Thursday 31 May 2018

Bypoll results 2018: Kairana has a loud message for Modi-Shah before 2019

The Kairana Lok Sabha bypoll result has yet again underlined the challenge that Narendra Modi-Amit Shah combine is set to face in 2019 against a united Opposition. The Bharatiya Janata Party’s (BJP’s) loss here is seen as yet another dent in the invincibility cloak of Prime Minister Modi and party chief Shah.
With the BJP likely to struggle a repeat of its 2014 performance in much of northern India, the Kairana loss puts into sharper focus Shah’s efforts at expanding the party in areas beyond the Vindhyas and Chota Nagpur plateau, and make inroads in the Coromandel coast states.

In 2019, the BJP needs to win in the northeastern states, West Bengal, Odisha, Andhra Pradesh and Telangana to offset its foreseeable losses in Rajasthan, Madhya Pradesh, Uttar Pradesh, Maharashtra, Gujarat, etc.
The BJP’s Kairana loss comes on the heels of its losses in recent Lok Sabha by-polls in Phulpur and Gorakhpur in eastern Uttar Pradesh, and Ajmer and Alwar in Rajasthan.
While the BJP emerged the single largest party in Karnataka, its failure to form the government jolted the confidence that its supporters had in Shah’s abilities as a ‘master strategist’. These are not good signs as Modi and Shah prepare for 2019, and the government has its work cut out for the remainder of its term.
Beyond the ‘ganna’ (sugarcane) versus (Muhammad Ali) Jinnah narrative, the Kairana loss again indicates that all isn’t well within the Uttar Pradesh BJP. UP Chief Minister Yogi Adityanath is deeply resentful of the interference of Shah’s man Friday, Sunil Bansal.
As was the case with Phulpur, Kairana has traditionally been a difficult seat for the BJP to win. The 2014 Lok Sabha elections were a rare instance of the BJP winning Kairana and Phulpur. The Kairana win in 2014 had come on the back of communal polarisation in western UP in the wake of the 2013 communal riots in neighbouring Muzaffarnagar. With the Opposition remaining divided, the BJP had consolidated its Lok Sabha wins in the region in the 2017 UP Assembly polls.
With Adityanath and Bansal not on the same page, PM Modi and Shah put their best foot forward this time to win Kairana, including the PM holding a public rally in nearby Baghpat on the eve of the poll; he reached out to sugarcane farmers.
But Kairana has followed the script written in Phulpur and Gorakhpur – a united Opposition, upset farmers, unenthused Sangh Parivar cadre and BJP’s middle-class support base not turning up to vote.
It marks the rise of the Rashtriya Lok Dal’s Jayant Chaudhary, who led his party’s campaigning for its candidate Tabassum Hasan. It could also be the first sign that the region has recovered from polarisation in the aftermath of the Muzaffarnagar communal riots that had torn asunder the social combine built by Jayant’s grandfather Chaudhary Charan Singh. Jats seem to have voted in larger numbers for Hasan.
At a press conference in New Delhi to mark four years of the Modi government on May 26, Shah had indicated that he wasn’t confident of his party winning Kairana. He said voter behaviour is different when voting in bypolls. Shah said the vote in 2019 would be Modi versus the rest.
But to expect a ‘Modi wave’ similar to 2014 looks unrealistic at the current juncture. A united Opposition, even if discredited, would ensure the pooling of anti-BJP votes in most of the crucial states that could significantly bring down BJP’s 2014 count of 282.
The results of Lok Sabha bypolls in Maharashtra also indicate that a united Opposition would be no walkover for the BJP. In Bhandara-Gondiya, the Nationalist Congress Party candidate is ahead. However, in Palghar, the BJP is ahead of the Shiv Sena, and Bahujan Vikas Aghadi is trailing at number three, though with a healthy vote share. Both these seats were won by the BJP in 2014.

A senior adviser to PM Modi believes RBI needs better rupee policy

India's central bank should step up its fight to curb turbulence in the rupee and ensure the currency doesn’t swing wildly, a senior adviser to Prime Minister Narendra Modi said.
“We need a better exchange management policy, a sharper response and a lower time to respond, ” Rajiv Kumar, vice chairman of the government think-tank NITI Aayog, said in an interview on Wednesday. “RBI should be acting more smartly to smoothen the volatility rather than see this yo-yo-like movement in the rupee value.”

India has been swept up in an emerging-market rout triggered by rising U.S. interest rates and a stronger dollar. With investors pulling money out of stocks and bonds, the rupee has slumped 6 percent against the dollar this year, the worst performer among a basket of Asian currencies tracked by Bloomberg News.
The Reserve Bank of India’s reserves slid $11 billion in the five weeks through May 18, partly to halt the currency’s drop, data from the central bank show. An email sent to the RBI spokesman remained unanswered.
Oil Price Rise
Adding to the South Asian nation woes are rising crude oil prices. Every $10 rise pushes up the inflation rate by 30-40 basis points and hurts economic growth by about 15 basis points, according to Nomura Holdings Inc.
The Reserve Bank of India needs to keep interest rates unchanged next week to boost growth and lend a helping hand to manufacturers who are struggling to access bank loans, Kumar said. The inability of banks to extend credit amid mounting bad loans is a risk to growth this year, he added.
RBI Governor Urjit Patel has kept rates unchanged since August and cut inflation projections before turning hawkish at its April policy meeting. The recent spike in oil has boosted speculation the rate-setting panel will raise rates at its June 6 meeting.
“It would be reasonable for RBI to maintain a steady pause so that they can see whether pressures on inflation are transitory,” Kumar said.

After $32 billion rally, TCS CEO sees path to even faster growth

These are challenging times for India’s technology-services industry. Growth has slowed. Profits are pinched. Layoffs, once unheard of, are commonplace. Many of the businesses’s own leaders think its best days are in the past.
Rajesh Gopinathan is not one of them. The chief executive officer of Tata Consultancy Services Ltd. argues the industry’s opportunities today are bigger than they’ve ever been. The problem he contends is that his peers aren’t thinking creatively enough about how to evolve from the services of the past.

India’s tech industry was built by using the country’s low-cost labour to handle basic tasks like technology support and infrastructure maintenance. Now corporate clients need help with ever more challenging questions of technology and strategy -- and companies can thrive if they divine the answers.
“The industry has been overdoing the negativity,” says Gopinathan, 46, during an interview in his wood-paneled office in Mumbai. “We have the largest technology talent pool in the world - 400,000 people - and if we can’t figure out how to grow from here, then there’s something wrong.”
He’s done okay so far. Since Gopinathan was named CEO last January, his stock is up 50 percent, adding about $32 billion to its market value. TCS is now worth about $100 billion, more than that of the next four rivals combined.
“Their strategy is working,” says Deven Choksey, managing director of the Mumbai-based KR Choksey Investment Managers. “Investors are more confident about TCS than its peers."
Gopinathan vows to get revenue growing even faster, despite warnings from rivals like Infosys Ltd. about tough times. “Our target is to get back to double-digit growth,” he says, which would be up from 8.6 percent in the last fiscal year.
He may negotiate more acquisitions to get there. Critics point out that rivals like Dublin-based Accenture Plc have spent billions of dollars on deals to boost growth. He cautions TCS will be selective about finding “the right asset at the right price point.”
He also has to contend with President Donald Trump, who has been tightening the rules for foreign workers, like those from TCS, who take high-skill roles in the U.S. Gopinathan says new technologies will let his company handle client needs wherever its employees are. “Work will go where the talent is, rather than talent moving to where the work is,” he says.
On a recent May afternoon, Gopinathan welcomes visitors to his office at TCS House, an impeccably-restored colonial building in Mumbai. The sprawling space is adorned with art, antiques and an historic map of the local neighborhood. He sits on a couch and then immediately springs up to put on his jacket, making sure he’ll look nothing less than professional for a photographer.
Gopinathan started his career at TCS in 2001, becoming chief financial officer in 2013. He took over the CEO suite last year when his predecessor was promoted to restore stability at conglomerate Tata Group after a bitter boardroom coup.
TCS pioneered the India tech services model five decades ago and, until recently, the industry barreled along at 20 percent-plus growth with little trouble. Now easy outsourcing deals are gone and customers are looking for price cuts. Gopinathan says the industry needs to adapt, like it has with the evolution from mainframes to smartphones.
“If the iPhone doesn’t come up with a new model every two years, they will fall off the peak,” he said. “If they don’t have the luxury of permanence, why should any of us even expect that?”
Gopinathan offers an example. British retailer Marks & Spencer Group Plc initially came to TCS looking for cost cuts on technology in the wake of Brexit and market tumult. Instead of pushing back, TCS came up with a broader five-year strategy, including an enterprise-wide tech-led transformation to use digital and other technologies to boost the retailer’s customer experience and drive growth. “By not responding negatively, we turned it from a CIO’s project into a CEO initiative,” he says. Business grew.
TCS benefits from helping corporate customers unsnarl internal operations that are inefficient or outdated. Among its recent contracts are mega-deals with Rolls-Royce Holdings Plc and Transamerica Corp. “For every dollar spent on customer-facing ops, it’s getting clients to put four dollars on the back-end,” says Ashutosh Sharma, India head of Forrester Research. “That’s where TCS shines.”
Gopinathan spent much of his first six months meeting with clients to hear their concerns and see if TCS could help. He came away convinced new technologies are agitating most industries -- like in retail where the buying experience is digitized or in autos where cars are sold based on how smart they are. All these shifts can amplify demand for TCS services. But the company has to invest in new technologies, like artificial intelligence and cloud computing, and retrain hundreds of thousands of employees. "It is aligning yourself for the future," says Gopinathan.
He’s overhauled his management team. He tapped the head of the infrastructure services practice, a 36-year company veteran named PR Krishnan, to lead a newer automation services unit. Digital services -- like cloud computing, analytics and machine learning -- account for about $4 billion revenues, about a fifth of total revenues, but nearly every large deal is becoming a digital deal.
He’s pouring money into training. TCS used to teach workers skills much like at university -- with classrooms and faculty. Now employees are more likely to get guidance from its “classroom-in-the-cloud,” where they watch short videos or take micro sessions on mobile devices anytime. Learners code on the fly, compete with peers and become ‘gurus’ in specific technologies. Internal job fairs recruit those proficient in newer technologies and counsel others on which skills to learn.
As the conversation winds up, Gopinathan stands against tall windows that overlook lush foliage. There’s a distant rumble of construction for an upcoming metro line.
Are the tremors shaking up TCS headquarters? “Not those tremors,” laughs Gopinathan.

Debt-free firms make up 57% of all market cap; Why Dalal Street loves them

In a world awash with debt, Dalal Street shows special preference for companies that stay away from borrowings and fund their operations largely from internal accruals. Debt-free companies (on net debt basis) account for 57 per cent of all market capitalisation of listed non-financial companies even though they are in minority in terms of revenues, assets and net profits.In a world awash with debt, Dalal Street shows special preference for companies that stay away from borrowings and fund their operations largely from internal accruals. Debt-free companies (on net debt basis) account for 57 per cent of all market capitalisation of listed non-financial companies even though they are in minority in terms of revenues, assets and net profits.
In all, 209 non-financial companies out of a total sample of 594 companies were debt-free at the end of FY18 and together they accounted for 25.6 per cent of the sample companies’ combined net sales, 22.7 per cent of all assets and 46.5 per cent of their net profit. The analysis is based on a common sample of companies that part of BSE 500, BSE Midcap and BSE Smallcap indices.
Tata Consultancy Services (TCS) is the largest and the most valuable debt-free company followed by Hindustan Unilever, ITC and Infosys and Maruti Suzuki. Most of the debt-free companies are in sectors such as fast-moving consumer goods, consumer durables, IT services, pharmaceuticals and automotive. Besides, most of the Indian subsidiaries of global multinationals including those in sectors such as capital goods are debt-free.
In India, the total debt to the non-financial sector from all sources reached $3 trillion (around Rs 198 trillion) at the end of September 2017 quarter, against $2.4 trillion three years ago according to data from Bank for International Settlements (BIS). This includes the non-financial corporate sector, households and the government sector.
Debt-free companies are currently valued at Rs 50.5 trillion against the combined market of Rs 89.2 trillion for non-financial companies in the Business Standard sample. If we include companies with insignificant debt on their books --net debt less than 25 per cent of their net worth, then the share of these cash-rich companies in total market capitalisation grows nearly 65 per cent, which is more than twice their share in corporate India revenues and assets.
How the pie gets divided in corporate IndiaShare in total (%)Debt:EquityRatio MarketCap Net
Sales NetProfit TotalAssets Mkt Cap toNet Sales Price-EarningsmultipleDebt Free 56.6 25.6 46.5 22.7 4.1 28.0Between 0.01 and 0.25 8.1 8.3 10.3 9.0 1.8 18.1Between 0.26 and 0.5 16.2 30.1 24.9 25.5 1.0 14.9Between 0.51 and 1.0* 8.2 15.4 10.2 12.4 1.0 18.4More than 1.0* 10.9 20.7 8.0 30.4 1.0 31.4All Cos 100.0 100.0 100.0 100.0 1.8 23.0*Valuation ratio impacted by presence of many loss-making firmsBased on common sample of 594 non-financial companies from BSE 500, BSE Mid-Cap and BSE Small-cap Index; Source: Capitaline; Compiled by BS Research BureauIn the real world, however, consumers, government and companies continue to pile up debt. Globally, the total debt to the non-financial sector from all sources increased to a record high of $174 trillion at the end of September 2017 quarter, according to data from BIS.
Analysts attribute this to the premium valuation that the debt-free companies enjoy over a similar company with debt on the books. "Debt-free companies get premium valuation compared to companies with some debt on their books. It is due to the lower risk inherent in investing in these companies," says G Chokkalingam, founder & MD, Equinomics Research & Advisory Services.
The only risk that an investor takes with debt-free companies is growth risk. "An investor may not make money in a debt-free company say due to poor growth but there is little chance of you losing money," he adds.
Besides, these companies report higher return on equity and do not depend on outside sources of funding to launch new products or enter new markets.
This shows in the valuations ratios of these companies. A typical debt-free company is valued at nearly four times its latest 12 months revenues and 28 times its annual profit. The corresponding valuation ratio is 1.8x and 18.1x companies with debt-to-equity ratio between zero and 0.25 times.
However, contrary to popular perception not all debt-free companies are from asset light sectors such as FMCG, IT services and consumer goods. Hindustan Zinc – a debt-free zinc maker is the country’s most valuable metal company. Similarly, Shree Cement is among one of the most expensive stocks on the bourses in terms of price-earnings multiple basis despite operating in a capital-intensive sector such as cement.
Analysts say that debt-free companies enjoy greater financial flexibility to grow their business in a cyclical upturn in the economy. "When the business cycle improves, debt-free companies can continue to grow while indebted companies will use profitability to deleverage their balance sheet rather than invest in new products and markets," says Dhananjay Sinha.
It also helps that debt-free companies are cash-positive which means that their operations generate more cash then they use for growth and expansion. This makes them big dividend payers that attract investors. For example, TCS is the country’s top dividend payer in the private sector. And most of the top debt-free companies (in terms of market capitalisation) are also among the biggest dividend payers in the country.
Analysts say that debt-free companies with lower risk profile become even more attractive to investors in times of low-growth and economic and business volatility that the world has witnessed since 2008 global financial crisis. “The stable cash flows that these companies generate are even more valuable at a time when many businesses find it tough to stay profitable let alone grow their top line and bottom line,” says Dhananjay Sinha.
But it could also be a case of lack of investment opportunity in the economy forcing companies to sit on cash reserves or not make fresh borrowings to fund capital expenditure (capex). Corporate capex has nearly dried up in the country due to poor demand growth across sectors.
Krishna Kant

Core sector growth gains pace, marginally up 4.7% in April

Sustained rise in cement production and a spurt in coal output led the combined output of the economy’s eight core sectors to grow at a marginally higher pace of 4.7 per cent in April as against 4.4 per cent in March.
The pace of growth had been sluggish over the past two months. The eight sectors comprising crude oil, natural gas, refinery products, fertiliser, steel and electricity, contribute about 40 per cent to the total industrial production.

In April, six sectors performed better than a month earlier. Double-digit rise in cement production continued to solidify overall growth for six straight months, rising 16.6 per cent as compared to 13.3 per cent in the previous month. Increased budgetary support for affordable housing, growth in rural economy and rise in infrastructure spend are expected to support cement demand in FY19 as well.
In April, the next-best performing sector, that is coal, saw output shoot up by 16 per cent. This is the maximum pace of growth in more than a year. "The low base of April 2017 pushed the expansion in coal output, which would support mining growth in that month. The weak performance of the coal sector in May-June 2017 suggests a moderate growth outlook for the coming two prints," said Aditi Nayar, principal economist at ratings agency ICRA.
Graph
Despite the surge in the expansion of coal output, growth of electricity generation slowed to 2 per cent from 6 per cent in the previous month. “According to data released by the Central Electricity Authority, hydro electricity generation contracted 26 per cent in April 2018. Tyear over year (YoY) decline in reservoir levels suggests that hydro generation would continue to contract over the next two months,” Nayar said.
In energy, crude oil output continued to decline for the fifth straight month, albeit a slower pace in April. The sector saw a contraction of 0.8 per cent after 1.6 per cent contraction in March. With global crude prices firming up and the government in hot water over rising petrol prices back home, experts say crude oil production should go up over the coming months.
Natural gas production shot up by 7.4 per cent after 0.8 per cent growth in March when the sector had reversed the decline which is ongoing since September 2017. As a result of the changes in both the sectors, growth in refinery product output rose to 2.7 per cent, up from March’s 1.1 per cent.
Steel, the other major pillar of the construction sector, saw production slow down in April. It rose by 3.5 per cent, down from 4.7 per cent in March.
Graph
Experts suggest favourable domestic demand and remunerative prices at home and abroad are likely to bolster production growth in the near term, although the risk of trade wars could affect export and import.
“Cement and steel production in April 2018 can result in a nearly stable IIP for infrastructure/construction goods.” said Devendra Pant, chief economist at India Ratings and Research.
Data issued by the commerce and industry ministry on Tuesday showed cumulative growth for the core sector was 4.3 per cent in 2017-18, lower than the 4.8 per cent growth in 2016-17.

Fiscal deficit at 3.5% of GDP in FY18 at Rs 5.9 trn, meets new estimates


Fiscal deficit for 2017-18 worked out to be 3.53 per cent of the GDP, broadly in line with the government's revised estimates.
According to the data released by the Controller General of Accounts (CGA), the revenue deficit was 2.65 per cent of the GDP.

In absolute terms, the fiscal deficit was Rs 5.91 trillion or 99.5 per cent of the Budget estimates.
The government in the Budget, in February, had revised the fiscal deficit target for 2017-18 to 3.5 per cent from the earlier estimate of 3.2 per cent.
It proposes the bring down the fiscal deficit -- the gap between total expenditure and total revenue -- during 2018-19 to 3.3 per cent of the gross domestic product (GDP).
The CGA data, released this evening, further said that the government's total expenditure was Rs 21,426.67 billion or 96.6 per cent of the originally planned.
Its total receipts were Rs 15,510.04 billion or 95.6 per cent of the Budget Estimate.
The data further revealed that revenue deficit during the last fiscal was Rs 4.43 trillion or 101 per cent of the Budget Estimate.
Fiscal deficit is a reflection of government borrowings, which is used to bridge the gap between revenue and expenditure.

India retains tag of fastest growing economy; GDP rises 7.7% in Jan-Mar

The Indian economy grew 7.7 percent during the period from January to March, topping the pace of the previous quarter for India to retain its position as the fastest growing major economy.
India surpassed China's growth of 6.8 percent in the January to March quarter.

Growth for Asia's third-largest economy, reported by the Ministry of Statistics, trumped forecasts in a Reuters poll for annual growth of 7.3 percent.
The ministry revised the October-December annual pace to 7.0 percent from the provisional 7.2 percent it reported earlier.
For the fiscal year that ended March 31, the ministry reported growth of 6.7 percent, down from 7.1 percent for a year earlier.
A faster pace of growth in manufacturing, at 9.1 percent compared with 6.1 percent a year ago, helped lift overall economic growth, alongside higher investments.
Thursday's data is likely to be a welcomed by Prime Minister Narendra Modi, who is set to seek a second term next year.
To help businesses tide over multiple taxation, his government launched a nation-wide goods and services tax but a botched implementation of the GST nearly scuttled India's growth prospects in the near term.
"Seems like we have moved beyond the teething troubles related to GST implementation," said Tushar Arora, a senior economist at HDFC Bank. "The pick-up in investment activity is also a good sign."
The faster pace of growth in the latest quarter might also strengthen expectations for a rate hike by the Indian central bank when it reviews monetary policy next week.
About 40 percent of economists polled by Reuters expected a rate hike next week, driven by a higher inflation figure of 4.58 percent in April, above the Reserve Bank of India's target of 4 percent for the sixth month in a row.

Setback for Modi's divestment plans with no bids for Air India at close

In a major setback to the Air India disinvestment process, the government said no initial bids were received for the proposed strategic stake sale of the debt laden airlines by the deadline today.
The deadline for submission of Expression of Interest ended on Thursday.

"As informed by the Transaction Adviser, no response has been received for the Expression of Interest floated for the strategic disinvestment of Air India," the Civil Aviation Ministry said in a tweet.
"Further course of action will be decided appropriately," it added.
EY is the transaction adviser for the process.
The government has proposed to offload 76 per cent equity share capital of the national carrier as well as transfer the management control to private players, as per the preliminary information memorandum.
The transaction would involve Air India, its low cost arm Air India Express and Air India SATS Airport Services Pvt Ltd. The latter is an equal joint venture between the national carrier and Singapore-based SATS Ltd.
Earlier this month, the government had extended the EoI submission deadline to May 31 from the previous date of May 14. The qualified interested bidders were to be intimated on June 15.
As per the earlier schedule, the details of qualified interested bidders would have been known on May 28.
The government would retain 24 per cent stake in the national carrier, the winning bidder would be required to stay invested in the airline for at least three years, as per the memorandum, issued on March 28.
The ailing airline's total debt stood at over Rs 48,000 crore at the end of March 2017.
In April, both IndiGo and Jet Airways had said that they would not be participating in the Air India disinvestment process. IndiGo was the first to evince interest in Air India disinvestment when the government had mooted the plan last year.

Wednesday 30 May 2018

False alarm! Petrol prices down by just 1 paisa to Rs 78.43/litre in Delhi

After news of a cut in petrol prices in the morning, India's biggest fuel retailer, Indian Oil has revealed that the announcement of a cut in prices it made earlier in the day was a mistake. It has revised the prices once again on its website.
IOCL informed ET Now that it had published wrong prices on its website earlier.
According to the Indian Oil Corporation website, petrol is now priced at Rs 78.42 per litre in Delhi. This is just 1 paisa lower than yesterday's price.
In Mumbai, petrol will be sold at Rs 86.23 per litre.
ALSO READ: Hardening petrol, diesel prices likely to weigh on RBI MPC meet from Jun 4
Earlier, it was reported that Indian Oil Corp had slashed the prices of petrol by 60 paise after 16 days of price hike. The new prices had been listed on their website as well. Petrol price in Delhi was cut by 60 paise to Rs 77.83 per litre.
The same is true for prices of diesel which were first reported to be cut by 56 paise today but now stand revised to just 1 paise less than yesterday's levels.

ALSO READ: Sebi likely to allow futures trading in petrol and diesel
Looks like the joy was shortlived as prices are now back to yesterday's level.
image

Procedural issues galore as GST refund claims pile up with Modi govt

An excess of procedural glitches and faulty filing of claims have meant that exactly eleven months after the Goods and Services Tax (GST) regime was rolled out, exporters across the country are yet to receive an estimated Rs 200 billion worth of tax refunds that have been filed but are stuck with the government.
On Monday, apex exporters body, the Federation of Indian Exports Organizations (FIEO) pointed out that refunds had flown smoothly till March 31, after which the pace has considerably slackened. "While claims over Rs 70 billion were cleared during March, the amount in April fell to a little over Rs 10 billion," FIEO President Ganesh Kumar Gupta said.

The industry's pet peeve has been that the slow pace of government disbursal and procedural glitches in the GSTN portal make the process of claiming the refunds a strenuous one. However, Commerce Ministry officials claim that one of the main reasons behind the stuck refunds is that many traders have not been able to file in the correct manner.
Let's take a look.
"Earlier the refunds were flowing on a monthly basis, but from February the government has gone in for a cumulative calculation. Now, having an error in any month is enough to disrupt the entire process and as a result, many refunds have got stuck. Earlier, a trader could at least get the refunds for the months where there were no errors, but it's not the case anymore" Ajay Sahai, FIEO Director-General said.
Of the total pending refunds, Input Tax Credits constitute about Rs 130 billion while the rest is Integrated GST (IGST). Exporters have pointed out the ITC claiming process is not completely electronic and the roundabout manner in which it is organised has given rise to a lot of jokes in the exporters' community.
An exporter has to first file an application online after which his cash ledger is debited. He then has to take a physical printout of the transaction and file with the tax authorities. But the overburdened tax authorities are generally not willing to accept the same quickly. "This is because current rules stipulate that from the day of acceptance of the physical copy, within the next 7 days, at least 90 per cent of the tax refunds have to be released," Sahai said.
Since many tax departments across the country have claimed they are running low on funds to pay back exporters, lower level officials have on many cases turned down legitimate claims, exporters allege. "We have received a demand for putting the ITC claims on a fully automatic route and are assessing it. We will incorporate all such suggestions before going for a further streamlining of the export refund mechanism in the GST," a Commerce Ministry official said.
The seeming lack of funds has also led to low disbursal by state governments for the state GST component. States such as Andhra Pradesh, Uttar Pradesh, Bihar and Chhattisgarh have said they are out of funds to pay exporters.
With regards to the IGST, a lot of refunds are pending due to wrong filing in cases when goods have moved through Inland Container Depots, Sahai said.
Refunds for exports made through ports that are not connected to the government's electronic data interchange (EDI) system have also faltered. Exports from such ports constitute about 15 per cent of India's outbound trade but refunds for such exports are yet to start, Sahai added.

ICICI Bank okays independent probe into allegations against Chanda Kochhar

The board of India's largest private sector lender ICICI Bank has ordered an independent probe into allegations of 'conflict of interest' and 'quid pro quo' in bank's MD and CEO Chanda Kochhar's dealing with certain borrowers.
There are allegations of involvement of Kochhar and her family members in a loan provided to Videocon group on a quid pro quo basis.

It was alleged that Videocon Group pumped money into NuPower Renewables, a firm owned by Deepak Kochhar, husband of Chanda Kochhar.
Last week, market regulator Sebi had served a notice on Kochhar on dealings of the bank with Videocon Group and Nupower.
The enquiry was ordered by the board, at its meeting yesterday, on a complaint by an anonymous whistle-blower against Kochhar, the bank said in a regulatory filing today.
"...the enquiry to be headed by an independent and credible person (will) examine and enquire into an additional anonymous whistle-blower complaint...," it said.
The scope of enquiry would be comprehensive and include all relevant matters arising out of and in course of examination of the facts and wherever warranted, use of forensics/email reviews and recordal of statements of relevant personal, it said.
The enquiry, the bank said, will be conducted by an 'independent and credible' person.
The whistle-blower had alleged that the bank's MD and CEO had not adhered to provisions relating to code of conduct of the bank and legal and regulatory provisions relating to conflict of interest over a period of time and also alleged quid pro quo in the course of Kochhar's work in dealing with certain customers/borrowers of the bank.
Interestingly in April, the board had expressed full confidence in Kochhar and ruled out any quid pro quo as alleged with regard to certain loan given to Videocon group.
The regulator filing, which came today after close of stock market, further said the enquiry will cover all "connected matters" in the course of investigations to bring the matter to a final close.
In keeping with the whistle-blower policy of the bank, its board mandated the audit committee to appoint an independent and credible person to head the enquiry and also define the terms of reference, including timeline.
There are also allegations that NuPower got investments of Rs 3.25 billion from Mauritius-based Firstland Holdings, a company owned by Nishant Kanodia, son-in-law of Essar Group co-founder Ravi Ruia.
The investments from Ruia's son-in-law's firm into NuPower started in December 2010. Incidentally, the same month ICICI Bank was lead banker in a consortium of Indian banks that extended a USD 530 million loan to Essar Steel Minnesota LLC on December 29, 2010. This loan was later classified as NPA.
The Reserve Bank in its 2016 investigation in the matter had raised questions over the ownership of the Mauritius-based entity, First Land Holding, which had invested Rs 325 crore in NuPower.
Also, there was no clarity over the alleged Rs 640 million loan (unsecured fully convertible debentures) given to NuPower by Supreme Energy, which was 99.99 per cent owned by Videocon chief Venugopal Dhoot at that time.
While Chanda Kochhar sat on the credit committee that approved the loan to Videocon, there are allegations of conflict of interest in her husband's brother, Singapore-based Rajiv Kochhar, performing debt-restructuring work on errant corporate borrowers from ICICI, including Videocon.
The restructuring wasn't commissioned by the bank but by the borrowers.
Interestingly, the board of ICICI Bank expressed full faith in Chanda Kochhar, whose current tenure as CEO is set to end on March 31, 2019. It had reviewed credit approval processes and found them to be robust, according to a March 28 filing by the bank.

RCom, Ericsson agree on settlement; green signal for Reliance Jio deal

The National Company Law Appellate Tribunal (NCLAT) stayed the May 15 order of the National Company Law Tribunal (NCLT) in Mumbai, which had admitted Reliance Communications (RCom) and two of its subsidiaries for insolvency proceedings.
The NCLAT asked the Anil Ambani-controlled firm to pay Ericsson Rs 5.5 billion by the end of September.

With the stay on bankruptcy proceedings, RCom can now continue with its asset monetisation scheme involving the sale of towers, optic fibre cable network, spectrum and media convergence nodes to brother Mukesh Ambani-controlled Reliance Jio Infocomm (Jio) for Rs 170 billion.
On Tuesday, NCLAT chairman Justice S J Mukhopadhaya asked the parties to settle the matter stating that the fate of operational creditors under the corporate resolution process was not ideal, especially if Ericsson wished to recover the majority of its dues.
NCLAT also asked RCom and Ericsson to file an affidavit by June 7 stating that the two companies will abide by the settlement.
Ericsson India, a subsidiary of the Swedish telecom equipment maker and service provider, had filed a case at NCLT, Mumbai last September seeking the liquidation of Reliance Communications (RCom), and its subsidiaries Reliance Infratel and Reliance Telecom, in order to recover Rs 11.5 billion.
The three companies were subsequently admitted under the Insolvency and Bankruptcy Code (IBC), and NCLT appointed a resolution professional (RP) to take over the management of each company. Ericsson had argued that it had entered into a seven-year agreement in 2014 with RCom and its subsidiaries for maintaining, upgrading and developing the latter's telecommunications infrastructure, which was not honoured.
RCom and its subsidiaries owed Ericsson around Rs 9.78 billion for their services which, Ericsson's counsel told the NCLT, had increased to around Rs 16 billion given that there were delays in the payment, despite several notices being issued to the Anil Ambani controlled companies.
RCom filed its appeal with the NCLAT, and was awarded with a stay on the order admitting the three firms under the IBC.
RCom and its subsidiaries now have the permission to go ahead with the debt restructuring plan that was prepared in December 2017. There were fears of the three Reliance group companies undergoing insolvency proceedings, which would have meant that the asset monetisation scheme under the plan would not be allowed.
The restructuring will reduce debt of Rs 460 billion to around Rs 60 billion, as per Anil Ambani’s plan stated in December 2017.
The NCLAT allowed the Anil Ambani-led companies to continue with their strategic debt restructuring plans, with the proceeds for the sale of assets to Jio going to the secured financial creditors.
In another case, minority shareholders of the company had filed petitions at the NCLT in Mumbai against the sale of assets to Jio. However, on Tuesday, the NCLAT dismissed the petitions as RCom informed the appellate tribunal and the National Stock Exchange that “an amicable settlement has been arrived at between it and minority investors holding 4.26 per cent equity in the company, and consent terms will be filed shortly”.
RCom shares closed at Rs 17.5 on Wednesday, almost 10 per cent higher than the previous close on the NSE.

Monday 28 May 2018

L&T Construction secures two major orders worth Rs 57.04 billion

Larsen & Toubro's construction arm has won orders worth Rs 57.04 billion in domestic market.
"The water and effluent treatment business of L&T Construction has secured orders worth Rs 57.04 billion," the engineering and construction major said in a BSE filing.

L&T said it has won two major orders from the Narmada Valley Development Authority (NVDA), government of Madhya Pradesh, for execution of Indira Sagar Project- Parwati phases I and II and Kalisindh phase I Micro Lift Irrigation Schemes.
The company has also received an EPC order from the Madhya Pradesh Jal Nigam Maryadit for execution of Buxwaha Multi Village Rural Water Supply Scheme.
L&T shares were trading at Rs 1,358.25 apiece, up 1.08 per cent, from the previous close on the BSE.

Bypolls top updates: Opposition seeks repoll alleging EVM malfunctioning

Voting started at 7 am on Monday for four Lok Sabha and 10 Assembly seats, including in Kairana in politically crucial Uttar Pradesh. Voting in the Bhandara–Gondiya Lok Sabha bypolls was suspended temporarily across 35 booths because of faulty electronic voting machines (EVMs).
Not long after voting started, reports emerged of faulty EVMs and voter-verifiable paper audit trail (VVPAT) machines from various constituencies.
One BJP Candidate from Kairana LS bypolls has approached the Election Commision with regards to faluty EVMs.
"There was massive technical snag in the EVMs and total breakdown of systems. My supporters went back without voting as machines were not working. My party leaders have approached the EC regarding the matter," said Mriganka Singh, BJP Candidate from Kairana Lok Sabha bypolls.
However, Leaders of the Congress, SP and the RLD demanded that the Election Commission should order re-polling in the Kairana Lok Sabha and Noorpur Assembly constituencies after there were reports of malfunctioning of the EVMs in some areas.
A delegation of the opposition party leaders met the EC and raised the issue of polling being halted at a number of places due to faulty EVMs.
The delegation, comprising Congress leader RPN Singh, SP leader Ram Gopal Yadav and RLD chief Ajit Singh, told the commission about the reports of malfunctioning of the electronic voting machines at many places.

"We have demanded that wherever the machines have malfunctioned, where the machines have taken more than an hour-and-a-half to be changed, re-polling should take place at those booths tomorrow or the day after.
"We have also demanded that wherever the machines were changed in less than an hour-and-a-half, an additional time of 90 minutes after 6 0'clock should be given to the people to cast their votes," Singh told reporters after the meeting.
Besides Kairana in Western Uttar Pradesh, by-elections are being held in the Bhandara-Gondiya and Palghar parliamentary constituencies in Maharashtra and the Nagaland Lok Sabha seat.
The Kairana Lok Sabha constituency fell vacant after the death of Bharatiya Janata Party (BJP) MP Hukum Singh, whose daughter Mriganka Singh is now the party's candidate. She is fighting against Rashtriya Lok Dal's (RLD's) Tabassum Hasan, who is backed by a united Opposition, including the Congress, the Samajwadi Party (SP), and the Bahujan Samaj Party (BSP).
In the two Lok Sabha seats that are going to the bypolls in Maharashtra, all four major parties -- the Congress, BJP, Shiv Sena, and Nationalist Congress Party (NCP) -- are going all out as these bypolls are being considered as crucial in the run-up to the General elections in 2019.
The Shiv Sena has fielded late BJP MP Chintaman Wanaga's son Shriniwas Wanaga in Palghar, much to the dislike of the saffron party, which has in-turn nominated Congress deserter Rajendra Gavit.
Here are the top updates from the bypolls:
1) One BJP Candidate from Kairana LS bypolls has approached the Election Commision with regards to faluty EVMs.
"There was massive technical snag in the EVMs and total breakdown of systems. My supporters went back without voting as machines were not working. My party leaders have approached the EC regarding the matter," said Mriganka Singh, BJP Candidate from Kairana Lok Sabha bypolls.
BJP delegation met EC officials in Delhi over reports of malfunctioning in EVMs during by-polls today. BJP's Arun Singh says, "we told them that we received info that EVMs worked either late or with some issues or didn't work at all in 197 booths,demanded repolling at few stations"
2) Leaders of the Congress, SP and the RLD demanded that the Election Commission should order re-polling in the Kairana Lok Sabha and Noorpur Assembly constituencies after there were reports of malfunctioning of the EVMs in some areas.
A delegation of the opposition party leaders met the EC and raised the issue of polling being halted at a number of places due to faulty EVMs.
The delegation, comprising Congress leader RPN Singh, SP leader Ram Gopal Yadav and RLD chief Ajit Singh, told the commission about the reports of malfunctioning of the electronic voting machines at many places.
"We have demanded that wherever the machines have malfunctioned, where the machines have taken more than an hour-and-a-half to be changed, re-polling should take place at those booths tomorrow or the day after.
"We have also demanded that wherever the machines were changed in less than an hour-and-a-half, an additional time of 90 minutes after 6 0'clock should be given to the people to cast their votes," Singh told reporters after the meeting.
3) Palghar by-poll voter turnout: Voter turnout of 19.25 per cent recorded until 1 pm in the Palghar bypoll.
ANI

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19.25% voter turnout recorded till 1 pm in #Palghar by-poll #Maharashtra
1:58 PM - May 28, 2018
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4) Prashant Narnaware, returning officer for the Palghar by-poll, told news agencies that they encountered problems and panic in the initial hours. "Nothing has happened after 12 pm. The new machines are working properly. We are in consultation with Central Election Commission about extension of voting time," added Narnaware.
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@ANI
Encountered problems & panic in the initial hours. Nothing has happened after 12 pm. The new machines are working properly. We are in consultation with Central Election Commission about extension of voting time: Dr Prashant Narnaware, Returning Officer on #Palghar by-poll
1:57 PM - May 28, 2018
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5) EVMs malfunction during Bhandara-Gondiya bypoll: "In many big European nations, election commissions have rejected the EVMs and gone back to ballot paper system. SP leader Akhilesh Yadav ji just called me up, he also said 300 EVMs not working in Kairana bypoll," NCP's Praful Patel told news agencies.
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EVMs malfunctioning in Bhandara-Gondiya poll. In many big European nations, election commissions have rejected the EVMs and gone back to ballot paper system. SP leader Akhilesh Yadav ji just called me up,he also said 300 EVMs not working in Kairana bypoll: Praful Patel,NCP
1:38 PM - May 28, 2018
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6) Shahkot bypoll voting count: Voter turnout of 44 per cent recorded until 1 pm in the Shahkot Assembly by-election Punjab.
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44% voter turnout recorded till 1 pm in Shahkot assembly by-election #Punjab
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7) Use ballot papers instead of EVMs, says Shiv Sena: Technical problems in EVMs and VVPATs clearly indicate failure of EC. If this is the situation in by-polls, think about coming Lok Sabha Elections. We've said it again and again, and other parties have also agreed, that elections should be conducted using ballot papers," Shiv Sena's Anil Desai told news agencies.
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Technical problems in EVMs&VVPATs clearly indicate failure of EC.If this is the situation in by-polls, think about coming Lok Sabha Elections. We've said it again & again & other parties have also agreed,that elections should be conducted using ballot papers:Anil Desai, Shiv Sena
1:06 PM - May 28, 2018
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8) A dress rehearsal for a united Opposition taking on PM Modi: The Kairana bypoll is seeing a joint Opposition going up against the ruling BJP. Due to the political importance of UP, the bypoll has virtually assumed the dimensions of a strategic battle in the run-up to the 2019 Lok Sabha elections.
The Opposition is hoping that they could possibly repeat the success of the Gorakhpur and Phulpur bypolls by consolidating the anti-BJP vote.
In a boost to Opposition unity, the Lok Dal candidate, Kanwar Hasan, withdrew from the contest and announced his support for the RLD candidate.
ALSO READ: Bypolls 2018: Stage set for 4 Lok Sabha, 10 Assembly seats for Monday
BJP taking no chances in Kairana; ministers in campaign fray: After the drubbing in the Gorakhpur and Phulpur bypolls, the BJP is making extra efforts to try and retain the Kairana constituency. Apart from Uttar Pradesh Chief Minister Yogi Adityanath and Deputy Chief Minister Keshav Prasad Maurya, at least five others ministers campaigned in Kairana for the party candidate.
They include Dharam Singh Saini (minister of state for Ayush), Suresh Rana (Sugarcane Development), Anupama Jaiswal (Basic Education), Surya Pratap Shahi (Agriculture), and Laxmi Narayan (Religious Affairs, Culture, Minority Welfare, Muslim Waqf and Haj).
ALSO READ: UP bypoll: Slow polling in Kairana
9) Security stepped up for Kairana bypoll: A total of 51 companies of central paramilitary forces have been deployed for the Kairana bypolls. Out of which, 26 are stationed in the Shamli district and 25 in the Saharanpur district, an official told news agencies.
According to the official, state boundaries touching Kairana have also been sealed ahead of the bypoll.
10) AAP supports SP, RLD candidates in UP bypolls: The Aam Aadmi Party (AAP) had announced its support for the RLD candidate in the Kairana parliamentary bypoll and the SP candidate in the Noorpur Assembly constituency in a bid to throw its weight behind a united Opposition.
"We have decided that there has to be solidarity among the Opposition parties on these two seats and hence this decision," party leader Sanjay Singh said.
ALSO READ: Opposition coming together no threat to BJP: Amit Shah With agency inputs

After petrol & diesel, CNG prices too rise in Delhi NCR; check new rates

Indraprastha Gas Limited (IGL), on Monday announced revision in compressed natural gas (CNG) prices in Delhi, Noida, Greater Noida and Ghaziabad region from midnight to offset the impact on its input costs.
The revision in CNG prices would result in an increase of Rs 1.36 per kg in the consumer price of CNG in Delhi and Rs 1.55 per kg in the consumer price of CNG in Noida, Greater Noida and Ghaziabad.The new consumer price of Rs. 41.97 per kg in Delhi and Rs 48.60 per kg in Noida, Greater Noida & Ghaziabad would be effective from May 29.

This comes on the back of rising petrol and diesel prices in Delhi touching a new peak of Rs 78.27 a litre and Rs 69.17 a litre respectively on Monday.
IGL is a joint venture of GAIL (India) Ltd., BPCL and Delhi government. The company said it will continue to offer a discount of Rs 1.50 per kg in the selling prices of CNG for filling between 12.30 am to 5.30 am at select outlets. However, the price of PNG in these cities remains unaffected.
There has been a steep appreciation of the dollar as compared to rupee since the last CNG price revision. "The base price of natural gas being procured by IGL from its sources is dollar-linked thereby making the entire input price totally dependent on price of dollar vis-à-vis rupee. In addition, as per the revised domestic gas allocation for supply as CNG, the proportion of costlier PMT gas has been increased, which has added to the input cost of gas," the company said in a statement today.
However, this increase would have a marginal impact on the per km running cost of vehicles. For autos, the increase would be 4 paise per km, for taxi it would be 7 paise per km and in case of buses, the increase would be nearly 40 paise per km.
"With the revised price, CNG would still offer over 60 per cent savings towards the running cost when compared to petrol driven vehicles at the current level of prices. When compared to diesel driven vehicles, the economics in favour of CNG at revised price would be nearly 40 per cent," the company said.
IGL is meeting fuel requirements of over 1.5 million vehicles running on CNG in NCR through a network of 446 CNG stations. IGL is supplying PNG to nearly 900,000 households in Delhi and NCR towns.

L&T Q4 net up 4.7% to Rs 31.67 bn on higher order intake, beats estimates

Industrial group Larsen & Toubro Ltd posted a nearly 5 percent rise in fourth-quarter net profit on Monday, beating analysts' estimates, on higher order intake during the period.
Net profit rose to 31.67 billion rupees ($469.78 million) in the three months ended March 31 from 30.25 billion rupees a year earlier, L&T said.

Analysts on average had expected the Mumbai-headquartered company to post a net profit of 30.03 billion rupees, according to Thomson Reuters data.
Revenue from operations jumped 10.5 percent to 406.78 billion rupees.
L&T's order intake rose 5 percent to 495.57 billion rupees in the quarter.

Electrosteel sale status quo hurting banks, lift stay: Vedanta to NCLAT

Vedanta Ltd on Monday asked the National Company Law Appellate Tribunal (NCLAT) to vacate its order for maintaining status quo over the sale of debt-ridden Electrosteel Steel.
During the proceedings of the appellate tribunal, senior advocate C A Sundaram appearing for Vedanta Ltd said that status quo is causing losses to the banks involved.

The NCLAT bench, headed by Justice S J Mukhopadhaya, has directed to list the matter tomorrow and would hear it continuously for three days till May 31.
On May 17, NCLAT admitted the petition of Renaissance Steel challenging Vedanta's bid for debt-ridden Electrosteel.
Renaissance Steel's resolution application was rejected by the Committee of Creditors (CoC) of Electrosteel Steels.
On May 1, NCLAT had directed to maintain status quo in the case pertaining to the sale of debt ridden Electrosteel Steels to Vedanta Ltd.
Renaissance has submitted before NCLAT that Vedanta is not eligible to bid for Electrosteel under section 29 A of the Insolvency & Bankruptcy Code as one of Vedanta's affiliates in Zambia a unit of its UK-based parent Vedanta Resources Plc had been found guilty of criminal misconduct.
It also raised an objection against CoC's decision to not allow it to participate in the meeting in which the successful bidder was decided.
The NCLT had last month approved the resolution plan submitted by Vedanta Ltd for Electrosteel Steels, making it the first among 12 large stressed accounts identified by RBI last year to get resolved under the Insolvency and Bankruptcy Code.
The resolution plan involved close to Rs 53 billion cash payout and a haircut of 60 per cent of the total banks' debt.
Electrosteel Steels owes lenders more than Rs 130 billion, of which about Rs 50 billion is to State Bank of India alone.
Vedanta had said in a statement earlier that "one of its wholly-owned subsidiaries will subscribe to the share capital of Electrosteel for an aggregate amount of Rs 18 billion (USD 275.7 million) and provide additional funds aggregating to Rs 35.15 billion (USD 536.9 million) by way of debt".
"Upon implementation of the Resolution Plan, the company will hold approximately 90 per cent of the paid up share capital of Electrosteel," it had said.
(Only the headline and picture of this report may have been reworked by the Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)

Sunil Mittal set to pump in $1 bn into a hotel chain founded by son-in-law

The family of billionaire Sunil Mittal, who controls India’s biggest mobile-phone operator, is looking to pump more than $1 billion into a hotel chain founded by his son-in-law in London, people with knowledge of the matter said.
The money, which would come from a unit of Mittal’s Bharti Group that handles the founding family’s wealth, would fund acquisitions by Sharan Pasricha’s Ennismore, a developer that owns the Gleneagles resort and Hoxton hotel chain, which is expanding in the U.S. and Europe, said the people, who asked not to be identified as the matter is private.

The injection would help Pasricha acquire and convert properties in trendy urban areas in U.S. and European cities into hotels aimed at appealing to younger travelers. Hoxton, known for its casual atmosphere and affordable rates, operates two hotels in the London neighborhoods of Shoreditch and Holborn and one each in Amsterdam and Paris. The brand has 667 rooms across these three cities.
Ennismore said in an email it’s partners with Bharti Global, which makes investments for the Mittal family, and declined to comment further. A Bharti Global representative declined to comment.
Street Art
Pasricha, who’s married to Mittal’s daughter Eiesha, ran a media startup, then a leather-goods factory and private equity before getting into the hotel business. Pasricha acquired the first Hoxton in Shoreditch, an east London neighborhood known for street art. The second in Holborn in 2014 was followed by Amsterdam in 2015 and Paris in 2017.
Hoxton is developing hotels in New York City’s hip neighborhood of Williamsburg, Los Angeles and Portland, Oregon, with plans to start opening some of them this year, according to its website. By 2020, the firm expects to add locations in Chicago, San Francisco and in London’s Southwark and Shepherd’s Bush.
Ennismore also acquired the 232-room Gleneagles resort in Scotland in 2015 and is planning a new chain called NoCo -- a budget hotel format it is positioning as “less boring” -- to open its first location in 2019.

Blow for Vedanta as Tamil Nadu orders permanent closure of Sterlite factory

Tamil Nadu has issued a Government Order (GO) to close Vedanta Group's Sterlite Copper in Thoothukudi. The development comes after 13 persons were killed last week in police firing during protests against the plant.
The GO states that it is brought to the notice of the government that the Tamil Nadu Pollution Control Board did not renew the Consent to Operate to Vedanta Ltd's copper smelter plant at Thoothukudi in its order dated April 9, 2018. Subsequently, on May 23, 2018 Tamil Nadu Pollution Control Board has also issued directions for closure and disconnection of power supply to the unit.

"Under sections, 18(1)(b) of the Water Act, 1974 in the larger public interest, the Government endorse the closure direction of the Tamil Nadu Pollution Control Board and also direct the Tamil Nadu Pollution Control Board to seal the unit and close the plant permanently," said in the Order.
ALSO READ: Anti-Sterlite: SC refuses to give urgent hearing
While welcoming the GO's, protestors said that they needed cabinet decision on this or company would move court to get a stay. They also want the Centre to take a similar stand.
Tamil Nadu Chief Minister Edappadi K Palaniswami said last Thursday that the state government was taking all steps legally to permanently close down Sterlite Copper. Earlier the Tamil Nadu Pollution Control Board (TNPCB) ordered the closure of the Sterlite Copper unit with immediate effect and disconnected electricity supply to the plant.
The TNPCB said that during inspections by its officials on May 18 and 19, it was found that the unit was carrying out activities to resume its production operations though permission was not granted.

Munjal-Burman group agrees to re-open bidding, Fortis board undecided

Fortis Healthcare on Sunday said the Munjals-Burmans combine, whose bid for investing Rs 18 billion was approved by its board, have consented to re-opening the bidding process.
In a regulatory filing Fortis Healthcare said it has received a letter from Hero Enterprise Investment Office and Burman family Officer...giving their consent to re-open the bidding process to enable the company to move ahead with the fund-raising transaction.

In a letter to the board of directors, Munjals-Burmans combine expressed "deep anguish and regret" and said "it appears that there may be indecision on the part of the company regarding the bid process, which we understand could be on account of a few shareholders indicating their preference to the company for re-open of the bid process".
Fortis Healthcare, however, did not clarify whether it will re-open the bidding process.
When contacted, a Fortis spokesperson said the company's board will take a decision on whether the bidding should be re-opened or not, without specifying when the meeting would take place.
"Necessary intimation to the regulator and stock exchanges would be given accordingly," he said.
Fortis' board of directors is scheduled to meet on May 30 to consider and approve the audited financial results for the quarter and financial year ended March 31, 2018.
Last week, Fortis board was reconstituted after its shareholders had voted out its director, Brian Tempest, from the board in the extraordinary general meeting (EGM) held on May 22.
Earlier, out of four directors whose removals were sought by two institutional investors, three directors - Harpal Singh, Sabina Vaisoha and Tejinder Singh Shergill - had resigned ahead of an EGM called to vote on the matter.
The resignations of three directors and removal of Tempest has cast a shadow over the ongoing attempt to sell Fortis as these four directors were among the five who had voted in favour of Munjals-Burmans combine's Rs 18-bn bid for the healthcare firm.

Insolvency resolution: Binani CoC votes in favour of UltraTech's proposal

The Committee of Creditors (CoC) of Binani Cement on Monday voted in favour of the Rs 79.60 billion offer from UltraTech Cement for the takeover of the aforesaid company currently undergoing insolvency proceedings.
Sources attending the meeting said that since UltraTech is taking care of all the legitimate claims of all the stakeholders, its proposal received 100 per cent consent.

As the next step, the CoC will submit its plan to the resolution professional and in turn, the offer will be submitted to the NCLT.
"No Letter of Intent needs to be issued and hence the proposal can be submitted directly to NCLT", a lender said.
The lenders met in Mumbai and voting in person took place. One of the leading lenders had earlier asked the CoC to be physically present at the venue for the voting process.
Sources in the CoC, who participated in the voting said that it overrides its previous decision when it selected the offer from the Dalmia Bharat led consortium as the successful bidder. Hence, as per this decision, UltraTech becomes the H1 bidder thereby replacing Rajputana Properties - the Dalmia Bharat led consortium.
In the previous instance, after the CoC had approved Dalmia Bharat's proposal and placed the proposal to the Kolkata bench of NCLT, UltraTech and several other stakeholders contested it. In turn, the Tribunal had ordered the CoC to consider the Aditya Birla Group company's proposal and select a resolution plan for submission latest by June 24.
Sources in Dalmia Bharat said that in case the NCLT approves the offer from UltraTech, it will contest the decision in the Appellate Tribunal and may also move the Supreme Court.
On the other hand, on the same day, the Supreme Court has admitted Dalmia Bharat led consortium's allegation that UltraTech is ineligible to bid under Section 29(A) of the IBC. The hearing on the matter is slated early next week.
Lenders who passed UltraTech's plan and had claimed it to be eligible, thereby refuting Dalmia Bharat's claim said that despite the CoC reaching a decision on the bidder, they will abide by the decision of the Supreme Court.
Lenders opined that the Tribunal had directed while passing the order, that its actions need to be in accordance with the spirit of the IBC. The Tribunal had also held that the objective of the IBC is maximisation of value.
"It is clear from the order that one who is offering the highest amount will be selected as the H1 bidder. We had asked Dalmia Bharat to match the offer from UltraTech but they didn't within the stipulated time", a lender said.
Even as the Dalmia Bharat led consortium has moved the Supreme Court alleging UltraTech Cement to be disqualified to bid for the stressed assets of Binani Cement, the Rs 79.60 billion proposal from UltraTech will be put to vote on Monday by the Committee of Creditors (CoC) of Binani Cement.
Asked about the voting on Monday, one of the leading lenders said, “There is a hearing on this case on June 4 and by then we feel that a successful bidder had to be selected”.

Sunday 27 May 2018

EU regulator calls the end of diesel in several years, puts faith in e-cars

Consumers may do as much as regulators to propel the car sector into the electricity-powered age foreseen by Tesla Inc., according to the European Union’s industrial-policy chief.
European Commissioner Elzbieta Bienkowska said the EU has had a “breakthrough moment” since Germany-based Volkswagen AG admitted in 2015 that it fitted diesel engines with software to cheat US checks on smog-causing discharges of nitrogen oxides. This deeply affected “the emotions in society toward emissions and cleaner cars,” she said.

Brexit spurs EU banks to trim UK assets “Diesel cars are finished,” Bienkowska said in a May 24 interview in her ninth floor Brussels office. “I think in several years they will completely disappear. This is the technology of the past.”
The auto-emissions scandal may help the EU gear up for a technological revolution in road transport. Europe is seeking to retain leadership in the worldwide market for passenger cars in the face of competition from the US., where Tesla is based, and China, which accounts for about half of electric-vehicle sales.
Tighter Rules
VW’s cheating, which the U.S. uncovered and led Germany to order an EU-wide recall of 8.5 million Volkswagen vehicles, pushed the world’s No. 1 carmaker into a crisis and left policy makers in Europe scrambling to patch up regulatory holes that threatened a “clean-diesel” strategy dating to the 1990s. Bienkowska’s services were subsequently notified of possible engine-management irregularities in more diesel cars, including some made by Fiat Chrysler Automobiles NV.
The issue has been politically thorny in Europe because around half the cars in the region are powered by diesel -- which causes more urban pollution than gasoline while having less global-warming impact -- and because many member states have struggled to meet clean-air goals meant to reduce human sicknesses and premature deaths.
“People have realized that we will never have completely clean -- without NOx -- diesel cars,” said Bienkowska, who comes from Poland.
Last week, EU governments backed a revamp of the rules for authorizing car models in the 28-nation bloc. The European Commission, the EU’s regulatory arm, won the power to fine automakers up to 30,000 euros ($35,157) per faulty car and order recalls as part of the more centralized market oversight, becoming more like the U.S. Environmental Protection Agency.
Carmaker ‘Arrogance’
Bienkowska said “arrogance” by carmakers, coupled with their traditionally close ties to national governments, meant the draft law was initially greeted as if the industry wrongdoing had been insignificant. Gradually, she said, attitudes changed.
“I am really a little bit less frustrated than I was a year ago,” said Bienkowska. “During this denial phase, it was awful.”
Adding to the optimism is an initiative by the commission and industry to spur the development in Europe of batteries for electric cars, including through financing. European companies seeking to get a foothold in the market include BMW AG, Daimler AG, BASF SE and Vattenfall AB.
“We want to have the first batteries produced in Europe, but also the whole value chain,” Bienkowska said. “It’s the kind of a project that a single member state cannot afford.”
Individual European companies are doing their part too.
VW, which aims to sell as many as 3 million all-electric cars annually by 2025, has awarded 40 billion euros in contracts to battery producers. The deals take the company to within striking distance of its target to lock down 50 billion euros in supplies.
European electric-vehicle sales, now about 1.5 percent of all new registrations on the continent, will rise to about 5 percent in 2021 and take off from 2025, according to Bloomberg New Energy Finance.
European Incentives
EU policy to fight climate change may also play a role, albeit in a more nuanced way than China’s approach of imposing quotas. A draft European law to tighten caps on car discharges of carbon dioxide offers incentives for automakers to shift to electric vehicles.
In the meantime, Bienkowska must continue to tackle the haziness and headaches of the diesel age. She’s stepping up legal threats against several EU countries, including Germany and Italy, for lax enforcement of the previously agreed European rules meant to ensure carmakers heed NOx limits.
Bienkowska is also urging a number of EU nations, particularly in eastern Europe, to increase recalls of vehicles suspected of failing to meet NOx standards. At present, eight member countries have mandatory recalls in place.
“We have member states like Romania, Slovakia and Poland where the recall rate is extremely low,” she said. “We don’t want those parts of Europe to be full of old diesel cars.”

Watch and learn before mordernising IT prospect: Nasscom's Chairman Premji

Industries, enterprises and their leaders today do not have the "luxury" of time to wait and learn before modernising IT landscapes for being ready for the future, Nasscom Chairman Rishad Premji said, stressing that modernisation is not just about technologies like artificial intelligence and blockchain but also about change management and talent.
"With an eye on the unpredictable future, I would humbly submit to you that we don't have the luxury of time to wait, watch and learn before modernising our own IT landscapes to be future ready, Premji said addressing the NASSCOM C-Summit here.

He said the pace of the modernisation journey is dictated by the shifting landscape of technology and ecosystems but the choice to act is ours. This in many way is the leadership challenge of today."
"Technology is no longer enabler to business strategy, I think technology is the new business strategy, he said at the May 24 summit.
The day-long Nasscom (National Association of Software and Services Companies) C-Summit focussed on the theme of digital innovation and brought together executives, industry leaders and analysts who talked about digital innovation and transformation and how new technologies such as Artificial Intelligence, Blockchain, Internet of Things and Augmented Reality are transforming work and customer experience.
Premji, who was in April this year appointed as Nasscom Chairman for 2018-19, said the modernisation agenda is not only about technologies such as cloud, Application Programme Interface (API), Artificial Intelligence and Blockchain but it is as much about culture, change management, about fundamentally revisiting the ways of working and about talent.
Premji, Chief Strategy Officer and Member of the Board at Indian IT services giant Wipro, said digitalisation is still very much in its early stages of scaling but there is significantly more maturity in the way companies and industries are addressing it.
We have learnt that beyond the latest technology, the fundamental economics have changed. Business models are being and will continue to be disrupted and industries will blur boundaries. But irrespective of the strategy, the fundamentals of putting the customer first and at the centre of every conversation will not change, he said.
He pointed out that new technologies powered by more organised data and the focus on behavioural design would make it possible for other stakeholders to stake claim on one's customers.
The good news is that if you can impactfully leverage this data and technology to truly know and understand your customers, the opportunity to grow is limitless, he said.

Why India has become deadliest country in the world for forest rangers

On February 20, 2017, range forest officer (RFO) Daulat Ram Lader was having his ritual after-dinner tea with wife Pushpa when there was a knock at the door. Lader was posted at Lailunga, Dharamjaigarh forest division, in Chhattisgarh’s Raigarh district.
Lader opened the door and stepped out to speak with the visitors. An hour later, his body, hacked to death, was found some 40 yards from his home, just across the local police thana (outpost).

A month before, Lader had seized a tractor carrying illegally mined stones from the Kelo river, a tributary of Mahanadi that flows through the Lailunga reserve forest. It belonged to one Dilo Kumar.
“Kumar had repeatedly threatened Lader over the past month,” said sub-divisional officer Chakrapani Sharma. “(But) Lader dabang type ka tha (he was fearless).” He was known to be an upright officer who never bent to political pressure.
Lader’s murder was not an isolated incident. India is currently the most dangerous country in the world for forest rangers. In 2017, 29 rangers were killed on duty in India; the Democratic Republic of Congo (17) and Thailand (8) made for a distant second and third, as per a report of the the International Ranger Federation.
Between 2012-17, India accounted for nearly 31%–162 of 526–ranger deaths, according to the federation. Besides being the highest globally, this is just one less than the sum of deaths of the next five countries on the list–Congo, Thailand, Kenya, USA and South Africa.
India recorded most deaths (34) in 2012 and 2016, and the least (19) in 2013.
Frontline forest staff in India are increasingly targeted by poachers, illegal miners, timber smugglers and encroachers while protecting forests, wildlife, rivers, wetlands and other natural ecosystems and resources.
Why the work that rangers do is critical
The work that rangers do is critical to India’s ecological and economic security. The forests they protect, for instance, absorb 11.25% of India’s greenhouse gases, according to a ministry of environment and forests (MoEF) report. The value of what is technically called an “ecosystem service” would amount to Rs 6 lakh crore ($120 billion).
Yet, our investigations across India showed, rangers work with outdated equipment, no emergency medical assistance, few support or safety systems and little recognition of the hazards they face everyday.
As recently as May 15, 2018, forest guards were manhandled and injured when they tried to stop illegal fishing in Kaziranga National Park.
The period between 2011-2014 saw the death of 72 forest rangers in India. “India has one of the highest rates of ranger deaths in the world,” Sean Willmore, president, International Ranger Federation and founder-director, The Thin Green Line Foundation, told IndiaSpend over email.
‘Rangers’ includes the uniformed service, or the frontline staff of the forest department, the authority mandated to protect India’s forests and wildlife.
One of the hazards of working in forests is accidental death by wild animals. A recent example was S Manikandan, field director at the Nagarahole Tiger Reserve, who was accidentally killed by an elephant while trying to douse forest fires on March 3, 2018, World Wildlife Day.
The number of deaths is conservative because they rely on regional ranger associations for reporting deaths. It is unlikely to include daily wagers who form the bulk of the frontline staff but are not on any official employee list.
Why are rangers singled out for attack?
The answer lies in the fact that they protect India’s forest which covers about 20%–the figures are disputed–of its terrestrial area and the natural resources they contain: Wildlife, wood, timber, minerals, sand, stones and boulders. All these are becoming increasingly rare and precious.
The rocks seized by Lader were not worth much–no more than Rs 20,000–but they feed an illegal multi-crore trade in minor minerals. Rocks are crushed into gravel chips or gitti for use in the construction industry and road building.
Conservationist Meetu Gupta, who has been working in Chhattisgarh for 18 years, said that hundreds of illegal stone crushers operate in and around Dharamjaigarh and Raigarh. They are backed by the local mafia and politicians, she alleged.
“Though the extraction of ‘minor minerals’ like sand and gravel/boulders is regulated by central and state laws as well as court judgments, illegal extraction and markets thrive,” said Gupta. “The region is seeing massive road and railway expansion to transport coal, and the contractors prefer to buy ‘black’ as it’s cheaper.”
‘Our forests are an open treasury, open to loot’
Ravindra Singh Jachpele of the Maharashtra forest department is another forgotten hero. He paid with his life for protecting the Gondia forests that form a critical corridor between Navegaon-Nagzira (Maharashtra) and Kanha (Madhya Pradesh) tiger reserves. It is also one of the last remaining tracts of original teak forests of the central Indian highlands.
While on routine patrol on May 20, 2017, Jachpele noticed illegal felling of trees in the corridor and booked the offenders. He was murdered a few days later. The men who cut the trees are now murder suspects.
“Our forests are an open treasury, easy to loot,” said Bittu Sahgal, Sanctuary Asia Editor and founder of Sanctuary Nature Foundation. “While we love our tigers, few realise the effort, and sacrifice that goes into protecting them.”
Safeguarding the endangered red sanders tree is another risky task. Valued as basic material for musical instruments crafted in southeast and west Asia, it can fetch over Rs 2 crore ($293,900) a tonne in the black market. Three forest staffers were stoned and hacked to death for trying to stop the smuggling in the erstwhile Andhra Pradesh in 2013.
In Kalwa forest division, Navi Mumbai, encroachment cost forest guard Budhaji Jadhav his life on July 14, 2014. Illegal encroachment, including for real estate, industry and agriculture, is the single biggest driver of forest destruction: 1.89 million hectares of forest land–that’s 18,900 sq km or roughly five times the size of Goa–have been encroached upon, according to data revealed by former environment minister Prakash Javadekar in Parliament in April 2016.
If encroachment is destroying forests, illegal wildlife trade is driving species to extinction. Wildlife crimes are ranked alongside trafficking in arms and drugs in terms of profits, and fetch between $8-10 billion annually, as per the United Nations Office on Drugs and Crime.
Nandini Velho, a researcher who has put in many years in Pakke Tiger reserve, Arunachal Pradesh, narrated the story of forest guard PD Majhi: “He was instrumental in starting off anti-poaching efforts in Pakke, and was shot dead in an encounter with poachers in April 2007. In park director Tana Tapi’s words, ‘It was like we lost a colonel, only he died battling for Pakke.’”
In Odisha, attacks by armed poachers in Kuldiha Wildlife Sanctuary on May 2, 2018, prompted divisional forest officer Biswaraj Panda to seek police protection for his personnel. This wasn’t the first time, Panda told IndiaSpend: “Over the past month, nine forest staff have been injured in two separate incidents.” Kuldiha is an important wildlife area abutting the Similipal Tiger Reserve.
The dangers of challenging sand miners
The war over sand is particularly ruthless worldwide, but nowhere is it “more ferocious than in India”, said this March 2015 report in Wired.
To feed its construction boom, India digs 500 million metric tons of sand–the main ingredient of concrete–every year, and that’s only what is legally recorded. There are no official figures for the amount of sand mined illegally, but in 2015-16 more than 19,000 cases of illegal mining of minor minerals, which includes sand, gravel and stones, were registered.
The cost of this demand for sand is felt by those who try to stop illegal sand mining from rivers nationwide.
During a visit to the National Chambal Wildlife Sanctuary in March 2016, news came in that forest guard Narendra Sharma was mowed down by sand miners illegally operating in the sanctuary in Gwalior district, Madhya Pradesh. In February 2018, Indian Forest Service officer Abhishek Tomar was attacked by the sand mafia in Madhya Pradesh’s Chhattarpur district, the Times of India reported on February 9, 2018. When Tomar intercepted a tractor trolley carrying sand, they tried to run him over and shoot him, the report said. Fortunately, he survived.
“Sand mining could turn out to be one of the biggest ecological disasters in recent times,” said Kanchi Kohli, researcher, Centre for Policy Research, a think tank. “The environment ministry’s 2016 guidelines to regulate sand mining clearly acknowledge that excessive extraction is having a major impact on rivers, deltas, coastal and marine systems, resulting in loss of land, coastal erosion and lowering of groundwater tables, all of which are hazardous to the riverine ecosystem.”
The extraction of sand also leads to collapse of river banks and beaches which is particularly fatal to species that nest here. The loss of such nesting sites is leading to extinction of the gharial, an ancient crocodilian species, of which fewer than 1,000 survive in the wild.
Most rangers have faced life-threatening situations
Those on the frontline of the forest wars live a tense life. Threats are constant. The staff at Deori chowki, Morena (Madhya Pradesh), manning the Chambal river banks, talked about the terror of the sand mafia. Retaliation is inevitable when there is an attempt to stop dumpers from ravaging the sand bank.
Lader was a “soft target as he had fearlessly cracked down on the illegal smuggling of wood, coal, sand and stones under his watch”, his colleagues said. Records accessed from the Chhattisgarh government show that seizures done by Lader yielded a revenue of Rs 9.65 crore ($1.41 million) to the state between 2012-17.
“Threats in the course of work are not uncommon, but we tend not to let these weigh us down,” said Sunil Bachchan, Lader’s batchmate and RFO in the adjoining Bilaspur district. But he admitted to be being shaken by Lader’s murder.
No less than 63% rangers have faced life-threatening situations, according to a 2016 survey by the Worldwide Fund for Nature (WWF) and Rangers Foundation Asia (RFA), both NGOs. The survey also revealed that more than 20% rangers felt threatened by local communities.
Protected areas are restricted for anthropogenic activities such as grazing, wood-cutting and collection of minor forest produce which can lead to confrontations with criminal elements engaged in commercial extraction and local residents who live off the land.
These confrontations often mean that the staff are at odds with their own community. Members of the Human-Elephant Conflict Mitigation Squad tasked with tracking elephants in Athgarh (Odisha), for instance, talked of dealing with the resentment of villagers, sometimes even their own families, for protecting animals that damaged crops.
In instances of human-wildlife conflict like these, traumatised villagers sometimes turn on the forest staff and the animals. One such incident was reported from Kalagarh part in the Corbett Tiger Reserve, where villagers set a caged leopard aflame in March 2011. Though the cat had been captured, it was doused with kerosene and set ablaze. Kerosene was also poured on the staff to prevent them from rescuing the leopard.
Globally, 2-3 rangers die on duty every week
Around the world, the number and intensity of environmental conflict is growing. The murder of environment defenders–local people, journalists, conservationists, scientists–by those seeking to exploit natural resources is also becoming a global trend.
Rangers are on the frontlines of this battle. Two to three rangers lose their lives every week on frontline duty, over 1,000 have been killed in the last decade, Sean Willmore wrote in The Guardian in December 2016. Nearly 70% were murdered by poachers, prompting the International Union for Conservation of Nature to call for tough measures against wildlife crime.
Rangers are especially vulnerable in Africa, where the slaughter of wildlife is relentless. Virunga National Park, the finest habitat for the last of the world’s 800 mountain gorillas in the Democratic Republic of Congo, is ranked one of the most dangerous conservation projects in the world. A number of armed rebel groups operate in and around the park. It also faces serious threats from poachers and illegal timber smugglers.
Over the past two decades, 175 rangers have been killed in Virunga National Park. Most recently, on May 11, 2018, ranger Rachel Katumwa was killed by gunmen when she tried to shield British tourists who were kidnapped.
In tropical forests across Asia–particularly Malaysia, Indonesia, Thailand, Cambodia–illegal logging and clearing of forests for palm oil are lethal businesses.
In Pakistan, forester Mohamad Akram was decapitated by illegal loggers when he refused to accept a bribe to let them continue their “job”.
Little recognition of the dangers rangers face
Though they are constantly targeted and killed, forest rangers operate in a void: Field investigations over the years show that there is little recognition and no honour accorded to the job. There isn’t even provision for essential equipment or training. Three in four staff surveyed across Asia by the Rangers Federation said they were not supplied with proper equipment and amenities to ensure their safety. Nearly half–48%–had not received adequate training for the job.
Conversations with forest staff and officials show that in India too they are poorly equipped and not empowered to deal with the threats they face every day. They are rarely armed and when they are, their antique .12 bores and .303 rifles are neither reliable nor useful. If there are vehicles and boats for patrolling, for instance, there isn’t enough fuel to run them. Often, contract workers do not get their wages on time. Funds are delayed or not appropriately allocated.
As a member of the National Board for Wildlife, this writer had submitted an agenda for staff welfare to the MoEF during a meeting on June 6, 2013. It highlighted the challenges routinely faced by rangers: Working in remote, isolated areas with poor communication facilities and no immediate medical assistance in case of an emergency.
In this meeting, it was also stated that staff shortages average about 30% across India. In some reserves like Palamu in Jharkhand, it has hovered around 90% over the last decade and improved only recently.
The consequences of such shortages can be catastrophic. In Lalgarh, south Bengal, in March 2017, two employees monitoring a tiger fell asleep in their vehicle and suffocated to death. With only 40% manpower and a tiger in an inhabited area, “many put in long hours of work, leading to such a horrific tragedy”, Ravi Kant Sinha, the chief wildlife warden of West Bengal, told IndiaSpend. “We lost our best men.”
Little state support, but that can change
India does not stand by its forest rangers even in death.
In case of an injury or death, forest authorities usually pitch in to help the family or provide medical assistance. They are assisted by contributions from Ranger Associations, NGOs and individuals. NGOs, such as the WWF-India and Wildlife Trust of India, provide insurance schemes and assistance for frontline forest staff. Some parks–Kaziranga (Assam), Periyar (Kerala), Kanha (MP) and Annamalai in Tamil Nadu–have taken life and medical insurance initiatives for their staff. Tiger reserves offer a small incentive for field staff.
But there is no “institutional pan-India life or health insurance schemes for frontline forest staff”, admitted Sanjay Pathak, deputy inspector general with the National Tiger Conservation Authority (NTCA). Tiger reserves are encouraged to make such provisions in their annual plans, which can be financed by NTCA, he said.
Recognising these threats, the MoEF had constituted a committee for the welfare of frontline forest staff, at the suggestion of the National Board for Wildlife in September 2013. In a meeting on December 2013–in which this correspondent participated–a policy was proposed to govern ranger recruitment, posting and promotion and consider welfare measures, such as housing and medical facilities, insurance schemes, rationalisation of duty hours and hardship allowance.
Four years since, officials admitted there had been “no movement forward”.
There is another important element missing: Motivation, support and appreciation from society. Some park managements, usually aided by NGOs, have stepped up to motivate their staff–with awards for courage, exemplary dedication etc.
Pakke Tiger Reserve has taken this a step further with a public voting contest for “best camera trap images” to help motivate field staff. In the most awaited evening in the Pakke calendar, senior officials, staff, researchers and locals get together, dine and play sports. Awards are handed out to deserving staff–a small step in making rangers forget their deadly reality.

Moon, Kim discuss scrapped summit as Donald Trump signals optimism

The leaders of North and South Korea met for two hours on Saturday to discuss the canceled summit with Donald Trump, less than a day after the U.S. leader signaled the meeting may be back on citing “very productive” talks between the two countries.
South Korea’s Moon Jae-in and North Korean leader Kim Jong Un, in a surprise move, spent two hours together at the truce village of Panmunjom, and had a candid discussion about the potential U.S.-Korea meeting, Moon’s office said in text message. Moon will brief the media on the unexpected meeting at 10 a.m. Sunday, his office said.
Trump on Friday night said the historic June summit with Kim could go ahead following talks between the two countries.
“We are having very productive talks with North Korea about reinstating the Summit which, if it does happen, will likely remain in Singapore on the same date, June 12th, and, if necessary, will be extended beyond that date,” Trump said in a tweet.
Moon crossed the border to meet Kim at the Tongilgak building in an area of Panmunjom controlled by North Korea. They discussed how to implement the Panmunjom Declaration and the success of a potential Trump-Kim meeting, according to the text from the president’s office.
Trump abruptly canceled the planned summit in a letter to Kim on Thursday -- and then pivoted a day later. “We are talking to them now,” he told reporters in Washington earlier Friday, saying the summit might proceed and “it could even be the 12th.”
State Department spokeswoman Heather Nauert told reporters in Annapolis, Maryland, on Friday, that “we are working on plans going forward.” While there are always “high points and low points” in diplomacy, she said, “we hope that the meeting will go forward at some point.”
The comments reflected a broadly shared perception inside the White House and State Department that the two leaders still want to get together and there will be a meeting eventually. “We would like to do it,” Trump said, and “they very much like to do it.”
Less than a year after the two leaders traded threats of nuclear war, the back-and-forth over whether the summit will even happen reflects both Trump’s lead-from-the-gut style of decision-making and North Korea’s long-standing penchant for unpredictable behavior.
US Claims Successes
U.S. officials argue that the administration has already won a great deal from North Korea, including a moratorium on missile testing and the release of three American prisoners, without giving up anything in return. A White House-led advance team is heading to Singapore this weekend as previously planned to deal with the logistics of a potential summit, Politico reported.
But the latest developments also exemplified how quickly aspirations for successful talks between North Korea and the U.S. -- which remain technically at war -- can rise and fall.
Secretary of State Mike Pompeo told a Senate committee on Thursday that U.S. negotiators had been getting only “dial tones” when they tried calling their North Korean counterparts in recent days, which coincided with increasingly sharp rhetoric from Pyongyang about U.S. intentions. Trump cited North Korea’s “tremendous anger and open hostility” as his reason for canceling the summit.
At the same time, it also was increasingly clear that the administration’s goal of “total denuclearization” of the Korean peninsula was interpreted differently in North Korea, which analysts say is unlikely to give up all of its nuclear capabilities and especially not in short order, as the U.S. has demanded.
“We weren’t getting the right signals previously, so hopefully we will in the future,” Nauert said. “We didn’t want to go to a meeting just for the sake of going to a meeting. There had to be something to come out of it.”
‘Everyone Plays Games’
Trump appeared to take the turbulence in stride. Asked Friday if North Korea was playing games ahead of the summit, the president responded, “Everyone plays games.”
Although he trumpeted America’s “massive and powerful” nuclear arsenal in his letter canceling the summit, Trump also thanked Kim for the release of the detainees, described the “wonderful dialogue” they were developing and left open the door for reconciliation. North Korea responded in kind, with First Vice Foreign Minister Kim Kye Gwan saying that his country still wanted to pursue peace and said it would give Washington time to reconsider talks.
“The first meeting would not solve all, but solving even one at a time in a phased way would make the relations get better rather than making them get worse,” First Vice Foreign Minister Kim said in a statement carried Friday by the state-run Korean Central News Agency. “We would like to make known to the U.S. side once again that we have the intent to sit with the U.S. side to solve problem regardless of ways at any time.”
According to a person familiar with the administration’s thinking, Trump’s letter was intended only to convey his decision against going ahead with the summit on June 12 -- not to rule out a meeting in the future. The person, who asked not to be identified discussing internal matters, said the “maximum pressure” campaign to strangle North Korea’s economy is working, and Kim’s regime will have to come to the table eventually.
China’s Vice President Wang Qishan found encouragement in the continuing exchanges between the U.S. and North Korea.
“Both sides still leave some maneuver for a discussion,” Wang said Friday on a panel at the St. Petersburg International Economic Forum in Russia. “So I’m confident that peace and security on the Korean peninsula can be maintained. And it’s between North Korea and the U.S. right now. And a summit is needed to achieve a breakthrough.”
At the Pentagon, Defense Secretary Jim Mattis said Friday that “the diplomats are still at work on the summit” but declined to say whether he thought the event would take place on June 12. He did say that the leaders of the two nations have had positive interactions. “I’ll let them talk all they want and then I’ll hope and pray the diplomats pull it off,” he said.