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BUSINESS AND ECONOMY - December 2015

Dec 2015

Jul 28, 2019

GST on Electric Vehicles, Chargers Cut to 5%

In a bid to encourage the adoption of electric vehicles, the Goods and Services Tax (GST) Council decided to reduce the tax rate on electric vehicles from 12% to 5% and on EV chargers from 18% to 5% from August 1.
The council, which met via videoconference, also exempted the hiring of electric buses by local authorities from GST.

Adani Plans to Invest in UP

According to Gautam Adani, Adani Group would invest Rs. 5,500 crore over the next five years in power transmission and food processing sectors in Uttar Pradesh.
Speaking on the occasion of the second ground breaking ceremony that would see the launch of multiple projects by corporates, Adani said that he had announced his investment plans during UP investors' summit in February 2018 and the work on two power transmission projects has already started.
Under the food processing segment, rice and flour mills, kachchi ghani refining facility would be set up in the state.

ICICI Bank Clocks Profit

ICICI Bank reported a Rs. 1,908.03-crore net profit for the April-June quarter compared with a Rs. 119.55-crore loss during the same period of the previous year as additions to bad loans fell, lowering provision requirement.
Net interest income (NII) increased 27% year-on-year to Rs. 7,737 crore while net interest margin rose 3.61% compared with 3.19% in the same period of the previous year. Net interest margin was 3.72% during the fourth quarter of 2018-19.

Indigo Paints to Ramp up Capacity

Indigo Paints Pvt. Ltd., India's fifth-largest decorative paints company, is planning to ramp up capacity by investing Rs. 40-Rs. 50 crore every year for five years as demand for its range of paints is picking up across the country, according to a top company executive.
According Hemant Jalan, managing director, Indigo Paints Pvt. Ltd, the company has been growing at a rate of 45% year-on-year as against industry growth of 12-13%.
Jalan said that the company which has retail presence in the whole of India except Jammu and Kashmir and Himachal Pradesh would expand deep into major markets of Maharashtra, Gujarat, Tamil Nadu and Karnataka which it tapped three to four years back.

Jul 27, 2019

PNB Back in the Black

The Punjab National Bank (PNB) reported a profit of Rs. 1,018.63 crore for the quarter ended June 30 owing in large part to a reduction in provisions.
The public sector bank had reported a loss of Rs. 940 crore in the corresponding quarter of last year.
The bank's total income stood at Rs. 15,161.74 crore in the first quarter of the financial year 2019-20, up from Rs. 15,072.41 crore earned in Q1 of the previous fiscal. Provisions and contingencies accounted for Rs. 2,462.8 crore,, drastically lower than the Rs. 5,134.71 crore in the same quarter of 2018-19.
Despite posting a profit this quarter, the bank's asset quality further deteriorated on a sequential basis.
The gross NPA ratio increased to 16.49% in Q1 compared with 15.5% in the fourth quarter of the previous financial year. The gross NPA ratio was 18.26% in the first quarter of 2018-19.

Anglo American Shares Fall

Anil Agarwal-led Vedanta Limited has sold its stake in Anglo American with superior gains, giving rest to speculation that the mining baron will launch a bid to acquire the global miner.
However, the sale, with a net gain of over $100 million, couldn't enable the firm to improve its profitability as net profit for the first quarter fell 12% to ₹1,351 crore.
Cairn India Holdings Limited (CIHL), an overseas subsidiary of the company, and Volcan Investments Limited, had agreed to unwind entirely the structured investment entered into between them in December 2018 ahead of the originally envisaged schedule.
Company's revenue during the quarter fell by 4% to Rs. 21,167 crore, primarily due to lower commodity prices.

Yes Bank Picks up Stake in Cox & Kings

Yes Bank acquired 18.55% stake in travel and tour operator Cox & Kings by invoking pledged shares.
The bank acquired 32,750,139 shares of nominal value Rs. 5 each comprising 18.55% of the post-issue, fully paid-up share capital. The bank has also acquired 30% of Ezeego One Travel & Tours by invoking pledged shares.
Cox & Kings had earlier defaulted on commercial paper payment leading to a downgrade by rating agencies. Meanwhile, Yes Bank stock closed 9.64% higher on the BSE to Rs. 96.10 after reports of the bank planning to raise $ 1.2 billion to boost capital.

Jul 26, 2019

India may Build Tesla-scale Storage Plants for Batteries

India is putting the final shape on a plan to build at least four Tesla-style giga factories to manufacture batteries with an investment of around $4 billion, as the country prepares to switch to electric vehicles to curb pollution and cut its dependence on foreign oil.
Aimed at securing India's energy needs, the plan to set up these factories of 10 gigawatt hours (GWh) each is being helmed by federal policy think tank NITI Aayog and looks to accomplish what Tesla has done at its Gigafactory in Nevada, US.
The focus on battery storage manufacturing will enable India to develop an electric vehicle ecosystem including manufacturing and R&D, an opportunity the country missed while developing the solar industry.
As part of the plan, the government may offer a raft of incentives to manufacturers such as concessional financing options with around 3% foreign exchange hedge on overseas loans and a fixed 3% interest subvention on loans availed in Indian rupees. In addition, a reduction in minimum alternative tax (MAT) may be offered.
Apart from electric vehicles, such battery storages will cater to the consumer electronics industry and electricity grids, given the intermittent nature of electricity from clean energy sources such as solar and wind.
According to a conservative scenario envisaged by NITI Aayog, India will need six such gigawatt-scale facilities (of 10 GWh each) by 2025 and 12 by 2030. While this doesn't include the export market potential, the base scenario envisions 11 such giga factories by 2025 and 24 by 2030.
To put this into perspective, each GWh (1,000 megawatt hour) of battery capacity is sufficient to power 1 million homes for an hour and around 30,000 electric cars.
The programme aims to be technology-agnostic, meaning it will be left to the market to determine which technology is best suited for the country, depending on demand and price.

Jul 25, 2019

Govt Plans $10bn Global Bond Sale

India is considering an option to raise $10 billion in one go from its first overseas bond sale as early as October 2019.
The government would prefer to sell yen or euro-denominated debt so as to offer lower yields.
A dollar bond isn't ruled out given there would be more liquidity, while it could also decide to sell the debt in multiple sales over a longer period.
India is banking on the novelty of a debut offering at a time when investors are desperate for returns as the world's pile of negative-yielding debt grows to a record $13.4 trillion.
While Saudi Arabia and Argentina have raised more money in recent years from international bond sales as emerging markets return in popularity, Prime Minister Narendra Modi's government will be working to a tight timeline.

ICRA Downgrades Yes Bank's Bonds

Credit rating agency Icra Ltd downgraded ratings on Yes Bank's Rs. 32,911.7 crore bond programme, citing an increase in stressed assets and lack of debt resolutions. The rating on bonds aggregating Rs.22,111.7 crore were downgraded by one notch, while that on Rs. 10,800 crore of additional tier I (AT-I) bonds were downgraded by two notches.
The outlook on the ratings remained negative as Yes Bank saw a sizeable increase in gross bad loans and BB and below rated exposures along with weakened capital cushions.
The rating for these AT-I bonds (BBB+) is three notches lower than the rating for the Basel III compliant tier II bonds (A+) of Yes Bank as these instruments have loss-absorption features that make them riskier, said the credit rating agency.
The coupon payments are non-cumulative and discretionary and the bank has full discretion at all times to the cancel the coupon payments.
The cancellation of discretionary payments shall not be an event of default. Coupons can be paid out of the current year's profits.
However, if the current year's profit is not sufficient or if the payment of the coupon is likely to result in a loss, the coupon payment can be made through reserves and surpluses created through the appropriation of profits, (including statutory reserves)
The coupon payment is subject to the bank meeting the minimum regulatory requirements for common equity tier I (CET-I), tier I and total capital ratios (including capital conservation buffer, at all times as prescribed by the Reserve Bank of India (RBI).
These AT-I bonds are expected to absorb losses through a write-down mechanism at the objective pre-specified trigger point fixed at the bank's CET-I ratio as prescribed by the RBI, 5.5% till March 2020, and thereafter 6.125% of the total risk weighted assets of the bank or when the point of non-viability trigger is breached in the RBI's opinion.
The rating downgrades also factor in the further weakening in Yes Bank's core equity (CET-I) capital cushions with the growth in RWAs and elevated provisioning leading to subdued profitability.
The CET-I declined to 8% as on June 30, 2019 against the minimum regulatory requirement of 7.375% for March 31, 2019 and 8% for March 31, 2020.

India Up on Innovation Index

India moved up five places to 52nd in the world's most innovative countries 2019 ranking, in what is the biggest jump by a large economy this year, according to the Global Innovation Index (GII).
The GII ranks 129 world economies on 80 innovation indicators such as intellectual property filing rates, mobile app creation, education spending, and scientific and technical publications.
India, which was ranked 81 in 2015, has steadily improved its ranking in the last four years. It went up to the 66th spot in the 2016 and improved its ranking by six positions in 2017.
Switzerland retained the first rank as the world's most innovative country, followed by Sweden, the United States, the Netherlands, the United Kingdom, Finland, Denmark, Singapore, Germany and Israel.
At 14, China is the only middleincome economy to be ranked in top 30.
Three Indian cities -- Bengaluru, Mumbai and New Delhi -are among the world's top 100 science and technology clusters, according to the report.
India maintained its top place in Central and Southern Asia, improving its position in labour productivity growth, knowledge and technology outputs, and intellectual property related variables, among other parameters.
In Central and South Asia, Iran ranked 61 and Kazakhstan 79. Pakistan was ranked at 105.
India moved up to the 4th position in GII rankings among lower-middle-income economies, and outperformed on innovation relative to its GDP per capita for nine years in a row.
However, India lagged in indicators such as logistics performance and women employed with advanced degrees. The largest drops are found in logistics performance, females employed with advanced degrees, and printing and other media.

HPE to Invest in India

Hewlett Packard Enterprise Co. (HPE) plans to invest $500 million in India over the next five years, increase its workforce by 20% over the next 3-5 years, and start manufacturing in India by the end of this year.
Specifically, HPE will hire new engineering talent with expertise in artificial intelligence and networking.
The company will also begin construction of a high-tech extension to its Mahadevapura Campus in Bengaluru that will house over 10,000 employees, as well as state-of-the-art R&D facilities.
HPE also plans to commence manufacturing in India. The company is scheduled to start manufacturing Aruba's (Aruba is a unit of HPE) portfolio of mobility and internet of things solutions in India before the end of 2019.

Cabinet Clears Sugar reserve proposal

The Cabinet has cleared a proposal to create an emergency sugar reserve of four million tonnes and also decided to keep the price millers have to pay sugarcane farmers unchanged at Rs 275 per quintal (100 kg), steps aimed at maintaining favourable demand-supply conditions of the sweetener in the country.
India is the world's second largest sugar producer, next only to Brazil, and also its largest consumer.
About 90% of the country's annual sugar consumption goes into commercial use, such as packaged foods. Household consumption accounts for only 10%.
The price at which mill owners buy raw cane from farmers, called "fair and remunerative price", is federally determined, based on a recommendation by the Commission on Agricultural Costs and Prices (CACP).
Additionally, sugar-producing states declare bonuses above this price, which influence cane output and the retail prices of sugar, which tends to inflate mill-end prices of the commodity.
The price of Rs 275 a quintal is applicable on a 10% recovery rate.
The recovery rate of sugar denotes the amount of sugar extracted from each 100 kg of raw cane. It varies from state to state, depending on agro-climatic conditions, cane varieties and also the technology of mills.
If the amount of sugar recovered from each 100 kg of cane exceeds 10%, then a farmer will have to be paid an additional premium of Rs 2.75 per quintal for every 0.1% increase
According to a CACP official, in order to incentivise efficiency in terms of higher sugar recoveries, the federally determined price payable to farmers is linked to a basic recovery rate of sugar, with a premium payable to farmers for higher sugar recovery.
The cabinet committee on economic affairs, chaired by Prime Minister Narendra Modi, also decided to create a stockpile of four million tonnes of sugar for one year at a cost of Rs 1,674 crore. In 2018, the government had created a similar stockpile of three million tonnes.
Mills would be paid on a quarterly basis and the amount would be directly credited into farmers' accounts on behalf of mills against cane price dues, according to the Cabinet's decision.

Jul 24, 2019

RBI Launches Medium-term Strategy Plan

RBI governor Shaktikanta Das launched Utkarsh 2022, the central banks' medium term strategy framework, in line with evolving macro-economic environment, said an official release.
The framework has been unveiled to achieve excellence in the performance of RBI's mandates and strengthening the trust of citizens and other institutions.
The RBI said its management attaches high importance to 'Utkarsh 2022' and will periodically monitor its implementation and progress through a sub-committee of the central board.
A formal strategic management framework was launched in April 2015 to re-articulate the core purpose, values and vision statement of the RBI so as to delineate its strategic objectives in contemporary terms to provide a framework and backdrop within and against which its policies would be formulated.
The vision statements will guide the RBI during the medium-term period (2019-22).

IMF Cuts India's Growth Forecast to 7%

The International Monetary Fund (IMF) further cut its annual growth forecast for India, as it expects weaker domestic demand to limit an economic recovery.
The economy is now expected to expand 7% in the year ending March 31, 2020, 0.3 percentage point slower than IMF's April projection.
The broad-based slowdown in consumption and investment demand in India was partly a reflection of the uncertainties associated with the just concluded general elections in India, as well as tightening of borrowing conditions for small and medium enterprises.
Gross domestic product (GDP) growth in India in the March quarter slowed more than expected to 5.8% from 6.6% in the December quarter.
This was the slowest quarterly GDP growth in five years. Annual GDP growth slowed to 6.8% in the year ended March 31 from 7.2% in the previous year.
Since June 2019, Reserve Bank of India (RBI), the Economic Survey of the finance ministry, and the Asian Development Bank have cut their growth outlook for India to 7%.
IMF also revised downward its growth projections for China as well as for the world by 10bps each to 6.2% and 3.2%, respectively for 2019.

Snapdeal Raises Fresh Funding

Snapdeal and Piramal Group executive director Anand Piramal has made an investment in the e-commerce company.
The investment has been made by Piramal in his personal capacity.
However, details of the investment and the valuation of Snapdeal post the transaction were not disclosed.
Anand's investment comes as a significant endorsement for Snapdeal and the transformation the company has undergone over the last couple of years.

Sodexo Invests in Zeta

Sodexo, the voucher-based employee benefits firm, has made a strategic investment in Zeta, a financial technology startup for employee tax benefits and gifting space.
Started by serial entrepreneur Bhavin Turakhia, this would be the first institutional funding coming into the company and would value the startup at $300 million (Rs 2,068 crore).
Zeta did not disclose the size of the funding.

Due Date for Filing I-T Returns Extended

The government extended the due date for filing income tax returns by individuals for financial year 2018-19 by a month till August 31, 2019.
Individuals, including salaried taxpayers, and entities were earlier required to file their income tax returns for fiscal 2018-19 by July 31, 2019.

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