Pioneer Edition Delhi 9.1.2017 Page 11 Height 8.22em Width 1241 em

Minister of P&NG Dharmendra Pradhan will be fel~itating the Jr Wond Cup p~yers winners who helped the Indian leam emerge victoriOus against the strong BelgIan team. IndIa has won the Cup two times, once in 2001 and now In 2016. India is the only host countlY to win the title In fhis latest competijlon held at Lucknow in December, 2016 tile Ind~n team had 5 players from ONGC and 5 players from BPCL. ONGC players Gurchant Singh, Simranjeet Singh and Mandeep Singh were match Winning scorers in the semi­final and also in the final, beating Belgium 2-1. Pradhanwill be felicijating the players from ONGC and BPCL who helped the Indian team to emerge victorious against the strong Belgian learn.

ET- Wealth Edition Delhi 9.1.2017 Page 14 Height 15.72em Width 14.33 em

Should you invest in the new CPSE ETF?

WhiLe the fund promises a Lucrative pLay on the India growth

story, there are certain pitfaLLs.

SANKETDHANORKAR

The government is set to launch a new exchange traded fund (ETF) based on me Central Public Sec­tor Enterprises (CPSE) Index. Managed by Reliance Mutual

Fund, this wi ll be the second CPSE ETF. The fund aims to provide investors the op­

portunity (Q invest in a diversified basket of publicsec(orcompaniesand benefit fi'om the growth porential over the long term. It will milTor the perfonnance of the CPSE In-

entry point to retail investors. In addition to this, (he preva iling low va luations of the un­derlyingshares make it a compelling offer­the PSU stocks that form (he CPSE ETF are trading at much lower PE ratio and high divi ­dend yields than the broader market. While CPSE Index tradesata PE multipleofll.44 and dividend yield of4.07%, the Nifty 50 in· dex is available at 22 times and 1. 35% respec­tively. A low expense ratio of 0.065% also en­sures that costs do not eat into the gains made by the scheme over time.

The ETF claims to offer investors a play on

GETTYIMAGES

17.2%. Over the past year, the fund delivered 17.43% return, even as the Nifty 50 index clocked 2.8%. This effectively makes it the best performing large-cap fund. But this per­formance needs to be put in context. The fund reached its peak net asset value (NAV) withi n two months of being launched, sup­ported by a combination of lac tors such as government oi l price deregulation and tum­b ling crude oil prices. Investors were also of the belief that the efficiency of public sector companies would improve under the new government. As Kunal Bajaj, CEO, Clear-

dex and the portfolio will comprise shares of the 10 largest PSUs-O il & Natural Gas Corpo~ rationm CONGC), GAIL India, Coal India, Indi­an Oil, Oil India, Power FinanceCorporation, Rural Electrification Corporation, Container Corp, Engineers India and Bharat Electronics.

To findoU( if it's a good idea to invest in the fund, il is importanttoconsiderhow the first CPSE ETF has shaped up. When it was launched in March 2014, the govemment had oJlered an upfront discount of 5% on the issue price to swee£en the deal for investors. A year later, the government issued 'loyalty ' units in the ratio of15:1 to eligible retail inves­[Ors who remained invested since [he new fund offer, which amounted to an additional discount of around 6_66%. It is expected that [he newCPSEETF will also offer similar dis­counts and bonus, providing an attraC[ive

ET- Wealth Edition Delhi 9.1 .2017 Page 14 Height 15.72em Width 14.33 em

the India growth story through a diversified basket ofPSU s[Ocks. But a closer inspection of the composition of the underlying index suggests that the portfolio is far from diversi­fied_ Three stocks-ONGC, Coal India and In­dian Oil COIvoration-together constitU(e around 63% of [he emire portfolio. The port­folio is also skewed towards a few sectors, with energy, metals and financial services making up nearly 90% of the portfolio. This lends a higher risk element to the ETF, de­spite the fact that the underlying stocks are some of the biggest names in their respective sectors.

The performance of the firstCPSE ETF looks impressive. Since its inception , [he fund has clocked 14 .5%annualised return, even as the Nifty 50 index gained 7_5% during the same period. After adjusting for loyalty units, retail investors have madea gain of

funds, point out, the fund's returns have since mostly been driven by the trend in commodity prices, as the index is heavily skewed towards commodity-driven busi­nesses.

Experts areofthe opinion that this is more of a speciality fund, rather than a typical dI­versified equity fund, and should be regard­ed as such. "lnves(Qrs should treat this as a sector or thematic fund and invest accord­ingly, That means it should notbea panof your core allocation. You can opt for partial allocation within the 10% tactical allocation in the portfolio," suggestsAmolJoshi , Founder, PlanRupee InvesunentServices.

Anmher facror to consider is that any changes in the pol icies of the promoter corud have a bearing on the entire basket. "Retail invesrors should nO[ over-expose their pon~

folio to such a concentrated bet," warns Ba~

First ETF yielded impressive retwns

A sharp spike in NAV at the outset

Even without loyalty bonus, the first CPSE ETF has gained 14.5% since its inception.

Investment (~ )

Issue price after 5% discount 17.45

Number of units allotted 5730.5

Number of additional units 382.04 (15:1 bonus units)

Total units held 6112,6

Current NAV (~) 25.41

Current market value (~) 1.55,320

Return (CAGR)

Nifty 50 return (CAGR) 7.49%

Data as on 2 Jan 2017.

Oil price deregulation and low crude ail pr ices have played a role.

28

24

20

16 28 Mar 2014 2 Jan 2017

jaj, addinglhatsince the fuel price hike and deregulation is mostly behind us, there aren't too many things [he governmentcan do to help the stock prices of these energy PSUs. Besides, while the lower valuations for the underlying PSU stocks provide some comfonon the downside, they are cheap for a reason, pointsomjoshi_ Most private sec­tor businesses in the respective sectors are run far more efficiently, and are therefore a\varded expensive valuations. While the likely discount and loyalty bonus makes it an attractive proposition, you should invest in theCPSE ETF only ifyoll think the underly­ing businesses have growth potential and in­tend to hold on to itover the long run .

" Please send your feedback to " etll'culth@limesgroup.t·o/ll

Economic Times Edition Delhi 9.1 .2017 Page 18 Height 12.89cm Width 17.04 cm

ONGC Close to Solution for $800m Projects Stuck Post Swiber Crash ONGC chairman says co close to finalising the method to complete the three projects Sanjeev .Cho udha ry@!jmesgroup .com

New Delhi: State-run explorer OU and Natural Gas Cor poration (ONCe) Isc1o­se to fi nalisi ng ways to complete its $800 million projects stuck midway ariel' the contractor, Singapore's Swiber HoI­dings Ltd , coJJapsed last year following an oil slump.

ONGC's three projects off the western coast faced delays al1er Swiber, the orr­shore cons truction and support servi­ces provider for oil and gas fielddeve Jop­menL, filed for liquidation in Singapore followingdeepfinanciaJ troubJe.

"We are close to t1.naJising the method to complete the projects," said Dinesh K Sarrae chairman at ONCe. " We would be able to bring all stakeholders toget­her. Therewon't be much de lay in these projects." A final deci sion will be taken by mid-January, he sa id .

ONGC is cons idering using subcont­ractors to complete the C-26 cluster de­velopment project, which is about 90 % done, sources familiar with the matter said . Terms and cQnditiQns fQr subcQnt­ractQrs will rema in the same as before. Swi ber was sUPPQsed to' prQvide su b-sea

WeLls have already been drilled in the C-26 cluster and cQmpletion wil i un lock abQut Z.S milliQn metric standard cubic meters a day (mmscmd) Qf natural gas, he ipjng enhance India 's dQmestic Qut­put falling for years, sQurcessaid.

About 60% of the project at Daman is complete, 'where [ive piatformsand asso­ciated pIpel ines were to be built by 8wi­ber. A pIpeline replacement prQject. at Bombay High is also stuck ONGC may issue limited tenders for the completion Qf these pr Qjects, sources said.

/\. II three prQjects were targeted to be ~ _____ =-=-______ ~u comple ted at different points 0'1' time in

... DINESH K SARRAF V Chairman,ONGC

Wewou ld beableto bring all stakeholders together There won't be much delay in these projects pipelines and carry out platfQrm mQdin­cations .in this. ONGC has in the past used subcQntractQrs to 1ini sh when the CQntractor lena prQject midway.

2017 and wiJl nQw J ikely getdelayed by at least a fewmQnths,sQurcessaid.

Swibers trQuble started last July when it faiJed to' raise fresh funds and defaul­ted Qn lQans. After this, it approached a SingapQre

court fQr winding up the CQmpan y. The prQtractedoil dQwnturn that resul ted in fewerprQjects, luwer margins a nd redu­cedcash I1QWS has hurt8wiber.

ONGC had earlier attempted tQ invQke Swiber's perfQrmance bank guarantees bu t fQllQwing the SingapQre firm '5 objec­tiQn and ajudici al intervention , itagre· ed tousethemoneyto finish the projects.

Business Standard Edition Delhi 9.1.2017 Page 16 Height 3.88em Width 13.60 em

Retail fuel prices to remain high

Govt unlil<elyto cut excise duties to compensate for higher global prices, say analysts

AMRllIl A PILLAY & JYOTI MUKUL MumbailNew Delhi, 8January

Diesel and petrol prices are about 20 per cent more than what rbey

were a year before at this time and seem unlikely to reduce.

Global crude oil prices are inching upwards after amput curs by [he Organisation of the Petroleum Exporting Countries (Opec) cartel. And, the govern­ment is not li kely w cut the excise-duty. Diesel is nowt57.82 a litre in Delhi, 25 percent h igh­er than in December2015. Petrol is t70.6 a litre, about 18 per cent more from then.

Opec decided on November 30 ro implement a new com­bined production target of32.5 million barrels a day, lower by 1.2 mn bbljday from {he earlier tar­get. "How fast the market rebal­ances will depend on the d isci­pli ne to enforce and mainrain the cuts, across a d isparate group of oil producers, especial­ly with crisis-ravaged members Libya and Nigeria exempted but with rhe potemial to see large additions in outpU[," S&PGlobai Plans, the energy watchdog body, 5.:.'lid in its omlool< report for this year. More, a rerum by US shale oil producers could keep a lid on p rices.

Those in the sector say the Opec cm was factored into glob­al prices. "The cm will show in supply now but the market had earli er d iscoumed some of the impac(," said D K Sarraf, chair­man of Oil and Natural Gas Corporation (ONGC). He expects global cmde to sray at $60-65 a barrel. Over the past two years when prices were low, he sa id, the governmem had taken some encouraging steps such as decontrol of d iesel pric­ing, d irect benefi ts transfer (of the subsidy) in cooking g..'lS and curtailmenr in kerosene supply. This has helped cur the subsidy.

ONGC has not shared rhesu­bsidy burden of the three gover­nment-owned oil marketingco­mpanies (OMCs) for the past Ib­ree quarters, due to the low pri­ces and government measures. Being an oil producing compa­ny, ONGC benefits from a rise in global prices bur has (0 share the subsidy burden ofOMCs un­der a governmem mechanism. As of March last year, the basic customs duty on petrol and d iesel was 2.5 per cent. Pe[l'ol amacrs an excise duty oftl1.48 a litre and d iesel oftl7.32 a li tre.

"The governmenr has been smart to bu ild on the excise duty, keeping it h igh when crude (price) was down. This gives rhem a window ro cut excise and even our the rise in cmde prices. However~ rhegov­ernmem is unli kely wexercise this in rhe next one year or so, as it m ight not see inflation due w higher commodi ty prices as an issue yet," said an analyst.

Added anorher analyst, from a fo reign brokerage: "What hap­pens on the reta il side and if excise duty curs will come ro the rescue will depend on [he cmde price movement. For now, th is seemsro have stabilised ar$55a barrel, a lso reflecting in retail prices. We expe::r global cmde prices to recover gradually over two to three years. If there is a sharp rise, on ly then m ight excise cuts be an option."

BURNING ISSUE Petrol (f /litre) Diesel (f/litre)

e Oec16,'15. Ja n 2,'17

Crude Oil (I ndia n basket) Excha nge rate

f /$ $1 barrel

Oec30,'15 .Oec30, '16 Source: IOCwebsite, PIS

With the earlier global d ip in cmde prices, demand rose for petroleum products. Petrol con­sumption in April-November 2016, fi rst eight months of th is financial year, rose [0 nine mi l­lion tonnes (m() from 8.7 mt a year before. Diesel consumption in the same period grew to 50.7 mt, from 48.7 mtearlier.

"This demand surge cou ld have been due (0 restocking on inventories. Agrowth rate of five to six per cent is a more modest one ro assume," said one of the analysts quoted earlier.

Stocl< prices for the country's oil majors d id nor showanysig­nificam decline after rhe Opec decision. 'Ihe SSE Incliaoil and gas index has risen 5.1 per cent since November 30. In the seg­ment, Oil lndia and Indian Oil Corporation were the h ighest ga iners in that period, wh ile Petronet LNG and Castrol lndia lost the most.

Times of India Edition Delhi 9.1.2017 Page 1 Height 12A5em Width 12.75 em

Late-night deal: Fuel pumps say no, then yes to cards

Oil Minister Prods Banks To Defer Levyi ng

1% Charge TIMES NEWS NETWORK

Consumers already gra­ppUngwith a cash shor­tage were in for a rude

shock on Sunday as petro\e-

FULL COVERAGE: P 10,21

urn dea.lers announced that they would stop accepting credit card payments from Monday. Many pointed out that this ran directly against the government's efforts to wean peopieorr cash and en­courage digital payments,

Finally, there was some relief on Sunday night after banks agreed to defer their decision to charge 1 % tTans-

H seeks cash deposit details from Apr 1·Nov 8

The Income-Tax department has asked banks and post

offices to report cash deposits f rom April 1 to NovemberS in accounts where deposits exceed specified limits after demonetisation was announced. Banks will have to give details of cash deposits of Rs2.5lakh or more in individual accounts. P 9

action fee on card payments at petrol pumps from Mon­day.1'he move had prompted dealers to say they would stop accepting plastic mo· ney Wlless a mechanism to compensate them was put in place. Petroleum dealers ha­ve now said they will accept cards till January 13.

The banks relented after proddIng from oil minister

State tax collections not hit by note ban

State tax collections have not been hit by

demonetization, data shared with the Centre shows. Seventeen ofthe 31 states and union territories have shared numbers for Decemberand only three-West Bengal, MeghaJaya and Arunachal Pradesh - reported a decline. In Novembertoo, only three of 23 states saw a decline. P21

Oharmendra Pradhan du­ring discussions among ban­kers. deaJers and representa­tives of state-run fuel retai­lers. "Banks have agreed to defer the fee for 4-5 days," a se­n ior oiiministry official said, indicating that a mechanjsm to compensate dealers \vou ld be worked out.

... ·Low margins', P 10

Times of India Edition Delhi 9.1.2017 Page 1 Height 12A5em Width 12.75 em

Margins are not enough to absorb bank charge: Petrol pump owners

"Continued from P 1

At the heart of the dispute is the merchant discount ra te (MDR). As in any other card transac­

tion , the bank passes on the money to the petrol pump owner after deduct­ing fees 1n the form of merchant discount rate.

'The agreement between the bank and the merchant has a clause that does notallow the merchant to passon the charge. But petrol pumps have ar ­bTUed that their margins are not enough to absorb this charge. So there has hjstorically been a tacit agree­men t between banks and petrol pumps whereby banks charge a lower MDR of 1 % and the petrol pumps pass on the MOR to the customer, calling it a sur­charge. The bani,s would turn a bJ.ind eye to this, but would refund this sur­charge to high end customers.

F'ollowing demonetisation, the government said that petrol pumps \vould not pass on charges to custom­ers and would in fact give them a dis­count. 'T'he government also asked banks and payment companies to waive off charges on debit cards to merchants unti l December 31.

However, once the December 3) deadUne lapsed, banks said MDR could not be zero as thjs would make electron­ic paymen ts a loss· making business for both card issuers and pas installers. Petrol pumps say they do not have the margins to absorb it. Oil marketing companies would take a big hit if they have to compensate banks for it as the collective amount paid bypetrol pumps across the counlry would run into sev-

eral hundred crores. Petroleum dealers sa id that SBJ,

HDFC Bank and Axis Bank had com­municated to them about the sur­charge on Saturdaynight.IC ICI Bank, the country's largest private bank, sa id they had not sen t any such com­munication.

Following the notice, pumpowners decided to stop accepting cards from Monday at a meeting of all dealers' as­sociations in Bengal uru on Sunday. AU rndia Petroleum Dealers Associ­ation (A IPDA) president Ajay Bansal told TOI from Bengaluru that the 1 % levy bas been announced even when

LEVY ON CARD USAGE they were not getting their due in setc t1ement of the 0.75% discount an ­nounced by govermnent in December.

8 R Rav indranath. president, Akhi­la Karnataka Federation of Petroleum Traders and 8angalore Petroleum Dealers Association, saId their net profit, after deducting all operational costs, stands at 0.3% to 0.5%. "Tf the banks straightaway levy a 1 % transac­tion fee, wheredotheyexpect us togo? It becomes extremely diOlcult to survive in such circumstances."

ICICI Bank and HDPe Bank ao­countfor some 60% of card swipe ma­chines deployed a t52,000petrol pumps outo( (he 53,842 public sector fuel re­tail outlets across the COWl try. There aTe 56, 190 petrol pumps in the country, incJudingthoserun byprivateoil com­panies. 'T'he governmenton December 8 decided that all s tate-owned estab­lishments would have to bear the cost

of card payments to them. In this case, the dealers are to be compensated by the oil retailing companies. But the mechanism isyet tobe worked outas it involves bearing an annual burden of Rs 800-1000 crore for the retailers.

Still, the sudden move by the banks appears to have taken even the oil min­istry by surprise. "To be fair to dealers, the transaction fee has to be borne by the oil marketing compan ies. Discus· sion is required toseta system wherein dealers can raise daily demand on oil com pan ies for compensating them," an oil ministry official told TO!.

In a communication to fina nce minister Anm Jaitley; ATPDA said: "Tocompound matters further, credit card machine issuers are delaying payments and_ not settLing the entire dues as per our se ttlement. There are disputes about purchases being re ­tur ned ornot delivered. The reconcil­ia tion of swipes to amount beingcred­ited to our accounts is caus ing a lot of hardships and losses to a large per­centage of the deaJercommunity. "

According to Bansal, banks usual­ly have agreement with establish­ments that have a profit margin of 5% or more. "Petro] pumps are the only sector where the banks bear the cos t of even our communication lines used forthecardswipernac hines. So if they levy the fee, we cannot passon the bur­den to consumers as thesa-lepricesare set by oil companies, as also our mar­gin. So that leaves the burden on our laps. We don't have the strength to bear the burden and willcol\apse un less it is withdrawn or oil companies lend us theirshoulders," hesaid.

Asian Age Edition Delhi 9.1.2017 Page 1 Height 25 .84em Width 21.81 em

• Move on hold till Jan 13 as banks defer charges

Petrol pumps drop threat to stop card payments today

PAWAHBAU NEW DElHI, JAN. 8

There was high drama till late Sunday night over the petrol pump owners' threat to stop accepting credit and debit card pay. ments In protest over the imposition of up to one per cent transactlon fees by certain banks.

However, Intervention by (op government offi· clals, including the PMO, saw the banks postponing their decision to impose transaction fees for a few days till the Issue can be resolved in consultation with the petroleum min· Istry, After the banks' announcement, the petrol pump

owners too deferred their deciSion UU frIday, and sa id that they \VIU colllin· ue to accept card payments for now.

"The AJI·Tndia Petroleum Dealers Association has received an official com· munlcatlon li'om the oil marketing companies that with the intClvenlion of

th.e petroleum minister the transaction fee charges have been deferred till 13th January 2017. The A1PDA also has decided to defer the agitation tlU 13th

January 2017," the assocla· tion said in a late·night statement.

Earlier Sunday. many state associations of petrol pump owners, including Delhi and Tamil Nadu, among others. threatened that they will not accept any card payments from Monday onwards, AIPDA president AJay Bansal said that HDFC Bank and Axls Bank had demanded upto one per cent Merchant Discount Rate (t'.IDR) on each transaction. "Our margins are not so much that we can accept this one per cent charge on each transaction. We have spe· clfic mechan!sms to com· pute the margln 3.nd these do not have any scope for MDR charges. This will lead to financial loses ror the dealers:' Mr Bansal said. . TUmtDPage4

Card payments: Petrol pumps drop threat . ContlnuedfromPqe 1 The threat of petrol pump OWllers to reject card payments would have been a huge embarrassment for the Narendra Modi govern· ment, which has been cia ini inll the increase in cashless transac­tlOII as one of the major achievements of the demonetisation of ~ 500 and t 1.000 curren­cy nOles on November 8.

A sen ior f{D Fe Ban k official told thi· news· paper that the impo I­tlon of one per cent

transaction charge in the form of MDR was an industry decis ion which had been taken by all banks. "We may have been one of the first to nolify the petrol pump owners but this is a decision taken logether by all the banks. It is not a deci­sion only laken by us." said the official. The official claimed earlier the banks were charg­Ing a fuel surcharge. but a notification li'om tile government recent· ly said now MDR will be !mposed that the

state-owned oil compa· nies will bear: "So 1\ Is the oil companies which have to bear (hIs charge as per the gov· ernment notiflcation.H

Ihe official said. PSU 011 marketing

companies' officials said tha I they had writ· ten to the banks to defer the imposition of trans· action charge. "We have asked them [or a meet· !ns in 2-3 days to

settle this issue under the guidance of the petroleum and even the finance mlnlstry. It Is correct that petrol

pump owners cannot bear thIs charge. We will have (0 see wha I

mochani 01 can be evolved to deal with this whole issue," said an oil marketing com­panyofficial.

After the demonetisa· tlon of ~500 and n.ooo currency notes on November 8, the gov. ernment has been pushing for cashless transactions aU across the country. Making India cashless was pro­jected by the Modi gov­el'mnent a one of the major driving forces

behind the demonel1sa· lion announcement. The petroleum min· I try had also taken a series of initiatives to promote digital payme­nts. State-owned petrol pumps are giving a dis· count of 0.75 per cent of sale price to consumers on the purchase of petrol and diesel through digital means.

The banks' move wouid not have impact· ed consumers directly as no new charges \ViU be levied on customers us!ng debit or cr dH cards.