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BUSINESS AND ECONOMY - December 2015

Dec 2015

Dec 11, 2019

Reliance Ties up with ADNOC for Chemical Unit

Reliance Industries and Abu Dhabi National Oil Company (ADNOC) signed an agreement to explore setting up of a facility in UAE to produce ethylene dichloride, which goes into making of PVC that is commonly used in pipes, tubes and cable.
Under the terms of the agreement, ADNOC and RIL will evaluate the potential creation of a facility that manufactures ethylene dichloride or EDC adjacent to ADNOC's integrated refining and petrochemical site in Ruwais, Abu Dhabi and strengthen the companies' existing relationship supporting future collaboration in petrochemicals.

Oil India Keen on Acquiring Full Control of Numaligarh Refinery

State-run Oil India Ltd may pitch for full control of Numaligarh Refinery Ltd (NRL. NRL is a subsidiary of state-run Bharat Petroleum Corp. Ltd (BPCL).
As part of its strategy to divest stake in BPCL, the government in November decided to carve out NRL from BPCL. BPCL holds 61.65% stake in NRL, while Oil India holds 26% and the government of Assam 12.35%.
NRL was set up at Numaligarh in Assam's Golaghat district, in accordance with provisions of the Assam Accord signed on August 15, 1985, and has been associated with the industrial and the economic development of the region.
The capacity of NRL is being expanded from the present 3 million metric tonnes per annum (MMTPA) to 9 MMTPA at an investment of Rs. 22,594 crore.
The expansion project is targeted to be completed in four years and expected to meet the refining requirements of the North-East region.

World's First Fully-electric Commercial Flight

An all-electric powered seaplane has taken flight in Vancouver, Canada, in what the operators describe as a world first for the aviation industry.
The short test flight by Harbour Air and magniX involved a six-passenger aircraft fitted with an electric motor.
The companies said that it was a first step to building the world's first all-electric commercial fleet.
The push to electric could help slash carbon emissions in the high-polluting aviation sector.
This historic flight signifies the start of the third era in aviation - the electric age.

State Bank Under-reports Bad Loans

India's largest lender, the State Bank of India (SBI), underreported bad loans and their provisioning by Rs. 11,932 crore and Rs. 12,036 crore, respectively, in 2018-19, the Reserve Bank of India (RBI) found, the highest such figures reported by any bank so far.
In a stock exchange filing disclosing the central bank's risk assessment report, SBI said that had it taken into account the provisions based on RBI's findings, the bank would have reported a net loss of Rs. 6,968 crore in 2018-19 instead of its reported profit of Rs. 862 crore.
However, SBI's remaining impact on the gross non-performing assets (NPAs) in the third quarter of 2019-20 is Rs. 3,143 crore, since some of it has already been recognised in the first two quarters of FY20.

Yes Bank Weighs Citax's $500 mn Lifeline

Yes Bank is considering a $500 million investment offer from London-based Citax Holdings and Citax Investment Group, in what would be a vital financial lifeline for the cash-starved lender.
A final decision on the investment, which is proposed to be made through a preferential allotment, will be taken at the bank's next board meeting.
Yes Bank said that several investors had shown interest in buying its shares worth a total $2 billion through a preferential allotment. The potential investors included the family office of Canada-based Erwin Singh Braich and Hong Kong-based SPGP Holdings (as part of the $1.2 billion binding offer) as well as the $500 million offer from Citax Holdings, through non-binding agreements.

Dec 10, 2019

RBI May Soon Have Greater Control over Co-op Banks

The Centre is considering introducing an ordinance to amend the Banking Regulation Act, 1949, in order to give more power to the Reserve Bank of India (RBI) to regulate co-operative banks in the wake of the alleged fraud at Punjab and Maharashtra Co-operative (PMC) Bank Ltd.
The proposed amendments in the law could get the Cabinet's approval as early as this week.
In September 2019, the RBI had superseded the scam-hit PMC Bank's board for six months after finding under-reporting of loans. Currently, co-operative banks are governed by dual regulations—state cooperative bodies and the RBI.

Sanofi to Buy Synthorx

France's Sanofi agreed to buy California-headquartered biotechnology firm Synthorx in a cash deal worth about $2.5 billion as it steps up a push in the lucrative field of cancer drugs under its new Chief Executive Officer (CEO).
Sanofi offered to buy all the outstanding shares of Synthorx common stock for $68 per share in cash, or a 172% premium to Synthorx's.

Yes Bank Stalls Blackstone Deal

Coffee Day Group's proposed sale of its Global Village Technology Park to private equity firm Blackstone Group Lp hit a hurdle, with the debt-laden group's largest creditor, Yes Bank, signalling its reluctance to give approval to the Rs. 2,800 crore deal.
The sale of the 90-acre tech park on the outskirts of Bengaluru is to be used for repaying the debts of Cafe Coffee Day's (CCD) associate firms and their promoters. Founder VG Siddhartha committed suicide in July, 2019.
Coffee Day Group firms and their promoters have total debts of at least $1 billion and Yes Bank is the single-largest lender to the group and its promoters, with an exposure of at least Rs. 1,500 crore.
Yes Bank put a condition that it will give its "no objection" to the Blackstone deal only if Coffee Day agrees to repay the entire loan taken by the group from Yes Bank or at least the loans taken by Coffee Day's subsidiaries Tanglin Developments Ltd (which owns the tech park) and Sical Logistics.

State Bank Cuts Lending Rate

The State Bank of India (SBI) announced the reduction in its marginal cost of fund based lending rate (MCLR) by 10 basis points across all one-year products with immediate effect.
This is the eighth consecutive cut in MCLR by the lender this fiscal. The new one-year MCLR has been cut to 7.9% from 8%.
The reduction comes as the Reserve Bank of India, in a surprise move earlier this month, left the key policy rates unchanged at 5.15%.

Dec 09, 2019

Tesco Considers Sale of Thai and Malaysian Stores

The UK's biggest retailer, Tesco, is considering the sale of its stores in Thailand and Malaysia.
Tesco has about 2,000 stores in the two countries under the Tesco Lotus brand and employs some 60,000 people.
If a deal is agreed it would mean an almost complete retreat from international markets for the supermarket giant.
The company's only other overseas stores, other than Ireland, are in its loss-making European unit.

RIL Eyes Tie-ups to Enter Diagnostics Biz

Mukesh Ambani, India's richest man, now wants a share of your diagnostics budget, in a move that can potentially shake up the sector similar to the disruption in telecom market after the entry of Reliance Jio.
Reliance Life Sciences or RLS, the biotechnology subsidiary of RIL, plans to start pathology labs across India through partnerships with local entrepreneurs. RLS is controlled by the Ambani family, the promoter group of RIL.

Bharti Telecom Seeks Approval for Rs. 4,900 cr FDI

Bharti Telecom Ltd has sought government approval for a Rs. 4,900 crore investment from Singapore-based Singtel and other foreign entities. Bharti Telecom is the promoter company of Bharti Airtel Ltd, the oldest private telecom operator in India.
Bharti Telecom applied for infusion of Rs. 4,900 crore in the company, which includes investments from Singtel and some other foreign investors. With this, Bharti Telecom will become a foreign entity, as majority stake will be held by overseas investors. DoT (department of telecommunications) is expected to approve this investment this month.
Sunil Bharti Mittal and his family currently own around 52% stake in Bharti Telecom. The fund infusion, if approved, will raise the foreign stake in Bharti Telecom beyond 50%.

Dec 08, 2019

GSM Giant Turkcell Signs Deal with Chinese Bank

Turkey's leading GSM operator, Turkcell, signed an agreement for an eight-year loan worth €500 ($539) million with the China Development Bank.
Supported by growing demand from corporate and retail customers, the new loan will be used to finance the procurement of hardware and equipment from Chinese vendors.
The door-to-door tenor of the loan facility will be eight years, of which the first three will be an availability and grace period.

Personal Income Tax Rate May be Cut

Finance Minister Nirmala Sitharaman indicated that the government may soon relax the personal income tax burden to provide relief to individuals and boost consumption by putting more money in the hands of people. The relief, if provided, will come amid a downturn in the economy led by tepid demand and sluggish private investment.

VA Tech Wabag to Foray Into South Africa

Water treatment solution provider VA Tech Wabag Ltd. will foray into the South African market as part of its expansion programme.
VA Tech Wabag has operations in 30 countries.
The company recycles 423 million litres of water per day (MLD) in India and 1,250 MLD globally. It plans to close the current fiscal with revenue of Rs. 3,000 crore compared with Rs. 2,781 crore last year.

CIL Eases Payments for NRS Customers

A new payment facility, earlier extended only to big power generating companies, will now be extended to non-regulated sectors (NRS) such as steel, sponge, cement and aluminium industries by Coal India Ltd. (CIL).
Buyers will now be given a 'letter of credit' and thus, they do not need to make 100% advance payment as earlier. The facility is extended to micro, small, medium enterprises and independent power plants as well. In 2018-19, about 73 million tonnes (MT) of coal was supplied to the NRS sector, of a total coal off take of 608 MTs.
CIL board green-flagged the proposal to extend the letter of credit facility, allowing the sectors the payment of coal value through irrevocable revolving letter of credit mode for coal supplies through rail mode.

Dec 07, 2019

E-commerce Companies to File FDI-compliance Report Annually

The government made it mandatory for e-commerce companies like Amazon and Flipkart to submit FDI policy compliance report by statutory auditor by September 30 every year, a move aimed at ensuring that they follow all the norms properly.
Section 15 of the Foreign Exchange Management Act (FEMA) deals with e-commerce entities.
This decision will help in ensuring compliance of FDI policy in the e-commerce sector.

Promoters of Welspun Buy Stake in Firm

The family office of the promoters of Welspun Group announced the acquisition of a majority stake in One Industrial Spaces, an integrated fund, development and asset management firm focussed on the warehousing sector in India.
The unspecified investment was made by the promoters in their personal capacity through a family office investment vehicle.
One Industrial Spaces, which was founded in July 2019 by Anshul Singhal, will now be rebranded as Welspun One Logistics Parks.

RBI Proposes Prepaid Card

The Reserve Bank of India proposed to introduce a prepaid payment instrument (PPI) that could be used only for transactions of goods and services worth up to Rs. 10,000.
PPIs have been playing an important role in promoting digital payments and bringing in the new PPI will further facilitate its usage.

SEBI Asks LIC, SBI and BoB to Pare Stakes in UTI MF

SEBI directed three public sector financial institutions -- LIC, SBI and Bank of Baroda to dilute their stakes to below 10 per cent in UTI Asset Management Company (AMC) by December 2020.
In the case of non-compliance with directions, the shareholding and voting rights of these entities in UTI AMC and UTI Trustee in excess of 9.99 per cent and corporate benefits will be frozen till the time they comply with the orders.
Currently, LIC, SBI and BoB each have a 18.24% stake in UTI AMC. Incidentally, the earlier deadline for the three entities to bring down their holding in the mutual fund entity was March 12, 2019.

OPEC and Partners Agree to Cut Production

The OPEC group of oil producing countries and their allies — including Russia — agreed to a production cut of 500,000 barrels per day in addition to their current agreement.
Ministers gathered at OPEC headquarters in Vienna "decided for an additional adjustment of 500 (thousand barrels per day)", effective from 1 January 2020.
This would bring production 1.7 million barrels per day below October 2018 levels.
OPEC members had been aiming for a cut in order to stem pressure on prices from abundant reserves and weak global economic growth.

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