Despite privacy scams & data reaping charges, advertisers stick to Facebook

Observers around the world made a particular note that privacy scandals on Facebook, the risk of manipulation on the platform, and increasing scrutiny due to its sheer size and influence, will ultimately drag its growth and profits. It didn’t happen this time.
Facebook smashed those concerns out of the park on Wednesday, announcing December quarter earnings that beat market expectations. The social media giant posted a 30 per cent rise in revenue to $16.9 billion, while daily active users (DAUs) were up to 1.52 billion, from 1.4 billion last year.

Growth was across the board but what was more heartening for investors was an uptick in the US and Canada— mature markets where Facebook is believed to have maxed out its growth. Revenue from the region grew 32 per cent to $8.4 billion, even as DAU count stood almost flat at 186 million.
Revenue from the Asia-Pacific region, which includes India, also grew 34 per cent to $2.7 billion, as it added 78 million more DAUs.
These numbers suggest that Facebook not only maintained a robust advertising business inflow, it was also able to grow user count and juice more out of those users. Facebook said overall average revenue per user (ARPU) was $7.37, up 19 per cent, and DAUs grew 8.7 per cent, year on year.
“Daily active users on Facebook reached 1.52 billion, up 9 per cent compared to 2017, led by growth in India, Indonesia and the Philippines. This number represents approximately 66 per cent of the 2.32 billion monthly active users in Q4. MAUs grew 191 million or 9 per cent compared to last year,” Facebook chief financial officer (CFO) David Wehner said on a post-earnings conference call.
Investors rewarded Facebook as the stock ended 4.3 per cent up on Nasdaq on Wednesday, but concerns still loomed over the future. Facebook’s market capitalisation, to be noted here, is still down from its peak $509 billion in July, when the company’s worth tanked $120 billion in a single day, the steepest in the corporate history, after Facebook had lowered growth guidance.
Facebook has committed to invest more resources in fighting fake news and manipulation of the platform, as it happened in the case of Russian meddling in US elections, and Cambridge Analytica unauthorisedly harvesting user information.
The platform is also working on a plan to integrate back-end tech for WhatsApp, Instagram and Facebook Messenger, to gather richer data on users and target ads better.

AgustaWestland case: ED arrests Rajiv Saxena, lobbyist Deepak Talwar

In a major boost to agencies probing high-profile corruption cases, a Dubai-based businessman wanted in the VVIP choppers case and a corporate aviation lobbyist have been deported to India, officials said Thursday.
They said Rajiv Shamsher Bahadur Saxena wanted in Rs 3,600 crore AgustaWestland VVIP choppers money laundering case and lobbyist Deepak Talwar wanted by the ED and the CBI in a case of misusing over Rs 90 crore taken through the foreign funding route, were brought in a special plane to Delhi around 1:30 AM.
The two have been arrested by the ED.
ALSO READ: AgustaWestland co-accused Rajiv Saxena, Deepak Talwar extradited to India

The agency has taken their custody and they will be produced before a court here later in the day, the officials said.
Both of them were picked by Dubai authorities on Wednesday "in assistance" to a request made by Indian agencies, they added.
A co-accused and alleged middleman in this case, British national Christian James Michel was recently extradited from Dubai to India (in December last year). He is currently in judicial custody.
Saxena's lawyers alleged that no extradition proceedings were started against him in the UAE and he was not allowed to access his family or lawyers while being sent to India.
ALSO READ: Probe agencies looking to identify Michel's assets to ascertain money trail

Talwar has been charged with criminal conspiracy, forgery and under various sections of the FCRA for allegedly diverting Rs 90.72 crore worth of foreign funds meant for ambulances and other articles received by his NGO from Europe's leading missile manufacturing company. His role in some aviation deals during the UPA government's regime is under scanner.
Talwar has been booked by the ED and the CBI in criminal cases of corruption, even as the Income Tax Department has charged him with tax evasion.
The ED had summoned Rajiv Saxena, a resident of Palm Jumeirah in Dubai, multiple times in the case and had arrested his wife Shivani Saxena from the Chennai airport in July 2017. She is now out on bail.
ALSO READ: AgustaWestland case: ED arrests Gautam Khaitan for possessing black money

The ED had alleged that Rajiv, his wife and their two Dubai-based firms-- Ms UHY Saxena, Dubai and Ms Matrix Holdings -- routed"the proceeds of crime and further layered and integrated in buying the immovable properties/shares among others".
The ED had said that its probe found that "Agusta Westland International Ltd, UK paid an amount of Euro 58 million as kickbacks through Gordian Services Sarl, Tunisia and IDS Sarl, Tunisia.
"These companies further siphoned off the said money/ proceeds of crime in the name of consultancy contracts to Interstellar Technologies Ltd, Mauritius, and others which were further transferred to UHY Saxena, Dubai and Matrix Holdings Ltd. Dubai and others," the ED had charged.
The ED had said Rajiv is "beneficial owner" of Interstellar Technologies Ltd and both his companies received proceeds of crime in their respective Dubai bank accounts from this firm.
ALSO READ: AgustaWestland case: Christian Michel named 'Mrs Gandhi', ED tells court

It had said the couple have remitted/ transferred a "huge amount of money" through their Dubai-based companies to various other accounts.
The ED had named Rajiv Saxena in its charge sheet filed in this case and had got issued a non-bailable warrant against him.
On January 1, 2014, India scrapped the contract with Finmeccanica's British subsidiary AgustaWestland for supplying 12 AW-101 VVIP choppers to the IAF over an alleged breach of contractual obligations and charges of kickbacks to the tune of Rs 423 crore paid by the firm for securing the deal.

USCIS finalises higher preference for US advanced degree holders for H-1B

Immigration authorities in US have released final rules to ensure higher number of H-1B applicants with advanced degrees from US institutes get an advantage during the filing season that starts on April 1st 2019. Further, online registrations for H-1B visa petitions will not be introduced this year as the platform for registration needs more testing before full implementation, said US Citizenship and Immigration Services (USCIS) in a statement on Wednesday.
“These simple and smart changes are a positive benefit for employers, the foreign workers they seek to employ, and the agency’s adjudicators, helping the H-1B visa program work better,” said USCIS Director L. Francis Cissna. “The new registration system, once implemented, will lower overall costs for employers and increase government efficiency. We are also furthering President Trump’s goal of improving our immigration system by making a simple adjustment to the H-1B cap selection process. As a result, U.S. employers seeking to employ foreign workers with a U.S. master’s or higher degree will have a greater chance of selection in the H-1B lottery in years of excess demand for new H-1B visas.”

Changing the order in which USCIS counts these allocations will likely increase the number of petitions for beneficiaries with a master’s or higher degree from a US institution of higher education to be selected under the H-1B numerical allocations. Specifically, the change will result in an estimated increase of up to 16% (or 5,340 workers) in the number of selected petitions for H-1B beneficiaries with a master’s degree or higher from a U.S. institution of higher education, said USCIS in a statement.
The US Department of Homeland Security (DHS), posted a final rule amending regulations for H-1B cap-subject petitions, including those that may be eligible for the advanced degree exemption. The final rule reverses the order by (USCIS) selects H-1B petitions under the H-1B regular cap and the advanced degree exemption, and it introduces an electronic registration requirement for petitioners seeking to file H-1B cap-subject petitions.
"The reverse petition selection process, introduced this year from April 1, 2019 means that USCIS will run a lottery on petitions across the board and then those petitions for individuals with advanced degrees (generally called Master’s Cap) that were not selected in the general lottery will be subject to a second lottery to select the 20,000 petitions reserved for this category of beneficiaries. There isn't a separate process or application for Master’s Cap cases but this reversal of selection order is expected to be an advantage of up to 16% for people with US degrees.," said Poorvi Chothani, founder and managing partner of law firm LawQuest.
Following public feedback, USCIS has suspended the electronic registration requirement for the FY 2020 cap season to complete user testing and ensure the system and process are fully functional before implementation. Once implemented, the electronic registration requirement will require petitioners seeking to file H-1B cap petitions, including those that may be eligible for the advanced degree exemption, to first electronically register with USCIS during a designated registration period.
Only those whose registrations are selected will be eligible to file an H-1B cap-subject petition. USCIS expects that the electronic registration requirement, once implemented, will reduce overall costs for petitioners and create a more efficient and cost-effective H-1B cap petition process for USCIS and petitioners.
Earlier in the week USCIS also announced the reinstatement of premium processing for all fiscal year (FY) 2019 H-1B cap petitions only i.e. pending petitions, including those eligible for the advanced degree exemption (the “master’s cap”). Petitioners who have received requests for evidence (RFEs) for pending FY 2019 cap petitions should include their RFE response with any request for premium processing they may submit. When a petitioner requests the agency’s premium processing service, USCIS guarantees a 15-day processing time.

Flyers, alert! Airlines may not offer compensation for cancelled flights

Paying compensation for flight cancellations will not be mandatory for airlines. Domestic carriers would have an option to provide an alternate flight to a passenger impacted by cancellation as per the revised draft of the passenger charter of rights.
Last May, the civil aviation ministry had proposed passenger-friendly measures including a cap on ticket cancellation fee, increased compensation for loss of life or baggage in accidents and payouts for delays and cancellations. But the proposal was put on hold because of objections from airlines, which felt that the charges will impact their already stretched financial condition. The airlines had also asked the government to maintain a status quo on revisions.

A meeting was chaired by the minister of state for civil aviation Jayant Sinha earlier this month to hear airline and airport operators' concerns and finalise the proposal.
The ministry has sought further comments from all the stakeholders and is keen to issue the regulations in the next few weeks.
Currently, airlines are required to pay compensation of Rs 5000 - 10,000 to a passenger in addition to a refund of ticket cost in case of flight cancellation.
Compensation is payable if the airline does not give an advance intimation to the passenger, which is at least 24 hours before departure. In its initial draft released last May, the ministry has made tweaks in that proposal. Now, as per the revised draft airlines shall either provide alternate flight which is acceptable to the passenger or provide compensation and refund of the ticket amount.
On the ministry's revised proposal, the International Air Transport Association has proposed that regulation should be made applicable for departures from India and for Indian carriers only. Federation of Indian Airlines has suggested that airlines first offer alternate flight within two hours of initial departure and an airline would be liable for compensation only if the alternate flight is not suitable.
The revised proposal also states that airlines have an option to provide for an alternate flight or full refund in case of flights delays of up to six hours. Also, a proposal to provide compensation for missed connections has been dropped following objections from IATA.
" A balanced view must be taken while introducing the regulations. While it is good to safeguard consumer interest the government should also consider airlines' financial health and impact the regulations will have on them," said an executive from a private airline. The ministry has studied European and US regulations while revising its proposals, it is learnt.
Airlines would also be required to provide a lock-in option for 24 hours after booking to allow a passenger to cancel or make amendments without additional charges. Fare difference, if any would be applicable and the facility would available up to seven days prior to departure. Initially, it was proposed to provide the facility up to 96 hours prior departure but it has been revised on airlines' suggestions.
Passengers would also be allowed to make corrections in the name printed on the ticket if the mistake is pointed out within twenty four hours. Also, airlines would also be required to indicate cancellation charges on the ticket, as per the revised draft.

Interim Budget 2019: Govt plans to raise rural spending by 16%, says report

India is likely to raise its rural welfare spending by 16 per cent for the fiscal year beginning April, two government sources said, as Prime Minister Narendra Modi tries to woo the farm vote ahead of a general election due by May this year.
In its Interim Budget on Friday, the government is set to earmark about Rs 1.3 trillion ($18.25 billion) for the Ministry of Rural Development, up from Rs 1.12 trillion in the current fiscal year, said the sources with direct knowledge of Budget discussions.
The sources didn't wish to be named as the discussions were not public. Interim Finance Minister Piyush Goyal is likely to announce the increased allocation in his Budget presentation to Lok Sabha.
Modi's government is under pressure to step up support for the countryside, where more than two-thirds of India's 1.3 billion people live.
ALSO READ: Interim Budget 2019: Farm relief package on cards? Here's what to expect
Farm incomes have been ravaged in the past year by low crop prices and rising costs, and voters' concerns about the government's rural policies was evident in the loss of key state elections by Modi's Bharatiya Janata Party late last year.
On Monday, the leader of the main opposition Congress party, Rahul Gandhi, promised to provide the poor with a minimum income if his party wins the election. The BJP has dismissed Gandhi's promise as an unaffordable gimmick.
The plans for rural development may require an additional allocation of funds in a full Budget announcement that this government would likely make in July if it is re-elected, the sources said.
ALSO READ: Budget session LIVE: Rafale jets will strengthen our Air force, says Kovind
Among the key welfare programmes run by the Ministry of Rural Development, the highest allocation will be for the flagship rural job guarantee programme, which enables people in the countryside to seek government-paid work for up to 100 days in a year.
The government is expected to give about Rs 60,000 crore for the job guarantee programme for the 2019-20 fiscal year, 9 per cent more than the previous year, the sources said.
The Ministry of Rural Development also plans to raise wages for nearly 70 million current beneficiaries of the job programme, said the sources.
ALSO READ: Finance ministry says it will be 'interim' budget, rejects 'confusion'
A parliamentary panel last year asked the ministry to increase the programme's wages as they were lower than those paid to farm labourers elsewhere.
Interim Budget 2019
The government is likely to allocate about Rs 30,000 crore, a three-fold increase, under another key state-run rural welfare plan which will give financial assistance to nearly 30 million poor people, including widows and the disabled.
It intends to increase the monthly benefit from Rs 200 currently and increase the number of beneficiaries from 20 million now, the sources said.

Business not as usual: What changes for Amazon, Flipkart from tomorrow

On Friday, Indian consumers will wake up to an emptier, more expensive version of Amazon’s shopping service.
Gone will be iPhones and cheap jumbo packs of Pampers diapers. Fewer varieties of Maybelline cosmetics will be available, and Amazon’s own Echo smart speakers will vanish entirely.

In all, more than 400,000 items that account for nearly a third of Amazon’s estimated $6 billion in annual sales in India will probably disappear at least temporarily from the local version of the company’s service, as Amazon tries to comply with new e-commerce rules imposed by the Indian government.
Amazon, which had structured its operations carefully to adhere to a 2016 revision to the country’s e-commerce rules, said it had asked the Indian government to clarify the new policy and give it an additional four months to comply. “We remain committed to be compliant to all local laws, rules and regulations,” Amazon said in a statement.
Barring a last-minute reprieve, Amazon’s leading rival in India, Flipkart, which effectively became a Walmart subsidiary last year, will also be forced to remove thousands of products from its service, particularly in the apparel category, where it sells many clothing items made by affiliated companies. Flipkart could lose as much as a quarter of its sales in the short term, according to Technopak, an Indian consulting firm.
A spokesman for Walmart, which spent $16 billion for its controlling stake in Flipkart, declined to comment on the new policy or its potential effects.
The change underscores the risks American companies face in India, which ranked No. 77 globally in the World Bank’s most recent survey on ease of doing business.
With 1.3 billion residents, the country would appear to be an attractive market. But it poses many challenges, including bad roads, low per-capita incomes, a cacophony of languages, and a consumer economy that runs largely on cash.
The country’s millions of shopkeepers and small traders wield tremendous power in votes and campaign donations. And its large corporations, many of them closely tied to the government, are eager to wrest Indian consumers from the embrace of foreign companies like Amazon, Facebook and Google.
ALSO READ: Changes in e-commerce norms to have marginal impact on hiring, say firms
Prime Minister Narendra Modi traveled to Silicon Valley in 2015 to urge tech companies to invest in India.
But with national elections looming in May and growing disenchantment with Mr. Modi’s policies, his government has recently championed a vigorous economic nationalism, passing or proposing policies to rein in the power of foreign financial firms like Visa and Mastercard and tech companies like Facebook and Google.
Just after Christmas, it was the retailers’ turn. Mr. Modi’s administration announced that, effective February 1, foreign-owned e-commerce services like Amazon and Flipkart could not sell goods through affiliated companies. Direct sales to consumers had been banned earlier, but each of the two companies had set up a complex array of related companies to indirectly offer popular products at low prices with fast delivery.
ALSO READ: Traders' group asks govt to not defer Feb 1 deadline for FDI in e-commerce
To continue operating, Amazon and Walmart will now have to turn their sites in India into digital bazaars for independent merchants, becoming more like eBay, which charges for certain services but sells nothing itself.
“People have started to buy China’s viewpoint: We need to build domestic assets and domestic companies,” said Ankur Bisen, an analyst who leads the retail division at Technopak. “We have to have a more nuanced approach to the onslaught of global corporations.”
Ashwani Mahajan, a leader of the Swadeshi Jagran Manch, an economic self-reliance organization affiliated with Mr. Modi’s political party, praised the new policy, saying it was essential to help small shopkeepers survive against the economic might of global companies that can afford to offer deep discounts.
“I know my next-door shopkeeper,” Mr. Mahajan said, echoing arguments heard in the United States when Walmart was battling Main Street retailers. “I know his family. I don’t know who is Amazon, who is Flipkart. For the survival of these two entities, I can’t put the livelihood of my country at risk.”
Snapdeal, an Indian online marketplace that was hurt by earlier price wars with Amazon and Flipkart, also cheered the policy changes while urging the government not to grant the companies more time to comply.
Indian consumers may pay a price for such protectionism. A survey of common products currently available on Amazon’s Indian site suggests that after sales by its affiliated companies are banned, many products will disappear and others will become more expensive because they will only be sold by small merchants who lack the clout to negotiate low wholesale prices from manufacturers.
The policy changes prompted complaints from American business groups and diplomats, but the government has shown no sign of relenting.

Core sector growth slows down to 2.6% in Dec on crude oil, fertilisers

Eight core sectors grew at their slowest pace in 18 months at 2.6 per cent in December 2018 due to fall in output of crude oil, refinery products and fertilisers, official data showed Thursday.
The previous lowest expansion in output of these key industries was recorded in June 2017 at 1 per cent.

The growth rate of the eight infrastructure sectors -- coal, crude oil, natural gas, refinery products, fertilisers, steel, cement and electricity -- stood at 3.8 per cent in December 2017.
Crude oil, refinery products and fertiliser production recorded negative growth of 4.3 per cent, 4.8 per cent and 2.4 per cent, respectively in December 2018.
Growth of cement and electricity sectors slowed to 11.6 per cent and 4 per cent in December 2018 as against 17.7 per cent and 4.4 per cent in December 2017, respectively.
However, coal, natural gas and steel output grew by 0.9 per cent, 4.2 per cent and 13.2 per cent in December 2018.
Slow growth in the key sectors would also have implications on the Index of Industrial Production (IIP) number as these segments account for about 41 per cent of the total factory output.
According to Commerce and Industry Ministry data, during April-December 2018-19, the eight sectors recorded a growth of 4.8 per cent as compared to 3.9 per cent in same period of the previous fiscal.

Bharti Airtel posts 72% drop in consolidated net profit at Rs 86 cr in Q3

Bharti Airtel Ltd posted a nearly 72 per cent fall in quarterly profit on Thursday, as the telecoms bellwether suffered from continuing pricing pressure.
Net profit for the three months through December 31 was Rs 86.2 crore ($12.13 million) compared with a profit of Rs 306 crore in the year-earlier quarter.

The company reported a one-off gain of Rs 1,414 crore during the quarter.
That compared with analyst estimates of a loss of Rs 686 crore, according to Refinitiv Eikon data.
Revenue rose about 1 percent to Rs 20,519 crore.

Data not finalised, says Niti Aayog about report on unemployment rising

India's unemployment rate hit a 45-year high of 6.1 per cent in 2017, according to a report based on an official survey, which the government said was yet to be approved.
The National Sample Survey Office's (NSSO's) periodic labour force survey (PLFS), according to the Business Standard newspaper, states that unemployment was last this high in 1972-73.

To compare, the unemployment rate in the country had gone down to 2.2 per cent in 2011-12, according to NSSO data.
Niti Aayog Vice Chairman Rajiv Kumar, who had previously mounted a defence of lowering of UPA-era GDP growth rates, at a press conference Thursday said the report cited by the newspaper "is not finalised. It is a draft report".
Refusing to comment on the content of the news report, he said the government will release its employment report by March after collating quarter-on-quarter data.
He also debunked claims of jobless growth, saying how can a country grow at an average of 7 per cent without employment.
Niti Aayog CEO Amitabh Kant, who too was present at the conference, said India is creating adequate number of jobs for new entrants, but "probably we are not creating high quality jobs".
Two members -- including the acting chairman -- of the National Statistical Commission resigned this week, saying the government had not released the job numbers despite the commission's approval.
The NSSO report was based on data collected between July 2017 and June 2018 and is the first official survey post-demonetisation.
The news report further said that unemployment was higher in urban areas (7.8 per cent) as compared to 5.3 per cent in rural areas of the country.
Earlier, the Centre for Monitoring Indian Economy (CMIE) had stated that 1.5 million jobs were lost just in the first four months of 2017 -- immediately after demonetisation of old 500 and 1000 rupee notes.
The NSSO job report was previously planned to be released in December 2018.

Government revises FY18 GDP growth to 7.2% from 6.7% earlier

The government on Thursday revised FY18 Gross Dometic Product (GDP) growth to 7.2 per cent from 6.7 per cent estimated earlier. It also revised FY18 Gross Value Added (GVA) growth to 6.9 per cent from 6.5 per cent earlier.
The government revised FY18 nominal GDP growth to 11.3 per cent from 10.0 per cent earlier and revised FY17 GDP growth to 8.2 per cent from 7.1 per cent earlier.

'No mention of Rafale': Parrikar accuses Rahul Gandhi of petty politics

Ailing Goa Chief Minister Manohar Parrikar on Wednesday accused Congress president Rahul Gandhi of using his courtesy visit to him for "petty political gains", asserting that there was no mention of the Rafale issue in their five-minute meeting.
In a letter to Gandhi, Parrikar asked the Congress chief to put out the truth and not to use his visit to an ailing person to "feed political opportunism", BJP sources said.
His letter came a day after Gandhi targeted Prime Minister Narendra Modi over the Rafale deal, claiming that Parrikar, who is a former defence minister, had clearly stated that he has nothing to do with the 'new deal'.

ALSO READ: Ailing Manohar Parrikar presents Goa budget, says he's high on 'josh'
"Friends, the ex-defence minister Mr Parrikar clearly stated that he has nothing to do with the new deal that was orchestrated by Mr Narendra Modi to benefit Anil Ambani," the Congress leader told a booth-level party workers meeting here.
His statement had come hours after he met Parrikar at the Goa assembly complex in Panaji.
In his letter to Gandhi, Parrikar said he feels "let down that you have used this visit for your petty political gains. In the 05 minutes you spent with me, neither did you mention anything about Rafale, not did we discuss anything about/related to it."

Finance ministry says it will be 'interim' budget, rejects 'confusion'

Amid speculation over the shape of the Narendra Modi government’s last Budget before the Lok Sabha polls, the finance ministry on Wednesday clarified that it will be called ‘Interim Budget 2019-20’.
“This Budget will be called Interim Budget 2019-20 and, therefore, don't have any confusion on this issue,” a finance ministry spokesperson told reporters. The spokesperson’s statement referred to what the Budget speech and documents will officially be titled.
The statement came a day after a workshop of Press Information Bureau officers where officers were reportedly told that the Budget will be titled ‘General Budget 2019-20’. This information was shared with some journalists and that led to some confusion. Even after the finance ministry's clarification, some PIB officers insisted that the official press releases pertaining to the Budget on February 1 will be titled 'General Budget 2019-20'.
There have been suppositions among markets and policy watchers that, as the government heads into Lok Sabha elections 2019 after losses in three state elections, the 2019-20 Budget could be more than just a vote-on-account.
ALSO READ: Interim Budget 2019: Unconditional cash transfer to farmers better than UBI
Finance Minister Piyush Goyal, filling in for an indisposed Arun Jaitley, could announce a massive nationwide income-support scheme for farmers, as well as a forward-looking commitment to bringing in tax sops for the middle and salaried people if the Modi government were to be elected back to power.
According to the convention, Interim Budgets do not contain any direct tax proposals that might require an amendment to the Income Tax Act. The Finance Bills accompanying the Interim Budget are short 7-10 page documents meant to extend the existing budgetary provisions from April 30 to July 31, by which time it is assumed that a new or returning government would have prepared and presented a full Budget for the financial year.
Past Interim Budgets have changed indirect tax rates, but, with the goods and service tax now in the purview of the GST council, if a finance minister follows the set convention, he could now only touch customs rates. There is no law that prevents a government from presenting a sixth full Budget.
In an interview with Business Standard in late December, Jaitley, who is currently in New York and recovering from a surgery, had said: “I will go by precedence, that in an election year, there are certain things you can present, and certain things you cannot.”
ALSO READ: Interim Budget 2019 to focus on doubling farmers' income: Agri Minister
However, appearing an event in Mumbai through video-conference from New York, Jaitley had said that while the government would work “within the parameters of the conventions that exist”, the contents of the Interim Budget would be decided by the larger interests of the economy.
“Ordinarily there should be no reason why we should move away from that convention, but then the larger interests of the economy always dictate what should be in the Interim Budget… Without getting into specifics, some of those challenges really can’t afford to wait. There would be a necessity to address some of them. We intend to work within the parameters of the conventions that exist,” Jaitley had said at the event organised by a business news channel.

Govt to probe Dewan Housing, takes 'very serious note' of allegations

The Ministry of Corporate Affairs (MCA) has taken a "very serious note" of allegations of financial mismanagement against Dewan Housing Finance Corp Ltd (DHFL), a government source with direct knowledge of the matter told Reuters on Wednesday.
Investigative media outlet Cobrapost on Tuesday said Dewan diverted funds to shell companies to buy assets, and that firms linked to Dewan's controlling shareholders—the Wadhawan group—made political donations beyond mandated levels.
The company on Wednesday said the report was unfounded and malicious, and that it had engaged lawyers to defend itself.
The government will likely inspect the records of Dewan Housing and "further action" against the company and its directors cannot be ruled out, said the source, who declined to be named due to the sensitivity of the matter.

HCL Tech shows better-than-expected Q3 results, net up 19% to Rs 2,611 cr

Information technology (IT) services company HCL Technologies (HCLT) on Tuesday delivered better-than-expected financial numbers in the third quarter (Q3) ended December 31, 2018, and exuded strong faith to end the year with double-digit revenue growth.
In the quarter under review, the Noida-headquartered company’s net profit at Rs 2,611 crore grew 19 per cent on a year-on-year basis, while sequentially, growth was 2.8 per cent. Revenue in the quarter came in at Rs 15,699 crore, a rise of 22.6 per cent over the corresponding period last year and 5.6 per cent sequentially.

The sequential growth clocked by the company during the quarter was the highest among the other large industry peers. During the same period, industry leader Tata Consultancy Services posted a quarter-on-quarter revenue growth of 2.43 per cent, while for Infosys and Wipro, the number stood at 3.8 per cent and 3.6 per cent, respectively.
A Bloomberg estimate, based on consensus analysts’ poll, had expected HCLT’s net income at Rs 2,541 crore and revenue at Rs 15,514 crore.
“We had the highest bookings this quarter, driven by financial services, technology services vertical, and manufacturing vertical. This is the second quarter in this fiscal year, where we are seeing the highest bookings,” said C Vijayakumar, president and chief executive officer of HCLT.
“With the confidence in the bookings we’ve had and with the demand environment, we feel confident of delivering towards the higher end of our guidance,” added Vijayakumar.
For 2018-19 (FY19), HCLT maintained its revenue growth forecast of 9.5-11.5 per cent in constant currency terms. The company had earlier said it was expecting revenue growth for the fiscal year to come in towards the middle range of this growth forecast.
ALSO READ: HCL Technologies taking more risks over product play, say experts
In dollar terms, revenue came in at $2,202 million, up 5.6 per cent sequentially and 13 per cent annually on a constant currency basis. Net income was $364 million, up 2.1 per cent sequentially and 7 per cent over last year.
However, the operating profit margin of the company in Q3 declined 30 basis points to 19.6 per cent over the previous quarter on currency headwinds and wage hikes, though it was well within its forecast range of 19.5 per cent to 20.5 per cent.
With this, HCLT is expected to overtake the third-largest IT services firm Wipro in revenue terms in FY19. On a nine-month basis, HCLT’s revenue of $6.353 billion is already $240 million higher than that of Wipro’s.
“HCLT delivered impressive revenue growth for the quarter, with 5.9 per cent constant currency growth. However, margin performance was a tad below estimates,” said Sanjeev Hota, AVP Research at Sharekhan.
The company’s growth in Q3 was led by technology and services vertical, which grew 7.5 per cent, while manufacturing, retail and consumer packaged goods segments grew 3.9 per cent and 8.4 per cent, respectively. Revenues from financial services vertical saw a marginal decline of 0.6 per cent on a sequential quarter basis.

NSC members feel 'sidelined by govt', resign on row over jobs, GDP data

The Chairman and external member of National Statistical Commission (NSC) have resigned, expressing disappointment over the treatment being meted out by the government.
PC Mohanan, who was the acting chairman of the NSC along with member JV Meenakshi resigned on Monday, leaving behind no external members in the body.

Two key reasons cited for resigning from the NSC were – withholding the publication of the National Sample Survey Office (NSSO)’s employment survey for 2017-18 and a lack of consultation with the Commission before releasing the backdated Gross Domestic Product (GDP) series last year.
“We have resigned from the NSC. Over the months, we have been feeling that we were not been taken seriously and being sidelined by the government. Recent decisions of the NSC were not being implemented,” PC Mohanan told Business Standard on Tuesday.
The immediate trigger for resignation was the delay in releasing the NSSO’s first series of the household survey, known as periodic labour force survey, for 2017-18.
Sources said the NSC had approved the survey report in its meeting held on December 5 in Kolkata and it was supposed to be released by the Ministry of Statistics and Programme Implementation, as per convention.
“The report was approved and should have been released immediately, but was not the case. I thought I should not watch silently what was happening,” Mohanan added.
However, almost two months after the approval, the report hasn’t been made public. A former member pointed out that the government was uncomfortable with the findings of the NSSO’s latest household survey. This comes even as the Labour and Employment Ministry has withheld the release of the annual household survey for 2016-17 conducted by the Labour Bureau, despite necessary approvals in place.
The issue of employment has taken centre stage as the campaign to the upcoming general elections gathers momentum. The National Democratic Alliance (NDA) government has repeatedly cited lack of numbers on jobs as a bigger problem than job creation itself.
“The NSC was essentially meant to bring about a sense of credibility to the data put out by the National Statistical System and if the NSC feels that it is not being permitted to carry out its functions then it is entirely appropriate that it resigns,” Pronab Sen, who was the chairman of NSC between 2013 and 2016, said.
As such, the survey reports of the NSSO need the Commission’s approval and not that of the government, a former NSC member explained. “This mechanism has been put in place since the 1960s when a Governing Council was in place which was replaced by the Commission in 2006,” the member said, requesting anonymity.
The government released GDP back-series through Niti Aayog in November last year but did not involve NSC in the consultation process, which did not go down well with NSC members.
“The government did not take the GDP back-series to the NSC. It is supposed to be the highest body in terms of statistics,” pointed out another former member.
The NSC had released its report on the GDP back-series which was disowned by the government as just another exercise.
Further, the latest Economic Census was announced by the government but was not brought to the Commission. Also, the NSC was kept out of the release of National Policy on Official Statistics. “The National Policy on Official Statistics was announced without any reference to the Commission,” said a former member.
Former NSC Chairman RB Barman said, “Since NSC is the apex of the system, whatever they do they should have enough space for being independent.” His term ended in July last year.

NCLT says Ruias' Rs 54,000-cr bid not 'maintainable'; Essar may move NCLAT

In a major setback for the Ruia family, the promoters of insolvent Essar Steel, the National Company Law Tribunal’s (NCLT’s) Ahmedabad bench on Tuesday rejected the plea of its majority shareholder, Essar Steel Asia Holding Ltd (ESAHL), to submit a settlement proposal.
In its order rejecting the interlocutory application (IA) 430 of ESAHL, the two-member Bench comprising adjudicating authorities Harihar Prakash Chaturvedi and Manorama Kumari held that as the holding company and majority shareholder, ESAHL did not have the locus standi to make a debt settlement proposal as it did not approach as a resolution applicant unlike others.
Essar is expected to challenge the decision in the appellate tribunal. “We continue to believe that our offer of Rs 54,389 crore is the most compelling proposal available to Essar Steel creditors. It seeks to repay all classes of creditors and fulfils the IBC’s overriding objective of value maximisation that has been established time and again by courts at all levels. We submitted the proposal under the recently introduced Section 12A of the IBC and the recent judgement of the Supreme Court has established that the section’s provisions are applied retrospectively. We are awaiting a copy of the full NCLT order, and will take a call on next steps after we have thoroughly gone through the contents,” an Essar Steel spokesperson said.
ALSO READ: NCLT says banks not wrong in rejecting Essar Steel settlement plan: Report
ArcelorMittal welcomed the judgment and said, “We welcome today’s ruling by the NCLT which protects the integrity of the IBC and ensures its legitimacy as a rules-based law. This is a positive development for both Essar Steel India and the country more broadly. We hope now for a swift resolution to this case.”
The NCLT bench observed, “We do not find any irregularity or illegality in the decision of the RP and CoC in not considering the settlement plan (of ESAHL).”
It further observed that other than the resolution applicant i.e. ArcelorMittal, the resolution process “cannot be made open to another person to make an application under Section 60(5) of IBC.”

ALSO READ: NCLT Ahmedabad can decide on Essar Steel's insolvency case by Jan 31: NCLAT
“IA 430 is rejected on the grounds that it is not maintainable before this adjudicating authority under 60(5) of IBC,” the order read.
The Bench observed that the scope of the settlement proposal under section 60(5) would not be proper when a specific provision under section 12(A) of resolution plan had already been incorporated. “It is a certain position as per the decision of the NCLAT that shareholder cannot have a legal right post submission of insolvency petition. The present applicant (ESAHL) did not choose to file such an application either before this adjudicating authority or NCLAT nor Supreme Court....which should have been done at the relevant time,” the operative part of the order read.
The tribunal reiterated the Supreme Court (SC)'s recent judgment on January 25 where it upheld the Constitutional validity of the Insolvency and Bankruptcy Code (IBC) and Section 12A, which talks about adjudicating authority being able to allow withdrawal of application made under Section 7 or Section 9 or Section 10, on an application made by the applicant with the approval of 90 per cent voting share of the CoC.
ALSO READ: SBI pushes Essar Steel auction deadline to Feb 11 on developments at NCLAT
Unlike ESAHL which made a settlement offer outside of the resolution process, ArcelorMittal had submitted a resolution plan which was approved by 92 per cent of the CoC.
The Bench also observed that while the Transfer of Property Act, as invoked by ESAHL is establishing its locus standi as a shareholder to redeem Essar Steel, was a constitutional right under Article 300A of the Constitution of India, the SC had also upheld the IBC's Constitutional validity.
The Bench will now hear on ArcelorMittal's resolution plan which was approved by Essar Steel's Committee of Creditors (CoC).
The order on Tuesday comes after the National Company Law Appellate Tribunal (NCLAT) last week directed the NCLT to decide on the ArcelorMittal resolution plan by January 31. The NCLAT, by way of a last opportunity, had allowed the NCLT to pass an order in the case by the date, failing which it would pass an order on February 4.
There was an urgency to wrap up the Essar case, one of the largest accounts on the Reserve Bank of India's (RBI's) first list of non-performing assets (NPAs), which had been dragging for more than 540 days now.

Public sector banks to turn more profitable: Piyush Goyal after review meet

Public sector banks (PSBs) will become more profitable and proactive in the days to come, Finance Minister Piyush Goyal said after holding a review meeting with the lenders on Monday, days ahead of the interim Budget.
The chiefs of PSBs discussed issues faced in taking bad loan cases to the National Company Law Tribunal (NCLT) along with ways to boost credit, particularly for micro, small and medium enterprises (MSMEs), and improve recovering bad loans.

“The sum and substance of today's meeting is we are going to see a far more vibrant, proactive, profitable banking sector in the days to come,” Goyal said. “We would like them to look at ways to improve delivery of services to farmers. We would like them to be more proactive in encouraging retail businesses.”
Reserve Bank of India (RBI) Governor Shaktikanta Das addressed the chiefs earlier in the day and took stock of the liquidity situation, particularly in non-banking financial companies, said a PSB executive.
Sources said the RBI governor asked banks to make provisions for bad loans. A finance ministry note said Das flagged the need for strengthening various aspects of banking, including underwriting standards, capacity building, using tech, and governance.
Chart “The idea (behind the meeting) was to share with PSB chief executives the regulator's expectations from the banking sector and also to listen to them about their assessment of the state of the banking sector in general and the PSBs in particular and their take on the outlook of PSBs,” Das told reporters.
A PSB chief said the governor was assured there was no liquidity crunch. “The governor told us a line of communication was open between the RBI and banks and all our concerns would be heard. He also told banks to make use of the dispensation given by the RBI on restructuring MSME loans,” a PSB chief executive said.
Earlier this month, the RBI allowed a one-time restructuring scheme for MSMEs with a maximum exposure of Rs 25 crore, to be implemented by banks by March 31, 2020. The MSME account should remain a “standard asset” as of January 1.
The finance minister said discussions centred around support to MSMEs and businesses, along with ways to promote finance for housing and give a thrust to homeowners.
“Bankers expressed confidence that after the government amended the Prevention of Corruption Act while anybody indulging in bad practices will not be spared, (and) genuine commercial decisions by bankers will be protected,” Goyal said. He added the government was “fully backing” every PSB, which would perform better at the earliest.
Punjab National Bank Managing Director (MD) and Chief Executive Officer (CEO) Sunil Mehta said banks were asked whether the process of restructuring MSME loans could be expedited in the current financial year.
“Banks are identifying cases and we are going to provide relief to genuine MSME borrowers in cases where the business model was fine but temporary stress was there,” Mehta said. Mehta said there was an overall review of the Insolvency and Bankruptcy Code framework “and how banks are approaching and resolving the issues. There was a detailed discussion on how we can improve the efficacy of recovery and credit delivery system”, Mehta said.
State Bank of India Chairman Rajnish Kumar said the government was pro-actively addressing issues PSBs raised and the onus was now on bank managements to deliver. He added the RBI governor was receptive of “whatever issues the banks had submitted”.
FinMin on meet
Banks have agreed to step up MSME lending, reduce turnaround time for loan sanctioning, and increase use of advanced data analysis for monitoring
Lenders have committed to enhance efforts for financing under Pradhan
Mantri Awas Yojana, which is aimed at securing ‘Housing for All’ by 2022
Prompt Corrective Action banks advised
to maintain trend of improvement in performance, with a view to bringing them out of the PCA framework at the earliest

DHFL siphoned off Rs 31,000 crore of public money, claims report

A news website on Tuesday claimed that primary promoters of DHFL, a housing finance institution, siphoned off over Rs 31,000 crore of public money through loans and advances to shell companies and other means to create private wealth for themselves.

Calling it the "biggest banking scam in Indian history", the Cobrapost website, known for journalistic sting operations, alleged that Dewan Housing Finance Corp Ltd's (DHFL) promoters routed money through dubious companies and parked it outside India to acquire assets.

The probe alleged that the company under-reported Rs 20 crore donation to the Bharatiya Janata Party (BJP).
"The scam has been pulled off mainly by sanctioning and disbursing astronomical amounts in secured and unsecured loans to dubious shell/pass-through companies related to DHFL's own primary stakeholders Kapil Wadhawan, Aruna Wadhawan and Dheeraj Wadhawan through their proxies and associates, which have in turn passed the money on to companies controlled by the Wadhawans," Cobrapost editor Aniruddha Bahal told a press conference here.
In a panel discussion that followed the press conference, former Finance Minister Yashwant Sinha demanded a multi-disciplinary SIT probe into the alleged scam. He said if even after all this a probe was not ordered, then it would prove that people at the top were "party to it".
Recollecting that Prime Minister Narendra Modi used to say that neither would he indulge in corruption nor would allow anyone else to do so, Sinha said first it was IL&FS where Rs 95,000 crore "will not come back" and now it was DHFL where Rs 31,000 will not be recovered.
Alleging complicity of regulatory institutions like RBI, SEBI, Company Law Board, credit rating agencies and the Income Tax department, activist lawyer Prashant Bhushan said a "nexus of holy cows" had been created in the financial system.
Bahal alleged that the money had been used to buy shares and other private assets in India and abroad, including in countries like the UK, Dubai, Sri Lanka and Mauritius.
"By lending to shell or pass-through companies without due diligence, DHFL has ensured that the recovery of such dubious loans is impossible since the companies or their directors themselves don't own any assets," he said, adding the private assets acquired by Wadhawans and their associates using the siphoned off funds were completely "ring-fenced" from any recovery process.
Bahal said the scam was exposed by closely scrutinizing public records available with the government authorities and information available in public domain.
He said that with net worth of Rs 8,795 crore, DHFL had taken loans from banks and financial institutions to the tune of Rs 96,880 crore and had disbursed Rs 84,982 crore in loans and advances to other entities.
"Thus the only losers in the process would be the public sector banks, such as the SBI and Bank of Baroda, with an exposure of over Rs 11,000 crore and Rs 4,000 crore respectively, foreign banks and shareholders from among the public or investors of DHFL," he said.
He said there had been serious violations of several civil and criminal laws and regulations and a massive deviation both from the industry practice on the lending policy and from good corporate governance norms of the company.
"Surprisingly, all these violations have taken place right under the nose of the RBI, SEBI, Finance Ministry, auditing agencies, Income Tax Department and the rating agencies."
"It is a clear case of complete connivance amongst public and private figures," he said.
In its investigation, Cobrapost identified 45 companies allegedly used by Wadhawans as vehicles to siphon off funds from DHFL which were given loans in excess of Rs 14,282 crore.
"Out of these, 34 companies are so dubious that most of them have no business of income. More often than not, they are audited by the same accounting agencies, helping them hide all the fraudulent transactions," Bahal said, adding that many of those companies operate from same addresses and are run by the same group of initial directors.
"Given the debt of exposure of the company to the tune of Rs 96,880 crore, what Cobrapost has unearthed may just be the tip of the iceberg. The true scale of the scam can be arrived at only after investigative agencies conduct a thorough forensic audit of the money trail," he said.
DHFL's statement:
DHFL is a publicly listed Housing Finance Company and is regulated by the National Housing Bank and the Securities and Exchange Board of India, amongst other regulators. This mischievous misadventure by CobraPost appears to have been done with a mala fide intent to cause damage to the goodwill and reputation of DHFL and resulting in erosion in shareholder value.
DHFL today received an email at 8.44 a.m. in the morning, with a follow-up reminder one hour later, seeking answers to 64 questions from Cobra Post, many of which were laced with political innuendos. We are shocked and surprised to receive this inquiry this morning, although Cobra Post had announced its press conference last Friday, i.e. 25 January 2019, to disclose an alleged financial scam. One would have expected as a responsible media house CobraPost would have asked these questions during their investigations and not on the day of the press conference.
Their entire approach raises serious concerns about the motivation of this so-called expose.
It is necessary in public interest that if they believed in the genuineness of their issues to have given DHFL an opportunity to explain the facts that are in any case available in the public domain.
DHFL is one of the leading and most respected housing finance companies in India with over Rs.1,11,000 crores of assets under management and a large customer based across the country. Despite the recent liquidity regime, DHFL as a responsible corporate has met all its obligations to the lenders and has paid back to them in excess of Rs.17,000 crores in the last three months. DHFL has a strong corporate governance regime and has received AAA credit rating from leading credit agencies. The company is fully tax compliant and its books are audited by global auditors.
We understand, for the last several weeks, an anonymous note has been making the rounds with similar defamatory and scurrilous allegations. The real intent of this exercise appears to be to destabilize the company and the market equilibrium besides hampering our meeting the on-going obligations. We are also concerned about the timing and the holding of the press conference before the stock market close and days before the interim budget.
DHFL is a responsible and law-abiding corporate citizen and all loans are disbursed in the normal course of business in accordance with industry best practices and in compliance with all regulatory norms. The company’s financial statements are submitted to the Stock Exchanges and are in the public domain.
DHFL and its group companies are confident of meeting any scrutiny on any aspect of our operations and will pursue these frivolous allegations to its logical conclusion.

HDFC Q3 total income rises 20% to Rs 10,569 cr; net profit at Rs 2,114 cr

Housing finance company HDFC Ltd Tuesday reported a net profit of Rs 2,113.80 crore on the standalone basis for the third quarter ended December 2018.
The company had posted a net profit of Rs 5,300 crore in the October-December quarter of the last financial year.

The profit numbers for the quarter ended December 31, 2018 are not comparable with that of the quarter ended December 31, 2017, HDFC Ltd said in a statement.
In the quarter ended December 31, 2017, the company had sold shares in the initial public offer of HDFC Life Insurance Company Limited for a consideration of Rs 5,250 crore.
Total income rose to Rs 10,569 crore during the December quarter against Rs 8,824 crore in the year-ago period.
As per National Housing Bank (NHB) norms, the gross non-performing assets stood at 1.22 per cent of the total assets (Rs 4,731 crore) at the end of quarter.
The capital adequacy ratio stood at 18.9 per cent, of which Tier I capital was 17.2 per cent and Tier II capital was 1.7 per cent, it said.
As per the regulatory norms, the minimum requirement for the capital adequacy ratio and Tier I capital is 12 per cent and 6 per cent respectively, it said.
During the nine months ended December 2018, the company's profit after tax before other comprehensive income was Rs 6,771 crore compared to Rs 8,703 crore in the corresponding period of the previous year.
The board approved the appointment of Ireena Vittal as an independent director of the company for a period of 5 years with effect from January 30, 2019, it added.

Flipkart seeks 6-month delay in e-commerce rules, cites customer disruption

Walmart Inc's online retailer Flipkart has told the government the company faces the risk of "significant customer disruption" if the implementation of new curbs for e-commerce is not delayed by six months, a source told Reuters.
India's new foreign investment restrictions will, from February 1, bar e-commerce companies from selling products from firms in which they have an equity interest and also ban them from reaching deals with sellers to only sell on one platform.

In a letter to India's industries department earlier this month, Flipkart Chief Executive Kalyan Krishnamurthy said the rules required the company to assess "all elements" of its business operations, according to a person privy to the communication.
"Redesigning numerous elements of our technology systems to ensure that we can validate and evidence our compliance, in such a compressed period of time, has caused us to divert significant resources," Krishnamurthy wrote in the letter. The new curbs were only announced on December 26.
ALSO READ: Amazon, Walmart push hard to extend FDI guidelines in e-commerce
He also said the regulations could cause "significant customer disruption" if the deadline for compliance wasn't extended. He asked for a six-month delay.
The contents of Flipkart's letter have not been previously reported. Flipkart declined to comment.
Indian officials have said the government is unlikely to change the policy's implementation date. The industries department declined to comment for this article.
The policy move has jolted Walmart, which last year invested $16 billion in Flipkart in its biggest ever deal, and Amazon, which has committed $5.5 billion in India investments.
ALSO READ: Snapdeal, ShopClues support govt's Feb 1 deadline for e-commerce FDI norms
Industry sources have said the new policy would raise compliance costs and force Amazon and Flipkart to review their business arrangements in the country.
Flipkart and Amazon have both started working on approaching thousands of sellers on their platforms to ensure the companies comply with the regulations, three sources aware of the matter said, even as they seek a deadline extension.
For Flipkart, the process would take five-to-six months, said one of the sources, who told Reuters: "the company is right now focusing on working with sellers (for compliance), all rest is on the back burner".
Unfair marketplace?
India's small traders had complained that large e-commerce companies used their control over inventory from their affiliates to create an unfair marketplace that allowed them to offer deep discounts on some products. Such arrangements would be barred under the new policy.
Amazon told Reuters last week it had written to the Indian government to seek an extension of four months. With more than 400,000 sellers and "hundreds of thousands of transactions" daily, Amazon said it needed the time to understand the policy.
Flipkart, in its letter, said the group has more than 80,000 employees and contractors and the number of shipments and packages which move daily were between 500,000 and 600,000.
ALSO READ: Govt's e-commerce curbs could hit online sales by $46 bn by 2022: PwC
The new policy "imposes several new conditions, which we believe could potentially have undesirable impacts on the continued growth of e-commerce in India", Krishnamurthy wrote.
The company added that it wanted to work with the federal government to promote "pro-growth policies" which can help develop the e-commerce sector. Before the policy change, Morgan Stanley estimated India's e-commerce market would grow 30 per cent a year to $200 billion in the 10 years up to 2027.
The US government has been concerned and earlier this month told Indian officials to protect Walmart and Amazon's investments in the country, citing "good relations" between the two countries, Reuters reported on Thursday. 

Huawei hits back, accuses western govts of 'slander, discrimination'

China's envoy to the EU on Monday said Huawei was the victim of slander as western governments try to hamper the Chinese telecommunications giant's effort to deploy its technology worldwide.
"It is not helpful to make slander, discrimination, pressure, coercion or speculation against anyone else," Ambassador Zhang Ming said in an interview with the Financial Times.
"Now someone is sparing no effort to fabricate a security story about Huawei," he said.
Beijing's criticism follows similar words by Foreign Minister Wang Yi who said the campaign against Huawei was "unfair and immoral".
The United States, France and other western nations have voiced fears that using Huawei base stations and other gear could give Beijing access to critical network infrastructure worldwide, possibly allowing it to spy on foreign governments.
ALSO READ: Trudeau sacks envoy to China after comments on Huawei CFO's extradition
In an interview with Bloomberg, European Commission Vice-President Andrus Ansip said the EU was especially worried given China's National Intelligence Law, passed in 2017.
This law compels companies and individual citizens to actively assist China's spy organisations in investigations.
"When it's written in the law, then we have to understand those risks are higher. We cannot be naive anymore," Ansip told Bloomberg.
The worries circle around 5G technology, in which Huawei has invested billions of dollars, competing mainly against Sweden's Ericsson and Finland's Nokia.
ALSO READ: Besides security, another reason US fears Huawei: Its gear actually work
The United States, Britain and other countries have warned of potential Huawei security risks, not least since its founder Ren Zhengfei is a former People's Liberation Army engineer.
Huawei officials bristled at the claims, and chairman Liang Hua warned this week that it would pull out of partnerships in countries where it is not welcome.
"We do not pose a threat to a future digital society," Liang said at the World Economic Forum in Davos, Switzerland last week.
Adding to the tensions, Canadian police arrested in December Huawei's chief financial officer Meng Wanzhou -- a daughter of the company's founder -- on a US warrant over suspected Iran sanctions violations.
China on Wednesday accused Washington of "bullying behaviour" after US authorities confirmed plans to seek Meng's extradition.

Tata Power's quarterly profit plunges nearly 67%; hit by higher expenses

Tata Power on Monday reported 67.42 per cent decline in consolidated net profit at Rs 204.61 crore for December quarter 2018, mainly on account of higher fuel and borrowing costs.
The company's net profit in the year-ago period stood at Rs 628.16 crore, it said in a BSE filing.

Total income rose to Rs 7,721.52 crore in the reported quarter from Rs 6,451.31 crore a year ago.
Fuel cost of the company rose to Rs 3,189.87 crore from Rs 2,491.24 crore in the year-ago period. Similarly, the finance cost rose to Rs 1,013.96 crore from Rs 855.28 crore a year ago.
The company said its net profit of Rs 628.16 crore in the year-ago period was also higher due to one time exceptional item.
During April-December 2018, net profit stood at Rs 2,333.09 crore as compared to Rs 1,246.52 crore in the year- ago period. Total income during the nine-month period was also higher at Rs 22,537.58 crore as compared to Rs 19 991.94 crore a year ago.
The stock of Tata Power settled at Rs 70.80, down 4.26 per cent from the previous close, on BSE.

'Maintain patience': Inside Subhash Chandra's fight to keep empire afloat

The media mogul behind India’s biggest television network is battling to restore confidence in his businesses after an online news site reported that Subhash Chandra’s Essel Group has links to a company that’s being probed by fraud investigators.
It began Friday, when a report by the Wire sent all of Essel’s seven listed units plunging, including a record 27 per cent tumble at Chandra’s flagship TV broadcaster, Zee Entertainment Enterprises Ltd. A barrage of denials and statements from the conglomerate since helped Zee and its two affiliates recover some of their losses on Monday, while the remaining Essel units continued to fall.

Essel’s PR blitz also unearthed some potentially broader issues: The closely held group had been scrambling to sell assets, including a big stake in Zee, to pay debts. The group emerged as the latest example of the growing number of Indian businesses struggling to cope with tougher borrowing conditions after the government began taking steps to lower the world’s second-highest ratio of bad loans.
The episode increased the urgency for Chandra to sell as much as half of Essel’s 42 per cent stake in Zee, according to Nirmal Gangwal, founder at advisory firm Brescon & Allied Partners LLP. The shares that Essel is putting up for sale are valued at about $1 billion, based on the latest closing prices.
"It is critical for Zee to find a definitive buyer for the proposed sale to arrest erosion of value of the company," Gangwal said.
Fraud probe
According to the Wire, a little-known company called Nityank Infrapower is being probed by the Serious Fraud Investigation Office and has been involved in various transactions involving the conglomerate. In one occasion, a Nityank-backed firm lent more than $140 million to a company backed by Essel, according to the report. The Wire didn’t report that Essel is engaged in fraud but went on to question how an obscure company like Nityank could get involved with a large one such as Essel, even providing security for loans taken out by Essel companies.
Graph Graph
Essel countered by saying the conglomerate had nothing to do with the fraud probe and that Nityank was independent of the group. Contact information for Nityank officials weren’t immediately available, while the SFIO declined to comment.
Among other Essel units, Zee Media Corp., SITI Networks Ltd. and Shirpur Gold Refinery Ltd. plunged between 18 per cent and 19 per cent on Monday, extending Friday’s rout. Zee Learn Ltd. slumped 7.5 percent. Dish TV India Ltd. fluctuated between gains and losses before settling 6.7 percent higher.
Zee Entertainment, which boasts 1.3 billion viewers across 173 countries through its 78 channels and 4,800 movie titles, surged 17 per cent but that recovery was less than half of the losses it saw in the previous session. A lot is riding on the stock’s price because the sale of Zee Entertainment’s stake would allow Essel to pay all its dues, according to Chandra.
The problem with Essel’s stake is that 59 per cent of it has been pledged as collateral to borrow money from creditors, putting those shares at risk of being seized and dumped if the price falls below certain thresholds. Friday’s plunge caused various covenant breaches but the group reached an understanding with 97 percent of its lenders, Zee Entertainment Chief Executive Officer Punit Goenka said on a call on Monday.

ALSO READ: Jio may join race to pick stake in Subhash Chandra's Zee Entertainment
Zee Entertainment is also trying to sell stressed assets for an enterprise value of 200 billion rupees ($2.8 billion). It isn’t clear how much Essel owes its creditors and who those creditors are -- group officials won’t say.
Zee Entertainment analysts weren’t spooked by the events in the last few days. More than 70 per cent have a buy rating on the stock and none had cut their assessments as of Monday.
Chandra, who started Zee in 1992, has been saying that he planned to sell the stake to secure financial backing, while capitalising on booming demand for Indian content. According to the Business Standard, a slew of companies ranging from Amazon.com Inc. to Apple Inc. and Sony Pictures Entertainment Inc. are among companies interested in buying the Zee Entertainment stake. The TV company’s profits in the latest quarter surged 75 per cent jump in profit to 5.6 billion rupees on sales of 21.7 billion rupees.
Meanwhile, Chandra, a former rice trader who sports a skunk hairstyle, in his letter urged lenders to “maintain patience, till the process of Zee Entertainment’s stake sale is completed.”
“Post the sale process, we will be positively able to repay the entire dues, but if the lenders react in a panic situation, it will only hurt them and us,” he said.

Rahul Gandhi promises minimum income guarantee for poor if voted to power

Somewhat reminiscent of his grandmother Indira Gandhi’s poll promise of ‘garibi hatao, or alleviate poverty, in the 1971 Lok Sabha elections, Congress president Rahul Gandhi on Monday said the Congress, if voted to power in the 2019 Lok Sabha polls, would implement a minimum income guarantee for the poor of India.
The Congress president made the promise while addressing a public meeting in Chattisgarh’s Raipur. He also subsequently tweeted about it. Party sources said a minimum income guarantee for the poor, and not universal basic income (UBI), would be the key manifesto promise of the Congress party for the 2019 Lok Sabha polls. They said the details would be made public in a calibrated manner in the weeks to come.

Former finance minister P Chidambaram, the chairperson of the Congress party's manifesto drafting committee, said the party will explain its plan in its manifesto for the 2019 Lok Sabha polls.
However, Gandhi's announcement was also an attempt to steal the thunder of Modi government’s interim budget, party sources admitted. Stand-in finance minister Piyush Goyal will present the interim budget in the Lok Sabha on Friday, and there is speculation that it could promise a minimum monthly income for farmers.
In a tweet after his speech at the rally, Gandhi said, “We cannot build a new India while millions of our brothers and sisters suffer the scourge of poverty. If voted to power in 2019, the Congress is committed to a ‘minimum income guarantee’ for every poor person, to help eradicate poverty and hunger. This is our vision and our promise.”
In its 2004 manifesto, the Congress party had promised farm loan waiver, which it implemented in 2008. At least since the run up to the Uttar Pradesh and Punjab Assembly polls in 2017, Gandhi has promised farm loan waivers in all Assembly polls. The Congress party promised to write off farm debts in Rajasthan, Madhya Pradesh and Chhattisgarh in the recent Assembly polls in the three states. Post elections, the three Congress governments have implemented the promise.
Chidambaram said the Congress president’s announcement was “historic”, which “will mark a turning point in the lives of the poor”. “The principle of Universal Basic Income (UBI) has been discussed extensively in the last two years. The time has come to adapt the principle to our situation and our needs and implement the same for the poor. We will explain our plan in the Congress manifesto,” Chidambaram tweeted.
The former finance minister said 140 million people were lifted out of poverty between 2004 and 2014, the 10-years of Congress-led UPA rule at the Centre. “Now we should make a determined effort to wipe out poverty in India. The poor of India have the first charge on the resources of the country. Congress will find the resources to implement the promise of Rahul Gandhi,” Chidambaram tweeted.
Arvind Subramanian, who authored the 2016-17 Economic Survey, had mentioned UBI as a “radical option” to reduce poverty and vulnerability. “UBI has three components: universality, unconditionality, and agency (by providing support in the form of cash transfers to respect, not dictate, recipients’ choice),” the Economic Survey had stated. However, the Congress is mulling a minimum income guarantee for the poor, and not UBI.
In his speech in Raipur, Gandhi accused Prime Minister Narendra Modi and the ruling BJP of trying to create two Indias -- "one of the Rafale scam, Anil Ambani, Nirav Modi, Vijay Mallya, Mehul Choksi and the other of the poor farmers".
"The Congress has decided to take a historic decision... The Congress-led government is going to give minimum income guarantee. This means, each poor person in India will have minimum income. This means there will be no hungry, poor people in India," Gandhi said.
The Congress president also distributed loan waiver certificates to some of the beneficiary farmers during the 'Kisaan Abhaar Sammelan' held in the Chhattisgarh capital to express gratitude to Chhattisgarh's people, particularly farmers, for voting the Congress to power in the state after a gap of 15 years.

CBI to soon summon Chanda Kochhar, other suspects in ICICI Bank case

Advised by union minister Arun Jaitley to avoid "adventurism", the CBI will start calling suspects in the ICICI Bank case involving its former CEO Chanda Kochhar for questioning after completing scrutiny of documents seized during searches last week, officials said Monday.
The CBI is carrying out scrutiny of the documents seized during searches at the offices of Videocon Group and Nupower Renewables and Supreme Energy, run by Chanda Kochhar's husband Deepak Kochhar, they said.

It is the prerogative of the investigation officer to decide which premises will be searched, the officials said when asked why the residence of Chanda Kochhar, named an accused in the FIR, was not included in the search operation on January 24.
Interim CBI Director M Nageswara Rao had changed the in-charge of the case a day after the filing of the FIR on January 22, and gave the charge of the case to Superintendent of Police Mohit Gupta. Sudhanshu Dhar Mishra, who filed the FIR in the case, was transferred to Ranchi on January 23.
Justifying the transfer, the CBI had pinned the blame on Mishra for keeping the preliminary enquiry pending without any reason and also alleged that his role was suspected in possibly leaking the information about searches, they said.
Immediately after the registration of the case, the searches were proposed to be conducted, they said.
"However, it was suspected that there was a possibility of information regarding searches being leaked. A discreet inquiry was conducted and role of Sudhanshu Dhar Mishra was strongly suspected. Hence he has been transferred pending detailed inquiry in the (serious) matter," an official had said Sunday.
It is alleged that during the tenure of Chanda Kochhar, six loans worth Rs 1,875 crore were cleared for Videocon Group and its associated companies. In two of these cases, she herself was on the sanctioning committees.
In its FIR, the CBI has also named several top honchos of the banking industry, including the present CEO of ICICI Bank, Sandeep Baxi, alleging that they were also members of the sanctioning committees whose role needs investigation.
Banking doyen and Chairman of New Development Bank K V Kamath,Goldman Sachs India chairman Sonjoy Chatterjee, Standard Chartered Bank CEO Zarin Daruwala, Tata Capital head Rajiv Sabharwal and Tata Capital senior advisor Homi Khusrokhan need to be investigated, according to the FIR.
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Their names were included by the agency in the text of the FIR after a year-long preliminary enquiry.
The action attracted strong comments from Jaitley, who advised the agency against "adventurism".
"Sitting thousands of kilometres away, when I read the list of potential targets in the ICICI case, the thought that crossed my mind was again the same - instead of focusing primarily on the target, is a journey to nowhere (or everywhere) being undertaken? If we include the entire who's who of the banking industry with or without evidence what cause are we serving or actually hurting."
ALSO READ: Don't cast net too wide: Jaitley on CBI's handling of ICICI Bank case
Jaitley is currently undergoing treatment in the US.
Jaitley, who was finance minister of India till last week and had to temporarily hand over the charge to his fellow minister Piyush Goyal for the duration of his indisposition, advised the investigators "Follow the advice of Arjun in the Mahabharat Just concentrate on the bull's eye.

'Made-in-India' Railways' Train 18 named Vande Bharat Express: Piyush Goyal

Acknowledging its made-in-India status, the Indian Railways has named the indigenously manufactured Train 18 as Vande Bharat Express, Railway Minister Piyush Goyal said Sunday.
The train is set to run between Delhi and Varanasi at a maximum speed of 160kmph.

Prime Minister Narendra Modi is likely to flag off the train soon.
The 16-coach train, built in 18 months at a cost of Rs 97 crore by the Modern Coach Factory, Rae Bareli, in 18 months, is regarded as a successor to the 30-year-old Shatabdi Express. It's also the first locomotive-less train in the country.
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The fully air-conditioned train will stop at Kanpur and Allahabad and will have two executive chair cars.
"It is completely made in India and various names were suggested by the general public but we have decided to name it Vande Bharat Express. A gift on the occasion of the Republic Day to people.
Will request the prime minister to flag it off," said Goyal.
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EWS quota will not affect existing reservation for Dalits, Tribals: PM Modi

Prime Minister Narendra Modi Sunday hit out at critics of the 10 per cent quota for the economically weaker sections, saying some persons in Tamil Nadu were creating an "atmosphere of suspicion and mistrust" to serve their interest.
Sounding the poll bugle in Tamil Nadu at a well-attended BJP rally here, he took a swipe at the proposed grand alliance of the opposition parties, saying they had set aside their differences to "remove this watchman," in the coming Lok Sabha polls.
He also said his government was taking effective steps to rid the country of corruption and nepotism.
"Any person who has cheated or looted the country, shall be brought to justice," Modi said in an apparent reference to economic offenders -- Vijay Mallya, Nirav Modi and Mehul Choksi who are wanted in connection with defaulting on huge bank loans.
Asserting that the provision of 10 per cent quota to economically weaker sections (EWS) in the general category will in no way impact the existing reservation benefits for Dalits, Tribals and others, Modi urged the youth to "reject forces of negativity."
The EWS quota had been earmarked with the 'spirit' of providing opportunities to all in education and employment.
"This decision has been taken in such a way that it doesn't affect Dalit, tribals," and others, he said.
"It is unfortunate that an atmosphere of suspicion and mistrust is being created by some people in Tamil Nadu to serve their interest," he said.
Opposition DMK and some other parties in the state have opposed the 10 per cent quota, saying social backward alone should be the criterion for reservation.
The DMK has moved the Madras High Court challenging the Constitution amendment providing for 10 per cent EWS quota.
The Prime Minister said "Narendra Modi will firmly stand with the poor," drawing thunderous applause from the crowd.

Mann Ki Baat: Modi praises Shivakumar Swami, urges youth to vote in polls

Prime Minister Narendra Modi on Sunday paid tribute to late Shivakumar Swamiji, the pontiff of Sree Siddaganga Matha who recently passed away after a prolonged illness in Karnataka's Tumkur, saying that he had dedicated his entire life to social service, working for the social, educational welfare of scores of people.
"Shivakumar Swamiji was a true follower of Lord Basaveshwar's tenet 'Kayakave Kailash'. During his life spanning 111 years, he strived tirelessly towards social, educational, and economic upliftment of thousands of people," Prime Minister Modi said while addressing the Mann Ki Baat programme.
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"I have had fortunate opportunity to be blessed by Swamiji, many a time. In 2007, on the occasion of the Centenary celebration of Sri Sri Sri Shivakumar Swamiji our former President Dr APJ Abdul Kalam had paid the visit to Tumukur," he added.
Prime Minister Modi also urged the young generation to register themselves as voters as Lok Sabha elections are just around the corner. In his podcast, the PM stated: "This year, our country will undergo Lok Sabha elections. First time ever, young persons born in the 21st Century to exercise their Right to Vote in Lok Sabha Elections. I urge young generation to register themselves as voters if they are eligible."
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The Prime Minister also lauded the Election Commission of India (ECI) for conducting massive elections in India and making efforts to strengthen India's democracy.
He also praised ECI for setting up a polling booth in Gir forest for just one voter. "You must have heard about Gujarat, in Gir forest, a polling booth was set up just for 1 voter. When I listen to these things, it is very natural to be proud of the Election Commission."
"I urge eminent people of the country to come forward and jointly contribute in campaigning for spreading awareness on voter registration and casting one's vote on the day of polling," he added.

Kerala's cultural ethos under attack by Left govt: Modi on Sabarimala issue

Prime Minister Narendra Modi Sunday lashed out at the CPI(M)-led government in Kerala and said the Sabarimala issue had shown to the people of the country how the communist government was trying to disrespect the culture of the state.
He said the opposition parties could abuse him as much as they wanted but should not mislead farmers.
The Prime Minister said the opposition should not create hurdles in opportunities for the youth.
"Sabarimala got the attention of the entire nation. The people of India have seen how the communist government was trying to disrespect the culture of Kerala.
Why is the government undermining the culture of the state? Unfortunately, the cultural ethos of Kerala is under attack. It's been done by a party which is governing the state," Modi told a huge gathering at a Yuva Morcha meet here.
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Modi said his government had made efforts to make all kitchens in the country smoke free.
"When we came to power, we made efforts to make all kitchens smoke free. At that time, only 55 per cent of houses had gas connections. But today we have achieved 90 per cent," he said.
The Prime Minister also termed as the 'biggest joke,' the Congress and Left parties talking about democracy.

Cabinet likely to approve relief package for farmers tomorrow: Report

The cabinet on Monday is likely to approve a package for farmers to boost their income and address distress in the farm sector, sources said, adding that the move will come ahead of the general elections.
"The cabinet meeting is scheduled tomorrow (Monday) and the agriculture ministry's proposal on addressing income deficit syndrome of small and marginal farmers is on the agenda," a highly placed source said.
The agriculture ministry has recommended several options to provide both short and long term solutions to address agrarian distress. However, a final call will be taken in the cabinet meeting as a huge cost is involved, the sources said.
One of the options proposed is waiving interest on crop loans for farmers who pay on time, costing an additional Rs 15,000 crore to the exchequer, the sources stated.
There is also a proposal to completely waive premium for taking insurance policy for food crops. The centre is also evaluating the scheme followed by the Telangana and Odisha governments wherein a fixed amount is transferred directly into the bank account of farmers, the sources added.
Agriculture Minister Radha Mohan Singh had recently indicated that the government would announce an agriculture package before the 2019-20 Budget, to be presented on February 1.
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Experts said the government has less time to implement any new scheme. The measure has to be such that it can be implemented faster to reap the political gains during the election.
It may be noted that the central government has taken farmers' issues seriously after the ruling BJP was defeated in Madhya Pradesh, Rajasthan and Chhattisgarh in the recent state polls, where rural distress was a key factor.
Farmers are in distress owing to fall in prices of most crops in view of bumper crop.
(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.)

Indian bonds face a familiar foe with elections just round the corner

After posting the best quarter in four years, Indian bonds are pitted against a familiar foe: likely record debt sales by the government to finance populist measures before national elections due by May.
Prime Minister Narendra Modi’s administration may announce Friday plans to borrow 6.4 trillion rupees ($90 billion) for the next fiscal year in its budget, according to the median estimate of 15 strategists in a Bloomberg News survey. That compares with a revised 5.35 trillion rupees for the current year.

Investors have turned skittish about the health of India’s finances amid signs that the government is ready to sacrifice fiscal discipline as it weighs an aid package to appease farmers, a key voting block. The concerns have led to the yield on the most-traded 2028 bonds rising in four of the past five weeks, with primary dealers rescuing a sovereign debt sale on Jan. 18.

“All pre-poll budgets are oriented toward elections, and markets will react negatively if the budget is heavy on spending and ambitious on revenues,” said Killol Pandya, head of fixed income at Essel Funds Management. “We are positioned more in the shorter-maturity bonds, given that the outlook is not benign due to budget worries.”
Net borrowing, adjusted for repayment of bonds, is seen at 4.2 trillion rupees versus 3.91 trillion rupees this fiscal year, according to the survey.
While the yield on 2028 bonds fell rapidly in the October-December period as oil slumped and the central bank boosted its debt purchases, it was the 700-billion rupee reduction in federal borrowings that first began to buoy the sentiment after a yearlong selloff.
Worries about higher debt sales have re-emerged just as prices of oil -- India’s top import -- have begun to recover and revenue from income tax and asset sales is trailing estimates. That’s not all. The budget deficit is seen widening to 3.5 percent of gross domestic product in the year ending March versus the 3.3 percent target, according to a separate Bloomberg News survey.
Not surprisingly, the yield on the 2028 bonds has risen 18 basis points in January, the most among the major Asian emerging markets, and global funds have pulled $317 million from local bonds this month.
The benchmark 10-year yield could climb to 8 percent if the size of the farm-relief package is “substantial and weighs more on the fiscal deficit that what we have penciled in,” said Hugo Erken, senior economist at Rabobank International. The yield on 2028 bonds fell one basis point to 7.55 percent on Friday.
Reclaiming the 8 percent mark -- a level seen in October -- will “make it difficult for the government to refinance their debt in fiscal 2020,” he said.

2019 a growth year for Indian IT firms: Tech Mahindra MD Gurnani at Davos

The Indian IT sector faces global headwinds like Brexit but developments around Globalisation 4.0 and 5G technology will bring growth for the industry this year, Tech Mahindra's MD and CEO C P Gurnani said.
He also flagged currency risks but added that the domestic IT sector will benefit from investments in digital.
"Uncertainty and lack of clarity around the US shutdown and Brexit are risks for the IT industry. However, the IT sector is poised for future growth, with technology being the key enabler for Globalization 4.0.
"Technology is at the core of everything we do, be it solving the skill problem or sustainability issues," Gurnani told PTI.
Meanwhile, US President Donald Trump on Friday backed a deal to temporarily end the record-breaking government shutdown despite getting no funding for his controversial plan to build a wall along the US-Mexico border.
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The deal resolved the crippling 35-day closure but not the fight over his proposed border wall.
"While US accounts for 60 per cent of the Indian IT spend, for Tech Mahindra, 45-46 per cent business comes from US. We also have other currencies to battle. Every currency has its own equation with the US currency and hence, it all balances out in the end. The impact of the current geopolitical issues, if any, is likely to be two to three quarters away. I would wait and watch before drawing any conclusion," he said.
Britain is set to exit the 28-member EU on March 29. But with just over two months to go, Britain is still undecided on a roadmap, which has led to uncertainties for businesses and the global economy as a whole.
Gurnani, who served as chairman of IT industry body NASSCOM in 2016-17, said the Indian IT sector is betting big on Globalization 4.0 where global trade will be shaped mainly by the use of technology.
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"Despite global slowdown, India has witnessed robust growth and is poised to become the 5th largest economy in the world. Together with Asia, India has a critical role to play in Globalization 4.0, and it is important for us to sustain the momentum," he said.
According to Gartner estimates, India's IT spending will grow by 6.7 per cent in 2019 to USD 89 billion. Increasing spending on three segments -- devices, enterprise software and IT services -- will give a major boost to IT spending levels in India in 2019, it said.
"2019 will be the year of growth as the IT industry invests aggressively in digital. The future is now, and it is all about being agile and being able to deliver better customer and citizen services.
"The economy is being driven by millennials that has led to a huge demand in data and data services. Using data for personalization and customization of services will hold the key," Gurnani said.
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He also said Tech Mahindra is betting big on emerging technologies like 5G, blockchain, artificial intelligence, deep machine learning and quantum computing and will continue to focus on strategic acquisitions to scale faster.
"The future of innovation depends on the successful rollout and implementation of 5G. Networks are at the heart of accelerating digital transformation and a fully functional 5G network will deliver unprecedented productivity gains. After 18 months, 5G will take the centrestage in the tech world and all our conversations will be about digital and 5G," he said.

Investors hit by Zee group stock crash, panicky MFs meet company officials

Public shareholders, including mutual funds (MFs) and foreign portfolio investors (FPIs), have been hit hard by the crash in stock prices of Zee group companies. Panicky MFs met with the officials of the beleaguered group on Saturday to take stock of the situation, said sources.
Domestic fund houses have high exposure to the group companies both on the equity as well as debt side.
Flagship group company Zee Entertainment Enterprises, part of the benchmark Nifty index, has MF equity holding of Rs 1,850 crore, while FPI holding of over Rs 12,700 crore, an analysis of shareholding data shows. More importantly, debt MFs have exposure of nearly Rs 7,300 crore to Zee Entertainment.
The investments have landed in a tricky spot after nearly a third of the value of the stock evaporated on Friday. The woes have got exacerbated after Zee group chairman Subhash Chandra, in an open letter, expressed difficulties in repaying its lenders amid sharp sell-off in the seven listed firms belonging to the Zee group.
“I am compelled to apologize to our bankers, NBFCs and mutual funds, since I believe that I have not lived up to their expectations, despite the best of my intentions,” Chandra wrote in the letter.
Immediately after the letter, MFs sought a meeting with Zee group.
“Zee being a Nifty company, almost all MFs have exposure to the stock. We are more worried about our debt exposure. The meeting was to discuss the group’s position,” said a fund manager.
Debt funds have exposure of Rs 7,300 crore to Zee Entertainment papers. Aditya Birla MF, HDFC MF, Franklin Templeton MF and ICICI Prudential MF have the highest exposure. Sources say Aditya Birla MF has the highest exposure worth Rs 1,500 crore. Other aforementioned fund houses also have exposure of more than Rs 500 crore each.
Sources say most of this exposure is in the form of loan against share.
“While the debt exposure is indeed high, it is in the form of loan against share. In case the group is not able to repay, we have to option to invoke and sell the shares. As of now the cover is sufficient, however, if the group stock tumble further, it could lead to a problem,” said another fund manager.
According to BSE website, Rs 7,580 crore worth of Zee Entertianment have been pledged. This is nearly 60 per cent of the value of promoter’s stake. The 32 per cent fall in the stock price led to creation of fresh pledges on Friday, exchange data showed.
Other group companies Dish TV India, Zee Media and Zee Learn also have high promoter pledging with either MFs or non-banking financial companies (NBFCs). Shares of these companies fell between 10 per cent and 33 per cent in Friday’s trade.
“The letter by the group chairman, clearly indicates that the group is under strain. This could trigger fresh round of selling in the stock on Monday. If MFs and NBFCs start selling the pledged shares, it will further add to pressure,” said an analyst.
Typically, lenders keep a cover of 1.5-2 times while pledging shares. In other words, they disburse Rs 100 for every Rs 150-Rs200 worth of shares pledged. If the value of the pledged shares falls, lenders either liquidate their holdings or ask for more shares from the promoters.
On the equity side, besides exchange traded funds (ETFs), schemes from ICICI Prudential MF, Aditya Birla MF and Mirae MF have exposure to Zee Entertainment stock. However, in most cases the exposure is less than a per cent of the schemes total corpus.