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BUSINESSEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEE
THE HINDU DELHI
THURSDAY, SEPTEMBER 19, 2019 15EEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEE
NIFTY 50
PRICE CHANGE
Adani Ports. . . . . . . . . . . . . . . . . . . 366.35. . . . . . . . . 1.05
Asian Paints. . . . . . . . . . . . . . . . 1547.75. . . . . . . 16.85
Axis Bank . . . . . . . . . . . . . . . . . . . . . . 648.40. . . . . . . . . 7.95
Bajaj Auto . . . . . . . . . . . . . . . . . . . 2777.05. . . . . . . . . 3.90
Bajaj Finserv. . . . . . . . . . . . . . . 7255.05. . . . . 104.55
Bajaj Finance . . . . . . . . . .. . . . 3413.85. . . . . . . 45.45
Bharti Airtel . . . . . . . . . . . . . . . . . 335.60. . . . . . . . -4.25
BPCL. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 382.10. . . . . . . 13.35
Britannia Ind . . . . . . . . . .. . . . 2613.85. . . . . . -78.60
Cipla . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 458.65. . . . . . . . -2.00
Coal India . . . . . . . . . . . . . . . . . . . . . 192.35. . . . . . . . -5.25
Dr Reddys Lab . . . . . . . .. . . . 2743.65. . . . . . . . . 5.60
Eicher Motors. . . . . . . . .. 16030.40. . . -254.55
GAIL (India). . . . . . . . . . . . . . . . . . 134.95. . . . . . . . . 3.05
Grasim Ind . . . . . . . . . . . . . . . . . . . . 703.10. . . . . . . . . 2.15
HCL Tech. . . . . . . . . . . . . . . . . . . . . 1058.45. . . . . . . . . 2.60
HDFC . . . . . . . . . . . . . . . . . . . . . . . . . . . 1988.30. . . . . . . . -7.95
HDFC Bank. . . . . . . . . . . . . . . . . . 2187.75. . . . . . -23.60
Hero MotoCorp . . . . . .. . . . 2576.10. . . . . . . . . 7.15
Hindalco . . . . . . . . . . . . . . . . . . . . . . . 198.00. . . . . . . . . 0.05
Hind Unilever . . . . . . . . .. . . . 1829.20. . . . . . . . -2.00
Indiabulls HFL . . . . . . . .. . . . . . 419.25. . . . . . . . -9.90
ICICI Bank . . . . . . . . . . . . . . . . . . . . . 399.35. . . . . . . . -1.30
IndusInd Bank . . . . . . . .. . . . 1330.40. . . . . . . . -2.20
Bharti Infratel . . . . . . . .. . . . . . 253.50. . . . . . . . . 3.30
Infosys . . . . . . . . . . . . . . . . . . . . . . . . . . 829.85. . . . . . . . -1.40
Indian OilCorp . . . . . . . .. . . . . . 128.15. . . . . . . . . 2.95
ITC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 239.25. . . . . . . . . 2.05
JSW Steel. . . . . . . . . . . . . . . . . . . . . . 221.40. . . . . . . . . 5.20
Kotak Bank . . . . . . . . . . . . . . . . . 1464.75. . . . . . . 16.45
L&T . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1318.00. . . . . . . . . 4.30
M&M . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 527.00. . . . . . . . . 5.05
Maruti Suzuki . . . . . . . . .. . . . 6095.05. . . . . . -35.35
NTPC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 122.50. . . . . . . . . 1.60
ONGC . . . . . . . . . . . . . . . . . . . . . . . . . . . . 127.00. . . . . . . . -2.70
PowerGrid Corp . . . . .. . . . . . 202.05. . . . . . . . . 1.60
Reliance Ind . . . . . . . . . . . . . . . 1205.70. . . . . . . . . 8.25
State Bank . . . . . . . . . . . . . . . . . . . . 280.40. . . . . . . . . 6.45
Sun Pharma . . . . . . . . . . . . . . . . . . 416.80. . . . . . . . -3.85
Tata Motors . . . . . . . . . . . . . . . . . . 121.75. . . . . . . . -0.25
Tata Steel . . . . . . . . . . . . . . . . . . . . . 358.25. . . . . . . 13.30
TCS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2138.55. . . . . . . 15.90
Tech Mahindra . . . . . . .. . . . . . 716.75. . . . . . . 10.80
Titan . . . . . . . . . . . . . . . . . . . . . . . . . . . 1160.70. . . . . . . . . 2.45
UltraTech Cement. .. . . . 3902.80. . . . . . . . . 2.40
UPL. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 557.05. . . . . . . . -6.25
Vedanta . . . . . . . . . . . . . . . . . . . . . . . . 149.70. . . . . . . . . 4.30
Wipro . . . . . . . . . . . . . . . . . . . . . . . . . . . . 244.30. . . . . . . . . 0.15
YES Bank. . . . . . . . . . . . . . . . . . . . . . . . . 64.10. . . . . . . . -1.00
Zee Entertainment . . . . . . 335.40. . . . . . . . -1.95
EXCHANGE RATES
Indicative direct rates in rupees a unitexcept yen at 4 p.m. on September 18
CURRENCY TT BUY TT SELL
US Dollar . . . . . . . . . . . . . . . . . . . .. . 71.03. . . . . . . 71.35
Euro . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . 78.51. . . . . . . 78.86
British Pound. . . . . . . . . . . . .. . 88.46. . . . . . . 88.86
Japanese Yen (100) . .. . 65.67. . . . . . . 65.97
Chinese Yuan . . . . . . . . . . . . .. . 10.02. . . . . . . 10.07
Swiss Franc . . . . . . . . . . . . . . . .. . 71.40. . . . . . . 71.72
Singapore Dollar . . . . . . .. . 51.71. . . . . . . 51.95
Canadian Dollar. . . . . . . . .. . 53.60. . . . . . . 53.84
Malaysian Ringitt . . . . . .. . 16.97. . . . . . . 17.07
Source:Indian Bank
BULLION RATES CHENNAI
September 18 rates in rupees with pre-vious rates in parentheses
Retail Silver (1g) . . . . . . . . . . . . . 50.2. . . . . . . (50.4)
22 ct gold (1 g) . .. . . . . . . . . . . . 3600. . . . . . (3615)
market watch
18-09-2019 % CHANGE
Sensex dddddddddddddddddddddd 36,564 ddddddddddddddd0.23
US Dollardddddddddddddddddddd 71.24 ddddddddddddddd0.75
Gold ddddddddddddddddddddddddddd 38,676 ddddddddddddd-0.55
Brent oil ddddddddddddddddddddd 64.07 ddddddddddddd-0.91
State Bank of India’s (SBI)plan to off��er fi��xedcumfl��oating home loan rates — knownas teaser loans — is likely tohit a regulatory hurdle as theReserve Bank of India (RBI)is uncomfortable with suchproducts.
Teaser loans are thosewhich charge comparativelylower rates of interest in thefi��rst few years after whichthe rates are increased.
During a recent media interaction, SBI chairman Rajnish Kumar said the bankwill engage with the RBI forthe product which will bearfi��xed interest for about 10years and then, turn fl��oating. There is no fi��xed ratehome loan product in themarket though there is demand for such a product,and a fi��xedcumfl��oating rateproduct could have addressed that demand.
According to sources, theRBI is of the view that someborrowers may fi��nd it diffi��cult to service the loans oncethe normal interest rate,which is higher than the rateapplicable in the initialyears, becomes eff��ective.
In addition, a bank, whileextending the loan, does nottake into account the borrowers’ repayment capacity
after lending rates increase. While such teaser pro
ducts are not banned by theregulator, the standard assetprovisioning requirement ishigher for such loans. Fornormal home loans, thestandard asset provisioningis 0.4% but for teaser loans itis 2%. RBI had increased theprovisioning by fi��ve times forsuch loans since these loans
are perceived as more risky.Following the introduc
tion of higher risk weights,banks had discontinuedthose products.
SBI’s decision to ponderover such products came after the banking regulatormandated banks to link fl��oating rate retail and MSMEloans to an external benchmark. SBI, in fact, pioneeredsuch a product by linking itshome loan rate to repo rate,which it started off��eringfrom July.
Many other public sectorbanks followed suit beforethe RBI mandated such products for the entire bankingsystem from October 1.
SBI, however, decided towithdraw the product earlierthis month following the RBInorms on external benchmarklinked fl��oating rateloans and is reworking theproduct in line with the guidelines.
SBI’s teaser loan plan may notfi��nd favour with the RBI Banking regulator still has concerns over fi��xedcumfl��oating rate loans
MANOJIT SAHA
Mumbai
Cautious stance: RBI feels borrowers may fi��nd it diffi��cult toservice loans once normal rates take eff��ect. * REUTERS
After mandating banks toimplement external benchmarking for retail loan pricing, the Reserve Bank is nowlooking at the loan pricingregime of nonbanking fi��nance companies to makethe practice moretransparent.
According to sources, thecentral bank is internallydiscussing the loan pricingmechanism of the nonbanking sector. At present, thereis no anchor rate for NBFCs,similar to banks, that islinked to the lending rate ofa particular loan.
For example, banks havethe marginal cost of fundbased lending rate (MCLR) —the anchor rate — and all theloans are linked to such arate. Earlier, the base rateacted as an anchor rate.
Banks were not allowed tolend below the base rate orthe MCLR rate. Banks are allowed to add a spread, basedon the risk assessment, tothe anchor rate.
However, there is no such
mandate for NBFCs to havean anchor rate to which allthe loan rates are linked.
“There is no anchor ratefor NBFCs.
“So, fi��rst, we have to seehow they are pricing loans,”sources said, adding itwould take some time before mandating an anchorrate for NBFCs.
Unresponsive to changesIt has often been noticedthat lending rates of banksand NBFCs, including housing fi��nance companies, arenot responsive to changes inthe RBI’s policy rate or therepo rate. As a result, thebanking regulator has now
mandated banks that fl��oating rate retail loans forhomes, vehicles and loans tosmall and medium enterprises should be linked to anexternal benchmark like repo rate or Government of India Tbills, for example.
The main objective behind linking loans to an external benchmark was forfaster transmission of monetary policy rates, particularly in a declining interest regime. At the end ofSeptember 2018, the number of NBFCs registered withthe Reserve Bank of Indiadeclined to 10,190 from11,402 at the end of March2018. Only a handful of largeNBFCs are supervised by thebanking regulator.
The consolidated balancesheet of NBFCs expanded in201718 and also in 201819,helped by strong credit expansion. The profi��tability ofNBFCs improved on theback of fundbased income,low NPA levels relative tobanks and strong capitalbuff��ers, RBI had observed ina recent report.
NBFC loan pricing under RBI lensBanking regulator may mandate anchor rate
MANOJIT SAHA
Mumbai
Saudi Aramco will be ableto fully restore its production capacity by the end ofSeptember, the company’spresident and CEO AminNasser said on Tuesday.
Saudi Aramco’s Abqaiqand Khurais plants were hitby drone attacks on Saturday, severely aff��ecting theirproduction capacity. Global oil prices shot up byabout 20% following the attacks. “These synchronised attacks were timed tocreate maximum damageto our facilities and operations,” Mr. Nasser said at apress conference in Jeddah. “The rapid response... shows the company’spreparedness to deal withthreats aimed at sabotaging Aramco’s supply ofenergy to the world.”
It was also revealed thatproduction at Khurais resumed 24 hours after theattack.
Aramco torestore fullproduction bySept. end
Special Correspondent
NEW DELHI
Reliance Communications(RCom) on Wednesday saidits wholly owned subsidiaryGlobal Cloud Xchange(GCX), which has fi��led forbankruptcy protection in aU.S. court, was planning toreduce its bond debt by $150million.
“GCX has announced aprepackaged plan of reorganisation to support itslongterm growth and development by reducing bonddebt by $150 million, providing a permanent capitalstructure that includes working capital facility and transitioning the business to newownership,” the company
said in a fi��ling with the exchanges.
New loans to fi��rmUnder the new plan, GCX’ssenior secured note holderswould become owners of the
company and provide newloans to support and growthe business. GCX, that ownsone of the world’s largestprivate subsea cable systems, fi��led for bankruptcyprotection in a U.S. court onSeptember 15 after it missedpayments on its $350 millionof 7% bonds that matured inAugust this year.
“Upon emergence fromthis process, the companyexpects to be wellpositioned to aggressively pursue its business plan independent of the overhangcaused by its corporate parent’s challenges,” GCX said,adding that more than 75%of the company’s lendershave already committed
their support for the plan.To ensure GCX maximises
value for its stakeholders inthis process, the companywill also use the protectionsand framework of Chapter 11to undertake a sale processthat welcomes additionalprospective buyers. GCX expects to complete the Chapter 11 process and emerge asa stronger company withinthe fourth quarter of 2019.
“We appreciate the strongcollaboration with our lenders, which has resulted in aplan of reorganisation thatallows us to honour our commitments to employees, customers and suppliers,” saidBill Barney, chairman andCEO, GCX.
GCX plans to cut bond debt by $150 million Arm of Reliance Communications fi��les for bankruptcy protection in U.S. court
Bill Barney
Special Correspondent
Mumbai
In a new trend in the road infrastructure space in India,pension funds, sovereignwealth funds and privateequity funds from Canada,Abu Dhabi, Australia andSingapore are seen emergingas new owners of road assets, replacing traditionalowners like IRB, GMR, DilipBuildcon and L&T, to name afew.
So far, these funds havecollectively pumped inabout ₹��20,000₹��25,000crore in upandrunningroad assets and more fundsare on their way. “Ownership of road assets has signif
icantly changed over the lasttwo years. Suddenly, therehas been a change in ownership pattern,” said Jagannarayan Padmanabhan, director and practice leader,Transport Infrastructure Advisory, Crisil Risk & Infrastructure Solutions.
“Earlier it was L&T IDPL,Ashoka Buildcon, IL&FS andothers who were the roaddevelopers. Now, you are
having a separate set of owners of assets who were notactive in this space. These include GIC, CDPQ, CTPID,CPPIB, Macquarie and Esquire Capital, who have nowbecome owners of roadassets.”
Some of the other foreigninvestors in Indian assets include AMP Capital and National Infrastructure & Investment Fund (NIIF), inwhich Abu Dhabi Investment Authority (ADIA) hasmade signifi��cant investment.
“What this means is thatother than NHAI, foreign investors are controlling a certain percentage of India’sroad assets. That is a signifi��
cant twist in how things panout,” he said. These strategicinvestors are looking at thelong term, he said. He addedthat the Centre’s plans for investment of ₹��100 lakh crorein infrastructure in 5 yearsseemed to be farfetched.
“Internally, last year wehad a view that in the next 5years, the need for investment is about ₹��50 lakh crore.
“While the share of central government funding isclose to 45%, State governments will spend 2527% andthe rest will be done by theprivate sector. This meansthat the Centre is not goingto spend the planned entire₹��100 lakh crore,” he said.
Foreign funds ‘take over’ Indian road assets Overseas investors have so far pumped in up to ₹��25,000 crore in projects
Lalatendu Mishra
MUMBAI <> GIC, CDPQ, CTPID,
CPPIB, Macquarie
are new names on
the block
Jagannarayan Padmanabhan
Director and Practice Leader,Transport InfrastructureAdvisory, CRIS Ltd.
For the fast moving consumer goods (FMCG) sector,which has been facing extreme headwinds in the lastfew quarters, the current fi��nancial year could be theworst in 15 years in terms ofrevenue growth on accountof agriculture slowdown, liquidity concerns, employment issues and slowerthanexpected impact of government initiatives.
“Agri GDP growth hasbeen at a 15year low since2018. Liquidity worsenedpost Oct2018 as NBFCsfaced pressures. Employment challenges for smallbusinesses started with demonetisation and GST, andwas aggravated due to liquidity. The simultaneousimpact of these factors isplaying out,” stated a reportby Credit Suisse.
“The PMKSN (PradhanMantri Kisan Samman Nidhi)direct income transfer rollout has been slower than ex
pected and has only covered50% of the intended benefi��ciaries by Sept2019. As perour analysis, PMKSN can, inYear 1, provide a 23% boostto overall FMCG growth, butthere will be a lag eff��ect afterfull coverage,” it added.
Trade disruptionsAccording to the global fi��nancial major, the slowdownin the FMCG sector startedin 2016, though it was camoufl��aged fi��rst by trade disruptions in 2017 caused bydemonetisation and Goodsand Services Tax, and thenby the lowbase eff��ect leading to high growth in FY19.
This assumes signifi��canceas most leading FMCGplayers are witnessing a multiquarter low in terms ofvolume growth.
HUL, which is the country’s largest pureplay FMCGentity, registered a 7% volume growth in the quarterended June 30, the lowestvolume growth in sevenquarters.
FY20 worst in 15 years forFMCG, says Credit Suisse‘Impact of multiple factors playing out’
Special Correspondent
Mumbai
Billionaire Mukesh Ambanihas raised promoter stakein fl��agship Reliance Industries by 2.71% to 48.87%,according to a regulatoryfi��ling by the company.
Reliance Services andHoldings Ltd, controlled bypromoter group fi��rm Petroleum Trust, acquired2.71% stake in Reliance onSeptember 13, it said.
The acquisition was pursuant to a scheme of arrangement not directly involving Reliance, the fi��ling saidwithout giving details.
Mr.Ambani and his private fi��rms held 47.29% stakeas on June 30, 2019.
As on June 30, FIIs held24.4% stake in the fi��rm,mutual funds had 4.56%and insurance companies7.1%. The remaining sharewas with the public.
Ambani hikesstake in RIL to48.87%
Press Trust of India
New Delhi
Citing increases in road taxesby various States as one ofthe main reasons for highercar prices, making them unaff��ordable, Maruti Suzukichairman R.C. Bhargava saidthat cars cannot be treatedas luxury products capableof bearing any level oftaxation.
“I think the most important thing is [to understand]why there is a slowdown.Why have customersstopped buying cars likethey had been buying before? One part of it is the fi��nancial aspect; and to someextent, because of the intervention by the Centre, that isbeginning to change... the attitude of the banks has certainly become much morefavourable... But the priceproblem still remains. To alarge extent, it is because inthe last few months, nineStates added substantially to
road tax,” Mr. Bhargava said.These States, including Bi
har, Punjab and Kerala, haveraised road taxes leading toan increase ranging between₹��5,000 and ₹��57,000 in theonroad prices of cars.
“State governments haveto realise that this industry isunable to bear this kind ofheavy taxation; in many cases, the offi��cers concernedseem to think that car is aluxury product capable ofbearing any amount of taxa
tion. It isn’t, as we have seennow,” he said.
“We are selling 33.5 million cars; we want to go to 510 million, how do you dothat if the price goes beyondthe reach of people? Youcannot get growth in the manufacturing industry, especially in a poor country likeIndia, if the price of the manufactured product is notkept within the reach [ofmass buyers],” he said. Headded, “It’s not in my hands
if somebody else is making amajor addition to the cost.”
On arguments that overproduction by automakershad resulted in the slowdown in the sector, Mr. Bhargava termed them ‘absurd’.
“It is not logical to relatethe two. How does overproduction lead to a fall in demand from customers? Youhave seen every manufacturer declaring nonproductiondays to cut down on production. It doesn’t do me [or]the dealer any good to havecars and inventory. So, ifanyone thinks that we produce cars for the fun of producing cars, they have diff��erent ideas of how businessruns.”
On long he expected theslowdown to stretch, he said,“I don’t know. But if I was tomake what would, at best, bea guess, we should start seeing a change in the comingmonths and the next yearshould be much better.”
Road tax hikes by States making carsunaff��ordable, says Maruti’s BhargavaCars can’t be treated as luxury products, taxed heavily, says the auto major’s chief
Off�� lane: It is illogical to relate overproduction withslowdown, says the Maruti Suzuki chairman. * KAMAL NARANG
Yuthika Bhargava
NEW DELHI
The U.S. Federal Reservecut interest rates by a quarter of a percentage pointfor the second time thisyear on Wednesday in awidely expected movemeant to sustain a decadelong economic expansion,but gave mixed signalsabout what may happennext. The central bank alsowidened the gap betweenthe interest it pays bankson excess reserves and thetop of its policy rate range,a step taken to smooth outproblems in money markets that prompted a market intervention by theNew York Fed this week.
In lowering the benchmark overnight lendingrate to a range of 1.75% to2.00% on a 73 vote, theFed’s policysetting committee nodded to ongoingglobal risks and “weakened” business investment and exports.
Fed cuts ratesby 25 bps on 73 voteReuters
WASHINGTON
