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Current Affairs - 19 June 2018

General Affairs 

Army Chief Bipin Rawat Meets Rifleman Aurangzeb's Family In Poonch
  • Chief of Army Staff General Bipin Rawat today met the parents and other family members of rifleman Aurangzeb, who was abducted and killed by terrorists last week in Pulwama district of south Kashmir.

    Mr Rawat along with senior Army officials went all the way to the remote Salani hamlet in the frontier Poonch district and conveyed to the family that forces stood with them in their hour of grief.

    Mr Aurangzeb, who belonged to the 44, Rashtriya Rifles, was on way home to celebrate Eid when terrorists abducted him.

    General Rawat flew from New Delhi to Jammu, where he was received by Northern Command chief Lt Gen Ranbir Singh, officials told PTI.

    Accompanied by officials, Mr Rawat flew to Poonch from Jammu technical airport and was received by commanders in the frontier district, they said.

    Mr Rawat met the family of the deceased soldier and spent over 30 minutes with the parents of Mr Aurangzeb.

    Earlier, Aurangzeb's family had made an emotional appeal to Prime Minister Narendra Modi and Army, besides the Jammu and Kashmir government, to eliminate terrorism from the state and avenge the martyrdom of their kin.

     "My son has laid down his life for the country. He was a brave soldier. I and my sons will also sacrifice (ourselves) for the nation. We want goons to be wiped out," Mohammad Hanief, Aurangzeb's father and a former Sepoy of the Jammu and Kashmir Light Infantry, had said.

     "I give PM Modi 72 hours to avenge my son's death or else we are ready to take revenge on our own. Kashmir is ours. We must not let Kashmir burn. Instead, we must eliminate the goons who are destroying the valley," Mr Hanief had said.

    In a video, widely seen on social media, an emotional Mr Hanief can be seen asking why Pakistani flags were waved in Kashmir.

    Rifleman Aurangzeb of 44, Rashtriya Rifles, was abducted and killed by terrorists in Pulwama district when he was on his way home to celebrate Eid on June 14. He was part of Major Rohit Shukla's team, which eliminated Hizbul Mujahideen terrorist Sameer Tiger.

    Mr Aurangzeb had boarded a private vehicle for Shopian, from where he was supposed to go to Rajouri district. The terrorists intercepted the vehicle as it approached Kalampora and abducted the jawan. His bullet-riddled body was found by at Gussu village, about 10 km from Kalampora, in Pulwama district.

Northeast Will Soon Emerge As Biggest Contributor To India's GDP: Amit Shah
  • Prime Minister Narendra Modi regarded the eight northeastern states as 'Ashta Lakshmi', the eight forms of the goddess of wealth, and his "visionary policies" would soon make the region the biggest contributor to the country's GDP, BJP president Amit Shah said today.

    He also slammed the Congress, which had ruled the region for long, for taking development in the region to its "lowest level".

    Except for the Congress-ruled Mizoram, the other northeastern states are governed by the BJP, independently or with its allies.

    "At the time of Independence, the Northeast had a very high growth rate but the region, which was mostly ruled by the Congress, was reduced to the lowest level of development," Mr Shah said after laying the foundation stones of 19 cancer care hospitals in the state, set up in partnership with the Tata Trust.

    Assam Chief Minister Sarbananda Sonowal, his Arunachal Pradesh counterpart Pema Khandu and Tata Trust chairman Ratan Tata were present on the occasion.

    The BJP has been in power in Assam for only two years but it has been successful in instilling confidence in people that the state will soon become a developed state, he said.

    "The Prime Minister has always regarded the Northeast as 'Ashta Lakshmi' and given prime importance to its development by focussing on road and rail connectivity, IT sector development, energy, industrial development and education facilities," he added.

    The prime minister is focussed on growth of the region through the Act East Policy.

    Painting a larger picture, the BJP president asserted that the Narendra Modi government had formulated a very ambitious and effective health policy which would benefit 50 crore people in the country.

    "Earlier, basic health facilities was a dream for the poor in the country but the Prime Minister's Ayushman Bharat initiative that led to the formulation of the country's health policy last year will benefit 50 crore people or 10 crore families," Mr Shah said.

    The government has also set up generic medicine stores with 400 medicines, he said, highlighting the "revolutionary steps" the Union government had taken in the field of health.

    The government's "Mission Indradhanush" will ensure vaccination of 18 crore children in the country.

    "These steps should have been taken much earlier but it was the Prime Minister's vision that led to the execution of such revolutionary steps in the health sector," Mr Shah added.

    Referring to the 19 cancer care hospitals in Assam, Mr Shah said that Northeast has a very high prevalence of cancer and every year more than 60,000 cancer patients go to the metros for treatment of the dreaded disease, draining the finances of the affected family.

    He thanked Tata Trust Chairman Ratan Tata for partnering with the Assam government in setting up the hospitals.

    Chairman of Tata Trust Ratan Tata said on the occasion that cancer was a silent killer with the Northeast having a high incidence of the disease.

    "We appreciate that the central and state governments have decided to launch a battle against cancer and tackle the disease on a war footing," Mr Tata said.

    Assam Chief Minister Sarbananda Sonowal thanked the Prime Minister and Ratan Tata for their help and cooperation in setting up these 19 hospitals.

    All the 19 hospitals will be established under the supervision of Assam Cancer Care Foundation to be headed by state health minister Himanta Biswa Sarma and the Tata Trust and would be based on a three-tier system and will be constructed under the L3 (Level 3), L2 (Level 2), L1 (Level 1) divisions.

    The L3 hospitals will maintain the basic standards of a hospital and will be located in Barpeta, Diphu, Dhubri, Jorhat, Silchar, Tezpur, Lakhimpur, Nagaon and Dibrugarh.

    The L2 hospitals will maintain the surgery standards and will be set up in Goalpara, Haflong, Karimganj, Kokrajhar, Golaghat, Darrang, Nalbari, Sivasagar and Tinsukia.

    The L1 hospital will have sophisticated standards and will be in Guwahati.

    Tata Trusts will give Rs. 830 crore, while the Assam government will put in Rs. 1,080 crore, making it an initial corpus of Rs. 1,910 crore for the project, the chief minister said.

Don't Question Intention: Law Minister On Appointing Next Chief Justice
  • The government's intention on the appointment of the next Chief Justice of India (CJI) should not be questioned, Law Minister Ravi Shankar Prasad said today, noting that when the incumbent names the senior-most judge of the Supreme Court as his successor as per convention, the executive will take a call.

    He was responding to a question on whether the government will follow the laid-down conventions and procedures to appoint Justice Ranjan Gogoi as the next Chief Justice when incumbent Dipak Misra demits office on October 2.

    "The question is far as the appointment of the Chief Justice of India is concerned, the convention is clear...the sitting chief justice names the senior-most judge (of the top court) as his successor. When the name comes to us, we will discuss it," he told a press conference held to highlight the achievements of the Law Ministry in the past four years.

    He also said that no one had the "right to question our intention".

    Justice Ranjan Gogoi along with three other senior most judges of the Supreme Court went public against the Chief Justice of India (CJI) Dipak Misra after a case relating to the death of CBI judge BH Loya was assigned to a judge who is number 10 in the Supreme Court hierarchy.

    The other three judges who held the press conference were Justices J Chelameswar, Madan Lokur and Kurien Joseph.

    According to the memorandum of procedure, a document which guides the appointment and transfer of judges of the apex court and the 24 high courts, "Appointment to the office of the Chief Justice of India should be of the senior-most judge of the Supreme Court considered fit to hold the office."

    Days before the CJI's retirement, the law minister seeks his recommendation for the appointment of his successor.

    "Whenever there is any doubt about the fitness of the senior-most Judge to hold the office of the Chief Justice of India, consultation with other Judges...would be made for appointment of the next Chief Justice of India," the document states.

    Responding to another question on the delay in finalising the memorandum of procedure for appointment of judges, Mr Prasad said discussions were on and the Supreme Court and the government would have to finalise the document together.

    "Our view (on the MoP) is that the norms of those selected (as judges) have to be mentioned (in the document)," he said.

    After the Supreme Court struck down a law through which the government had sought more say in the appointment of judges, the top court and the government have been trying to iron out differences on the MoP.

    He said those claiming hat the government was not appointing judges should remember that "numbers speak for itself".

    The Law Minister pointed out that apart from the stay on judges' appointment in 2014 and 2015 due to the NJAC Act issue, the Centre has appointed 126 judges in 2016 and 117 judges in 2017, and that the appointment of more judges is in the pipeline.

    "We will surpass our own record of appointing 126 judges in 2016 when this year comes to an end," he said.

Bullet Train "Extremely Essential" For Country: Railway Board Chief
  • Calling the bullet train "extremely essential" for India, Railway Board chairman Ashwani Lohani today said that the public transporter looked at it as a project that would unleash technology-driven transportation in the country. 

    The National High Speed Rail Corporation, a special purpose vehicle of the Railways and the state governments of Maharashtra and Gujarat, is implementing the Mumbai-Ahmedabad bullet train corridor with technical and financial assistance from Japan.

    The project has had its share of controversies with a section of people questioning the need for it and others agitating against its land acquisition process. 

    "The advent of bullet train is extremely essential for out country as it will unleash technology-driven transportation," Mr Lohani said today. 

    "By running a bullet train, we wanted to commission a medium of rapid transport which can run at par with air travel as far as speed is concerned," the CRB said.

    He added that the Mumbai-Ahmedabad high speed corridor has a deadline of December 2022 and said the Railways was hopeful of completing it by then. 

    He was in Mumbai today to review various suburban projects and held deliberations with general managers of Western and Central Railways as well as officials of the Mumbai Rail Vikas Corporation.

    Among the projects discussed were capacity enhancement works under Mumbai Urban Transport Project, particularly the 5th and 6th lines between Thane and Diva as well as Kurla and Parel on Central Railway. 

    Mr Lohani told reporters that the ministry was working to ensure the completion of big-ticket projects like the CSMT-Panvel suburban corridor.

    He, however, parried questions on plans to convert CSMT, currently the headquarters of CR, into a museum. "All I can say is that the glory of this incredible building will be restored and preserved by us," he said on the issue.

    D K Sharma, CR general manager, speaking on the closure of six clinics at its railway stations, said that the private operator had failed to adhere to terms and conditions set by the Railways.

    "We are going to review what else can be done or what course correction would be required to restart this facility," Mr Sharma said. These clinics, popularly called "one rupee clinics", were shut at Kurla, Ghatkopar, Wadala, Govandi, Vashi and Mulund stations on June 14.

    Mr Lohani, during his visit, inaugurated various passenger amenities like a self-ticketing zone, mobile charging station and a day-night 1098 Childline help desk at CSMT. 

Sushma Swaraj Meets Italian PM Conte, Discusses Steps To Revitalise Ties
  • External Affairs Minister Sushma Swaraj today called on Italian Prime Minister Giuseppe Conte and discussed ways to enhance cooperation across sectors and steps to revitalise the bilateral relationship.

    Ms Swaraj, who is here on the first leg of her seven-day tour of four European countries, also met her Italian counterpart Enzo Moavero Milanesi.

    "In the first engagement of the day, EAM @SushmaSwaraj called on Prime Minister of Italy Prof. Giuseppe Conte and congratulated him on assuming the high position," External Affairs Ministry spokesman Raveesh Kumar tweeted.

    Their discussions focused on forging bilateral cooperation across sectors and steps to revitalise the bilateral relationship, he said.

    It was the first major political exchange between the two countries after Mr Conte assumed charge as the Italian prime minister.

    She also met with Foreign Minister Milanesi and the two leaders reviewed all aspects of the bilateral relationship, and exchanged views on regional and global issues of mutual interest, Mr Kumar said.

    Ms Swaraj arrived here yesterday on the first leg of her seven-day tour of Italy, France, Luxembourg and Belgium, which is aimed at deepening India's strategic engagement and trade ties with the four European countries.

    The visit from June 17-23 will provide an opportunity to hold in-depth discussions with the political leadership on a wide range of global, regional and bilateral issues and advance India's growing strategic engagement with the European Union, the Ministry of External Affairs has said.

    Ms Swaraj will travel later today to France where she will spend two days.

    In Paris, Ms Swaraj will meet her counterpart Jean-Yves Le Drian and the two sides will review the bilateral relations.

Business Affairs

ICICI Bank CEO Chanda Kochhar to be on leave till probe is over, Sandeep Bakhshi named COO
  • The ICICI Bank's Board of Directors on Monday said that Chanda Kochhar, MD and CEO of ICICI Bank, will be on leave till the ongoing independent enquiry against her is completed. In its meeting today, the Board also appointed Sandeep Bakhshi as the Wholetime Director and Chief Operating Officer (COO) designate. He will report to the ICICI Bank CEO.

    "In line with the highest levels of governance and corporate standards, Ms. Chanda Kochhar has decided to go on leave till the completion of the enquiry as announced on May 30, 2018. The Board has noted and accepted this. During her period of leave, the COO will report to the Board," ICICI Bank said in a regulatory filing following the Board meeting.

    In its regulatory filing, ICICI Bank has also established that Kochhar will continue to hold the position of chief executive in the organisation.

    Bakhshi's tenure will be for a period of five years and his appointment is subject to regulatory approval. He will assume office on June 19, 2018, or on the date of regulatory and other approvals, whichever is later, the private lender said in its statement. As for his new responsibility as the COO of India's biggest private lender, he will handle all the businesses and corporate centre functions at the bank.

    Prior to his recent appointment, Bakhshi has been the Managing Director & CEO, of ICICI Prudential Life Insurance since August 01, 2010. Before that, he has been the Deputy Managing Director of ICICI Bank. In this role he headed the retail and subsequently the wholesale business at the Bank. Before moving to the Bank, he was the MD & CEO of ICICI Lombard General Insurance.

    Bakhshi is known to have has extensive experience of leading both corporate and retail businesses across ICICI Group. He started his career with ICICI Ltd. in 1986. He looked after the corporate clients for the Northern and Eastern regions of ICICI Limited before joining ICICI Lombard in 2002. His work responsibilities included business development, project appraisals, project monitoring and business re-structuring.

    Coming to educational qualifications, Bakhshi holds a degree in Mechanical Engineering from Punjab Engineering College, Chandigarh and has a post-graduate degree in management from Xavier Labour Relations Institute (XLRI), Jamshedpur.

    "All Executive Directors on the Board of ICICI Bank and the executive management will report to him. Mr. Bakhshi will report to Ms. Chanda Kochhar, who will continue in her role as MD & CEO of ICICI Bank," ICICI said in the statement.

    Kochhar has been in the eye of the storm after whistleblower Arvind Gupta levelled accusations of conflict of interest against her in loans to the Videocon Group. It has been alleged that her husband, Deepak Kochhar, received kickbacks in lieu of loans sanctioned by ICICI Bank of Venugopal Dhoot-led Videocon Group. In response to this, the bank has roped in former Supreme Court Judge BN Srikrishna to investigate the allegations against its chief executive.

    Earlier today, ICICI Bank stocks rose in trade after word got out that Bakshi might be named as the interim chief of the bank. The scrip became the biggest gainer on Sensex with its day's high at 293.90. The ICICI Bank stock opened at 284.95 and closed at 292.50, taking the market capitalisation of the lender to Rs 1,88,157 crore.

Private hospitals to get up to 40% higher than CGHS rates under Ayushman Bharat
  • Private hospital chains which have strongly opposed the price of treatment the government intends to pay them for treating patients under the Ayushman Bharat scheme should have little to complain since the government now plans to offer rates up to 40 per cent higher than the approved base rates.

    The government and India's private hospital chains have strongly disagreed over the pricing of the 1350 procedures that the government plans to cover under the Ayushman Bharat (National Health Protection Scheme). The scheme covers 10.7 crore Indian households for up to Rs 5 lakh per family per annum for secondary and tertiary care for life. This would cover nearly 50 crore Indians amounting to around 40 per cent of India's most needy. The scheme is to be unveiled on August 15 by prime minister Narendra Modi during his speech at Red Fort in New Delhi.

    The enormous additional volume of patients that the scheme will bring to the private sector has prompted the government to offer 10 per cent discount on existing CGHS rates since Ayushman Bharat covers general ward hospitalisation only while more private hospitals have other services as well.

    This has enraged private hospital chains which point to their employee and infrastructure costs saying joining Ayushman Bharat may not be viable for them. Their reluctance has prompted allegations that the private sector may be holding the government to ransom.

    However, under the new pricing plan being put together by the government, They can get up 40 per cent higher rates for a procedure over the NHPS/CGHS prescribed rate provided they meet certain conditions: A hospital that is accredited with the National Accreditation Board for Hospitals (NABH) can add 10 per cent more to the base rate; hospitals providing PG courses can add another 10 per cent to the base rate; hospitals in the 115 backward districts can add yet another 10 per cent.

    Besides, all states have the freedom to provide another 10 per cent top-up to the base rate if they believe the prices are below the cost. As a result, any hospital that meets all the four conditions could add 40 per cent to the base rate pricing, according to Dr Vinod K Paul, the chief architect of Ayushman Bharat and a member of Niti Aayog. "Private sector is going to play an important part. Care would be provided by a network of public sector hospitals and empanelled private sector hospitals on agreed terms. This is a two-way engagement. Private sector is an integral part," says Dr Paul.

    He says the price of each procedure had been arrived at after a lot of research. The first part of research was by the Directorate of Health Services of government of India. Those rates were further refined after finance minister Arun Jaitley announced the scheme in the Budget. Additional vetting or validation took place at Niti Aayog with involvement of Department of Health Research. It used information from Tier II and Tier III cities apart of other data available on the pricing. It also looked at the experience of the schemes that are already in place in different rates. It also reached out to 60-odd hospitals directly for an idea of the rates and procedures. "It is an effort that is holistic. It is from a network that encompasses bottom up information of a very significant volume. At this moment because actual cost based studies are few, this was based on this kind of a bottom-up inquiry," says Dr Paul. "These rates are quite competitive with the states in which such schemes are running."

    What kind of an impact will higher rates have on the insurance premium to be paid by the government? The premium has not been defined. In fact, the premium for the scheme will be discovered when insurance firms will be bidding for the business. It is, however, believed that the premium will be far higher than the Rs 11,000-12000 crore estimated so far.

    "Today, leading private hospitals in India make efforts to offer value-added technologically advanced services by highly qualified specialists. The equipment used is one of the best as found in any international hospital. It would be helpful if the rates are equitable, allowing the hospitals to recover the costs incurred," says Dr Narottam Puri, Advisor - Medical, Fortis Healthcare Limited. "The Government should appoint an independent agency to evaluate and determine the pricing in each state. We understand that the Government is planning to rope in around 20,000 public-private hospitals under this scheme. Therefore, making an independent assessment, providing a rationale for the rates and working in a collaborative manner will help in the overall process."

Arun Jaitley predicts a brighter future, more jobs in detailed Facebook post
  • He may be on sick leave and unable to attend office but that has not stopped Union Minister Arun Jaitley from actively batting for the government on the social media. He took his latest pot-shot at the opposition earlier today, tweeting that "The economy & the markets reward structural reforms, fiscal prudence, and macro-economic stability. They punish fiscal indiscipline and irresponsibility. The transformation from UPA's 'policy paralysis' to the NDA's 'fastest growing economy', conclusively demonstrates this."

    This is actually the conclusion to a long Facebook post titled "The Economy and the Markets Reward Structural Reforms and Fiscal Prudence" that he posted hours ago. Apart from addressing a couple of the biggest criticisms that the Modi government is currently battling - job creation and fuel prices - Jaitley's post spells out a brighter future awaiting the country in great detail.

    According to him, the 7.7 per cent economic growth in the fourth quarter of 2017-18 'firmly' established India as the fastest growing major economy in the world and the trend is "likely to continue for the next few years". While admitting that the country has seen 'two challenging quarters' on account of structural reforms like demonetisation, GST and the Insolvency and Bankruptcy Code, he also took a dig at naysayers. "Those who predicted a two percent decline in GDP growth have been conclusively proved wrong. A 'distinguished predecessor' of mine feared that he may have to live his future in poverty. We have enabled every Indian to be a part of the world's fastest growing economy. The future looks much brighter than the past," said Jaitley, who is recuperating from a kidney transplant and is currently a minister without portfolio.

    He is referring to former prime minister Manmohan Singh above, who had termed demonetisation as the Modi government's 'monumental mismanagement' back in November 2016 and said it might shave off about 2 percentage points of GDP growth. Then last year, former finance minister Yashwant Sinha had declared that the policies of the Modi government will make people poorer. "The prime minister claims that he has seen poverty from close quarters. His finance minister (Jaitley) is working over-time to make sure that all Indians also see it from equally close quarters," Sinha had said. P Chidambaram, another former finance minister, in a similar vein had claimed that the number of people below poverty line under the Modi government was higher than during the UPA regime.

    Jaitley's post goes on to highlight that the structural reforms introduced by the present government and its social schemes and rural development programmes have been unprecedented. "These involve legislations which are path breaking and development works in roads, railways, housing, power, sanitation - which yield high social benefits require high level of government expenditure. This type of high government spending promotes growth. This is what we are witnessing today," he explained.

    Taking the bull by the horns, he also addresses the question often thrown at the government: Where are the jobs? Modi, a vocal critic of jobless growth under the UPA regime, had made employment a key electoral promise back in 2014. Though the government has repeatedly relied on EPFO data to showcase job creation, not everyone was convinced.

    So Jaitley's post focusses on booming sectors instead. "An analysis of the data released clearly shows that the construction sector is expanding by double digits. It is a job creating sector. Investment is increasing. Domestic investment is also increasing. The FDI is at an unprecedented level," he said, adding that the manufacturing sector is also expanding. That apart, the government had increased expenditure on infrastructure creation and rural projects. "The social sector schemes, more particularly the financial inclusion programmes, have created a wave of self-employment. Each one of these is a high job creating sector," he penned.

    Jaitley also talks about the revenue situation, the country's improving track record in tax compliance in particular. "We have now reached 6.86 crore income tax return filers last year. The number of income tax returns post demonetisation show a 25 per cent growth. Even the corporate returns have increased by 17 per cent," he said, adding that even GST collections are now higher, all of which has helped the government keep "fiscal deficit on downward glide path".

    Observing that the Modi government has "established a very strong reputation for fiscal prudence and macro-economically responsible behaviour", he also addressed Chidambaram's claims last month that the government will "cheat the people by cutting price by Rs 1 or 2 per litre of petrol" while "Bonanza to central government is Rs 25 on every litre of petrol".  Referring to this suggestion by a "distinguished predecessor", Jaitley said that "He never endeavoured to do so himself. This is a 'Trap' suggestion". Taking a last swipe at the opposition, he added that it "intended to push India into an unmanageable debt - something which the UPA Government left as its legacy".

Indian warehousing: From godowns to modern boxes
  • The warehousing market in India is moving from mere godowns to real warehouses . Companies are demanding quality, amenities, and safety.  Business Today recently spoke to the CEO of Embassy Industrial Parks, Anshul Singhal. He spoke at length on how the market is being shaped and boosted by GST.

    1. What explains market growth: India's consumption is growing and there is a more aggressive buying behaviour, partly fuelled by e-commerce. While in many advanced countries, there is same-day delivery or half-day delivery, Indians are still mostly used to next day deliveries. The expectation of faster deliveries is giving rise to storage requirements that are both modern and strategically located.

    2. Current state of warehouses: Most of the current warehouses in India are not warehouses - they are godowns. They are in terrible shape. During monsoon, the roof leaks. The merchandise inside can go for a toss. In summers, the temperature inside the warehouses can rise substantially leading to damages in electronic items. The floor quality, the heart of the warehouse since throughput depends on it, is in poor condition as well.

    3. GST is changing things: Pre-GST, because taxation was complicated and a state subject, companies had to ensure godowns in every state and the stock had to be transferred to avoid taxes, a highly inefficient structure. Post-GST, companies have been demanding better quality warehouses and larger ones. They want office space, amenities, safety and security. There is a demand for logistics parks because it offers amenities such as fire fighting, food area, rainwater harvesting, solar panels, driver rest areas, ATMs etc.

    4. Investments and challenges:  Modern warehouses come with its now sets of challenges. This business involves land which requires a lot of capital. It is a variable math but the cost of construction on a 100 acre parcel could be anywhere close to Rs 300-400 crore. The biggest challenge facing those who want to build parks is getting the right land at the right price and at the right location.

TCS share buyback: How key financials are likely to be affected
  • IT firm Tata Consultancy Services (TCS) announced Rs 16000 crore share buyback plan on Friday. This share buyback scheme will see 7,61,90,476 equity shares of TCS being bought back by the company for Rs 16,000 crores at Rs 2,100 per equity share. TCS has proposed to buy back its equity shares under the tender offer route.

    The sanctioned amount of Rs 16,000 crore does not include any expenses incurred or to be incurred for the buyback like filing fees, advisory fees, public announcement publication expenses, printing and dispatch expenses, and other incidental and related expenses, the company further added.

    Last year in May, TCS had undertaken a Rs 16,000-crore buyback offer entailing around 5.6 crore equity shares at a price of 2,850 per scrip.

    We find out how the buyback would affect the financials of the company.

    The buyback will be over and above Rs 29 per share final dividend declared for 31st May FY18. This implies that the company will return Rs 27,100 crore cash to shareholders during FY19. Post buyback, the outstanding shares would reduce by 2% and return on equity would improve by 5%/4% in FY19E/FY20E. Further, earnings per share is expected to increase by more than 2% at Rs 77 (75.3) and Rs 86 (84.7) for the same period, respectively, according to Geojit Research team.

    According to a note by HDFC Securities which measures the impact of the buyback on company's finances, "Promoter holding stands at 71.92% and the promoters had participated in the previous buyback of Rs 16,000 crore at Rs 2,850 per share (pre 1:1 bonus).  The brokerage sees profit before tax impact of -2.3% on lower other income and expects neutral earnings per share with 2% reduction in equity share capital. It also sees return on equity (ROE) to improve by 200 bps. "

    It has recommended tendering of shares (Rs 2,100 implies 25.5 times FY20E - historical peak valuations).

    Brokerage Motilal Oswal in a note said, "The buyback should result in 2% accretion to EPS from a reduction in the share count. However, the cash reduction would result in a decline in other income, which is dominated by a yield of 8% on a pre-tax basis on the cash.

    Other income foregone would be to the tune of Rs 1200 cr -1300 cr, which would result in an adverse EPS impact of 2.5%, implying net EPS decline of 50 basis points. However, given the reduction in networth, the RoE is likely to improve by 2 percentage points."

    General Awareness

    NITI Aayog Governing Council
    • Context: Prime Minister Narendra Modi recently chaired the fourth meeting of Governing Council of NITI Aayog. The meeting was yet another attempt to take India – a federation of states forward with equal participation of all the stakeholders.

      About NITI Aayog:

      The Government, in January 2015, replaced Planning Commission with NITI Aayog (National Institution for Transforming India). It established with the aim to achieve Sustainable Development Goals and to enhance cooperative federalism by fostering the involvement of State Governments of India in the economic policy-making process using a bottom-up approach.

      Role of NITI Aayog:

      The institution has to provide governments at the central and state levels with relevant strategic and technical advice across the spectrum of key elements of policy. This includes matters of national and international import on the economic front, dissemination of best practices from within the country as well as from other nations, the infusion of new policy ideas and specific issue-based support. The institution has to be able to respond to the changing and more integrated world that India is part of.

      Composition of NITI Aayog:

      Chairperson: Prime Minister of India as the Chairperson.
      Governing Council comprising the Chief Ministers of all the States and Lt. Governors of Union Territories.
      Regional Councils will be formed to address specific issues and contingencies impacting more than one state or a region. These will be formed for a specified tenure.  The Regional Councils will be convened by the Prime Minister and will comprise of the Chief Ministers of States and Lt. Governors of Union Territories in the region.  These will be chaired by the Chairperson of the NITI Aayog or his nominee.
      Experts, specialists and practitioners with relevant domain knowledge as special invitees nominated by the Prime Minister.

      The full-time organizational framework will comprise of, in addition to the Prime Minister as the Chairperson:

      Vice-Chairperson: To be appointed by the Prime Minister.
      Members: Full-time.
      Part-time members: Maximum of 2 from leading universities research organizations and other relevant institutions in an ex-officio capacity. Part time members will be on a rotational basis.
      Ex Officio members: Maximum of 4 members of the Union Council of Ministers to be nominated by the Prime Minister.
      Chief Executive Officer : To be appointed by the Prime Minister for a fixed tenure, in the rank of Secretary to the Government of India.
      Secretariat as deemed necessary.

      Facts for Prelims- Initiatives by NITI Aayog:

      Its important initiatives include “15 year road map”, “7-year vision, strategy and action plan”, AMRUT, Digital India and Atal Innovation Mission.

      What’s important?

      For Prelims: Composition of NITI Aayog, various initiatives.
      For Mains: Cooperative federalism- meaning, significance and efforts by the government.

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