission,
appointed once in five
years and dealing with
only accounts, certainly
is not an adequate
institution to take care
of the ‘inequalities’
among the state. “More
recently there is no
Planning Commission,
he added.
Nifty
10348.05 31.60 p
85.00 q
EURO 85.04 0.03 p
$13.18 billion— Gems and jewellery exports stood at, contracting by 0.75% in April-August this fiscal
money
Exclusive
Dipu Rai
dipu.rai@dnaindia.net
New Delhi: The vendors of
IL&FS have defaulted on Rs
1,000 crore loans and their
projects have come to a
standstill as the new Board
looks to fix things at the trou-
bled shadow bank.
More than 200 vendors of
IL&FS road construction
arms, IL&FS Transporta-
tion Network Ltd (ITNL)
and IL&FS Engineering &
Construction Ltd (IECL),
Jittery investors pull out
`2.1 L cr from liquid funds
React to IL&FS debacle, park money in bank FDs, wait for stability
Kumar Shankar Roy
correspondent@dnaindia.net
Mumbai: Investors redeem-
ing their investments in liq-
uid/money market funds in
September were not just
driven by the motivation to
take back cash in the quar-
ter-end and half year-end.
A record Rs 2.11 lakh
crore, the highest ever
monthly net outflow in this
category, was triggered by
cautious investors who
wanted to park their money
elsewhere till volatile debt
markets stabilise. With the
IL&FS credit event and hul-
labaloo surrounding debt is-
sues related to some NBFCs,
debt investors were spooked.
As a result, they sold off liq-
uid/money market funds
worth Rs 18.38 lakh crore
while investing only Rs 16.27
lakh crore, translating into
such a huge net outflow.
The normal trend is that
in the last month of every
quarter, the fund houses wit-
ness redemptions in liquid/
money market funds. This is
due to the tax commitments
of corporates and also the
tendency to show money as
pure cash. “What happened
in September was that the
outflows were much larger.
Gold bond scheme India to buy Iranian oil in November: Govt
opens on October 15
Mumbai: The government’s
sovereign gold bond scheme
for 2018-19 will be open for
subscription from mid-Octo-
ber, running up to five
tranches till February, the
Reserve Bank said Monday.
The Sovereign Gold
Bonds will be issued every
month from October 2018
to February 2019 as per the
calendar specified, the
RBI said.
The bonds will be sold
through banks, Stock
Holding Corporation of In-
dia Limited (SHCIL), des-
ignated post offices, and
recognised stock exchang-
Luxe lane
Super luxury cars run into high taxes, policy wall
Shahkar Abidi
a_shahakar@dnaindia.net
Mumbai: Lamborghini, the
Italian luxury super car
maker, has met its India
sales target for till the first
half of next year.
Yet, Matteo Ortenzi, who
recently took over as CEO of
Asia Pacific region, is wor-
ried.
It is frequently changing
taxation policies that could
prove as a dampener in the
execution of his plan to dou-
ble India sales in the next
two years.
Ortenzi says high taxes in
India are not letting the mar-
Silver kg 38175.00 355.00 q
British pound 96.59 0.19 q
have started defaulting as
IL&FS failed to honour the
bill discounting agreement
with financiers, mostly
non-banking finance com-
panies (NBFCs), with the
figure now reaching Rs
1,000 crore.
An IL&FS source told
DNA Money, “Various road
and metro projects run by
ITNL and its related compa-
nies have been stopped, in-
cluding Bidar to Humnabad
section of NH-50 (Karnata-
ka), Birpur-Bihpur (Bihar),
metro projects in Bengaluru,
Nagpur Metro rail projects,
Gujrat Metro, Kolkata elevat-
Assets Under Management as on September 30, 2018 (Rs crore)
Waiting
Game Equity Schemes (Excluding Arbitrage Funds)
Infrastrucuture Debt Fund
Fund of Funds Investing Overseas
Worst months
Liquid funds net outflow (Rs lakh crore)
Mar '13
Apart from the quarter and
half year end redemptions,
the IL&FS credit event had
an impact. About Rs 1-1.2
lakh crore net outflows may
be linked to quarter-end re-
quirement. The rest may be
due to the credit event linked
nervousness,” said N SVen-
katesh, CEO, Association of
Mutual Funds of India.
es viz., National Stock Ex-
change of India Limited
and BSE Limited.
The first tranche of the
scheme will be open for sub-
scription between October
15-19, while the issuance of
the bonds will be on October
23. The next tranche between
November 5-19 (issue Nov
13), followed by December 24-
28 (issue Jan 1); January 14-
18 (Jan 22) and February 4-8
(Feb 12).
For the current fiscal, the
first tranche of the sovereign
gold bond (SGB) and its sub-
scription was opened on
April 16. —PTI
Lamborghini says its car costs 3.4 times the actual price in India, capping sales volume growth
ket expand and frequent
policy changes making the
prospective customers wait
for the purchase even as he
agrees that taxes are bound
to be high on a luxury brand.
Lamborghini, which has
over 40% market share in
the niche segment, had
clocked 26 unit sales in 2017.
As per the back-of-the-en-
velope calculations, a cus-
tomer in India wanting to
drive a super luxury car
like Lamborghini has to
shell out 158% on duties
and taxes.
Further, addition of
transportation and dealer
charges, insurance and reg-
FTSE 100
7318.54 99.80 q
IL&FS's debt service indicators
15
Source: IL&FS Annual Report
12
6.03%
9
6 banks’ money. No one is
1.19%
3 who are working for IL&FS.
0 condition and on the verge
2014
ed Metro.”
Vendors said that the new
gover nment-appointed
Board is only focusing on re-
Income
Liquid/Money Market
Balanced
Other ETFs
ELSS -Equity
Arbitrage Funds
Gilt
Gold ETF
1.12
1.09
Mar '15
Over the last 10-20 years,
liquid funds have seen many
months where net outflows
stood at Rs 50,000 crore. How-
ever, there are only 4-5 in-
stances when they saw
monthly net outflows top-
ping Rs 1 lakh crore. In De-
cember 2017, the category
saw net outflows to the tune
of Rs 1.38 lakh crore, the pre-
New Delhi: Oil Minister
Dharmendra Pradhan Mon-
day said two state refiners
have placed orders for im-
porting crude oil from Iran
in November, the month
when US sanctions on Irani-
an oil purchases take effect.
“Two of our oil compa-
nies have made nominations
to purchase Iranian oil in
November,” he said speaking
at The Energy Forum.
“We do not know if we
will get waiver (from US
sanctions) or not.”
This is the first time Prad-
han has spoken about India’s
stand on buying Iranian oil
once the US sanctions on
Iran come into force from
November 4.
istration, etc, takes the final
price 3.4 times of the actual
price, the company execu-
tives said. The company
which has Huracan and
Aventador models in its port-
folio recently introduced its
latest SUV Urus in India
starting at Rs 3.1 crore.
Lamborghini’s India head
Sharad Agarwal described
the high taxes as “taxes on
Nikkei 225
23783.72 Closed
Brent Crude $/barrel 84.20
UAE dirham
8.36%
7.97%
7.30%
1.16%
1.09%
1.09%
0.73%
2015 2016 2017 2018
covering the banks’ money
stuck with IL&FS but the
situation on the ground is
more grave.
3,94,774
1,77,065
90,439
84,303
54,775
8,018
2.11
Sep'18
4,434
2,698
1,808
1.38
1.17
Mar '14
Source: Amfi
vious record. In March 2015,
net outflows in liquid/mon-
ey market funds hit Rs 1.12
lakh crore. In March 2014,
net outflows in this category
had hit Rs 1.17 lakh crore
while in March 2013 the net
outflows was Rs 1.09 lakh
crore. In September 2018, the
figure has shot past Rs 2 lakh
crore mark. Turn to p2
Later, talking to report-
ers, he said India has its own
energy requirements which
it has to fulfill.
“We will be guided by our
national interest,” he said.
Indian Oil Corp (IOC)
chairman Sanjiv Singh said
his company is among the
Premium vroom
„„Lamborghini, which
has over 40% market
share in the niche
segment, had clocked
26 unit sales in 2017
„„As per the back-of-
the-envelope calculations,
a customer in India
wanting to drive a super
luxury car has to shell out
158% on duties and taxes
0.87 q
20.16 0.02 q
A Kolkata-based vendor,
who purchased various
equipment on loans and ar-
ranged the working capital
through bill discounting on
12.78%
behalf of IL&FS, told DNA
Money, “Everyone is talking
about saving IL&FS and the
speaking about the vendors
We are in a terrible financial
of bankruptcy.”
Several vendors who exe-
cuted the groundwork on
projects took bill discount-
ing facilities from NBFCs
and banks.
NHB enhances
refinance limit
of mortgage
cos to `30K cr
New Delhi: The National
Housing Bank (NHB) has in-
creased the refinance limit
to Rs 30,000 crore for housing
finance companies for 2018-
7,22,971 19 in view of the current li-
quidity position of the sec-
6,63,138 tor, according to an official
release.
The housing finance regu-
lator had originally set the
refinance target at Rs 24,000
crore for 2018-19 beginning
July this year.
The move will help allevi-
ate the liquidity crunch that
the sector is facing following
series of defaults by group
companies of IL&FS Ltd.
Dec'17
Shares of most of the
housing finance firms, in-
cluding DHFL, have been
hammered on bourses in the
past few weeks due to liquid-
ity concerns triggered by
debt defaults by IL&FS.
“Now, eligible Housing
Finance Companies & Other
entities will have increased
availability of funds”, the
finance ministry said in the
release.
This refinancing is a cred-
it flow to housing finance
companies and other institu-
tions, it said.
As a regulator, it said, the
NHB regularly monitors the
liquidity position of housing
finance companies.
The statement said that
till date, Rs 8,835 crore has
been sanctioned. —PTI
Even without
sanctions also, Iran
had been accepting
payments in rupee. So
let us see how it evolves
Dharmendra Pradhan,
Oil minister
two which have placed order
for November. “We have or-
dered for our usual quantity
of oil,” he said.
IOC and Mangalore Refin-
ery and Petrochemicals Ltd
(MRPL) together have placed
order for 1.25 million tonne
(mt) of crude oil from Iran.
taxes on taxes”.
Similarly, rival Ferrari
which sells over 20 units an-
nually in India launched its
Portofino car in the country
last month selling it at a
price starting from Rs 3.5
crore. The car costs less than
Rs 1.59 crore in the US.
Luxury brands such as
Aston Martin, Ferrari, Por-
sche declined to comment for
the story. An executive from
Now IL&FS has defaulted
on payments to these NBFCs
and banks are chasing ven-
dors and threatening to drag
them to National Company
Law Tribunal for repay-
ments.
Most of these bill of ex-
change (BoE) loans was dis-
bursed by NBFCs such as
L&T Finance and Tata Capi-
tal Financial Services.
ITNL, one of the biggest
road construction players in
IL&FS group, has seen debt
grow 1,767% in the last nine
years. ITNL defaulted on bill
discounting loan to several
financial institutions, leav-
Pharmacies may
sell health policies
Anurag Shah
anurag.shah@zeemedia.esselgroup.
com
Mumbai: Insurance Regula-
tory Development Authority
of India (Irdai) is set to float
a consultation paper to allow
diagnostic centres and phar-
macies to sell health insur-
ance. Diagnostic centres and
medical stores are the first
touch points for all wellness
and health related matters
across the country, which
the insurance companies
can use to offer health insur-
ance products.
A senior Irdai official
said, “To allow insurance
products at diagnostic cen-
tres and medical stores, a
consultation paper would be
issued soon and only few ba-
sic health insurance prod-
ucts would be allowed to of-
fer in order to avoid mis-
selling and rules would be
on the lines of MISP regula-
tions of auto dealers.”
Insurance companies will
sign partnerships with diag-
nostic centres and medical
stores, which would need to
register as health insurance
service providers. The per-
sonnel would be mandated
to go through basic insur-
ance product training.
“Sale of insurance prod-
ucts will go up and more op-
portunities will come. But the
concern of mis-selling is
there as the person selling the
Singh said options for
paying for Iranian oil are un-
der discussions.
US sanctions against Iran
will kick in from November
4, which will block payment
routes.
Paying in rupee is an op-
tion.
Iran can use the rupee to
settle its imports of pharma-
ceuticals and other goods
from India.
“Even without sanctions
also, Iran had been accepting
payments in rupee. So let us
see how it evolves,” he said.
For rupee payments, oil
companies could use UCO
Bank or IDBI Bank to route
oil payments to Iran, sources
said. —PTI
one of the companies said
that they have taken up the
issue of high taxes and fre-
quent changes in the policy
with the authorities at every
available platform and will
continue to do so.
According to the indus-
try insiders, luxury cars
and bikes are considered to
be an easy source of reve-
nue generation for the gov-
ernment and levying taxes
on it has been happening for
long. Further, the govern-
ment officials claim that it
is done to protect the local
industry. However, the rea-
soning has often been
questioned. Turn to p2
ing hundreds of its vendors
and scores of their associat-
ed small suppliers on the
verge of bankruptcy.
NBFC documents, ac-
cessed by DNA Money,
show, NBFCs are threaten-
ing these vendors of drag-
ging them to NCLT, in some
cases if they do not repay the
money within a week.
An NBFC letter, seen by
DNA Money, said, “Even if
ITNL and IECL have commit-
ted to honour BOEs and to
pay the amount due on given
date, however as they failed
in doing so now vendors have
to make payments”. Turn to p2
Wider
umbrella
18-20
%
Health insurance is growing
annually
`1,00,000 cr
The business may touch by 2021
products should have basic
insurance knowledge. But
surely it will help in Tier 3 &
4 cities,” Puneet Sahni, head-
product development of SBI
General Insurance, said.
A Velumani, chairman
and MD, Thyrocare Tech-
nologies, said, “There are
100,000 laboratories in the
country. When people are
unwell, they listen to us
carefully, that will give them
the opportunity to under-
stand and buy health policy.”
In India, health insurance
business is second-highest
premium generator for gen-
eral insurance companies,
and is expected to grow mul-
tifold over the next few
years.
NBFCs slip as
RBI plans to
strengthen
sector norms
Sharnya G
Bengaluru: Shares of a few
non-banking financial com-
panies (NBFCs) took a hit on
Monday after the Reserve
Bank of India (RBI) said on
Friday it was looking at
strengthening guidelines for
such entities to avoid rollo-
ver risks.
Dewan Housing Finance
Corporation Ltd’s stock fell
as much as 12.3%, while that
of Edelweiss Financial Ser-
vices Ltd tumbled as much
as 13.9%.
Shares of JM Financial
Ltd and IIFL Holdings Ltd
declined as much as 11.1%
and 11%, respectively.
The RBI left key policy
rates unchanged on Friday,
and urged all financial firms
to use long-term funds rath-
er than rely on short-term
funding.
The RBI will tighten
norms for NBFCs given that
many are becoming systemi-
cally important and have a
higher dependence on short-
term sources like commer-
cial papers and mutual
funds, CLSA analysts said in
a note.
The actions could be on
the lines of liquidity cover-
age requirements for banks,
the note added.
NBFCs came into focus
when India’s major infra-
structure financing and con-
struction company, IL&FS,
defaulted on some of its debt
obligations. —Reuters
 02
daily news & analysis I MUMBAI I TUESDAY, OCTOBER 9, 2018
 map ets & finance www.dnaindia.com I twitter.com/dna I epaper.dnaindia.com I facebook.com/dnaindia

Breakout Charts
ICICI BANK BAJAJ AUTO
Five stocks to watch out for

CADILA HEALTHCARE
Open Closed 

Titan
Stock recommendations are by Motilal Oswal Financial Services. Market investments are subject to risk

PIDILITE INDUSTRIES
1 p4.15 pts p1.35 % chg
2 p46.65 pts p1.83 % chg
3 q2.55 pts q0.67 % chg
4 p19.95 pts p2.52 % chg
5 p12.70 pts p1.32 % chg
314.5 2625 381 812.70 820 986
310.75
306.60

2544.75

792.75

961.75
2591.40 378.90
311.0 2600 379 810 974.45 978
376.55
307.5 2575 377 800 970

Prev close 379.10

306.60 304.0 2550 375 790 962
966.70
2528.00
Prev close 

Prev close 

Prev close 

Prev close 
790.00
300.5 2525 373 780 954

297.0 2500 371 770 946

9:15 am Oct 8, 2018 15:30 pm 9:15 am Oct 8, 2018 15:30 pm 9:15 am Oct 8, 2018 15:30 pm 9:15 am Oct 8, 2018 15:30 pm 9:15 am Oct 8, 2018 15:30 pm

We expect the bank to deliver 1.1% RoA/11%
RoE by FY20, which should expand further
thereafter. We have buy recommendation with
target price (TP) of Rs 380
We expect volume CAGR of ~12.8% over
FY18-20. After a prolonged period, all the three
businesses are firing in unison. We have buy
rating with target price of Rs 3,454
Strong launch momentum, coupled with limited
competition launches, should drive the US
business, going forward. We maintain buy rating
with target price of Rs 440
Growth in jewelry segment picked up in 2QFY19,
bucking the previous quarter’s muted trend.
Watches segment, too, performed strongly in the
quarter. Target price is Rs 1,071 with buy rating
Apart from Titan, Pidilite is the only player which
is expected to benefit significantly from the shift
of unorganised to organised. We have buy rating
with target price of Rs 1,216
Intra-day movement, share price on BSE in `

In brief
OMC stocks
bounce back
Shares of oil marketing
companies (OMC)
bounced back Monday,
surging up to 8% after a
massive sell-off in the
last two trading
sessions. The scrip of
HPCL soared 8.15% and
IOC jumped 5.63% on
BSE. BPCL gained
0.19%. Shares of OMCs
on Friday fell sharply by
up to 25%.
Pledged shares
decline 16%
The value of shares
pledged by promoters of
BSE-listed companies
declined 16% to Rs 2.10
lakh crore at the end of
September, according to
exchange data. Till
September this year,
pledging of shares was
seen in as many as 2,919
firms out of 4,643 BSE-
listed companies.
YES Bank shares
surge over 7%
Shares of YES Bank
surged over 7% on
Monday after the bank
constituted a panel to
choose chief executive
officer after Rana
Kapoor’s exit. The scrip
soared 7.08% to end at
Rupee drops 30p to close market
diary Q2 earnings may
bring relief on St
at record low of 74.06/$
Indices snap
three-day
I
f there is anything certain about stock markets, then it
has to be the eternal optimism of the investors. Such
Intraday rupee recovered to a high of 73.76, but failed to sustain the momentum losing streak optimism lies at the heart of all major moves in the
stocks; both bottoms and tops are its handiwork. Bottoms
are formed when such optimism gets the better of fears
Mumbai: The rupee central bank eased its do- DNA Money Correspondent and when fear gets the upper hand, crashes ensue. If we
slumped by 30 paise to finish how the currency may fare mestic policy to support the correspondent@dnaindia.net were to quantify optimism and fear, then picking bottoms
at a fresh lifetime low of Estimates of Rupee level vs Dollar economy, amid a deepening and tops would be just mathematics.
74.06 against the US dollar on for week to Oct 12 trade war with the US that Mumbai: After three days In other words, the stock market equation would be like
Monday amid strengthening Bank of Baroda 73.25-74.75 has increased pressure on of losing streak, the equity this: next bottom = forward optimism – present fear. Techni-
of the greenback and steady growth in the world’s second- benchmark indices on Mon- cal analysts use the fear and greed indicator to get close to
capital outflows. Federal Bank 73.40-74.30 largest economy. day ended positively after a solving this equation. The closest that we can get to quanti-
The rupee had opened India Forex Advisors Pvt Ltd 72.90-74.50 China’s central bank said volatile day. fying fear is by measuring risk. How-
lower by 14 paise against Fri- on Sunday said that it was Sensex closed at 34474.38 ever, that is very much an onerous
day’s close of 73.76 in early Mecklai & Mecklai 73.50-74.50 cutting the reserve require- rising 97.39 points, or 0.28%, job in itself, but it is easier to under-
trade as the US dollar ment ratios (RRRs) by 1% while Nifty settled at 10348.05 stand that fear. In stock markets,
strength against major glob- UCO Bank 73.60-74.50 from October 15, which will advancing 31.60 points, or volatility is a good judge of how the
al currencies weighed on the inject a net $109.2 billion in 0.31%. risk-taking investors embrace fear.
rupee sentiment.
free fall Value-buying, covering- Let us look at the extent of fear
cash into the banking system.
During the day, the domes- up of short positions by in-
Anand James prevailing in the equity markets
„„The rupee had opened lower by 14 paise against The domestic unit crashed
tic currency recovered to a Friday’s close of 73.76 in early trade as the US dollar below the 74-mark for the vestors also aided the recov- Tipping presently. At Monday’s low, Nifty
high of 73.76, but failed to strength against major global currencies first time ever in an intra- ery in the market. point had fallen over 13% from the record
sustain the momentum and day trade Friday after the YES Bank, Reliance In- peak. The fall is pretty steep, as re-
plunged to 74.10. „„The dollar demand strengthened after China’s RBI unexpectedly kept the dustries, Hero Motor Corp, cord peak was seen just a month
central bank eased its domestic policy to support the Abrupt-
It finally closed at 74.06, policy rate unchanged. Kotak Mahindra Bank and ago in August. But small and mid-
down by 30 paise, marking economy, amid a deepening trade war with the US Markets were caught off Asian Paints contributed ness and cap stocks have fallen much more
its fifth straight session of guard as the central bank most to the 30-share index steepness sharply and the decline has been
decline. On Friday, the do- est rates by 25 bps and sig- soaring as much as 7.08%.
may be seen if Reserve Bank maintained the status quo on of recent fall and persistent through the year, with
mestic unit plummeted by 18 nalled further monetary of India (RBI) permits for the benchmark interest rate. However, the broader small-cap registering a YTD (year-
paise to end at 73.76. tightening,” said Saif Muk- special dollar swap window However, the central bank market continued with its measures taken to-date) loss of 35% and mid caps
“The Indian rupee is ex- adam, research analyst, with some state-run fuel re- warned that rising oil prices losses and both BSE Midcap along the afore- registering a loss of over 22%. This
pected to trade with a nega- Sharekhan by BNP Paribas. tailers or come up with other and the tightening of global and Smallcap indices ended mentioned fac- suggests that fear has been floating
tive bias amid a strong dollar Mukadam further said that options to check Rupee fall,” financial conditions pose lower by 1.99% and 2.01% re- for a longer time, and got to the
and rising crude oil prices. traders will remain cautious Mukadam said, adding that substantial risks to growth spectively. tors, suggests no front line stocks only recently.
Demand for the dollar is go- ahead of the macroeconomic the expected trading range and inflation. Among sectors, BSE En- surprise is left for September was historically a
ing up on solid economic data, US treasury currency in near term is Rs 72.50-74.60. Meanwhile, heavy capital ergy (4.38%), Oil and Gas investor tough month for equities, but this
data from the US and, as US report and IMF meeting. The dollar demand outflows also added pressure (3.30%) and Bankex (1.16%) time, the falls got exacerbated by
Federal Reserve raised inter- “Correction in the rupee strengthened after China’s to the rupee. —PTI were the top gaining ones. coincidences like trade war ten-
sions, record low rupee, rising oil as well as issues surround-
ing IL&FS and YES Bank etc. The abruptness and steepness

Sebi revises norms for recovery of investors’ money

Rs 220.80 on BSE. At
NSE, shares surged
7.37%.
P-note investment
rises to `84K cr
Investments in the
Indian capital market
through participatory
notes climbed to Rs
84,647 crore till August-
end, making it the first
rise in such fund
infusion in 10 months.
New Delhi: Markets regula-
tor Securities and Exchange
Board of India (Sebi) has put
in place revised norms for re-
covering of investors’ money,
wherein a registered insol-
vency professional will be ap-
pointed as administrator to
undertake the sale of assets.
Sebi has revised the proce-
dures to be followed for re-
funding the investors’ money
pursuant to the failure of
complying with disgorgement
or refund orders passed by it.
In case an entity is not
traceable or is not complying
with Sebi directions, the re-
covery officer can appoint an
administrator for the purpose
of selling the properties at-
tached, the regulator said in a
notification dated October 3.
Only an entity registered
with the IBBI as insolvency
resolution professional would
be considered eligible for ap-
pointment as administrator.
The Insolvency and Bank-
ruptcy Board of India (IBBI)
is implementing the Insol-
vency and Bankruptcy Code.
Under the norms, no per-
son will be appointed as an
administrator where such an
appointment may be object-
ed to on the grounds that give
rise to justifiable doubts as to
the independence or impar-
tiality of such a person.
Any question involving
issues of conflict of interest
in the appointment of an ad-
ministrator will be decided
by the recovery officer.
The expenses pertaining
to the administrator would
be borne by the defaulter or
come from the sale proceeds
of the entity’s assets. —PTI
of the recent fall and the measures taken along the afore-
mentioned factors, suggests that they do not hold a surprise
to the investor anymore. This is reflected in VIX, a measure
of volatility, which, at 21.62 is approaching record peak.
Higher the volatility, higher the chances of seeing a re-
versal, which suggests that it may not be long before the
50-share Nifty sees a break from the present downtrend. The
sustainability of such a move is unsure but the investor
expectations are certainly at a tipping point, and second-
quarter earnings season provides a welcome distraction.
The writer is chief market strategist,
Geojit Financial Services

Steep EM descent draws US investors chart of the day

Vinod Nair, head of research, Geojit Financial Services David Randall
DHFL, YES Bank, HPCL, BPCL, New York: The steep decline
in the emerging market (EM)
IOC to remain in focus today stocks since early this year is
attracting some US fund
Bull market or bear market? managers who think they
1 Volatility in the market is likely to stay for some more may find long-term bargains
time owing to the heightened risk averseness by the amid the sell-off.
investors. Portfolio managers from
Harding Loevner, Federated
Sectors likely to impact market today? Investors, and Wells Fargo
2 Banking & Financial will continue to be in limelight. Fall are among those who have
in Brent prices may support overall sentiments. been adding emerging mar-
Stocks likely to be in limelight today? kets stocks to their portfolios
3 DHFL, YES Bank, HPCL, BPCL and IOC in the face of the imposition
of import tariffs by Presi-
Your mid-term view? dent Trump and rising inter-
Overall sentiments are likely to be negative at least in est rates in the US.
4 the near-term till there is stability in bond yield, rupee, Emerging market asset
oil prices, liquidity and normalisation in valuation, which prices have been hit hard
may take some more time. this year. The MSCI index of
emerging market stocks
What drove markets on Monday?
closed on Friday at its lowest
The hangover of RBI policy meets further depreciation
5 in rupee and weak global cues impacted market senti-
since May 2017 and it is down
about 21% from January’s
ments. Metal index declined by 3.6%, as rising interest
high. An MSCI index of
rates and trade wars worries hit global metal prices.
emerging market currencies
is down 8% from its 2018
high, hit in March.
On Thursday, JPMorgan
cut its rating on Chinese eq-
uities, the largest weight on
the benchmark index, to neu-
tral from overweight on ex-
pectations that a protracted
trade war with the United
States will hurt the Asian gi-
ant’s economy next year.
Yet some US international
and global fund managers
Restoring Value
ports from China yearly, for
Value buying Emerging-market stocks are 'on sale' after losses, BalckRock says
which Beijing has retaliated.
„„MSCI index of Investor concern about the
impact of the trade war has
Gap between MSCI Emerging Markets and MSCI World forward P/E ratios
10%
emerging market stocks
closed on Friday at its sent stocks in China and oth-
er emerging markets sharply
lowest since May 2017 0
and it’s down about 21% lower this year. Mack’s fund
from January’s high has its highest weighting in
emerging market stocks since -10
„„JPMorgan cut its 2006 and its lowest in the US
rating on Chinese since the same year in search
equities to neutral from of better values, he said. -20
overweight The fund sold its position
in Google’s parent Alphabet
-30
Inc and bought South Ko-
say that emerging markets rea’s Samsung Electronics.
Source: Bloomberg
offer better deals than the US Investors pay more than $25 -40
market, where stocks con- for every $1 in earnings ex- 2007 2018
tinue to hit record highs. pected over the next 12
“We’re finding opportuni- months at Alphabet, while
Value seen returning to emerging-market stocks after drop
ties because of the trade they pay just over $6 at Sam- Emerging-market stocks have “restored a lot of value” after eight
war,” said Chris Mack, a sung according to forward months of losses, according to Richard Turnill, BlackRock Inc.’s
portfolio manager of the price-to-earnings estimates. global chief investment strategist. Turnill compared the MSCI
Emerging Markets Index’s forward price-earnings ratio, based
Harding Loevner Global Eq- “You’re getting the bene-
uity fund. The US President fits of a company that is be- on profit projections, with the ratio for the MSCI World Index of
Donald Trump has slapped ing boosted by a secular developed markets in a blog post-Friday. Developing countries’ P/E
discount widened to 29% Friday from this year’s low of 19%, set
tariffs on more than half of trend at a much cheaper
January 26, as their MSCI index dropped 21%.
the $500 billion the US im- price,” Mack said. —Reuters

IL&FS vendors on verge of bankruptcy...
From p1
ITNL and ICEL preferred the
bill discounting method over
financial closure by banks.
Sub-contractors, or vendors,
availed loans from their work
bill invoices from NBFCs and
banks, including L&F Finance,
India Factoring and TCFSL by
the way of bill of exchanges.
Arvind Kumar Gupta, ad-
vocate and vice-president of
NCLAT Bar Association, Del-
hi, said, “It depends on the
conditions of the tripartite
agreements. If the agreement
says that the dues would be
repaid only after receiving
the said money from IL&FS,
then vendors’ interest could
be protected. But usually
these conditions are not in-
cluded in such tripartite
agreements, and if vendors
of machinery, a vendor said.
Vendors also have issued
postdated cheques to the NB-
FCs, which are threatening of
slapping cases along with
NCLT if the cheques are dis-
honoured. DNA Money had
earlier reported that ITNL and
IECL were accused of wilfully
default by Tata Capital Finan-
cial Services Ltd due to failure
are also independently liable in meeting loan obligation.
then they will have to face the IL&FS Group’s financial
insolvency proceeding as a position collapsed and its debt
defaulter of financial debt.” service indicators like debt-
These companies had pur- equity and interest coverage
chased equipment and ma- ratio, which show the ability
chinery for the projects of of repayment capacity, gradu-
IL&FS, but since the plans ally worsened. The ripple ef-
have stopped, their entire fects of IL&FS and associates
equipment and machinery is companies’ defaults have
lying idle, and they are not in been seen on mutual funds,
a position to repay their corporate bonds and a sharp
loans taken for these pieces sell-off in stock markets.
Super luxury cars face MFs see record `2.11L crore exits...
high taxes, policy wall
From p1 that consequently led to the
Many fund house CEOs are massive withdrawal of in-
playing the wait-and-watch vestment from liquid funds.
From p1 was increased 7% to 50%. game. “Some corporate Some liquid funds were found
US President Donald Finance minister treasury teams have taken to be holding IL&FS paper
Trump recently even Arun Jaitley increased the money out from liquid and also NBFC debt instru-
called India as the “tariff custom duty on CKD funds and parked it in 7-15 ments. So investors may have
king” over the huge lev- (completely knocked day tenure bank fixed depos- wanted to sit out for a while,”
ies on American iconic down) imports of motor its. Let us see what happens said the national sales of an
luxury cruiser bike Har- vehicles, motor cars, mo- next month. Historically, MF distribution outfit.
ley Davidson. torcycles from 10 % to flows return to liquid funds While liquid and debt
Experts claim that the 15% in the Union Budget in the subsequent month. In- funds saw quite a bit of re-
most recent changes hap- for 2018-19. come funds too saw outflows top fund house. demption, thankfully the MF
pened last year in July Also, custom duties worth Rs 32,000 odd crore in “The major investors in industry still retains the con-
post goods and services were doubled on certain September. So, put together the debt segment have been fidence of equity investors.
tax (GST) implementa- spare parts, accessories about Rs 2.5 lakh crore net corporates who invest their About Rs 12,000 crore net
tion, when luxury vehi- to 15%. As a result, the outflows went out from just excess cash in short-term inflows were seen in equity,
cles attracted base rate of car makers had no option two categories. This is why debt funds, liquid funds, and balanced and ELSS (tax-sav-
28% with 15% cess. Later, but to pass on the hike to at an industry level AUM has fixed maturity plans as a part ing) funds in a month when
in September cess on large the customers, making dropped from all-time high of their treasury manage- the broader markets cor-
cars was hiked 5%, taking cars more expensive by of Rs 25 lakh crore to Rs 22 ment. But the liquidity crisis rected by over 6% and mid-
the total GST incidence to up to Rs 10 lakh or even lakh crore in just one fears meant that many inves- cap and smallcap stocks fell
48%, while that on SUVs more, the experts said. month,” said the CEO of a tors may have panicked and by more than double of that.

Printed and published by Prashant Saxena on behalf of Diligent Media Corporation Ltd. Printed at Diligent Media Corporation Ltd, Plot No EL-201, TTC Industrial Area, MIDC, Mahape, Navi Mumbai.
Published at Diligent Media Corporation Ltd,18th floor, Marathon Futurex, N M Joshi Marg, Lower Parel East, Mumbai – 400013. Phone: 3988 8888 Editor : Anto T Joseph
 c mpanies
www.dnaindia.com I twitter.com/dna I epaper.dnaindia.com I facebook.com/dnaindia
Mercer invests in
Deal talent assessment
Street with Mettl buy
Global consulting leader Mercer said it has acquired
Mettl, an online talent assessment solution provider in
India. Established in 2010, Mettl offers multi-lingual
assessments conducted via secure software as a service
(SaaS) platform in over 80 countries. Mercer, however,
did not disclose the financial details of the transaction.
“Online talent assessment is a powerful tool that helps
companies unlock the potential of their people,” said
Mercer India CEO Anish Sarkar. He added that the
acquisition will enable companies in India to improve
their workforce as they prepare for the future of work
amid rapid digitalisation.
Coal India, NLC
to set up JV
Coal India said on
Monday it has entered
into a pact with NLC
India Ltd (NLCIL) to set
up a joint venture for
power generation.
“Coal India Ltd (CIL)
and NLCIL have signed
a memorandum of
understanding (MoU)
for the formation of a
joint venture for solar
power generation of
3,000 megawatt and
thermal power projects
of 2,000 mw capacity,”
the coal behemoth said
in a filing to BSE.
In brief
TCL to invest
`2,000 crore
China-based TV and
consumer electronics
maker TCL Electronics
would invest around Rs
2,000 crore in its proposed
new manufacturing
facility at Tirupati,
Andhra Pradesh in the
first phase, TCL India
country manager Mike
Chen said. The company
expects to start
manufacturing from its
first facility in India by
October 2019. The unit
will have a capacity to
roll out 3 million TVs per
year.
Salesforce’s hiring
plans on track
Cloud-enabled software
firm Salesforce’s plans
to hire 1,000
professionals in
Hyderabad by 2020 are
well “on track”, with the
company looking at
India as among its
growth markets, a
senior country
executive said.
Salesforce had
established a Centre of
Excellence (CoE) in
Hyderabad in 2016, in
line with its expansion
blueprint for India.
Federal Bank gets
nod for stake sale
Federal Bank said the
Reserve Bank of India
has approved proposal
to sell up to 45% stake in
NBFC arm Fedfina to
private equity firm True
North. Earlier in May,
the Board of the private
sector bank had
approved 26% strategic
investment by True
North in Fedbank
Financial Services Ltd.
Tata Steel’s Sept
quarter output
TATA STEEL 
Share price on BSE in `
682.02
559.80
Jan 1, 18 Oct 8
Tata Steel said its
consolidated steel
output remained almost
flat at 7.33 million tonne
(mt) during the second
quarter of the ongoing
financial year. During
July-September, 2017-18,
the company’s output on
a consolidated basis
stood at 7.26 mt, Tata
Steel said.
VECV to set up
`400 cr unit
Eicher Motors, which
has a 50:50 joint venture
with Volvo for trucks
and buses (VECV),
announced that the JV
plans to set up a new
greenfield truck
manufacturing plant at
an investment of Rs 400
crore in Bhopal. “Work
to set up this plant is
expected to start soon,”
Eicher Motors said.
Palo Alto
eyes RedLock
Palo Alto Networks has
entered into a definitive
agreement to acquire
RedLock Inc, a cloud
threat defence company.
Under the terms of the
agreement, Palo Alto
Networks will pay
approximately $173
million in cash to
acquire RedLock. The
acquisition is expected
to close during Palo
Alto Networks fiscal
first quarter, subject to
the satisfaction of
customary closing
conditions.
Oil & gas, metals to lift
july-September earnings
Led by oil and gas and metals, India Inc will post 26.7% sales
growth in the second quarter (Q2). Aggregate margins will fall
by 271 basis points, as per Prabhudas Lilladher
13.6% 18.3%
Expected adjusted The same in
profit after tax previous quarter
Sector snapshots The brokerage expects muted performance
from auto, pharma and public sector banks
„„Automobiles
(On-year change) All sector
- sales (%)
28% - Fall in PAT
11% - Revenue
growth (excluding
12.0
Tata Motors)
117 bps - Fall in
Ebitda margin
Q2 Q1 Q2
„„Cement FY18 FY19
Earnings expected to
All Sector
grow in single digit - EBIDTA (%)
due to weak margins
„„Consumer 16.2
11.8% - Sales will
increase
13.3% - Jump in PAT
36 bps - Margin Q2 Q1 Q2
expansion FY18 FY19
„„IT
0.7-3.5%
- Constant currency
revenue growth
quarter on quarter
(QoQ)
30 to 150 bps
- Ebitda margins will
improve QoQ
Greenko in pact to acquire Skeiron’s assets ASK Investment, Puranik, two
Hyderabad: City-based
Greenko Energy Holdings, a
renewable energy company,
announced on Monday that
it has signed a pact to buy the
assets of Pune-based Skei-
ron Green Renewables in
Andhra Pradesh and Karna-
taka.
Also, Greenko has already
acquired Orange Renewa-
bles as was proposed in June,
745
a senior executive of Green-
695 ko said.
645 The combined deal of Or-
595
ange and Skeiron would add
1,300 megawatt of wind and
545
solar power to the overall op-
495 erational capacity of Green-
ko to 4.5 gw of wind, solar
and hydroelectricity, a press
release said.
a new era
GE’s shock CEO ouster leaves billions in disposals up for grabs
Elizabeth Fournier
General Electric Co, a pro-
lific dealmaker throughout
its 126-year history, began the
biggest reorganisation ever
under CEO John Flannery.
Then Flannery was gone.
His restructuring cam-
paign was interrupted af-
ter just 14 months when he
was replaced by Larry
Culp in a surprise ouster
last week. Before Flannery
left, he had announced at
least 17 divestitures and
spinoffs worth more than
$13 billion.
GMR settles dispute with PE cos
SBI Macquarie, Standard Chartered PE, JM Financial to get 5.86% equity in GMR Airports
DNA Money Correspondent
correspondent@dnaindia.net
Mumbai: GMR Infrastruc-
ture Ltd (GIL) announced on
Monday it has settled the ar-
bitration with its private eq-
uity investors by giving them
5.86% equity in its subsidi-
ary GMR Airports Ltd (GAL)
along with a payment of Rs
3,660 crore.
The arbitration relates to
the settlement of Class A
compulsorily convertible
preference shares issued by
GMR Airports Ltd to the pri-
vate equity investors, i.e,
converting the investment
into equity. However, later on
GAL was against it. The in-
vestors then went into arbi-
tration.
The arbitration proceed-
ings were administered by
the Singapore International
Arbitration Centre and
asked both the parties were
directed to settle the matter
amicably.
The investors including
SBI Macquarie, Standard
Chartered Private Equity,
JM Financial Old Lane and
others had invested Rs 1,478
crore in the form of compul-
13.2%
A year ago
All Sector - Sales
(Excl. Oil & Gas) (%)
26.3 18.4
22.2
11.7
Q2 Q1 Q2
FY18 FY19
All Sector - EBIDTA
(Excl. Oil & Gas) (%)
27.2 22.1
13.0
11.6
Q2 Q1 Q2
FY18 FY19
Greenko has an addi-
tional capacity of generat-
ing over 8 gw from inte-
grated renewable energy
projects, which would take
the total operating capacity
to about 12 gw to become a
leader in the new energy
Former CEO announced reorganisation plans before leaving; health care spinoff, Baker Hughes exit still on the table
While he closed at least a
dozen of those deals, his
plan to streamline GE failed
to win over investors. While
Culp has yet to lay out his
strategy, purpose of the
CEO swap was to speed up
Flannery’s plan, not to
change directions. Here’s
what we know is up for
grabs:
Health care:
In June, Flannery an-
nounced plans to spin off
medical-equipment business.
The spinoff is due to be com-
pleted by the end of 2019.
`3,660cr ` 2,005cr `1,478cr
Payment GMR Infra will make to
PE investors; to be partly funded
end of
arbitration via sale of airport-related equity
ownerships to its arm GAL
GMR INFRASTRUCTURE
Share price on BSE in `
22.30
15.75 14.5
Jan 1, 18
sorily convertible prefer-
ence shares (CCPS) in GMR
Airports Ltd (GAL) in the
financial year (FY) 2011 and
FY2012.
“Further pursuant to the
settlement agreement, all
parties decided to withdraw
the ongoing arbitration and
pursuant to binding agree-
ments giving effect to the
terms of the settlement the
investors (along with certain
JLR global
sales decline
12.3% in Sept
New Delhi: Tata Motors-
owned Jaguar Land Rover
(JLR) on Monday reported a
12.3% decline in global sales
at 57,114 units in September,
hit by lower demand in Chi-
na, the auto major said.
JLR will close its Solihull
plant for two weeks later this
month due to fall in sales in
China. The company’s sales
in China declined by 46.2%
during September as com-
pared to the same month last
year as ongoing market un-
certainty resulting from im-
14.2
port duty changes and con-
tinued trade tensions held
back consumer demand.
Sales of Jaguar brand of
vehicles in September were
at 19,146 units, an increase of
4.4% over September 2017,
the company said in a state-
ment.
Land Rover range posted
sales of 37,968 units in the
month, down 18.8%, it added.
8.0
“As a business, we are con-
tinuing to experience chal-
lenging conditions in some
of our key markets,” JLR
chief commercial officer Fe-
lix Brautigam said.
Demand in China has
struggled to recover following
changes in import tariffs in
July and intensifying compe-
tition on price, while ongoing
global negotiations on poten-
tial trade agreements have
dampened purchase consid-
erations, he added. —Agencies
expansion drive
„„The combined deal of
Orange and Skeiron would
add 1,300 mw wind and
solar power to of Greenko’s
overall operational capacity
„„Greenko has additional
capacity of generating
over 8 gw from integrated
renewable projects
sector in the country, the
release said.
“The deal will add nearly
$200 million to Ebitda (earn-
ings before interest, tax, de-
preciation and amortisation)
of Greenko in the first full
year after close, with further
Flannery's Formula
GE's former CEO planned to focus on power,
renewable energy and aviation ($ billions)
Power
Aviation
Health Care
Oil & Gas
0.3
Renewable Energy
0.8
Capital
Transportation
-6.8
0.8
Lighting
Source: GE annual report 2017
Oil:
GE plans to offload its
62.5% stake in oilfield-servic-
es company Baker Hughes
NCDs GAL would use to
fund acquisitions of stakes
from parent firm GMR Infra
24.5
22.5
20.5
18.5
16.5
Oct 8
of their affiliates) would ac-
quire 5.86% equity of GAL at
a 100% valuation of Rs 21,000
crore and receive a payment
of Rs 3,560 crore in lieu of
their entire CCPS,” GIL said
in a statement.
GMR Infra said the cash
payment would be partly
funded by the company
through the sale of airport-
related equity ownerships to
its arm GMR Airports. GIL
‘Motherson eyes opportunities
in electric buses and trucks’
V
ivek Chaand Sehgal,
chairman of auto
components manu-
facturer Motherson
Sumi Systems, in an
interview with Swati
Khandelwal of Zee Busi-
ness, talks about how the
company will achieve $18 bil-
lion revenue target by 2020,
and the various opportuni-
ties and challenges.
„„How you deal with glob-
al challenges?
We have grown 7,000 times
in the past 25 years. We have
learned we are supposed to
connect with our customers
and resolve their problems at
our end. This is a reason that
such disturbances and dis-
ruptions don’t have any im-
pact on our business. In fact,
we get more opportunities.
For instance, during the
Lehman Crisis, we were able
to develop mirror company
which was appreciated by
carmakers and since then,
we have been able to increase
our sales by four times in a
period of just eight years.
„„BMW lowered its global
forecast. Will it impact
you?
It is very complicated.
Two-weeks ago, Bloomberg
in its report said August
sales in Europe had gone up
accretion and growth antici-
pated thereafter,” it said.
The proposed acquisition
of the assets of Skeiron and
Orange Renewable was ex-
pected to drive capacity, rev-
enue, Ebitda and overall
earnings growth potential of
Greenko and its stakehold-
ers, the release said.
Greenko has been focus-
ing on building integrated
renewable energy assets
with storage, which can
compete with conventional
energy assets like thermal
in quality, quantity and
cost, the release quoted
managing director and
chief executive officer of
Greenko Anil Chalamala-
setty as saying. —PTI
36
2.8
27.4
6.6
19.1
3.4
17.2
10.3 Revenue FY-2017
9.1 Profit FY-2017
4.2
2.0 0.2 Larry Culp
over the next two to three
years, likely via a series of
share sales rather than a
wholesale spinoff or sale, ac-
MUMBAI I TUESDAY, OCTOBER 9, 2018 I daily news & analysis
PE firms had invested in
the form of compulsorily
convertible preference
shares in GMR Airports
would sell its entire share-
holding of 40% in CEBU air-
port in Philippines at a 100%
valuation of $590 million,
50% shareholding in Clark
EPC project in Philippines at
a 100% valuation of $9.7 mil-
lion and its entire sharehold-
ing of 40.1% in Delhi Airport
Parking Services Ltd at a
100% valuation of Rs 499
crore.
The aforesaid sharehold-
ings are being acquired by
GAL based on valuations by
Duff & Phelps. GAL would
fund these acquisitions by a
fresh issue of non-converti-
ble debentures of Rs 2,005
crore subscribed by the in-
vestors and/or certain of
their affiliates.
G B S Raju, chairman,
Airport Sector, said in a
statement, “We thank our
investors for contributing to
the growth of GAL as an air-
port operator platform grow-
by 3% and is the best one.
This is a reason that things
can’t be generalised, at least
when there is no clarity. I
think the reaction of car-
maker for a reaction of a
particular area is not going
to have any impact on
our everyday sales.
„„ Do you think
demand is going
to be robust con-
sidering shared
mobility and move
towards electric ve-
hicles?
This is not a new challenge.
In fact, car production and
sales have gone up in the past
six decades, it also went up at
the time of Lehman crisis. Un-
doubtedly, there are people
who don’t want to buy a car
but there are so many
more who are buying.
„„ How are you
preparing for the
electric segment?
We are looking
at opportunities in
buses and trucks.
Secondly, PKC Group
Plc, which was
acquired
others get nod for maiden floats
New Delhi: Four compa-
nies, including wealth man-
agement firm ASK Invest-
ment Managers and real es-
tate developer Puranik
Builders, have re-
ceived markets regu-
lator Securities and
Exchange Board of
India’s (Sebi) approv-
al to float initial IPO
share sales. Watch
The other two
companies are IT so-
lutions firm Nihilent and
Muthoot Microfin.
ASK Investment Manag-
ers’ IPO comprises fresh is-
suance of shares worth up to
cording to analysts includ-
ing Sonny Randhawa at Sea-
port Global Securities LLC.
GE Capital:
In June, Flannery said that
by 2020 he would sell off the
bulk of what’s left of GE
Capital. Flannery laid out
plans to unload $25 billion in
assets from its energy and
industrial finance opera-
tions. That would primarily
leave GE Capital with a
world-class aircraft leasing
business, though that could
potentially be up for grabs
too. GIC Pte, Singapore’s sov-
03
ing from two airports assets
at the time of their invest-
ment to current six airports
assets (including Nagpur
Airport, for which we have
emerged as highest bidder.”
A Bengaluru-based ana-
lyst said this will end the
uncertainty over the arbitra-
tion result and help GMR to
gain more focus in its expan-
sion plans.
“We remain committed
and bullish on the airport
infrastructure business op-
portunities which encom-
pass growth of consumer
business and commercial
property business sur-
rounding the airport,” Raju
added.
GMR Group’s airport
portfolio comprises India’s
busiest Indira Gandhi Inter-
national Airport in New
Delhi, Hyderabad’s Rajiv
Gandhi International Air-
port, Mactan Cebu Interna-
tional Airport in partner-
ship with Megawide in the
Philippines. The greenfield
projects under development
include airport at Mopa in
Goa and airport at Herak-
lion, Crete, Greece in part-
nership with GEK Terna.
by us two years back, has all
facilities related to electric
vehicles. Similarly, Sumito-
mo also has the technology
in the segment. Thus, we
have everything available.
But 10 crore cars were made
last year and the number
of electric cars manu-
factured was just 8
lakh. But it is a
change for the fu-
ture and we would
like to welcome it.
In fact, you can’t ret-
rofit electric engines as
it was done in case of petrol
engines.
„„Are you on course to
becoming a $18 billion
revenue company by 2020?
Yes. In fact, we can achieve
it before that.
„„ What’s
driving this op-
timism?
This confi-
dence is due to
the change that
we have seen in
the segment in
the past three-
four decades.
Rs 600 crore besides an offer
for sale of up to 1,35,69,405
shares by private equity
company AI Global and 44
lakh stocks by promoter Sa-
meer Kotecha.
ASK plans a private
placement of up to
43,95,865 equity shares,
aggregating to Rs 300
crore. According to
sources, it is aiming to
raise Rs 2,000 crore
through the initial
public offering (IPO).
Proceeds will be utilised
towards investment in its
subsidiary ASKFH to aug-
ment capital base for the
ereign wealth fund, has ex-
pressed interest in purchas-
ing it, people familiar with
the matter said in September.
On Monday, Apollo Global
Management LLC agreed to
acquire about $1 billion of eq-
uity investments in energy as-
sets from a unit of GE Capital.
Insurance:
GE also said in June that it
was exploring options to re-
duce its insurance exposure,
after booking a $6.2 billion
charge earlier in the year tied
to an old portfolio of long-
term care insurance. Athene
Aavas shares
drop 6% in
debut trade
New Delhi: Shares of hous-
ing finance company Aavas
Financiers made a weak de-
but at the bourses on Mon-
day and ended 6% lower
against the issue price of Rs
821 per share.
The stock listed at Rs 758,
a fall of 7.67% from the issue
price on BSE.
During the day, the scrip
plunged 13.52% to Rs 710. It
finally ended 5.82% lower at
Rs 773.15.
On NSE, shares of the
company settled at Rs 771,
plunging 6% as compared to
the issue price. The stock
had listed at Rs 750, a dis-
count of 8.64% from the is-
sue price.
In terms of equity vol-
ume, 4.96 lakh shares of the
company were traded on
BSE and over 35 lakh shares
changed hands on NSE dur-
ing the day.
The company’s market
valuation stood at Rs 6,038.91
crore on BSE.
Aavas Financiers’s Rs
1,734 crore initial public of-
fering (IPO) ran from Sep-
tember 25 to September 27
and was subscribed 97%.
The price band for the of-
fer was fixed at Rs 818-821 per
share. —PTI
There was a time when 80%
of vehicle parts were devel-
oped internally by the au-
tomaker but now they are
producing only 15-20% prod-
ucts in-house. Besides, if a
company in the supply chain
goes bankrupt, the supply
chain management will call
the people or company whom
it trusts and ask them to take
over the company and under
such situation, we have very
less time to take over the
firm and go ahead with it.
That is why all our acquisi-
tions till date - 21 in total, are
running well at present.
„„What will contribute to
your business in the next
two-three years?
We don’t want to have one
country, one customer and
one component in more than
15% of our turnover. New
verticals will be available in
the market in a few days but
I don’t have approvals to
name them. Our USP is the
way we increase our content
per car. For instance, con-
sider we are supplying prod-
ucts valued Rs 10,000 for a
car and we have a target to
double the value to Rs 20,000,
which means that our turno-
ver has doubled. In such a
case, a decrease in sales of
the vehicle will not have an
impact on our business.
non-banking finance com-
pany business and for other
general corporate purposes.
The IPO of Puranik Build-
ers consists of fresh issue of
shares worth Rs 810 crore
and an offer for sale of up to
18,59,620 equity shares by the
company’s promoters and
existing shareholders.
The IPO is expected to
fetch Rs 1,000 crore, mer-
chant banking sources said.
Nihilent’s share-sale com-
prises fresh issuance of
shares worth up to Rs 250
crore and an offer of sale of
around 21,25,599 stocks by
promoter group entity. —PTI
Holding Ltd, an annuity sell-
er with ties to Apollo Global
Management LLC, has ex-
pressed interest in buying all
or some of GE’s insurance
business, a person familiar
with the matter said.
Power conversion:
GE tapped bankers to un-
load a unit within its power
operations formerly known
as Converteam, which could
fetch about $1.5 billion, peo-
ple familiar with the matter
said in August. That would be
well under the $3.2 billion GE
paid for it in 2011. —Bloomberg
 04 
daily news & analysis I MUMBAI I TUESDAY, OCTOBER 9, 2018
Pers nal Finance www.dnaindia.com I twitter.com/dna I epaper.dnaindia.com I facebook.com/dnaindia

Ashfaque Ismail
correspondent@dnaindia.net Money Sense
Thane-based Amol Bhosekar, personal tax
43, a pharmaceutical re- Arvind Rao
search professional, started

ITR error must be

investing in mutual funds
through systematic invest-
ment plans (SIPs) in 2008.
Until then, his investments
were in conventional instru-
ments like bank fixed depos-
its and insurance policies,
backed by evidence
A
which gave him returns in taxpayer had filed his return for assessment year
the range of 7% to 8%. “At 2006-07 and declared the loss from business at Rs
one point of time, I realised 3.26 lakh. His return was selected for detailed as-
these returns will not help sessment. During the course of assessment, the tax
me fulfill my financial officer scrutinised the taxpayer’s records and ob-
goals,” he said. served that the taxpayer had sold capital assets for Rs
In 2008, he started invest- 15.75 lakh, resulting in Short-Term Capital Gain

Markets in
ing between Rs 5,000 and Rs (STCG) of Rs 12.77 lakh. However, the taxpayer did
7,000 per month and in- not offer this for taxation nor disclose this in his re-
creased the amount gradu- turn of income.
ally. Currently he invests Rs The taxpayer submitted that he had insufficient
50,000 in different MF staff at that point, due to which this error inadvert-
schemes, every month, out ently took place while computing the total income of
of his salary of Rs 2 lakh. the year. Further, given the fact that the taxpayer had

turmoil, but
Bhosekar believes that at heavy accumulated business losses, there would not
least 30% of one’s monthly have been tax liability on his part, even if the STCG
income should go towards was disclosed in the return of income. The tax officer
investments. found this contention wrong, as the taxpayer claimed
“Salaried people don’t to set off these capital gains against the brought for-
have money in bulk for meet- ward business losses; whereas under the relevant

stay invested
ing contingencies. That is provisions of the Income Tax Act (‘the Act’), such a
why they can opt for SIP for set-off is not permitted. After the permissible set-offs,
investing. If you want to ben- the taxable STCG were calculated at Rs 3.33 lakh; on
efit from SIPs, you should which the taxpayer should have paid income taxes.
stay invested at least for Despite having taxable income, as the taxpayer had
three years. And for better filed his return of income without disclosing the
returns stay invested for 10 STCG, it was a case of filing inaccurate particulars

to 15 years,” he said.
Besides, getting profes-
sional advice from Chitnis
Financial Planners, he reads
about personal finance in
books, magazines, newspa-
pers and on the internet. “It
is better to learn your financ-
es than to depend fully on
advisors. After all, it is your
money,” he said. He uses cal-
culators available on web-
sites to calculate the cost of
financial goals in future.
About his strategy he said:
“Always link at least one fi-
nancial goal with your MF
scheme.”
Bhosekar’s goals are se-
curing his daughter’s educa-
tion and marriage. His tips
for being an ace investor in
MF include: one, choosing
right financial adviser and
two, selecting a good set of
MF schemes.
Why investors must not
stop SIPs
Bhosekar’s expectations can
be proved by numbers, as
Milind Chitnis, founder of
Chitnis Financial Planners
Retail investors in mutual funds must be patient, have an investment plan and stick with it
It is difficult for an individual
to track the live equity
market every day.
Vijay Zope, medical practitioner
explained. Suppose an inves- are a boom period for SIP
tor has a monthly SIP of Rs investors, as they can buy
9,000 for nine months, from their units at lower prices,”
January to September 2008. Chitnis said.
In September 2008, his in- Ashwin Patni, Head Prod-
vestment would have been ucts and Fund Manager, Axis
Rs 90,000 and the gain Rs Asset Management Compa-
82,000, as equity markets ny agreed that equities are a
were down. He would have long-term asset class. “In-
had to bear a loss of Rs 8,000. vesting systematically can
If the investor had stopped reduce risks of timing the
the SIP and looked for “saf- markets and help in reaping
er” avenues; say bank FDs, true rewards of equity in-
PPF, etc, by September 2018 vestments,” he said. As
he would have got Rs 3,20,000 against this, traditional sav-
as returns. But he had con- ings instruments provide a
tinued his SIPs, he would fixed rate of return, are tax
have invested Rs 12,90,000 by inefficient and don’t account
now and got Rs 31,78,000 re- for effects of inflation.
turns. “In fact, low markets G Pradeepkumar, CEO,
Since salaried people don’t
have money in bulk, they
can opt for SIP for investing.
Amol Bhosekar, professional
Union Asset Management an Parekh. Before he fully
Company also has the same switched to SIPs, Zope was
advice for investors. Once an active investor in direct
you pick good schemes and equities. For the past 35
put in place SIPs, you should years, he has seen markets
stick to these plans. “Never peaking new highs and fall-
start investing randomly. In- ing to record lows. Now, he
crease SIPs when the mar- has chosen different types of
kets are down as you will get MFs for investing. Presently,
cheaper units. And to get full he invests around Rs 50,000
benefits, keep investing for in MFs every month using
at least five years,” he said. SIPs. He started his SIP in-
vestments around 2001 and
Loss can be recouped within three to four years
Fifty-five year old Vijay recovered the money he lost
Zope, a medical practitioner in the stock market.
based in Mumai, lost Rs 20-25 Zope is also a firm believ-
lakh in the aftermath of the er that for an individual in-
stock market scams involv- vestor, MF investment
ing Harshad Mehta and Ket- through SIPs is the best op-
tion. “It is difficult for an
individual to track the live
equity market every day.
Even big names in the mar-
ket can’t do that with an
ease,” he said.
Lack of planning can
hurt returns
Fifty-year old Mahesh
Vaknalli started investing in
stocks in early 90s. His in-
vestments were not planned
and that caused him a loss of
Rs 1 lakh. “As an investor you
should ensure your money is
not lost and your primary
capital is intact,” he said.
In 2003, he started invest-
ing through SIPs with Rs
2,000-3,000 per month. Today
he invests 75,000-80,000,
which is 25% of his monthly
salary. He continued his in-
vestments during the crisis
of 2008 and stays invested
despite markets being in a
turmoil. His advice to new
investors is to start with a
basic minimum amount.
of income. In view of these facts, the tax officer levied
penalty of Rs 4.27 lakh under the relevant provisions
of the Act.
The first appellate authority agreed with the pen-
alty levied by the tax officer. Before the tax tribunal,
the taxpayer contended that there was no deliberate
intention or attempt to evade any tax on his part.
There were huge losses in the account books as well
as tax returns. The sale of fixed assets was recorded
in the account books maintained and were audited
too. The taxpayer submitted that he had neither con-
cealed any income nor furnished inaccurate particu-
lars and the omission of STCG was only due to the
inadvertent and bonafide mistake committed by the
accountant, while filing returns.
The tax tribunal observed that the taxpayer has
only made a general and sweeping statement about
the bonafide mistake. The same has not been demon-
strated with circumstantial evidence as to how this
error had happened. Likewise, reasons for the person
preparing the return to have failed to comprehend the
transaction, along with an affidavit of the said person
was not filed. A bonafide error needs to be backed by
facts and reasons, as was decided by the Supreme
Court in one of the earlier cases, that was relied upon
by the taxpayer. Consequently, the tribunal formed its
view that the taxpayer’s statement about the “bon-
afide mistake” was just being made up for giving an
explanation.
Accordingly, the taxpayer’s appeal was dismissed
and he was directed to pay the penalty.
The writer is a Sebi-registered investment advisor

the Expert India’s personal wealth to grow 13% Fund Meter

Tapan Singhel DNA Money Correspondent
MD & CEO, Bajaj Allianz General Insurance correspondent@dnaindia.net
General Insurance Mumbai: India’s personal
financial wealth, which is at
Health insurance premiums are $3 trillion, is projected to
grow by 13% to $5 trillion, by
sion patterns continue over
growth story the next few years-with bulk
Top 5 funds based on 3 year return
60% $5 trillion
of growth coming from eq-
uity and investment funds.
Depending on the outcome
Return in % Net asset
Scheme name 3 year 1 year (Rs crore)
Share of global
wealth that is
How much India’s per-
sonal financial wealth is
of current geopolitical un-
certainties, the level of Equity funds

based on change in age slabs 2022, making it the 11th

wealthiest nation, said a re-
in investible
assets such as
projected to reach by
2022
global economic develop-
ment and potential stock
Parag Parikh Long Term Equity Fund
Axis Focused 25 Fund
13.47
12.38
7.63
2.11
1352.17
6052.97
port by Boston Consulting equities, invest- market corrections, howev- Quant High Yield Equity Fund 12.24 -4.93 5.38
I did not have any medical insurance claim last year. My sum Group. According to the re- ment funds, er, growth could instead be Principal Multi Cap Growth Fund 11.70 -3.84 726.20
assured increased because I got no claim bonus. But despite not port titled “The Global bonds,etc substantially lower with a
making any claim my insurance premium increased. I want to L&T Midcap Fund 11.59 -9.71 3095.08
Wealth 2018 - Seizing The CAGR of about 4%. In a
know why my premium increased? Saloni Mahadik Analytics Advantage,” glob- worst-case scenario, if a full Equity: ELSS
al personal financial wealth blown crisis were to hit a Quant Tax Plan 15.58 -2.76 8.34
Health insurance premiums are predominantly decided based on
grew by 12% in 2017 to $201.9 major economies, the five- Principal Tax Savings Fund 11.27 -4.75 410.92
your age and sum assured opted. The premium amount changes and
trillion in US dollar terms. wealth increased from 64% global wealth took the form year CAGR would fall to less Motilal Oswal Long Term Equity Fund 11.17 -7.46 1137.07
increases with your age, irrespective of whether you have made any
This expansion is more than in 2012 to 67% in 2017 and is of investible assets-mainly than 1%. Taurus Tax Shield Fund - Regular Plan 11.13 4.70 54.87
claims or not. No claim bonus is a benefit which you get if there have
doubled that of the previous estimated to be 80% in 2022. equities, investments funds, Personal wealth in Asia
been no claims in the previous policy/policies. As a common practice Aditya Birla Sun Life Tax Relief 96 10.23 -0.32 7019.85
year, when global wealth Of India’s private wealth, currency and deposits and grew by 19% to $36.5 tril-
this is an incentive for claim free renewals and does not have any Hybrid: Aggressive Hybrid
rose by 4%. 6% is currently held off- bond- with the remaining lion, with residents of Chi-
impact on premium, it typically enhances sum insured by a percentage
shore, the report said. $80.3 trillion or 40% held in na holding nearly 57% of Principal Hybrid Equity Fund 14.62 6.45 1614.86
every year.
India 5th largest Asian non-investible or low liquid- that amount. Although the ICICI Prudential Equity & Debt Fund 12.09 5.68 29032.28
In case of your policy and the premium increase, you can take a clarity market Drivers of global person- ity assets such as life insur- asset allocation share of eq- Mirae Asset Hybrid Equity Fund 11.98 5.84 1345.10
from your insurance provider to understand reason for increase. Often, After China, India consti- al wealth ance, pension funds and eq- uities and investment funds
HDFC Children’s Gift Fund 11.49 5.64 2438.77
it is due to change in age slabs as defined by the insurer. tutes the second largest pool The main drivers were the uity in unquoted companies. has grown over the past five
of wealth from emerging bull market environment in years (from 22% to 31% in Tata Retirement Savings Fund 11.35 -0.19 927.73
I have a cashless mediclaim, but the hospital took a deposit from markets in the coming years all major economies with Outlook for global 2017), Asia remains a cash Debt: Medium to Long Duration
me at the time of admitting. Why? Also, if I pay the bill and claim and is the fifth largest Asian wealth in equities and in- wealth growth and deposits heavy region, DHFL Pramerica Strategic Debt Fund 7.74 2.63 5.68
from the company how long will it take for me to get money? Is market in number of afflu- vestment funds showing by Personal financial wealth with 44% of personal ICICI Prudential Advisor Series 7.59 5.07 241.10
there a time limit by the company has to pay?  Ranganathan Chary ent, High Net Worth and Ul- far the strongest growth and could rise at a Compounded wealth held in this asset SBI Magnum Income Fund 6.65 1.60 1578.26
Health policies cover hospitalisation expenses including pre- tra High Net Worth individu- the significant strengthen- Annual Growth Rate class. Over the next five
UTI Bond Fund - Regular Plan 6.22 0.76 851.06
hospitalisation and post-hospitalisation expenses as per your policy als. The number of affluent ing of most major curren- (CAGR) of about 7% in US years, the regional wealth
individuals per 100 is 322, cies against the dollar. dollar terms, from 2017 to is projected to growth ap- ICICI Prudential Bond Fund 6.22 1.45 2893.84
terms and conditions. However, there are certain non-medical
expenses incurred during hospitalisation which are not covered HNWI is 87 and UNHWI is 4. In terms of asset classes, 2022, the report said. This is proximately at CAGR of Returns as on 05 Oct 2018 Size as on Sep 30, 2018 Source: www.valueresearchonline.com
under health policies and the list of the same has been given by The amount of investable $121.6 trillion, or 60% of if the recent wealth expan- 12%, the report said.
Insurance Regulatory and Development Authority of India. During
cashless procedure, some hospitals have the practice of collecting
deposit to take care of such expenses. Once the cashless claim in the trap Just because personal loans are easily available, it does not mean that you should take them
is settled by the insurance company, the hospital calculates the

Avoid going overboard with easy loans, credit card debt

payable expenses by the insured and settles the refund amount with
the insured.
In case of reimbursement claims, Insurance Regulatory and
Development Authority of India has set a time limit of 30 days to pay
the admissible claims registered with the insurer. This period starts Anil Rego banks. It is always nice to Where did Ujjwal go mum outstanding on credit
after submission of complete set of documents to your insurance hear about your high credit borrow safely wrong? cards is a big mistake. It is
company. It all began with a harmless score. The sweet talk makes „„Repayment for Firstly, Ujjwal started out as the minimum amount that
SMS. Software engineer, 29- even a discerning borrower unsecured debt, which a credit-worthy customer, has maximum impact. Try to
My car was stolen and when it was recovered it was damaged. Can year old Ujjwal was looking feel great. Ujjwal was elated, who then over-leveraged pay all credit card dues, not
I claim insurance for the damage?  Ravi Patil includes personal loan
for some money to repay a and he felt the need to oblige and credit cards, should himself. It was an easy deci- just the minimum amount.
You can claim for damages to your stolen and recovered car. Once friend. For his photography everybody. New credit cards, not exceed more than sion for financial institu- Any amount that you do not
the vehicle is recovered, you need to take the legal possession of the trip to Malaysia, he had to new digital platforms offer- 20% of your monthly tions to lend to him. Howev- pay attracts interest.
vehicle and inform the Regional Transport Office and police about its borrow Rs 50,000 because he ings loans and even few of income er, the borrower should prac- Fourthly, Ujjwal was
recovery. You also need to give a recovery intimation of your vehicle decided to visit neighbour- friends working in non- tice restraint. Because some- sucked into more debt even
to the insurance company. The insurance company will do a physical ing Vietnam as well. He was banking finance companies „„Try to pay all credit body is offering attractively- as he tried to handle the situ-
inspection of your vehicle, assess the damage and accordingly settle wary of using his credit card (NBFCs) offered him great card dues, not just the designed loans, it does not ation. In a bid to reduce in-
the claim. In case, the theft of the vehicle was not intimated to the overseas, so asked his col- loan deals. minimum amount as mean you should take them. terest costs from his four
insurer earlier, you need to report the claim with copy of FIR registered league to wire the money. Top credit card compa- any amount that you Secondly, like many gulli- credit cards, he took a per-
with police for stolen vehicle. Two months later, it was nies gave him three more do not pay attracts ble borrowers, Ujjwal fell sonal loan. However, he took
time to pay back his col- cards. From Rs 2 lakh, his interest into the credit card and per- extra funds. More funds
The second aspect related to this picture is whether you can claim the league. The SMS from the credit limit became Rs 15 sonal loan vortex. Credit mean more debt, resulting in
vehicle after the insurance company has settled your theft claim and bank offered a great deal, lakh across four cards. Al- cards charge interest rates more repayment.
post this the vehicle is recovered/found. As per the subrogation rule, and the best part of it was ways paying off minimum aged to reduce the Rs 26,000 What he did wrong ranging from 30-42% per Lastly, one should assume
insurance company has the legal possession of your vehicle after they that this loan would not be dues for each of his cards, credit card Equated Monthly Four years after his year. Such high interest only that much unsecured
have settled your theft claim and the company can sell it to prospective added to his credit card lim- Ujjwal’s credit card debt Installments (EMIs) to Rs Malaysia and Vietnam trip, means you should never use debt which can be repaid eas-
buyers through bidding. In case you wish to buy back the vehicle, it. Ujjwal took the bait and soared. A personal loan was 18,000 EMI on personal loan, Ujjwal was knee-deep in credit cards for one to two ily. As a thumb-rule, you
you can repay the entire theft claim amount to insurer and get the signed up for a Rs 1 lakh loan offered to him to slash inter- Ujjwal started rolling over loans. His loan requirement year tenure of loans. Once should not take more than
possession from them. for three years. est costs of credit cards. The the personal loan too. Every from a mere Rs 50,000, had the outstanding starts get- 20% of your monthly income
personal loan salesperson time he took a new loan, the increased to Rs 6 lakh. More ting accumulated, the entire in unsecured loan repay-
Situation slips asked him to take a bigger personal loan provider asked than half of his salary went loan becomes too big, due to ments.
Send your queries related to general insurance to As months went by, Ujjwal amount in case he faced an him to take more than out- into paying EMI for the high-interest rate. The writer is CEO and
personalfinance@dnaindia.net. was approached by other emergency. Once he man- standing. consolidated personal loan. Thirdly, paying the mini- founder of Right Horizons