General Awareness

BUSINESS AND ECONOMY - October 2018

Oct 2018

Jan 27, 2020

AMC Marks Down Investment in Vodafone Idea

Franklin Templeton Mutual Fund, which marked down its investment in the securities issued by Vodafone Idea to zero, said that its board has approved the creation of segregated portfolios (or side pockets) to hold these securities in six of its schemes. The move would help prevent the distressed assets from damaging the returns generated from more liquid and better-performing assets. The board of trustees of Franklin Templeton MF approved the creation of segregated portfolios in six schemes—Franklin India Low Duration Fund, Franklin India Dynamic Accrual Fund, Franklin India Credit Risk Fund, Franklin India Short Term Income Plan, Franklin India Ultra Short Bond Fund and Franklin India Income Opportunities Fund. With effect from Jan. 24, various securities issued by Vodafone Idea in the schemes will be segregated from the total portfolio. The decision has been taken in order to protect the value for existing unitholders in these schemes, it added. On January 16, Franklin Templeton, which had an exposure of over Rs. 2,000 crore to Voda Idea, had marked down its investment in the securities issued by the telecom player to zero.

Govt. Eyes Unspent Funds to Tread Fiscal Tightrope

Money allocated for government schemes in the 2019-20 financial year that is lying unspent may help in keeping the Union government's fiscal math in order ahead of the upcoming budget despite the current economic slowdown and an expected fall in revenue receipts, according to two people aware of the matter.
As on November 2019, the total unspent money was Rs. 9,66,292 crore, or 34.7% of the Rs. 27,86,349 crore budgeted for 2019-20, according to official data of the Controller General of Accounts (CGA). Total unspent money during the corresponding period in 2018-19 was Rs. 7,83,572 crore, or 33.9% of the budgeted expenditure of Rs. 23,11,422 crore.
While a major portion of allocated money is often spent towards the end of the fiscal, the Union finance ministry has this year tightened its cap on rush expenditure. The finance ministry issued an instruction to all ministries not to indulge in the last minute spending considering the fiscal position of the government in the current financial year (2020-21).
According to the order, ministries cannot spend more than 15% of the budget estimate (BE) in two months (i.e. January and February 2020) and 10% of BE in the last month (March 2020) with some exemptions.

Brexit: Zero Tariff, Zero Quota Aim for Trade Talks

According to Brexit Secretary Stephen Barclay, the government is aiming to secure a "zero tariff, zero quota" free trade deal with the EU.
Mr. Barclay added the government's objectives for the trade talks would be published after Brexit on 31 January, 2020.
Mr. Barclay's comments came after the US treasury secretary said that his country wants to agree to a post-Brexit trade deal with the UK this year.
After Brexit happens at 23:00 GMT on 31-01-2020, the UK will be free to negotiate and sign new trade deals with countries with no existing EU deals - like the US.
The UK then enters into an agreed transition period with the EU, which lasts until 31 December 2020. During this time the UK will aim to negotiate a free trade deal with the EU to ensure that UK goods are not subject to tariffs and other trade barriers.

DCIL to Sell Away its Building in Vizag

The building constructed by the Dredging Corporation of India Limited (DCIL) in the Seethammadhara Housing Board Colony to run its corporate office has been put up for sale.
The DCIL, in which a consortium of four major ports led by Visakhapatnam Port Trust (VPT) acquired 73.47% equity in 2019 by paying little over Rs. 1,000 crore, has entrusted the job of finding a buyer through online sale to Metal Scrap Trading Corporation (MSTC), according to its Chairman Rinkesh Roy.
Mr. Roy, the Chairman of Paradip Port Trust, said that they were expecting a good response to sell away the five plus two basement building constructed with green technology.

Dream11 Eyes $500 mn from Tiger-led Funding Round

New York-based Tiger Global Management, one of the most active start-up investors in India, is likely to lead a $500 million funding round in fantasy gaming platform Dream11.
Tiger could spend as much as $200 million to buy new shares as well as shares from Dream11's early investors Kalaari Capital, Think Investment and private equity firm Multiples at a valuation of $2.5 billion. With this investment, Dream11 will be worth more than double its $1.1 billion valuation in April 2019. The company is working with investment bank Credit Suisse for the fundraising.
Founded by Harsh Jain and Bhavit Sheth in 2012, Dream11 offers games such as cricket, kabaddi and football, where users can win money from a reward pool, depending on the players they pick and the actual outcome of the game. Its official partners include the International Cricket Council (ICC), the Indian Premier League (IPL) and the National Basketball Association.
Dream11 also aims to build out its platform as a full-fledged sports platform selling merchandise. It has emerged as one of the fastest growing tech startups in India, driven by a lack of competition in the space, a large user base and avid following of sports, especially cricket.

Jan 26, 2020

Tata Motors Launches Altroz Premium Hatchback

In a bid to shift the focus away from price increase brought about by the BS-6 transition, Tata Motors is betting on highlighting the value on offering safety and technology features in its new BS-6 compliant models.
Tata Motors forayed into the premium hatchback segment with the launch of the Altroz at an introductory price starting from Rs. 5.29 lakh. Along with the Altroz, Tata Motors also launched the BS-6 compliant and upgraded versions of its Tigor, Nexon and Tiago models. The company decided that it was not just enough to introduce BS-6 compliant vehicles, but to offer superior value by offering better features.

WEF Unveils New Internet Security Principles to Help Protect up to 1 bn Users

The World Economic Forum announced new internet security principles, developed by a group of leading ISPs and multilateral organisations, to help protect up to one billion users.
Unveiling the new initiative here at its 50th annual meeting, the WEF said BT, Deutsche Telekom, Du Telecom, Europol, Global Cyber Alliance, Internet Society, Korea Telecom, Proximus, Saudi Telcom, Singtel, Telstra and ITU endorse these new principles combatting high-volume cyberattacks, protecting up to one billion consumers in 180 countries.
While certain cyberattacks focus on specific organisations, the majority target the largest number of internet users possible. Such attacks are often relatively easy for cybercriminals to undertake and can cause serious harm.

RBI Raises Short-Term FPI Debt Investment Limit

In a move that could lead to higher foreign inflows, the Reserve Bank of India (RBI) has hiked the short-term investments by foreign portfolio investors (FPIs) from 20 per cent to 30 per cent of the total FPI investment in Central government securities (including Treasury Bills) or state development loans.
In another measure aimed at giving a leg-up to bankruptcy proceedings, the central bank has exempted FPI debt investments in corporates undergoing insolvency resolution plan.
The central bank has also increased the FPI in corporate bonds from 20 per cent to 30 per cent. While the RBI move is aimed at arresting the outflow of FPI money from the debt market, analysts said short-term is hot money which can exit at a faster rate.

RBI Buys Rs. 10,000 Crore Bonds, Sells Rs. 2,950 Crore Debt

In the fourth special open market operation (OMO) auctions, the Reserve Bank of India bought Rs 10,000 crore worth of long-term securities and sold Rs. 2,950 crore worth of short-term government bonds.
The RBI had said it will simultaneously purchase and sell government securities under open market operations (OMO) of Rs. 10,000 crore each.
In the OMO purchase auction, the RBI received bids worth Rs. 26,887 crore for two types of securities -- 7.32 per cent-2024 and 6.45 per cent-2029 -- but accepted only Rs. 10,000 crore of bids.
For 7.32 per cent-2024, it got 157 bids and accepted 40 bids. The RBI got 147 bids for 6.45 per cent-2029 bonds but accepted 105 bids.

Jan 25, 2020

Temasek, EQT in $500 m Green Energy Venture

European alternative asset manager EQT and Singapore's state investment firm Temasek Holdings Pte announced that they have jointly set up O2 Power, a $500-million renewable energy platform in India. O2 Power will target more than four gigawatts of installed capacity across solar and wind projects, comprising both greenfield projects, as well as mergers and acquisitions. This would be EQT Infrastructure's first investment in India. EQT is investing in the platform through its EQT Infrastructure IV fund. With this transaction, EQT Infrastructure IV is expected to be 60-65% invested.

OIL Files Plea in Apex Court after Rs. 48,000-cr. Demand from DoT

State-owned Oil India Ltd (OIL) filed a clarificatory/modificatory petition in the Supreme Court against a Rs. 48,000 crore demand raised by the telecom department on cumulative revenue of Rs. 1.47 crore it had earned on an NLD telecom licence.
Following the October 24, 2019 Supreme Court ruling that non-telecom revenues of telecom firms such as Bharti Airtel and Vodafone Idea should be included for considering payments of government dues, the telecom department asked OIL to pay Rs. 48,000 crore in principal dues together with interest and penalty. The dues sought are double the net worth of OIL.

Shriram Capital Halts 3-way Merger

Shriram Capital Ltd. held off a plan to merge with its shadow lending arms after the Reserve Bank of India requested the group to cut its stake in its insurance business.
The unlisted Shriram Capital, which counts billionaire Ajay Piramal and private equity firm TPG Capital as investors, was planning to combine with its publicly traded units Shriram Transport Finance Co. and Shriram City Union Finance Ltd. The proposal would have effectively turned the merged entity into a shadow lender along with a 77% stake in life and general ventures.
The central bank was concerned because insurance business isn't typically the remit of a non-bank financier. The banking regulator recommended non-bank financiers including Shriram to lower their holdings in insurance business to 50% or below.
The RBI's direction is part of heightened scrutiny over the country's troubled shadow lending sector after a major infrastructure financier defaulted on series of debt repayments, leading to severe cash crunch and sharp jump in bad loans.

Jan 24, 2020

Vadilal in Talks to Sell Stake

The feuding promoters of Vadilal Industries Ltd are in advanced talks to sell their entire stake in the ice cream maker and its domestic distribution business to a combine of Arpwood Partners and PAG.
It will be an all-cash deal that would involve Vadilal's promoters exiting both their companies completely. The transaction is likely to value the business at around Rs. 1,000 crore. Investment bank Lincoln International is advising Vadilal on the transaction.

Bank of Baroda, Bank of India and Canara Bank Get New MD and CEOs

The government appointed heads of three large public sector banks - Bank of Baroda, Bank of India and Canara bank for a period of three years.
The Appointments Committee of the Cabinet (ACC) appointed Sanjiv Chadha as the Managing Director and Chief Executive of Bank of Baroda, Lingam Venkat Prabhakar as MD & CEO of Canara Bank and Atanu Kumar Das as MD & CEO of Bank of India.
Chadha was the deputy managing director at State Bank of India in charge of SBI Capital Markets. He replaced P.S. Jayakumar whose term came to end after his one-year extension ended in October 2019.
Prabhakar was the executive director of Punjab National Bank and he will be replacing R. A. Sankara Narayanan who will retire end of this month.
Das was the ED at Bank of India who will be promoted to the post of MD& CEO in the same bank following its vacancy since July 2019.

Offer Enable and Disable Options in Cards

The Reserve Bank of India (RBI) has asked issuers of credit and debit cards as well as those of non-bank prepaid payment instrument to provide the option of disabling and enabling cards, a move aimed at customer convenience.
According to the banking regulator, for existing cards, the issuers may take a decision, based on their risk perception, whether to disable the card not present (domestic and international) transactions, card present (international) transactions and contactless transaction rights.
Furthermore, the RBI said that customers should have the facility to switch on or off and set or modify transaction limits for all types of transactions.

New Demat Accounts Climb to 10-year High

Retail investors piled into the Indian stock market in a year that saw soaring equities and a slowing economy, driving the number of new dematerialized accounts opened in 2019 to a 10-year high.
According to data from the Securities and Exchange Board of India (SEBI), both new demat accounts, and the total number of such accounts hit a 10-year high in 2019. While new demat account openings rose 12.5% from the previous year to touch 4.5 million, total demat accounts at the end of 2019 stood at 39.3 million, up from 34.8 million in 2018.
A demat account is opened by an investor with a depository participant to invest in securities such as stocks and bonds. The securities are held in digital format.

Jan 23, 2020

Bharti Airtel Gets DoT Nod to Raise FDI Limit

Bharti Airtel Ltd has received approval from the telecom department to increase foreign direct investment in the company to 100%, allowing the telecom operator to raise more capital if it so requires.
The Reserve Bank of India has already permitted overseas portfolio investors to invest as much as 74% in Bharti Airtel.
The Indian government's approval will allow Singapore Telecommunications Ltd or Singtel, which owns a 35% stake in Bharti Airtel, to increase its stake in the Indian company.
It would also permit the Indian telecom operator to raise more funds from other foreign investors.

Big Rural Push Likely in Budget

As per reports, Union Budget 2020-21 is expected to focus on the transformation of rural India with a nearly 15% jump in fund allocation to boost the village economy and raise incomes, particularly of small and marginal farmers.
Transformation of the rural economy is a must for two reasons; to reverse the current economic slowdown, which is hit mainly due to weak demand, and to make India a $5 trillion economy by 2025. Both the objectives require special focus on agriculture and rural economy, hence greater fund allocation.
India's gross domestic product (GDP) grew 4.5% in the second quarter of the current financial year, the lowest since March 2013. According to the government's first advanced estimates, India's GDP is expected to grow 5% in 2019-20.

Danfoss Invests in Pune Unit

Denmark-headquartered Danfoss has invested 15 million euros to set up a facility in Pune for manufacturing mobile hydraulics for the construction, agriculture and other off-highway vehicle markets.
The company's Indian subsidiary Danfoss Power Solutions will be manufacturing products like electronic controls, pumps and valves, motors, sensors and transmitters, among others in this facility.
The company aims to invest on increasing its product offerings in India within the next 24 months and remains firm on its mission to ensure a minimum of 50 per cent localisation level for sourcing and manufacturing in their future product lines as well.

Red Ridge Invites Global Brands to shift Base to India

With the cost of manufacturing going up in China and many international brands looking out for cost-efficient destinations, Red Ridge Global is sensing opportunity in India.
The Chinese firm, started by Indian-origin founder Vickram Rana in 1998, is seeking to induce clients to shift their manufacturing base to India by offering to buy the entire production output and distribute the products across India and global markets.
With global revenues of $500 million, Red Ridge Global is one of China's largest arts, craft and learning kit suppliers having showrooms in the U.S., India, Canada, Malaysia and China. It has manufacturing and packing units in the U.S., Canada, Hong Kong, India and in Shanghai, Ningbo and Guangzhou.
In India, it operates via its 100% subsidiary Stone Sapphire India, which has established a distribution network across the country, besides manufacturing and distributing its own Sk'oodle brand of stationery products and art materials.

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