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BUSINESS AND ECONOMY - December 2015

Dec 2015

Jun 22, 2019

Walmart to Settle Corruption Probes

Walmart Inc. agreed to pay $282 million in penalties and a Brazilian unit admitted to violating a US anti-bribery law, providing a relatively subdued ending to a seven-year investigation that spanned the globe and at one point looked poised to yield record foreign-corruption fines.
In parallel announcements, the justice department and the Securities and Exchange Commission (SEC) faulted the country's largest retailer over payments made to fast-track store openings in Mexico, China, Brazil and India. Walmart would pay about $138 million in criminal penalties and $144 million in disgorgement to resolve the SEC's allegations.

GST Council Extends Filing Deadline

The Goods and Services Tax (GST) Council extended the deadline for filing of annual returns and the tenure of the anti-profiteering body, made e-ticketing mandatory for multiplexes, and took a slew of decisions to ease the compliance burden on taxpayers.
The 35th meeting of the council, and the first with Sitharaman as its chairperson, could not, however, arrive at a decision on reducing GST on electric vehicles (EVs), resolve the issue of valuation of the goods and services components in solar and wind power generating systems, and settle the question of dual taxation of lotteries.

Manulife to Take Stake in Mahindra AMC

Mahindra AMC, a subsidiary of Mahindra and Mahindra Financial Services, entered into an agreement with Manulife Asset Management (Singapore) Pte Ltd., in which M&M Financial Services would have 51% stake in the AMC arm and the foreign partner, 49%.
Mahindra AMC plans to beef up growth with this partnership in the retail segment.

Jun 21, 2019

BSR Quits as Auditor

BSR & Associates LLP, the sub-licensee of KPMG in India, quit as the auditor of Infrastructure Leasing and Financial Services' non-banking financial services (NBFC) arm, IL&FS Financial Services (IFIN), after it was served a show-cause notice on why it should not be removed.
BSR resigned as auditors of IFIN earlier this month (June 19). Both BSR and IL&FS confirmed the development.
BSR said that while it had responded to the show-cause notice from IFIN, it was yet to hear from IFIN.

Three Board Seats in Mindtree for L&T

Construction major L&T, which is in the midst of a hostile takeover of Mindtree Ltd., secured three board positions at the IT services firm, giving it a firm control over the company.
L&T CEO and MD S.N. Subrahmanyan would join the board of Mindtree as a non-executive director with effect from July 16, 2019.
The nomination and remuneration committee and the board of directors of Mindtree approved and recommended the appointments of Jayant Damodar Patil and Ramamurthi Shankar Raman as non-executive directors, subject to shareholders' approval.

Sundaram Finance to buy BNP in JV

Sundaram BNP Paribas Home Finance Ltd. (SBPHFL) is set to become a wholly owned subsidiary of Sundaram Finance Ltd. (SFL).
SFL would acquire the remaining stake of 49.9% from BNP Paribas Personal Finance S.A. France for Rs. 999.67 crore, subject to all regulatory approvals.
SFL inked an agreement with BNP Paribas Personal Finance S.A. France to this effect. The move follows a decision by the BNP Paribas Group to exit the retail housing finance business.
BNP Paribas currently holds 49.9% stake in the home finance unit and the rest is held by SFL. As per the deal, SFL would acquire the entire stake, representing 5.05 crore equity shares of Rs. 10 each.

Adani Green Energy Arm Bags Wind Power Project

Adani Green Energy's arm Adani Renewable Energy Park (Gujarat) bagged a 130-megawatt (MW) wind power project in an auction by the State-owned Solar Energy Corporation of India (SECI).
Adani Renewable Energy Park (Gujarat) Ltd. had won the bid for setting up a 130 MW ISTS (inter-State transmission system)-connected wind power project in a tender issued by SECI.

IBM to Secure Unconditional EU Approval

US tech giant International Business Machines Corp is set to secure unconditional EU approval for its $34 billion bid for software company Red Hat.
IBM was seeking to expand its subscription-based software offerings via the deal, its biggest to date, to counter slowing software sales and waning demand for mainframe servers.
It would also help it catch up with Amazon, Alphabet Inc and Microsoft in the fast growing cloud computing business.
The European Commission is scheduled to decide on the deal by June end (2019).
Founded in 1993, Red Hat specialises in Linux operating systems, the most popular type of open-source software and an alternative to proprietary software made by Microsoft.
US regulatory authorities gave the green light to the deal in May 2019 without demanding concessions.

Contract between Tech Mahindra and Airbus

IT firm Tech Mahindra signed a multi-year contract with Airbus for cabin and cargo design engineering with an aim to capitalise on the specialised skills and competencies in the growing cabin engineering business over the next few years.
As per Karthikeyan Natarajan, global head of engineering and IoT, Tech Mahindra, Airbus is a strategic customer and partner of Tech Mahindra, and it had been Tech Mahindra's constant endeavour to develop innovative engineering and digital solutions for our customers.
This is a step towards further nurturing this key relationship and supporting Airbus in consolidating their global supplier base while driving business efficiencies and competencies in this process.

Jun 20, 2019

Celebi Aviation to Invest in Taxibots

Turkish ground handling company Celebi Aviation would make an investment of up to €45 million to bring Taxibots at key Indian airports over the next five to six years to provide eco-friendly taxiing solution to airlines and airports.
Taxibot is a semi-robotic equipment that tows an aircraft from the terminal gate to the runway with the aircraft's engine turned off. This helps airlines to cut down fuel consumption by 85% during the takeoff stage as well as reduce carbon dioxide emissions.
The company signed an agreement with Delhi International Airport Limited for seven years and is already providing the service to SpiceJet.
The airport became the first to use the semi-robotic equipment globally for taxiing of aircraft in May 2019.
There are two Taxibots at Delhi airport and there are plans to get three more in the near future.

Kolhapuri Chappal Gets GI Tag

Maharashtra's extremely popular footwear brand Kolhapuri chappal was given the Geographical Indication (GI) tag, which is likely to further boost its sale in other parts of the country and abroad.
According to reports, the approval for the GI tag for the popular footwear brand was jointly granted to four districts of Karnataka and Maharashtra each for making these chappals.
The GI tag approvals mean that the artisans producing Kolhapuris in Kolhapur, Solapur, Sangli and Satara districts of Maharashtra and Dharwad, Belgaum, Bagalkot and Bijapur districts of Karnataka will now be able to make and market their product in domestic and international markets.

HDFC Open to Buying Retail Portfolios

Mortgage lender HDFC Ltd. is open to buying out retail portfolios of housing finance companies (HFCs) looking to raise resources.
Most HFCs are facing a liquidity crunch with banks becoming reluctant to extend loans as the shadow banking sector fights a crisis of confidence post the debt default of IL&FS in September 2018.

SAT Fines SEBI

The Securities Appellate Tribunal (SAT) imposed a penalty of Rs. 50,000 on Securities and Exchange Board of India (SEBI), after a person aggrieved by a SEBI order convinced the tribunal that the market regulator was in the wrong.
In November 2017, SEBI'S whole-time member Madhabi Puri Buch had issued an interim order against a little-known company, Supreme Tex Mart Ltd, on charges that it sent out bulk messages to buy its shares.
The order barred the company's directors from accessing capital markets pending further investigations.
A final order in March 2019 asked these directors and the company to disgorge Rs. 18 crore to investors which, SEBI said, were ill-gotten gains.
Sanjay Gupta, one of the individuals affected by the order, petitioned SAT that he had resigned from the Supreme Tex Mart board in 2013 before the alleged lapses occurred. He claimed he was no longer a director and that he was not involved in any fraudulent activity.

Apollo Munich and HDFC ERGO Merger

HDFC Ltd. signed a definitive agreement with Apollo Munich Health Insurance to buy out the entire Apollo Hospitals Group's stake of 50.8% for Rs. 1,136 crore and another 0.4% stake held by a few employees for Rs. 10.84 crore.
Post the acquisition of shares by HDFC, Apollo Munich would be merged with the former's general insurance subsidiary — HDFC ERGO. ERGO is a subsidiary of Munich Re, which has been a joint venture partner of HDFC ERGO since 2008.
Munich Re would continue to hold 49% stake in HDFC ERGO post the merger.
The acquisition would make HDFC ERGO the second-largest private sector insurer in the combined accident and health insurance vertical, with an 8.2% market share.

Agreement Between HCL and Cricket Australia

HCL Technologies signed a multi-year deal with Cricket Australia, the national governing body for the game in that country.
As part of the deal, the firm would help deliver a digital experience to cricket fans, players, partners, employees and volunteers across Australia and around the world.
HCL Technologies would manage Cricket Australia's digital products, including Cricket Australia Live App, cricket.com.au, bigbash.com.au and community cricket applications such as MyCricket as well community.cricket.com.au.

Jun 19, 2019

Facebook Plans to Launch Libra

Facebook Inc revealed plans to launch a cryptocurrency called Libra, the latest development in its effort to expand beyond social networking and move into e-commerce and global payments.
Facebook linked with 28 partners in a Geneva-based entity called the Libra Association, which would govern its new digital coin set to launch in the first half of 2020.
Facebook also created a subsidiary called Calibra, which would offer digital wallets to save, send and spend Libras. Calibra would be connected to Facebook`s messaging platforms Messenger and WhatsApp, which already boast more than a billion users.

Bajaj Holdings Acquires Stake in Maharashtra Scooters

WMDC (Western Maharashtra Development Corporation), a Government of Maharashtra undertaking, transferred its 27% stake in Maharashtra Scooters Ltd. (MSL) to Bajaj Holdings & Investment Ltd. (BHIL) for Rs. 71.58 crore plus 18% interest from January 2006.
WMDC transferred 3,085,712 shares at a price of Rs. 232 a share compared with Rs. 151.63 which BHIL was willing to pay previously.
Upon the acquisition of 27% stake of MSL from WMDC, BHIL's holding increased to 51% in MSL and thus, MSL has become a subsidiary of BHIL with effect from June 2019.

Boeing Signs First Deal

Boeing is selling its 737 MAX planes again.
The company announced at the Paris Air Show that International Airlines Group, the parent company of British Airways and other carriers, signed a letter of intent for 200 Boeing 737 aircraft.
Boeing said that it is the first sale of the jet since the crash of an Ethiopian Airlines 737 MAX in March 2019.
Another 737 MAX crashed in Indonesia last year (2018), and the planes are now grounded amid an investigation into problematic software.
The letter of intent is subject to final agreement but is a vote of confidence in Boeing as it struggles to win back trust.
The planes would be delivered between 2023 and 2027 to airlines owned by IAG.

KSEB Signs Deal for Brahmapuram Plant

Providing a new impetus to the government's ambitious project to establish Waste-to-Energy (WtE) plants across the State, the Kerala State Electricity Board (KSEB) signed a power purchase agreement with Kochi-based GJ Eco Power Pvt. Ltd., the agency implementing the project at the Brahmapuram solid waste treatment plant.
Under the agreement, the KSEB would purchase the power generated from the 9.76-MW WtE plant at a rate of Rs. 6.17 per unit for a period of 20 years from the commercial operation date.
The company was roped in by the Kochi Corporation to implement the State's first WtE project in the public-private partnership mode.
The firm, which would be supplied with 330 tonnes per day (TPD) of municipal solid waste by the local body, is tasked with generating 47 million units (mu) of power. The proposed plant is expected to be commissioned within 18 months of the launch of its construction.

RBI Slaps Penalty on HDFC Bank

The Reserve Bank of India (RBI) imposed a Rs. 1 crore penalty on private sector lender HDFC Bank for violating know your customer (KYC) and anti-money laundering (AML) norms.
RBI had received a reference from customs' authorities regarding submission of forged bill of entries (BoEs) by certain importers to the bank for remittance of foreign currency.

Jun 18, 2019

HDFC MF to Buy ₹. 500-cr NCDs of EssHDFC MF to Buy Rs. 500-cr NCDs of Essel Group el Group

HDFC Mutual Fund has decided to buy Rs. 500 crore worth of Non-Convertible Debentures (NCDs) of the Essel Group from the debt schemes that have exposure to these securities.
The move removes uncertainty among investors, who were concerned that they might not get back their entire investments in case the Subhash Chandra-controlled group failed to sell some of its assets and repay lenders before September 2019.

Chinese banks seek $2bn from RCom

Chinese lenders, including China Development Bank, Industrial and Commercial Bank of China and Exim Bank of China, have demanded at least $2.1 billion from embattled tycoon Anil Ambani's Reliance Communications, that slid into bankruptcy earlier in 2019.
China Development Bank, with loans worth Rs 9,860 crore was the biggest creditor to the company, according to a filing made by the company to stock exchanges.
Exim Bank of China sought payment of Rs 3,360 crore, while Industrial and Commercial Bank of China claimed Rs 1,554 crore.

Sotheby's Sold to Media Titan Drahi

Sotheby's, the auction house whose shares have dropped 40% in the past year, is being sold to telecom titan Patrick Drahi for $2.7 billion.
Investors will receive $57 in cash per share of Sotheby's common stock under terms of the agreement.
The offer represents a 61% premium to the closing price on 14 June 2019.
Sotheby's is returning to private ownership after 31 years as a public company, the last few spent battling expenses and margins even as masterpieces and contemporary works soared in value.
Drahi, 55, is the president of Altice Europe NV, a publicly traded telecommunications business with more than 30 million customers.
An avid art collector, he's worth $8.6 billion, according to the Bloomberg Billionaires Index.
Drahi's takeover would mean that French citizens will own the world's two major auction houses.
The family of Francois Pinault, founder of Paris-based luxury goods giant Kering SA, owns Christie's after first buying a 29.1% stake in the company from British billionaire Joe Lewis two decades ago.

Lenders to Take Jet to NCLT

Lenders to Jet Airways (India) Ltd decided to start bankruptcy proceedings against the grounded airline, complicating hopes of a recovery.
The consortium of lenders, led by the State Bank of India (SBI), chose to refer Jet Airways to the National Company Law Tribunal (NCLT).
A meeting of lenders was held to consider the way forward in respect of Jet Airways. After due deliberations, lenders have decided to seek resolution under IBC (Insolvency and Bankruptcy Code, 2016) since only a conditional bid was received and requirement of the investor for Sebi (Securities and Exchange Board) exemptions and resolution of all creditors is possible under IBC.
The pilots' union of Jet Airways, National Aviator's Guild, also plans to file a plea against the grounded airline at NCLT for non-payment of salaries and not providing a provision for gratuity payment to its staff.
Aviation analysts said it is unlikely that the lenders will be able to recover a substantial portion of their dues by referring the airline to NCLT.

Plan to Amend Banking Laws

The government is understood to be considering amending banking laws to check loan evergreening (helping borrowers pay old dues by handing out new loans).
New norms would likely require banks to report any default beyond a week to the company affairs ministry if the company is unlisted and to Sebi, if it is listed.
Such timely information sharing, it is believed, will prevent cascading damage when a company faces financial crunch and is on the verge of default.
Currently, while firms are required to immediately report default on bonds to Sebi, they are not required to do so for bank loans, which account for bulk of credit in the economy.
New reporting norms may also mandate ratings agencies to look at short-term instruments such as commercial paper more closely to prevent mismatch between short-term and long-term ratings.
The picture of the financial health of a borrower becomes fuzzy when its commercial paper often gets top rating even when its long-term rating is much lower.

L&T demands 3 seats on Mindtree's board

Engineering giant L&T has written to Mindtree demanding three seats on its board as the hostile acquirer makes the final push to check into the mid-tier IT services company. L&T, which has emerged as the largest shareholder with a 30% stake, has sought board seats for its independent directors.
L&T can only appoint independent directors as long it isn't categorised as promoter.
As the takeover stand-off escalates, L&T is also likely to seek promoter status soon after the open offer to public shareholders ends by June end.
In March 2019, L&T had bought 20% stake in Mindtree from Coffee Day founder V G Siddhartha.
The company later increased its holding by another 10% through open market purchases. Its open offer to buy an additional 31% stake from Mindtree public shareholders, at Rs 980 per share, is under way.
The Mumbai based conglomerate's plan is to have a maximum holding of 66% in Mindtree.
L&T is also likely to oppose Mindtree's hefty special dividend in the upcoming AGM as it feels that the company needs to preserve cash even though it would be the largest beneficiary of such a payout.
Mindtree's board had recommended a Rs 443-crore dividend bonanza, translating into Rs 27 per share, to celebrate the company's twin achievements of exceeding $1 billion in terms of revenues and its 20th anniversary.
L&T, with its 30% stake in Mindtree, will get over Rs 100 crore as special dividend.

Piramal Sells Stake in Shriram Transport

Ajay Piramal-controlled Piramal Enterprises Ltd sold its entire stake of about 10% stake in commercial vehicle financier Shriram Transport Finance Co. Ltd, citing a "broader strategy" to leverage opportunities for growth in its financial services business.
As of March 31, Piramal held 22.6 million shares in Shriram Transport, which specializes in financing second-hand trucks, representing a 9.96% stake. The stake sale will fetch Piramal approximately Rs. 2,300 crore, based on the closing price of the stock.
Piramal invested in the Shriram Group to gain entry into the retail financial business, having initially focused on corporate debt and equity financing for realty and infrastructure projects.
Piramal has been working on exiting its investment in the Shriram Group for a few months now.

Govt Plans Co to Screen and Rate Borrowers

The government is considering a proposal on creating a special purpose vehicle (SPV) similar to the Goods and Services Tax Network (GSTN) to monitor and screen commercial borrowers.
The SPV would be vested with a giant database collated from information available with all public sector banks. The database would be used to develop a dynamic rating model to monitor borrowers.
The proposal is said to be part of a set of initiatives the government is planning in its first hundred days in office.
GSTN is a non-profit, non-government, private limited company in which the central government holds 24.5% equity.
States and the empowered committee of state finance ministers together hold another 24.5% and the rest 51% is owned by non-government financial institutions.
It is tasked with operating the complex state and central tax systems on a single platform using technology.
The proposed ratings model would be dynamic and capable of monitoring borrowers continuously, from the time of application until full repayment.
It will use data analytics to track related party transactions and any attempts to siphon money out of companies, it is learnt.
Public sector banks that have a common majority owner—the government—is expected to ease consolidation of data. Artificial intelligence and machine learning will be used for analytics.

Govt Rules out Bringing Fuel under GST

Turning down the demands of the aviation sector and oil firms, the government has ruled out including petroleum products within the ambit of GST.
This, despite the fact that even the oil ministry has backed the sector's demand. The Centre is of the view that states may not agree to a change in norms as they will be keen to retain flexibility in taxing a few items that they have control over, such as stamp duty on realty, and excise on alcohol and petroleum products.
Besides, politically too, the Centre is not keen to bring products like ATF under GST as it believes that taxes on the fuel are passed on to consumers.

Reliance Capital Sells 10.75% Stake in Reliance Nippon Life

In two successive offers, Reliance Capital has sold 10.75% of its shareholding in Reliance Nippon Life Asset Management Ltd , aggregating over Rs. 1,450 crore and has achieved the minimum public shareholding of 25% in RNAM by reducing the promoter stake.
The entire RNAM stake monetization proceeds of Rs. 6,000 crore, to be received from the offer for sale and the already announced transaction with Nippon Life Insurance Company of Japan, will be utilized to reduce Reliance Capital's outstanding debt.
Based on the above, and other asset monetization deals presently underway, Reliance Capital expects to reduce its debt by at least Rs. 12,000 crore, or 70% in the current financial year.

Fitch Cuts India's FY20 GDP Growth Forecast

Global ratings agency Fitch Ratings cut India's GDP growth forecast for FY20 to 6.6% from 6.8% earlier as manufacturing and agriculture sectors showed signs of slowing down over the past year.
In March, the ratings agency had lowered the growth forecast to 6.8% from its previous estimate of 7% on weaker than expected momentum in the economy. However, it retained the FY21 estimate at 7.1%.
India's economy grew at a five-year low of 6.8% in 2018-19.

Maharashtra's Economic Survey

Though drought swept through Maharashtra in 2018, leading to a major dip in farm output, the state's economic growth rate for 2018-19 is set to remain unchanged at 7.5%, the figure for 2017-18, according to the state's economic survey. By contrast, the national growth rate is pegged at a lower 6.8% for 2018-19.
The survey shows although growth rate in the agricultural and industrial sectors is set to decline compared to 2017-18, in the services sector it is expected to rise from 8.1% to 9.2%. Given the much higher share of the services sector in the computation of the value of economic activity in the state, this rise appears to have restored the growth rate.
The survey showed a decline in estimated growth rate in the agricultural sector from 3.1% in 2017-18 to 0.4% in 2018-19 as a result of drought. While crop output showed growth of (-)8% in 2018-19, the survey forecast a rise in growth rate of several other segments. Growth rate in the livestock segment is expected to rise sharply from 8.5% in 2017-18 to 13.9%, while that in forestry and logging is set to double from 8.1% to 16.4%. Even the fisheries segment is expected to see a major rise from (-)11.7% to 3.4%.
Growth rate in the industrial sector is set to fall from 7.6% to 6.9%. The manufacturing sector is set to see a decline from 7.7% to 7.1%, while that in electricity and other utilities is estimated to decline from 6.5% to 4.3%. Mining and quarrying are expected to see a big dip from 7.2% to 2.9%
But growth rate in the construction sector is set to improve significantly from 7.9% to 9.9%. Within the services sector, the financial, real estate and professional services segment is set to see a rise in growth rate from 7.6% to 9.4% while the trade, hotels and communications segment is expected to improve its growth from 7.6% to 9.4%.
The state's financial position is still a concern, with debt estimated at Rs 4.14 lakh crore for 2018-19 compared to Rs 4 lakh crore in 2017-18. But the state says this is 15.6% of GSDP, well within the fiscal limit of 22.3% laid down by finance commission.
Data has shown employment of 73.50 lakh in 2018 compared to 67.50 lakh in 2017. Of total employment reported, 31.1% was in public sector. On government jobs, sanctioned posts in July 2018 were 7.17 lakh, of which 1.91 lakh had been filled.

Facebook to Unveil New Cryptocurrency

Facebook is set to unveil a bid to bring cryptocurrency payments into the mainstream, reportedly with the endorsement of governments and financial giants.
The world's biggest social network is expected to outline details of a virtual currency launching in 2020 that it hopes will avoid the rollercoaster volatility of "blockchain" technologies such as bitcoin.
Facebook is setting up a consortium called "Libra" which, according to the Wall Street Journal, has been joined by more than a dozen companies including Visa, Mastercard, PayPal and Uber.

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