General Awareness

BUSINESS AND ECONOMY - October 2018

Oct 2018

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.

Jul 23, 2019

SAIL Enters into MoU with Government e-Markeplace

Steel Authority of India Limited (SAIL) has signed a Memorandum of Understanding (MoU) with Government e-Marketplace (GeM), Department of Commerce, Ministry of Commerce and Industry, Government of India for procurement of goods and services on GeM portal.

IL&FS Group Unit Defaults on NCD Interest Payment

IL&FS Transportation Networks, a group company of the troubled Infrastructure Leasing & Financial Services Ltd (IL&FS) group, has defaulted on payments of Rs. 26.02 crore due on interest of non-convertible debentures (NCDs) because of insufficient funds.
The interest due and payable on July 21, 2019 was not paid to the debenture holders due to insufficient funds.
Meanwhile, IL&FS said it has received approval from the National Company Law Appellate Tribunal for the proposed sale of its balance 51% stake in seven wind energy subsidiaries to Orix Corp. of Japan.
The wind energy units are held under IL&FS Wind Energy Ltd.

Microsoft to Pay $25 mn Fine to Settle US anti-bribery Charges

Microsoft Corp. agreed on Monday to pay about $25.3 million, including a criminal fine, to settle US charges it made improper payments that were used to bribe government officials in Hungary and other countries.
The US department of justice said Microsoft Hungary will pay the $8.75 million criminal fine, as part of a three-year non-prosecution agreement in which it "admits, accepts and acknowledges" responsibility for employees' misconduct.
Microsoft also agreed to pay nearly $16.6 million to settle related civil charges by the US Securities and Exchange Commission (SEC) over its activities in Hungary, Saudi Arabia, Thailand and Turkey, without admitting wrongdoing.
Both settlements resolved charges that Microsoft violated the federal Foreign Corrupt Practices Act, after the Redmond, Washington-based company failed to properly account for the improper payments in its records.
Prosecutors said the Hungarian scheme generated at least $14.6 million of improper profit for Microsoft between 2013 and 2015, in connection with the sale of software licenses to Hungarian government agencies.
Executives and employees at Microsoft Hungary, which is based in Budapest, were accused of falsely telling Microsoft that steep discounts were needed to complete the transactions.

JPMorgan Shuts One Indian NBFC

US-based financial services firm JPMorgan is shutting its NBFC JPMorgan Advisors India and has surrendered its licence.
The RBI said 45 firms have surrendered their NBFC licences so far in 2019. JPMorgan Advisors India was one of them, the list showed.
To be sure, JPMorgan is not exiting its NBFC business since it also operates JPMorgan Securities India Pvt. Ltd.

Interministerial Panel Favours Banning Private Cryptocurrencies

A government panel on virtual currencies has recommended that the government enact a law to ban private cryptocurrencies such as bitcoin in India and impose fines of up to Rs.50 crore, along with imprisonment of up to 10 years for dealing in such currencies.
The high-level interministerial committee, headed by finance secretary Subhash Chandra Garg, has proposed a draft law, "Banning of Crypto-currency & Regulation of Official Digital Currency Bill, 2019".
Central banks cannot regulate the money supply in the economy if non-official virtual currencies are widely used, as these are decentralized.
This restricts their ability to stabilize the economy. In addition, cross-border transactions with non-official virtual currencies can violate limits on the inflow and outflow of money, particularly as such transactions happen irreversibly.
This compromises another important lever of monetary policy.

BHEL Expands Footprint in Nuclear Business

Bharat Heavy Electricals Limited (BHEL) has secured a prestigious order for erection work of reactor side equipment of 2x1000 MWe (Units 3 and 4) Kudankulam Nuclear Power Project in Tamil Nadu, being set up under foreign cooperation (Russia).
Valued at Rs 486 crore, the order has been placed by Nuclear Power Corporation of India Ltd (NPCIL).
This is the first time BHEL is lending its capabilities for erection of reactor side equipment manufactured by another supplier.

Antitrust Review of 'Big Four' Auditing Firms

The government wants the country's antitrust body to assess whether the so-called "Big Four" auditing firms and their affiliates are hurting competition in any manner.
The Competition Commission of India (CCI) needs to conduct a survey or an investigation to assess whether the Big Four that include PwC, EY, Deloitte and KPMG are abusing their dominant position in the Indian audit market.
India's ministry of corporate affairs, which holds that view, is yet to send any formal request to the CCI to probe the matter.
The Big Four do auditing work for almost 60% of the top 500 companies that trade on India's National Stock Exchange (NSE), according to corporate data tracker NSE Infobase.
The deliberations around an antitrust review come at a time when the Big Four are facing increased scrutiny in India.
In 2018, all the local units of PwC were barred from auditing any listed companies for two years in India after a probe into a decade-old accounting fraud.
An EY firm was also barred in June 2019 from conducting certain statutory audit assignments until April 2020.

Jul 22, 2019

Kohli to Launch Innerwear Range Under 'one8'

Cricket captain Virat Kohli is set launch a men's innerwear range under his 'one8' brand in association with Artimas Fashions, a subsidiary of Lux Industries.
Kohli is the highest-paid sports celebrity in the country.
He has a Rs.110-crore deal with German sports and athleisure brand Puma for one8-branded apparel, footwear and accessories.

World Bank to Support AP with over $1 billion

The World Bank, which has dropped a loan proposal for Amaravati project, said it continues to support Andhra Pradesh with over a billion USD programme that covers health, agriculture, energy and disaster management sectors.
This includes a new 328 million USD support to the state's health sector, signed with the Andhra Pradesh government on June 27, 2019.7.22.
The World Bank's statement comes in the backdrop of its dropping a 300 million USD loan proposal for the Amaravati Sustainable Infrastructure and Institutional Development Project.
The World Bank's Board of Executive Directors has been informed that the proposed project is no longer under preparation following the government's decision.

Xiaomi May Discontinue Poco Brand

Xiaomi may well be looking at killing its sub-brand Poco, say analysts, with one of the top executives responsible for its development quitting amid the Chinese handset maker's renewed push on the mid-to-premium price segment through another subbrand,
Redmi. This price segment was previously catered through the Poco sub-brand.
Poco was launched to give highend chosen few specs at mid-range prices, with clear compromises on design language.
It was launched as an upgrade option for large Xiaomi base without breaking bank required to buy a flagship phone. It saw a mixed response
But now, with this aggressive pricing of K series by Xiaomi with its absolute flagship specs, hardware, and design, the reason for the existence of Poco as a brand is in doubt.

GST Council to decide on tax cut on EVs

The GST Council, chaired by finance minister Nirmala Sitharaman, will meet on July 25, 2019 and decide on lowering tax rates for electric vehicles.
The 36th meeting of the Council, which will happen through video conferencing, is also likely to decide the valuation of goods and services in solar power generating systems and wind turbine projects for the purposes of levying GST.
The Council, which has state finance ministers as members, in its meeting last month, had referred the issue relating to GST concessions on electric vehicle and chargers and hiring of e-vehicles, to an officers committee.
The recommendations of the committee is likely to be placed before the Council on July 25, 2019.7.22.
To push domestic manufacturing of e-vehicles, the Centre proposed to the Council to slash GST rates to 5% from 12%. GST rate for petrol and diesel cars and hybrid vehicles is already at the highest bracket of 28% plus cess.
The Council will also consider tax structure for solar power projects. The Delhi high court had in May asked the GST council to take a relook at the taxation structure following industry petition.
The government had earlier this year said that for the purpose of taxing solar power projects, 70% of contract value would be treated as goods—taxable at 5%, and balance 30% as services—taxable at 18%.
Further, the Council may also look at taxation of lotteries.

Suzlon gets bad loan tag from Union Bank of India

State-run Union Bank of India has tagged Suzlon Energy Ltd as a bad loan and more banks are expected to follow suit as the stressed wind turbine maker has struggled to repay its lenders.
In the quarter ended June 30, Union Bank has updated the status of the account as non-performing in the central bank's Central Repository of Information on Large Credits database.
Under the Reserve Bank of India's asset classification guidelines, banks have to set aside 15% of their outstanding loans to a non-performing account as provisions.
To be sure, banks have to set aside money for every loan they make, but the quantum is just 0.4% till it remains standard.
Loans are classified into three major categories: standard, substandard and doubtful, depending on their repayment trends.
Emails sent to Suzlon, Union Bank of India and State Bank of India, the leader of the lenders' consortium to Suzlon, remained unanswered till the time of going to press.
The Pune-based company, led by founder Tulsi Tanti, reported a total debt of Rs. 11,141 crore as of 31 March, 2019.
This isn't the first time Suzlon has defaulted on bonds. In 2012, it defaulted on payments of $221 billion, forcing the firm into corporate debt restructuring.

Jul 21, 2019

YouTube to pay huge fine for violating kids' privacy laws

Google is expected to pay a multimillion dollar penalty from the Federal Trade Commission over its handling of kids' information on its video site YouTube.
The FTC was reportedly investigating YouTube for violating a federal law designed to protect kids and their data online. Concerns have been raised about how YouTube collects minors' information and also about comments from paedophiles that have plagued the site.
YouTube reached a settlement with the FTC resolving allegations that the company violated rules about collecting data on and advertising to children.
The settlement resolves a probe into whether the Google video service broke the Children's Online Privacy Protection Act, which makes it illegal to collect information on minors and disclose it to others without parental permission.
A group of activists last year asked the FTC to look into the matter.
YouTube is considering more changes to how it handles content for kids, according to a different person familiar with the company's discussions
One remedy the FTC has discussed is limiting advertising on videos aimed at kids. You-Tube introduced a kids app in 2015, but older children tend to watch the main site, according to a report earlier this year.

Jul 20, 2019

Jio pips Airtel to Become No. 2 by User Base

India's youngest and only profitable telecom operator Reliance Jio Infocomm Ltd has overtaken rival Bharti Airtel to become the second largest operator in terms of subscribers to its mobile phone services, according to data from the Telecom Regulatory Authority of India (Trai).
Jio, which entered the sector in September 2016, had 322.98 million users and 27.8% subscriber market share, against Airtel's 320.38 million users and 27.6% market share as of end-May.
To be sure, the subscriber numbers include active as well as inactive SIMs. The telecom regulator counts each SIM as a user although there are overlaps.
Vodafone Idea, the company born out of a merger between Vodafone India and Idea Cellular, continues to retain the top position with 387.55 million users and a 33.36% subscriber market share.
There is, however, a silver lining for Airtel. It held the maximum proportion (99.86%) of active wireless subscribers as against its total wireless subscribers in May.

L&T Finance to Exit Structured Finance Biz

L &T Finance Holding said the company was looking to exit from its Rs. 8,660 crore structured finance and debt capital market (DCM) business.
The decision to run down the business comes after in the wake of a mark-to-market hit on account of its exposure to Dewan Housing Finance Ltd. L&T Finance has classified its structured finance and debt capital market as "defocused" book this quarter, while it turns its focuses on infrastructure finance and infra debt fund.
The firm has exited from its supply chain finance business. Announcing its first quarter results, the company said its exposure to a specific housing finance company, part of its DCM business, saw a mark down of 50% on overall exposure of Rs. 567 crore.
It had to take the MTM hit after ratings of the housing finance company was downgraded.

AB InBev to Sell Aussie Brewer CUB to Asahi

The world's leading brewer, debt-laden AB InBev is selling off its Carlton & United Breweries (CUB) unit in Australia for 16 billion Australian dollars ($11.3 billion) following a failed IPO.
It was selling CUB to Japanese group Asahi Holdings in a deal that would also see Asahi acquire Australian distribution rights for AB Inbev brands.
AB InBev, a Belgian-Brazilian behemoth that owns brands such as Stella Artois and Budweiser, is saddled with more than $100 billion in debt, part of it stemming from its 2016 acquisition of SABMiller.

Only Digital Payment Allowed on National Highway Tolls

Beginning December 1, 2019, commuters will need to use FASTag to pay toll across national highways in the country, or pay double if they use cash, according to a letter sent by the Union road transport and highways ministry to the National Highway Authority of India (NHAI).
FASTag, a radio frequency identification (RFID) sticker typically fixed to a vehicle's windscreen, lets toll booths wirelessly and automatically deduct the fee, thereby not requiring a vehicle to stop.
The tags were made mandatory for all new cars sold after December 1, 2017, as a measure to encourage digital payments and free up congestion at toll booths.

Europe's LGT to Invest in Kauvery Hosp

The world's largest family owned asset manager LGT Group, owned by the Princely House of Liechtenstein, is striking the first direct investment in India by picking up a 10% stake in south-based Kauvery Hospitals for Rs 150 crore.
Kauvery operates eight hospitals with 1,200-1,300 beds in five locations across Tamil Nadu and seeks to expand into neighbouring states like Karnataka as well, with plans for 2,500 beds over the coming years. But the primary focus of the hospital chain will remain the Tamil Nadu market.
The hospital company is already emerging as one of the largest chains in the state with revenues of over Rs 500 crore. It was set up by two doctors — S Chandrakumar and Manivannan Selvaraj — back in 1999.
In 2017, serial healthcare services entrepreneur G S K Velu bought a large stake in the company through his family office GSK Ventures. He will continue to hold over 30% after the stake sale to LGT.
LGT manages assets totalling $140 billion in private banking and asset management industry.
The direct investment by the princely family of the small European state, which backs several high-profile global institutional investors, is significant for Indian private markets.

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