TUESDAY, 1 DECEMBER 2015

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MUMBAI (CITY)
~6.00

VOLUME XX NUMBER 77

THE MARKETS ON MONDAY

Sensex
26,145.67
Nifty
7,935.25
Nifty futures*
7,980.10
Dollar
~66.67
Euro
~70.47
Brent crude ($/bbl)##
43.81
Gold (10 gm)###
~25,410.00

hgg#
#
CCh

17.47
7.45
44.85
~66.76**
~70.74**
43.05**
~100.00

COMPANIES P2

REST OF THE NEWS P8

NESTL RESUMES PRODUCTION

LUXURY CARS GET CHEAPER AS
CARMAKERS INCREASE LOCALISATION OF MAGGI IN ALL PLANTS

*(Dec.) Premium on Nifty Spot; **Previous close; # Over previous

close; ## At 9 pm IST; ### Market rate including VAT and premium

Q2 growth at 7.4%, with

manufacturing boost

COMPANIES P3

The countrys largest telecom service provider,

Bharti Airtel, plans to invest ~60,000 crore
over the next three years on transforming its
network. The investment includes Airtels capital expenditure guidance of around ~16,000
crore in the current financial year. At the end
of the September quarter, Airtels net debt
stood at ~70,777 crore. The development comes
ahead of the impending launch of 4G services
by Reliance Jio, owned by Mukesh Ambani, in
the next year, which is expected to increase
competition in the telecom sector. Investors
and analysts have turned cautious about
incumbent telecom companies as Reliance Jio
is expected to target their existing base. This
makes it imperative for Airtel to defend its turf
by ensuring that its service is top quality.

COMPANIES P2

Domestic firms line up for

Welspun RE projects

Hero Future Energies, ReNew Power and

Reliance Cleangen are evaluating the renewable energy portfolio of Welspun Enterprises.
Welspun Renewables, the wholly owned
green energy arm of Welspun Enterprises, is
selling equity stakes in its solar and wind
power projects. SoftBank, which was earlier
keen to pick up stakes in the projects, has
dropped out. Welspun Renewables was raising capital through equity sales, said a person close to the development.

COMPANIES P2

Dr Lal PathLabs to go public

with ~638-crore IPO

It has the size, scale and a

sound financial track
record, complete with zero
debt and 14 per cent net
profit margin. But Dr Lal
PathLabs has another facet
to it history. Dr Lal PathLabs, which is
offering 11.6 million shares in an initial public
offering, is not only amongst the top pathology lab chains in India but it is also the oldest private lab chain with its origins dating
back to 1949. S K Lal laid the foundations of
the lab chain with the setting up of Central
Clinical Laboratory and Blood Bank
Transfusion Centre in New Delhi four years
after partition, writes ANEESH PHADNIS.

WORLD P6

IMF approves China's yuan

for currency basket

The International Monetary Fund (IMF) on

Monday approved the Chinese yuan as one of
the worlds main central bank reserve currencies,
a major acknowledgement of the countrys rising
financial and economic heft. This will help pave
way for broader use of the yuan in trade and
finance, securing Chinas standing as a global
economic power. But it also introduces new
uncertainty into Chinas economy and financial
system, as the country was forced to relax currency controls to meet IMF requirements. The
changes could inject volatility into the Chinese
economy, since large flows of money surge into
the country and recede based on its prospects.

COMPANIES P2

Quikr buys Commonfloor

for $200 million

Tiger Global-funded online

classifieds platform Quikr has
finalised a stock-cum-cash
deal to acquire real estate
portal CommonFloor.com for
$200 million (~1,300 crore) as
it deepens its play in the real estate segment.
The deal will be announced next week, two
people familiar with the development said. A
Quikr spokesperson declined to comment,
saying terming it market speculation.
CommonFloor, which counts investors
such as Accel, Google Capital and Tiger Global,
was in talks to merge with Quikr, after it failed
to raise additional capital to fund its business.

BS REPORTER

IN SLOW LANE

New Delhi, 30 November

ndias gross domestic product (GDP)

for the three-month period ended
September 30 grew 7.4 per cent a tad
higher than the seven per cent in the
previous quarter with a boost from manufacturing and financial services.
The growth of the manufacturing sector
more than nine per cent pleased the
finance minister, Arun Jaitley. He said
despite adverse global conditions, factory
production had increased.
The statistics and programme implementationministryreleasedthefiguresonMonday.
There was a slight increase in investments
because of the governments capital expenditure,butthedomesticdemandcontinuedtobe
a concern. The growth was, however, much
slower than the 8.4 per cent in the corresponding quarter of the previous financial year.
Economists had projected that GDP would
growby7.3-7.6percentthisquarter(seechart).
The gross value added (GVA), comprising
agriculture, industry and services, increased
to 7.4 per cent in the September quarter,
against 7.1 per cent in the June quarter.
According to the new methodology, the
GDP is calculated as the GVA plus indirect
taxes, excluding subsidies. However, over 35
percentgrowthinindirecttaxcollectionwas
not factored in, as additional measures such
as the hike in excise duty on oil, service tax
rateandthewithdrawalofexcisedutysopsto
theautoindustrywerenottakenintoaccount
while calculating economic growth.
FortheJuly-Septemberperiod,themanufacturingsectorgrew9.3percent,arecordsince
thenewseriesofGDPwasintroducedin201112, compared to 7.2 per cent in the previous
quarter.Grossfixedcapitalformation,aproxy
for investment, showed an uptick by expanding6.8percentinthesecondquarteragainst4.8

QuarterlyGDP growth:

Half-yearly growth

7.5

7.2

6.7 8.4

7.0 7.4

Q1 Q2
2014-15

Q1 Q2
2015-16

Note: All figures are in per cent

(y-o-y)

AIM & DISTANCE

Organisation

Some of the projections for

Indias GDP growth this financial
year and howmuch more is
required in the second half of
2015-16 to meetthese numbers:
Note: All figures are in per cent (y-o-y)

Required
Projection 2nd-halfgrowth

IMF
7.3
World Bank
7.5
RBI
7.4
Finance ministry 7.5-8**

7.4
7.8
7.6
7.8-8.9

** The finance ministrys original projections were

8.1-8.5. After the first quarter growth of 7, officials said
the revised figures would be 7.5-8. Official revisions are
yet to be released

per cent in the previous three months.

However,muchofthishascomeonthebackof
increasedgovernmentcapitalexpenditure.
YES Bank chief economist Shubhada
Rao said, Gross fixed capital formation... is
expected to have been driven by government capex. Jaitley, however, said there is
also private sector investment which has
nowstartedpickingup.AndIdohopeinthe
months to come, it picks up faster.
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ECONOMY, P4

Centres fiscal deficit till Oct at 74% of BE, down

from 90% a year ago
Appetite for gold buoys GDP growth
Core sector growth rate slows to 3.2% in Oct

OPINION, P13

Edit: Trapped in a range

THE SMART INVESTOR, P17

Sensex posts biggest monthly drop since Aug

Sebi green light for exchange IPOs

BS REPORTER

Mumbai, 30 November

The Securities and Exchange

Board of India (Sebi) on Monday
cleared the decks for initial public offerings (IPOs) by stock
exchanges and depository firms
byprovidingclarityonthelisting
framework.
It said the combined shareholding of trading members,
associates and brokers in a listed exchange cannot exceed 49
per cent. Every shareholder
will have to declare their fit &
proper status at the time of
the IPO. The depositories will
monitor the investment caps
for single entities.
The industry players, however, said they would wait for
more clarity.
We welcome the Sebi move.
We will be able to comment once
the detailed regulations are published. BSE will try to expedite
the listing process, based on the
regulations. Listingofexchanges
is expected to bring additional
transparency to their working,
said a BSE spokesperson.
BSE had proposed to list in

ACTION-PACKED ANNOUNCEMENTS

Some of the decisions taken at theSebi board meeting:

| Removes irritants to enable
| Proposes issuance and listing
listing of stock exchanges
green bonds
| Exemptionofopenofferincase
| Allows public issue of convertible
ofpassiveincreaseinvotingrights
securities by listed firms
| Exit option for investors if a
| Easy delisting norms for small
company alters objective of
firms
funds raised
| Business responsibility
| Accepts recos by K V Kamath
reporting extended to top 500
panel on clearing corp
companies

2012 but could not because of

the lack of enabling provisions.
The NSE, which recently told
its shareholders about its listing

plans, said it was examining

Sebis decision, which was
revealed after its board meeting
on Monday. More clarity is

RBI gives a leg-up to rupee bonds

BS REPORTER

Mumbai, 30 November
ILLUSTRATION: AJAY MOHANTY

Airtel to invest ~60,000 cr

in network

Govtcapitalexpenditurepushesinvestments,domesticdemandaconcern

Foreignborrowing
normsrelaxed

expectedonceitissuesacircular.
Most of the measures
announced by Sebi were already
there in the Stock Exchange and
Clearing Corporations (SECC)
regulations, said Sandeep
Parekh, the founder of Mumbaibased Finsec Law Advisors.
TheSebiboardalsoapproved
mostoftherecommendationsof
the K V Kamath-led panel on
clearing corporations. It said
exchanges need not transfer 25
per cent of their profits to a core
settlement guarantee fund of
clearing corporations. It has
allowed the transfer of five per
cent of the profit from a depository to an investor protection
fund. The regulator has asked
companies to provide an exit
option to shareholders if the
objects of fund raising are
changed a move that is likely
tobenefitminorityshareholders.
For instance, a company raises ~100 crore through an IPO to
build a factory. Later, it decides
to scrap the factory and instead
acquires a rival company. It will
now have to provide the option
of a refund to investors.
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The Reserve Bank of India (RBI) on Monday approved a set of more

liberal external commercial borrowing norms (ECB), allowing Indian
companies to raise rupee resources from overseas lenders, without
incurring currency risks.
The new norms will be effective
April 1 next year.
Such rupee-denominated bonds are
being issued in large numbers. They
are a hit with Japanese retail investors.
Once Indian companies start raisIn focus
ing rupee resources from abroad, more
RBI allows more liberal
such bonds will be issued and would
norms for external
help make the domestic currency more
commercial borrowing
international.
For ECB in foreign currency, the
On ground
central bank raised the limit for
Effective from 1 April
small-value bonds, with a minimum
Hit abroad
average maturity of three years, to
$50 million from the existing $20 milRupee-denominated
lion. For ECB of more than $50 milbonds, which are
lion, the minimum maturity period
already being issued in
should be five years, it said. The alllarge numbers, are a
in cost for such ECB has been
huge hit with Japanese
reduced 50 basis points from what
retail investors
was allowed earlier.
Effect on currency
For long-term ECB though, the all-in
cost is 50 basis points higher. For rupeeAs more such bonds are
denominated ECB, the rate will be comissued, rupee will become
mensurate with the prevailing market
more international
conditions.
Apart from usual lenders like
banks, such rupee resources can now be borrowed from sovereign
wealth funds, pension funds and insurance companies, according to
the final guidelines. The liberal approach, with fewer restrictions on
end uses and higher all-in cost ceiling will help for long-term foreign
currency borrowings as the extended term makes repayments more
sustainable and minimises roll-over risks for the borrower, RBI said
in a statement.
Such an ECB policy means attracting foreign funds will continue to be
a major tool to calibrate the policy towards capital account management
in response to the evolving macro-economic situation, the central bank
said, adding the guidelines will be reviewed after one year, based on the
experience and evolving macro-economic situation.
For ECB with a minimum three- to five-year average maturity, the allin cost ceiling is 300 basis points over the six-month London Interbank
Offer Rate (Libor), or applicable bench mark for the respective currency.
The ECB with an average maturity of over five years will carry a ceiling
of 450 bps over the six-month Libor.
The penal interest for default or breach of covenants is capped at two
per cent over and above the contracted rate of interest.

More liberal
norms

PHOTO: PTI

PM Narendra Modi (right) and Pakistan PM Nawaz Sharif in Paris on Monday

ECONOMY P21

Modis soft touch at Paris climate meet

Prime Minister Narendra Modi took a two-pronged approach to climate change

diplomacy on Monday. Writing an editorial for the Financial Times he
demanded that the rich world vacate the carbon space for developing countries
to grow in future. At the same time he sought to play India as a leader in the
global arena, stitching a Global Solar Alliance, with other countries such as the
US and France coming on board.
>
>

CLIMATE CHANGE A GLOBAL CHALLENGE, MUST ACT WITH URGENCY: PM

$2-TRILLION RATED DEBT COULD BE UNDER RISK

Panel proposes to unleash watchdog on private coaching

TO SET A WATCHMAN
Sector size:

Cost to students:

Centres:
| Kota in Rajasthan is the capital
of this sector, attracting
thousands of IIT aspirants
each year

for a 2-year course

| Other major centres are

Mumbai, Delhi and Chennai

~2.4 lakh
crore
~2-4 lakh

KALPANA PATHAK &

M SARASWATHY

Mumbai, 30 November

Like Gopal, the hapless

protagonist of Chetan Bhagats
bestselling novel Revolution 2020,
thousands of students spend
fortunes every year at coaching
classes, hoping to get through a
premier engineering college.
The~2.4lakhcroreunregulated
segmentcould,however,soonbe
underthewatchfuleyesofa
regulator,iftheAshokMisra
committeerecommendationsare
enforced.(Thesegmentincludes
allcoachingclassesfor
engineering,medical,lawand
othercompetitiveexaminations.)
The committee was set up in
October this year by the Union
human resource development
ministry, to recommend changes
to the Indian Institute of

Technology Joint Entrance

Examination (IIT-JEE). The
ministry and the premier
institutes expressed concern over
the growing number of aspiring
engineering students joining
private coaching classes in a
bid to crack the challenging
entrance exams.
Misraisaformerdirectorof
IIT-Bombay.Thecommitteehas
suggestedthataregulatorybody
shouldbeformedtokeepaneyeon
thecoachingsector.
The proliferation of coaching
centres has become a problem,
said a committee member who
did not want to be named.
Students are becoming too
dependent on the coaching
centres. This has adversely
affected school education. It is
also a financial burden on the
parents of the students.
The committee estimates the

engineering entrance coaching

sector earns about ~24,000 crore
each year.
Accordingtoana2013surveyby
AssociatedChambersof
CommerceandIndustryofIndia
(Assocham),titledBusinessof
PrivateCoachingCentresinIndia,
thesizeoftheprivatecoaching
sectorwas$23.7billion,or~1.41lakh
crore.Thesurveyalsopredicted
thatby2015,itwouldgrowto$40
billion,or~2.39lakhcrore.
The survey had collected data
from 5,000 students and parents
across 10 cities. It revealed that 87
per cent of primary and 95 per
cent of high school students in the
major cities took private tutoring.
This industry grew by 35 per cent
in the previous six years,
Assocham had said.
Initsreportsubmittedtothe
humanresourceministryon
November5,thecommittee

recommendedthatanall-India
councilbeestablishedtoregulate
thecoachinginstitutes.Thiswould
ensurethatbestpracticesare
maintainedandfeesareregulated.
Therecommendationsarein
thepublicdomainforconsultation
withstakeholders.
Coachinginstitutesare
unhappywiththesuggestionofa
watchdog.
Pramod Maheshwari, chief
managing director and chief
executive officer, Career Point
Infosystems, Kota, said: The
education system, which the
government regulates, is in a
shambles. The government
should focus on the performance
of its institutes rather than
regulating others.
Kota,about250kmsouthof
Jaipur,istheundisputedcapitalof
thecoachingsector.
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