Airtel plans ~19,000-cr capex this year

New Delhi: Despite a 72 per cent decline in net profit for the March quarter, telecom major Bharti Airtel said it was committing a capital expenditure of $3 billion (Rs 19,300 crore) this financial year, of which $500 million would be spent in Africa.
Nilanjan Roy, its global chief financial officer, said so in a conference call after announcing its quarterly results. The share price closed on Wednesday at Rs 372.70, about eight per cent higher, despite the 72 per cent fall in the quarterly net profit to Rs 373.4 crore. During the day, the stock had soared 10 per cent to Rs 380.05.
Analysts feel the rally was mainly on account of the belief that the Africa region would do well in the future. In constant currency terms, revenues in its African operations grew by 2.6 per cent over a year. Data revenue at $157 million grew by 14.5 per cent on a year before, with a rise in the data customer base by 19.3 per cent and traffic by 77 per cent.
Consolidated revenue was down 8.8 per cent over a year during the quarter, at Rs 21,935 crore. The company bore the brunt of of Reliance Jio’s aggressive pricing strategy. The latter had launched its free voice and data plan in September last year, and then extended it till end-March. It currently still offers free voice services, while its data rates are lower than those of the incumbents.
The others in the sector allege Jio's predatory pricing has hit the sector's financial health. The telecom industry owes about Rs 4.6 lakh crore to financial institutions.
Bharti Airtel’s average revenue per user (Arpu) declined 18 per cent to Rs 158 in the period, against Rs 194 in the same period of the previous financial year. Data continued to cannibalise voice, as seen in the decline of the voice Arpu to Rs 114 from Rs 138 in the earlier March quarter. The data Arpu at Rs 162 was higher but 17 per cent less than the Rs 196 in January-March 2016.
The company made two key strategic announcements in the quarter, the acquisition of Telenor India and agreement with Tikona Digital Networks to acquire its fourth-generation technology (4G) business.
The firm stands to gain on the spectrum front from both deals. Acquisition of Telenor India would provide 43.4 MHz of additional airwaves in seven telecom circles — Andhra Pradesh, Bihar, Maharashtra, Gujarat, UP (East), UP (West) and Assam. The agreement with Tikona means 100 MHz spectrum in the 2,300 MHz band and 350 sites in five circles.

Cars, 2-wheelers drive automobile growth to 7%

New Delhi: Domestic passenger vehicle sales surged 14.68 per cent last month helped by strong growth of market leader Maruti Suzuki and others like Toyota, Honda and Tata Motors.
According to data released by the Society of Indian Automobile Manufacturers (SIAM), Vehicle sales across categories registered an increase of 6.82 per cent to 20,30,476 from 19,00,848 units in April 2016.
Domestic passenger vehicles sales rose to 2,77,602 in April from 2,42,060 in the same month last year.
In a reversal, cars posted higher sales growth than utility vehicles. Domestic car sales posted their biggest monthly growth in one-and-a-half years at 17.36 per cent to 1,90,788. Utility vehicles grew by nearly 14 per cent last month.
"Factors like commissioning of new manufacturing plants and new model launches led to strong growth in the passenger vehicle segment during the month," said Sugato Sen, deputy director-general, SIAM.
He said the segment received a push with the commencement of operations at Suzuki’s Gujarat plant, which helped Maruti increase its sales by over 23 per cent last month. The Gujarat plant of Suzuki will contribute 150,000 vehicles to Maruti in 2017-18. Maruti sold 144,081 vehicles last month in the domestic market.
Sales of two-wheelers rose by more than 7 per cent in the domestic market last month to 16,74,796 from 15,60,308 in April 2016. Motorcycle sales were flat at 10,29,972 against 10,24,895 a year earlier. Scooters surged by 25 per cent to 586,886.
"Scooters are doing pretty well. Even in rural areas, people are increasingly going in for scooters," Sen said.
Growth in passenger vehicles and two-wheelers offset the declines in other segments. Sales of commercial vehicles were down 22.93 per cent to 41,490 in April, SIAM said. This was the steepest decline since January 2009, when volumes had contracted by 67 per cent.
Sales of medium and heavy commercial vehicles were most affected by the Supreme Court order on emission norms and their April volumes declined 55 per cent. Light commercial vehicle sales grew close to 2 per cent.
"After-effects of demonetisation still remain in the segment. Besides, there was pre-buying in February and March due to the coming into force of BS IV emission norms from April," Sen said.
Abdul Majeed, partner at Price Waterhouse, said April was a good start for the Indian automotive industry. “The pent-up demand is driving vehicle sales and the impact of demonetisation is wearing off. However, there are a few challenges ahead such as a smooth implementation of the GST and the monsoon,” he said.

India set for record foodgrain output

New Delhi: India is set to see the highest foodgrain production this crop year, according to the government’s third advanced estimate released on Tuesday.
Boosted by normal southwest monsoon — a first in two years — foodgrain production in the 2016-17 crop year, which ends in June, would be 273.4 million tonnes, almost nine per cent more than that of the previous year.
For many farmers, though, a bumper harvest isn’t good news, as they have been forced to sell their produce, particularly pulses, dirt cheap. Production of grains, according to the second estimate released in February, would be around 272 million tonnes.
Wheat production was projected at 96.6 million tonnes. Bumper rabi and kharif harvests in 2016-17 should help ease inflation worries for the government. Benign food inflation would also give the Reserve Bank of India (RBI) headroom to hold on to interest rates, unless monsoon projections for 2017 are not favourable.
“Largest-ever foodgrain production this year will keep food prices subdued till the next harvest,” Madan Sabnavis, chief economist CARE Ratings, told Business Standard.
“Prices of wheat, rice and pulses are expected to remain weak due to surplus crop, unless, of course, the 2017 southwest monsoon does not match projections.” After Tuesday’s estimate, he said, it looked all the more likely that the RBI would hold interest rates in the next review, in June, unless monsoon shocks. The India Meteorological Department has projected normal monsoon for 2017. But with chances of the dreaded El Niño rearing its head, many global weather forecasting models have been confusing signals. The agriculture ministry has in its estimate projected pulses output at a record 22.40 million tonnes, around 37 per cent more than last year’s.
Oilseeds output was projected at 32.52 million tonnes, around 7 million tonnes more than that of the previous year. Cotton production was projected at 32.57 million bales, around 8.5 per cent more, while sugarcane production was projected at 306 million tonnes, around 12 per cent less.
The 2016 southwest monsoon was the first normal monsoon after two back-to-back droughts in 2014 and 2015. The rains were good in almost 80 per cent of the country’s land mass.

Modi proposes model solar cities, bio-ethanol refineries

New Delhi: Prime Minister Narendra Modi asked the Union ministries on Tuesday to speed up infrastructure projects, including those in the renewable energy sector, to attain faster economic growth and generate jobs.
The focus assumes significance as fuel prices have shot up and Asia’s third-largest economy has recorded a slowdown with layoffs in various sectors after the government scrapped two high-value banknotes last November in a demonetisation drive to check illegal cash and corruption.
The government’s stats office, CSO, estimated economic growth to slide from 7.9% in 2015-16 to 7.1% in 2016-17. Analysts, however, predict a rebound as new cash inflow will revive demand and spur economic activity.
At his periodic review meeting, Modi proposed setting up of model cities, where power requirements are fulfilled solely by solar energy. He stressed the need to manufacture solar equipment to generate employment and derive maximum benefit from renewable energy.
Solar and wind tariffs have achieved grid parity, with rates well below Rs 4.0 per kilowatt-hour.
“A similar effort can be made to make certain localities kerosene-free,” the PMO quoted Modi as saying at the meeting with top officials from NITI Aayog, the government’s think-tank, and all infrastructure ministries.
The Prime Minister called for more emphasis to farm-based ethanol blending to check the country’s dependency on fossil fuel, and evolve mechanisms to help farmers benefit from the process that uses agricultural residues.
He said projects to build second-generation, bio-ethanol refineries should be expedited.
During a presentation, NITI Aayog CEO Amitabh Kant highlighted the progress in several sectors, including generation of renewable energy, affordable and rural housing.
The Pradhan Mantri Ujjwala Yojana has benefited almost 11 million households below the poverty line (BPL). The contribution of natural gas to the primary energy mix has risen and 81 urban centres are covered under the gas distribution network.
The rural electrification programme is proceeding swiftly, with more than 13,000 of 18,452 targeted villages getting electricity. The project is expected to be completed within its 1,000-day deadline.
Over 2.2 million BPL households got electricity in 2016-17, and more than 40 million LED bulbs were distributed during that period.
The inter-regional transmission capacity has significantly enhanced, with 41 gigawatts transmission capacity being added from May 2014 to April 2017.
The total renewable generation capacity has crossed 57 gigawatts, with an increase of 24.5% being registered in the past fiscal. The capacity addition in solar energy was the highest ever at 81% in the 2016-2017 financial year.
Under the Pradhan Mantri Awaas Yojana, progress has been achieved in rural areas. IT and space-based applications are being extensively used to monitor progress of the scheme. More than 3.2 million houses have been built during the 2016-17 fiscal.
The Prime Minister enquired about training imparted to masons, who were involved in the rural household scheme.
Seeking a consolidated approach to various schemes, such as electrification, IT networks and housing, he called for a focused approach on the 100 worst performing districts in each case.
He said future reviews should focus on problems at the district-level, so that the progress of poorly performing districts can be monitored in a better way.

US companies continue to bet big on India: USIBC

Washington: Companies in the USA continue to show high confidence on India, as both the countries have tremendous opportunities to work towards the digital transformation of the Indian economy, stated Mr John Chambers, Chairman, USIBC and Executive Chairman, CISCO. This will help to create employment, increase citizen engagement and change the lives of people both in the US and India. He further stated that US has partners in the Indian government who realise the need for digitisation in India. Mr Mukesh Aghi, President, USIBC, stated that American companies can help India in becoming a digital economy with India moving towards a cashless economy, creating smart cities and high growth of e-commerce. Mr Punit Renjen, Deloitte Global CEO and USIBC Board Member, stated that it is important to maintain strong bilateral ties between India and USA as it creates first-hand opportunities while both the countries are working towards digitalisation, economic growth and social progress.

India among top five markets: Twitter

New Delhi: From working on tools to take on trolls to making their product more appealing to the mass market, Twitter on Thursday said it was planning to attract a much larger user base in India even in areas where bandwidth was an issue.
Twitter also plans to go big on providing video content that, according to the company, works well with Indian consumers. The micro-blogging site has around 24 million active users in India.
For Twitter, last year was filled with issues ranging from high-profile exits to job cuts. Parminder Singh, managing director of West Asia and North Africa, and India head Rishi Jaitley were among the big names that left Twitter after differences with the management.
The company also cut down its global manpower by almost nine per cent. There have been reports of curbed growth, a shrinking user base and complaints of cyber-bullying and “trolling”. However, the company claimed it had come out strong and the India business was one of the biggest in its portfolio.
“India, which is one of the top five markets, is also one of the fastest growing markets for Twitter and we believe that it is the best time for growth in the country as more people join the platform, including celebrities,” said Twitter’s Southeast Asia and India Managing Director Maya Hari. Keeping India’s problems with Internet connectivity in mind, Twitter on Thursday launched a lighter version of its app that would work faster in entry level smartphones and in areas where connectivity was poor.
According to the company, the Twitter Lite app will save at least 70 per cent of data costs and will be 30 per cent faster. All this has been conceptualised keeping India in mind and will be taken to other countries where there are similar bandwidth issues. Twitter Lite will be available in six languages: Marathi, Gujarati, Kannada, Bengali, Tamil and Hindi.
Hari said Twitter Lite, increased usage in Indian languages, and enhanced video content would help the platform expand its user base in Tier-II and Tier-III towns.
With live streaming of sports, events, news and entertainment, Twitter plans to go big on providing video content.
The company has also launched a slew of tools to take on “trolls”. “Safety is of the utmost priority and we have launched tools to protect users,” Hari added.

Infrastructure sector sees deals worth US$ 3.49 billion in FY17

New Delhi: The infrastructure sector raised a total of $3.49 billion across 33 transactions in FY17 compared with $2.98 billion raised in 31 transactions in FY16, highlighting the growing number of deals in the sector, according to data from investment bank Equirus Capital.
The majority of private market transactions in the fiscal ended 31 March were led by the power, roads and renewables sectors and, within those, about 88% of the transactions were through the mergers and acquisitions (M&A) route with the remaining 12% through private equity (PE) investments, the data showed.
The value of private equity transactions in FY17 has fallen to $666 million compared with $1.11 billion in FY16, signalling that investors preferred buyouts over PE investments, according to the data.
Capital market activity during FY17 was subdued with only two companies—roads developer Dilip Buildcon Ltd and solar energy firm Azure Power Global Ltd—listing their shares publicly in the Indian and US markets, respectively. In comparison, FY16 saw eight capital market transactions, the data showed.
Deals, particularly in the roads and renewable energy sectors, are set to increase as companies put dozens of assets on sale, Mint reported on 15 January.
The government had in 2015 approved easier exit options to help road developers monetize their operational highway projects two years after the completion of such projects, irrespective of the year in which the project was awarded. This has helped debt-laden Indian infrastructure developers monetize assets and repay creditors. Many renewable energy firms, on the other hand, are evaluating fund-raises and going public.
“The M&A opportunities in the road sector are the highest among various infrastructure sub-sectors with around 88 operational national highway projects totalling 7,192km with a total project cost of Rs693.27 billion and median operational track record of four years,” said Shubham Jain, vice-president and sector head, corporate ratings at ICRA Ltd.
Healthy growth in traffic and decline in interest rates are expected to improve valuations for road projects and accelerate M&A activity in the sector, ICRA said in a report on Wednesday.
“Asset sales in the road sector have picked up over the last 24 months with the relaxation in exit policy. Sponsors in around 20 road assets involving a total cost of Rs123.27 billion have monetised their assets as opposed to around Rs70 billion in the preceding 50 months,” the report said.
Funds such as US-based I Squared Capital, Indian asset manager IDFC Alternatives’ infrastructure fund, Canada’s Brookfield Asset Management, Australia’s Macquarie Group, and the Canadian pension funds Canada Pension Plan Investment Board (CPPIB) and Caisse de Depot et Placement du Quebec (CDPQ) have committed large investments in the sector and are looking to buy assets across roads, thermal power and renewable energy to build their own portfolio in India.

Services growth at 5-month high: PMI

New Delhi: The services sector expanded for a second consecutive month in March, indicating that the predominant sector of the economy has recovered from the demonetisation setback, a private survey released on Thursday has shown.
The widely tracked Nikkei Services Purchasing Managers’ Index (PMI) for services rose to a five-month high of 51.5 points in March, compared to 50.3 in the previous month. A reading above 50 signifies expansion, while one below that shows contraction.
“India’s private sector economy stayed on an upward trajectory during March, benefiting from an upswing in demand and output,” Pollyanna De Lima, economist at IHS Markit and the author of the report, said.
“The country’s rapid recovery from the demonetisation-related downturn was accompanied by job creation and softer inflationary pressures,” De Lima added.
The sector had contracted for three consecutive months till January, with businesses failing to recover from demonetisation. The PMI averaged 49.3 points in the third quarter of the financial year (FY17). It was 49.5 points for the first two months of the fourth quarter of FY17. The sector experienced a back-to-back rise in new business inflows in March. New orders increased at the strongest rate since last October, the report, based on a survey of 400 private sector firms, pointed out.
In order to cope with a higher workload, services providers hired people. While employment increased slightly, the job situation has been the best since July 2015, the survey shows.
“By historical standards, the increases in new work and activity remain relatively mild, though growth is likely to gather speed as we head into the new financial year. This is shown by firms’ willingness to hire additional employees and reinforced by stronger confidence towards the 12-month outlook for output,” De Lima said.
The Nikkei India Composite PMI Output Index, which maps the manufacturing and services sectors, increased to 52.3 in March over 50.7 in February, signalling a rise in private sector activity in the country. Indicating a brighter outlook for the sector, services companies indicated that there would be more activity in the coming 12 months, with the overall degree of optimism at a four-month high. Almost 24 per cent of the panellists signalled a positive sentiment, with better marketing campaigns, stronger demand conditions, and the hope that the goods and services tax regime would be favourable to businesses, the key factors supporting confidence.
Input costs for services firms rose again in March, stretching the duration of inflation to seven months. However, despite accelerating to the fastest over this period, the rate of increase was moderate in the context of historical data, the survey said.

RBI to allow banks to invest in REITs, InvITs

New Delhi: Banks will be allowed to invest in real estate investment trusts (REITs) and infrastructure investment trusts (InvITs), attracting more institutional investors to such assets and expanding the investment scope of banks.
The Reserve Bank of India (RBI) on Thursday proposed to allow banks to invest in such investment trusts following a request from the markets regulator. The central bank will issue detailed guidelines by end May.
Banks, which are currently allowed to invest as much as 20% of their net-owned funds in equity-linked mutual funds, venture capital funds and stocks, may invest in these trusts within this limit.
This will benefit real estate developers firming up plans to launch these trusts.
“The RBI’s decision...is a huge positive. This step now has the potential to usher in a large number of REITs listing in India by offering a safe asset class to invest in and also provide competition to foreign institutions,” said Rajeev Talwar, chief executive of India’s largest real estate developer DLF Ltd. “For banks, it offers an additional important asset class for investing.”
For real estate developers, a pick up in REITs will free up capital that can be used to lower costs, he said.
Markets regulator Securities and Exchange Board of India (Sebi) has been easing rules to make REITs and InvITs more attractive to investors. In January, the markets regulator permitted mutual funds to invest in REITs and InvITs. Mutual funds are permitted to invest only up to 5% of their net asset value in units of a single issuer of such trusts. On 14 March, the insurance regulator also amended guidelines for insurers to invest in these asset classes.
“It is a crucial move because including it will bring in more institutional investors into these trusts, who are looking at relatively stable assets with steady but slightly lower returns. REITs may not be as lucrative for retail investors which is why it is important that owners find more number of institutional investors to participate,” said Abhishek Goenka, partner, PwC in India.
REITs are listed entities that primarily invest in leased office and retail assets, allowing developers to raise funds by selling completed buildings to investors. InvITs are trusts that manage income-generating infrastructure assets, typically offering investors regular yield and a liquid method of investing in infrastructure projects.
India’s REIT market is just about opening up with a number of developer-investors partners acquiring and consolidating rental assets and firming up plans.
DLF, which is in the last leg of selling a 40% stake in its rental portfolio to Singapore sovereign fund GIC Pte, has said it will list its office and retail properties in the form of REIT.
Global private equity firm Blackstone Group Lp, the largest owner of office real estate in the country, may list two separate REITs for its office assets with developer partners. One of them is with Bengaluru-based Embassy Property Developments Pvt. Ltd, which is valued at around Rs22,000 crore with more than 22 million sq. ft of space.
“While this will increase the number of institutional investors like banks coming in, we would also like to engage with retail investors and assure them good returns on the basis of rent income and appreciation,” said Embassy chairman Jitu Virwani. Embassy filed an application seeking approval for its REIT offering from Sebi in October and is expecting a go-ahead soon.
Other companies acquiring and consolidating their office assets and moving towards a REIT structure are RMZ Corp. and K. Raheja Corp.
The Competition Commission of India (CCI) in March approved Blackstone’s plan to acquire a stake in K. Raheja Corp’s commercial office portfolio.
IRB Infrastructure Developers Ltd is planning to launch India’s first InvIT in April, aiming to raise as much as Rs4,300 crore, a 17 March Mint report said.

GST rollout on 1 July likely as Rajya Sabha clears bills

New Delhi:The decks are cleared for the roll-out of the goods and services tax (GST) from 1 July after the Rajya Sabha signed off on all four supporting bills on Thursday without making any amendments.
The fact that they were passed without any changes is important as it reflects political consensus around this ambitious tax reform that aims to unite the country into a common market by removing existing tariff barriers.
The Rajya Sabha passed the four draft laws—the central GST Bill, the integrated GST Bill, the Union territory GST Bill and the GST (Compensation to states) Bill—after they were all tabled as money bills.
With the Lok Sabha passing these bills last week, they will be enacted once they receive the President’s assent.
The passage of these bills in Parliament brightens the prospects of a GST roll-out meeting the 1 July deadline—the only major task now left to be resolved is for the GST council to fit various goods and services into different tax slabs. The GST council is the representative body of the states and the central government and is schedule to meet in Srinagar on 18-19 May to resolve this task.
The bills were passed after a few opposition parties led by the Trinamool Congress failed to push through amendments to the bills in the absence of support from the Congress party.
However, the government did come under criticism over some of the provisions in the bills, including the powers allocated to the GST council, the private ownership of the GST Network, and provisions for anti-profiteering, and search and seizure.
Defending the provisions, finance minister Arun Jaitley said the GST council is an example of deliberative democracy where decisions are taken by consensus.
“What you decide in the council becomes a federal arrangement between the centre and the states and between the states themselves. But Parliament and state assemblies have plenary powers. GST council recommended these bills and they have come for Parliament’s approval,” he said.
“When GST council fixes the rates, every state will have to place it in the budgetary provisions. If assemblies have concerns, then they can bring it to the GST council,” he added.
Jaitley also defended the constitution of the GST network (GSTN) and said the government had no plans to review the existing structure—the centre and the states together hold a stake of 49% with the balance held by private banks and other financial institutions.
“There are billions of vouchers that have to be processed. Will you be able to have the flexibility inside the government to hire the best talent in terms of pay and conditions of service,” Jaitley said. He pointed out that despite GSTN being a private body, “there is a deep and pervasive government control in the management structure.”
In a 14-member board, the government has seven seats, while three belong to the private institutions and the remaining four are independents, Jaitley pointed out.
Earlier in the debate, Sitaram Yechury of the Communist Party of India (Marxist) stressed that Parliament cannot be ignored and bypassed.
“GST council’s decisions should come to us for our consideration and approval,” he said while pressing for the council to be brought under the purview of the Comptroller and Auditor General of India.
He also voted for a rate structure that does not burden the lower and middle class.
Congress MP Kapil Sibal pointed out that the anti-profiteering provision along with search, seizure and arrest powers will increase instances of abuse of powers by the taxmen. At the same time, he pointed out that prices are not dependent only on the tax rates but also factor in other things like input prices and market conditions.
“How will the extent of the price reduction be determined and who will do it?” Sibal said.