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BUSINESS AND ECONOMY - May 2018

May 2018

Feb 03, 2021

Indian Oil May form Subsidiary for Retail Assets to Unlock Value

Indian Oil Corp could create a subsidiary for its retail assets to help unlock value, the head of finance at India's largest refiner, a day after the government announced plans to monetise IOC's pipeline assets.
"Presently it is not on our radar but a possibility of any such thing to unlock the value cannot be ruled out," Sandeep Kumar Gupta said on an analysts call when asked if IOC plans to hive off its fuel retailing business into a separate company.
Finance Minister Nirmala Sitharaman in her budget for fiscal year from April, announced a plan to monetise oil and gas pipeline assets of IOC, gas utility GAIL (India) Ltd and Hindustan Petroleum Corporation Ltd.
Shares of IOC fell 27.6% in 2020, while the broader Nifty 50 index gained 14.9%.

RBI Appoints External Firm to Conduct IT Audit at HDFC Bank

The Reserve Bank of India (RBI) has appointed an external professional IT company to conduct an audit of HDFC Bank's IT Infrastructure and has sought a report from the company at the earliest, said a person familiar with the development.
This is part of the RBI's inspections to examine if the bank had improved on it digital capabilities following the recent issues, the person said.
The HDFC Bank has also informed the exchanges that the RBI move is in the backdrop of incidents of outages in the internet banking/ mobile banking/ payment utilities of the Bank over the past two years, including the recent outages in the Bank's internet banking and payment system on November 21, 2020 due to a power failure in the primary data centre.

SBI Launches 'YONO Super Saving Days' Carnival

The State Bank of India has announced the launch of its shopping carnival- 'YONO Super Saving Days' from February 4, 2021.
The carnival which will continue for four days and will be live till February 7 will offer an exclusive range of discounts and cash backs to SBI's banking and lifestyle platform YONO's users.
YONO users can avail up to 50% discounts from various merchant partners in multiple categories
Currently, over 100 e-merchants have partnered with YONO, SBI stated.
YONO has partnered with some top merchants including Amazon, OYO, Pepperfry, Samsung, and Yatra.

Feb 02, 2021

Fifteenth Finance Commission of India Submits Final Report

The Fifteenth Finance Commission of India has submitted its final report for a five-year duration. The report has been submitted with the objective of transforming the financial governance of India's municipalities.
The final report for Financial Year 2021-22 to Financial Year 2025-26 was tabled along with the Budget 2021-22.
The 15th FC has significantly raised its bar on financial governance of the India's municipalities in the interim report.
The final report also maintains these four specific agendas. The four agendas include:
The 15th FC has tried to increase the overall outlay for municipalities. It has set 29,000 crores for FY 2020-21. It has also indicated the intent to raise the share of municipalities in the total grants of local bodies from 30 per cent to 40 per cent.
Two entry conditions have been set for any municipality in India to receive FC grants namely, the publication of audited annual accounts that would help in boosting the financial accountability and notification of floor rates for property tax that would help in raising the revenue enhancement.
The 15th finance commission has adopted the approach of distinguishing between million-plus urban agglomerations and other cities.
It also recommends a common digital platform for municipal accounts, a consolidated view of municipal finances and the sectoral outlays at the state level apart from digital footprint of individual transactions at source.
These four aspects of the interim report highlight that the 15th finance commission aims to bring the logical culmination municipal finance reforms. However, the foundation for bringing about these reforms was also laid by thirteenth and fourteenth Finance Commission.

RBI Cancels Licence of Kolhapur-based Shivam Sahakari Bank

According to RBI, the licence of Maharashtra-based Shivam Sahakari Bank has been cancelled as it does not have adequate capital and earning prospects. The Commissioner for Cooperation and Registrar of Cooperative Societies, Maharashtra has also been requested to issue an order for winding up the bank and appoint a liquidator for the bank. With the cancellation of licence the process of paying the depositors as per the DICGC Act, 1961 will be set in motion.
As per the data submitted by the Kolhapur-based bank, more than 99 per cent of the depositors are fully insured by Deposit Insurance and Credit Guarantee Corporation (DICGC). The bank with its present financial position would be unable to pay its present depositors in full.

NBFCs Can Initiate Recovery under Sarfaesi for Loan Default of Rs. 20 lakh

The Union Budget for 2021-22 proposed to lower the threshold for non-banking financial companies (NBFCs) to initiate recovery proceedings under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002, (Sarfaesi Act).
Finance Minister Nirmala Sitharaman said, "To improve credit discipline while continuing to protect the interest of small borrowers, for NBFCs with a minimum asset size of ₹100 crore, the minimum loan size eligible for debt recovery under the Sarfaesi Act is proposed to be reduced from the existing level of Rs. 50 lakh to Rs. 20 lakh".
Proceedings under the Act help lenders recover their dues faster. If a lender cannot resort to the Sarfaesi Act, it needs to file cases in civil courts, which is a time-consuming process. Recovery under Sarfaesi is applicable only to secured loans, and allows lenders to auction the property mortgaged with them to recover dues from borrowers who have defaulted on loans. It is applicable to home loans, loan against property, and loan against collateral that micro small medium enterprises (MSME) avail. Under the Sarfaesi Act, a lender can take possession of the property or mortgaged assets after a 60-day notice.

No more Tax Exemption for Ulips with Annual Premium above Rs. 2.5 lakh

The maturity proceed from a life insurance company is tax-free. This is because the Clause (10D) of section 10 of the Act provides for the exemption for the sum received under a life insurance policy, including the sum allocated by way of bonus on such policy in respect of which the premium payable for any of the years during the terms of the policy does not exceed ten per cent of the actual capital sum assured.
Finance Minister Nirmala Sitharaman, while presenting the Budget 2021, has proposed capital gain on gains in Ulips and provide for the same treatment as the unit of the equity-oriented fund. This is, however, subject to the amount of premium paid in unit-linked insurance plans (Ulips).
The FM has proposed that the exemption under this clause shall not apply with respect to any ULIP issued on or after the 1st February 2021, if the amount of premium payable for any of the previous years during the term of the policy exceeds Rs. 2.5 lakh.

Feb 01, 2021

Setback for Tata Steel, Talks with SSAB to Sell Dutch Plant Collapse

Sweden's SSAB has withdrawn its initial interest for Tata Steel's Netherlands business. On November 13, Tata Steel announced that it had started discussions with SSAB for a potential acquisition of its Netherlands business, including Ijmuiden steelworks, and due diligence was expected to be completed by the end of December.
However, Tata Steel confirmed that SSAB had withdrawn its initial interest, but the company said it was committed to arriving at a strategic resolution for its European portfolio.
According to SSAB President and CEO Martin Lindqvist, after deeper analysis and discussions, it became clear that there were limited possibilities to integrate Ijmuiden into the framework of SSAB's strategies.

Nepal Awards 679 MW Lower Arun Hydropower Project to India's SJVN

The government of Nepal granted the contract for the construction of the lower Arun Hydro Project of 679 MW to Satluj Jal Vidyut Nigam- SJVN of India.
As per the Investment Board of Nepal, a meeting of IBN on January 29, 2021, made the decision of awarding the contract to an Indian company under the BOOT model- Build, Own, Operate and Transfer.
The meeting which was chaired by the Prime Minister of Nepal KP Oli decided to go for the developer company based on an assessment of the listed companies that were selected through an international bidding process.
Earlier, Power China, a Chinese Stated Owned Company, had shown interest in constructing the Hydro Power Project. The company had even signed an MoU with the Investment Board of Nepal- IBN for developing the project.

Myntra Changes Logo

Fashion e-tailer Myntra is changing its logo following a complaint by a Mumbai-based activist who alleged that the brand's signage was offensive towards women.
As per reports, Myntra is changing the logo across its website, app and packaging material.
The complaint had been lodged last month with the cyber cell in Mumbai.
Myntra is one of the largest fashion retailers in the country. During its 'End of Reason Sale' last month, it sold 11 million items while catering to more than 5 million orders.

Jan 31, 2021

Economic Survey 2020-21

Union Finance Minister Nirmala Sitharaman tabled the Economic Survey 2020-21 in the Lok Sabha.
The Economic Survey 2021 presented an estimation of the progress that the Indian economy has made in the last 12 months.
The survey highlights that the real growth rate for Financial Year 2021 was taken as -7.7% as per MoSPI while the real growth rate for Financial Year 2022 is assumed was taken as 11.5 % on the basis of estimates provided by the International Monetary Fund (IMF).
As per the survey, there was de-growth for the first time.
It highlights that the Indian economy is technically in a recession as it has witnessed a contraction in the Gross Domestic Product (GDP) for the last two consecutive quarters.
The Survey also provided a detailed analysis of India's V-shaped economic recovery after it was affected due to corona pandemic. It highlights that mega vaccination drive supports the V-shaped recovery.

Tata Steel to Continue Separation of European Activities

Tata Steel's European works council said that it expected the separation of Tata Steel's Dutch and British operations to continue, despite Swedish steel maker, SSAB's decision to halt talks over the potential acquisition of Tata's Dutch steel mill.
As per works council chair Cinta Groo, it is unclear how we will proceed, but we expect the separation to continue.
Groos said that she did not expect takeover talks with ThyssenKrupp to be revived, after the European Commission blocked a merger between Tata's European activities and the German company in 2019.

LG Electronics Announces Record Operating Profit in 2020

LG Electronics Jan. 29 announced record 2020 revenue of KRW 63.26 trillion ($56.45 billion) and record operating profit of KRW 3.20 trillion ($2.85 billion), an increase of 31.1% over 2019, and driven primarily by higher sales of OLED TVs and home appliances, among other products.
Sales in the fourth quarter, ended Dec. 31, of KRW 18.78 trillion ($16.76 billion) grew 16.9% from the same period of 2019 and were 11% higher than the previous quarter. Despite the impact of COVID-19, the quarter's operating profit of KRW 650.20 billion ($580.19 million) increased significantly by 539% compared to the fourth quarter of 2019.

Jan 30, 2021

Royal Enfield Enters Japanese Market with Flagship Store in Tokyo

Niche bike maker Royal Enfield made a foray into the Japanese market with the launch of a store in Tokyo.
The newly inaugurated store will offer a complete range of motorcycles, apparel and accessories, in addition to spares and service.
This is a fresh start for the company in what is perhaps the most iconic automobile market in Asia-Pacific region.
Royal Enfield will sell five of its widely popular models, featuring single-cylinder and twin cylinder engines, in Japan.
The company has roped in PCI Co Ltd in Japan as its distributor.

Bharti AXA General Insurance Launches 'Krishi Sakha' App

Bharti AXA General Insurance has launched Krishi Sakha App, a one-stop-shop for Indian farmers that offers them relevant information to cater to their daily farming needs.
It also provides guidance to farmers to adopt best farming practices and enhance their productivity. The farmers through this app will also have access to the Pradhan Mantri Fasal Bima Yojana (PMFBY) portal for crop insurance-related information.
Bharti AXA 'Krishi Sakha' aims at helping Indian farmers make informed decisions through customized information related to their farming requirements.
It shares relevant information about the scientific way of farming, crop cultivation, sowing, or harvesting of major crops. It guides the farmers about weather forecasting, market and crop prices and government schemes related to insurance and agriculture.

British Energy Firm Threatens to Seize India Government Assets

Cairn Energy has threatened to seize Indian government assets following a $1.2bn (£880m) award from a long-running corporate tax case.
The UK-based energy firm was awarded damages by an international tribunal in the high-profile dispute with the Indian government last month.
Cairn has started identifying assets it could seize if the Indian government does not comply with the order.
The case was filed after income tax officials seized Cairn's 10% stake in its Indian subsidiary.
In December the tribunal ruled unanimously that Delhi had violated the 2014 UK-India bilateral investment treaty.
It ordered Delhi to pay $1.2bn in damages, plus interest and costs, to compensate Cairn for the shares as well as confiscated dividends.

Airtel Says Network 5G Ready

Bharti Airtel said that its network is 5G ready now as the telco successfully demonstrated live fifth generation service—with ultra-high speeds—over a commercial network in Hyderabad city.
The move assumes significance as telcos are gearing up to leverage 5G as the next frontier for future growth to bolster revenues and provide stronger customer experience.
While the latest demonstration underscores the company's technology capabilities for rolling out of fifth generation services in future, Airtel said the actual impact of 5G experience will be available to customers, "when adequate spectrum is available and government approvals are received".

Bank of Baroda First Public Sector Bank to Look at Permanent Work-from-home Option

Bank of Baroda is the first public sector bank to consider work-from-home (WFH) as a permanent policy for a section of its employees.
BoB, which recently concluded the integration of Dena Bank and Vijaya Bank with itself, has appointed management consultancy firm McKinsey & Co to help implement a strategy for a post-Covid world.

L&T flags Off Heavy Reactors for HPCL

Larsen & Toubro Heavy Engineering flagged off two LC-Max Reactors, pitched to be the world's heaviest, ahead of schedule in the presence of MK Surana, Chairman & Managing Director, Hindustan Petroleum Corporation Ltd (HPCL).
The reactors, weighing 2,313 Metric Tons (MT) each, will enable India's first Residue Upgradation Facility (RUF) by Hindustan Petroleum Corporation's Visakh Refinery to convert the heaviest oils to high-quality BS-VI diesel, as well as increase feedstock and improve product flexibility, according to a press release from L&T.
The reactors will sail in "single piece" directly to Visakhapatnam from Larsen & Toubro's coastal manufacturing facility at Hazira in Gujarat.

Reliance Home Finance Gets Five Bids

As per reports, Kotak Special Situations Fund (KSS), Asset Reconstruction Company (India) Ltd (Arcil), Acre ARC in association with their foreign partners, non banking finance company Authum Investment and Infrastructure and Capri Global are five bidders that have submitted final binding bids to buy the debt-laden Reliance Home Finance Ltd (RHFL).
Only two of the bidders, Acre ARC and Authum have bid for the whole company. Acre has bid in association with its largest shareholder Aries-SSG Capital. The other three bidders have bid only to buy out the retail loan portfolio of the company.

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