General Awareness

BUSINESS AND ECONOMY - October 2018

Oct 2018

Jun 28, 2019

Government Revamps WPI Revision Team

The government has reconstituted the working group tasked with revising the current wholesale price index (WPI).
The terms of reference (ToR) of the working group include selecting the most appropriate base year for the preparation of a new official series of index numbers of wholesale price (WPI) and producer price index (PPI) in India.
The working group would also have to review the commodity basket of the current WPI series and suggest additions or deletions of commodities in the light of structural changes that occurred in the economy since 2011-12.
The ToRs also include a review of the existing system of price collection and suggesting improvements, along with coming up with a computational methodology to be adopted for the monthly WPI and PPI.
The current series of wholesale price index with 2011-12 as base year was introduced in May 2017.

Sale of Delhi-Agra Toll Roadway

Reliance Infrastructure said that the sale of its entire stake in the Delhi-Agra Toll Roadway to Singapore-based Cube Highways would be completed by the end of August 2019.
Reliance Infrastructure signed a binding share purchase agreement with Cube Highways for its 100 per cent stake in Delhi-Agra toll road for Rs. 3,600 crore.
Reliance Infrastructure would receive enterprise value of Rs. 3,600 crore including equity of up to Rs. 1,700 crore.
Reliance Infrastructure would utilise 100 per cent of proceeds only for debt reduction.

Govt. to Revive Air India Disinvestment Plan

The government will go ahead with the disinvestment process of Air India.
In a meeting, the Cabinet Committee on Economic Affairs had in-principle approved the consideration for strategic disinvestment of Air India & its five subsidiaries.
An Air India Specific Alternative Mechanism (AISAM) was constituted by CCEA for this.
In an AISAM meeting held in March 2018, it was decided that due to issues like volatile crude oil prices and adverse fluctuations in exchange rates, the atmosphere was not conducive for the disinvestment.
However, continued support from the government had resulted in improvement of financial & operational performance of Air India.
As per the recommendations of AISAM, the government would now go ahead with the process of disinvestment of the company.
Meanwhile, provisional figures issued by the government showed that the national carrier posted a loss of Rs. 7,365 crore in the year ended March 31, 2019, more than the Rs. 5,337 crore loss reported during 2017-18.
The loss in fiscal year 2018 was a 17% decline from the previous year (2017) though it exceeded the civil aviation ministry's provisional estimate of a loss of about Rs. 3,579 crore.

Jun 27, 2019

Investors Oust FundsIndia.com Founders

C.R. Chandrasekar and Srikanth Meenakshi, founders of Wealth India Financial Services Private Limited that runs online financial services platform, FundsIndia.com, were ousted from the company following differences of opinion with the firm's private equity investors.

Fonterra Enters Indian Dairy Market

Fonterra Future Dairy Pvt. Ltd., a joint venture between New Zealand's dairy nutrition company Fonterra and Kishore Biyani's Future Consumer, entered the value-added dairy products market in India with its new brand Dreamery targeted at youth and urban families.
The Dreamery range, comprising dahi (curd), ultra-high temperature (UHT) toned milk, and chocolate and strawberry milkshakes would be available in markets across western India in the first phase, followed by the south and then the rest of India.
The company plans to have pan-India distribution in two years and targets 5% market share of value-added dairy products in five to seven years.

L&T Completes Mindtree Takeover

Larsen and Toubro Ltd (L&T) gained a controlling interest in Mindtree Ltd, raising its stake to 60% in the Bengaluru based company and successfully concluding India's first hostile takeover of a software developer.
L&T completed buying the 31% additional stake it targeted to acquire in Mindtree for Rs. 4,988.82 crore through an open offer as large investors rushed to sell their holdings.
The offer to purchase 50.9 million shares of Mindtree from public shareholders was subscribed 1.2 times.
The 60% stake in Mindtree gives L&T complete control over the software company's board and management.

Acquia to Set Up Delivery Unit at Pune

Boston-based Acquia Global, an open source digital experience company with a revenue of $200 million, announced plans to develop Pune as its global delivery centre, to support innovation and its clients over the world.
The company, which provides technology to leading brands and helps them in their digital drive, opened a new office in Pune to expand its presence in India and Asia-Pacific, a high-growth region for the company.
Acquia plans to grow its staff across multiple departments in Pune and deploy people in product development.
This move positions Pune to become a part of one of the fastest growing digital experience centres globally.
Acquia Global has been in the India for over five years.

Foreign Firms can Process Abroad, but Must Store Data in India

According to the Reserve Bank of India (RBI), foreign payment firms such as Mastercard and Visa can process transactions made in India outside of the country but the related data should be brought back for local storage within 24 hours.
The announcement was made to clarify the central bank's directive in April 2018 that mandated foreign firms to store their payments data only in India for unfettered supervisory access.

RBI Begins Monitoring HFCs

The Reserve Bank of India (RBI) started monitoring the liquidity position, asset-liability gap and repayment schedules of housing finance companies (HFCs) on a daily basis after the liquidity crisis hit these firms, resulting in defaults.
Mortgage lenders are regulated by the National Housing Bank. But the central bank is of the view that since the liquidity crisis of the HFCs could have a spill over effect on the other segments in the financial sector, including banks, and hence, could affect financial stability, it was necessary to monitor these entities on a regular basis.
The move to monitor HFCs on a daily basis comes after some mortgage lenders started feeling the pressure to meet their financial obligations.

Jun 26, 2019

DHFL Partially Defaults on CP Repayment

Mortgage lender Dewan Housing Finance Ltd. partially defaulted in repaying its investors of commercial paper. The company could pay only 40% of the aggregate amount.
According to a notification to the stock exchanges, DHFL paid 40% of Rs. 375 crore, which is Rs. 150 crore, on a proportionate basis.
While DHFL met liability obligations of Rs. 40,000 crore since September 2018, there was no recourse from lenders.
The company met all its financial obligations through a combination of internal accruals, sell down of its loan assets and monetisation of non-core assets.

LIC Cuts Stake in Axis Bank

State-owned LIC sold over 5.25 crore shares, representing about 2 per cent stake, of Axis Bank through open market transaction.
With the sale of these shares, the stake of LIC (Life Insurance Corporation of India) in the private sector bank has now come down to 10.2 percent from 12.21 percent earlier, as per the BSE filing by Axis Bank.
LIC sold 5,25,06,202 shares through open market, the filing said without disclosing the sale value.
The total sale value could not be ascertained as the insurer sold the shares over a period of time.
The bank's shares closed at Rs 762.85, a piece on BSE, down 1.18 per cent.

Sinha-led Panel Proposes Stressed Asset Fund

A committee formed by the Reserve Bank of India (RBI), headed by former SEBI Chairman U.K. Sinha, recommended a Rs. 5,000 crore distressed asset fund for micro, small and medium enterprises (MSMEs).
The fund would assist units in a cluster where there is a change in the external environment such as plastic ban, which had resulted in large number of such entities becoming non-performing.
This would be of significant size which makes equity investments that help unlock debt or help revive sick units. It is a variation of venture capital fund, meant for equity investment of Rs. 1 lakh to Rs. 10 lakh in proprietary or partnership MSMEs, which would not or cannot list on the stock exchanges.
The structure would recognise that exits will not be big bang but through a percentage of revenues or profits over a period of 3-5 years. The onus of creating this fund would lie with the government.
The panel also suggested that the RBI should increase the limit for non-collateralised loans to Rs. 20 lakh, and this would address a significant proportion of the sector needs.
In addition, it also suggested revision in loan limit sanctioned under MUDRA by the Finance Ministry to Rs. 20 lakh from Rs. 10 lakh.
The committee also recommended banks that wish to specialise in MSME lending, their sub-targets for farm loans under the priority sector lender could be waived off, and instead can be given a target for loans to the SME sector.
The targets, committee said, could be of 50% of the net bank credit for universal banks and 80% for small finance banks.

Jun 25, 2019

Piramal Plans to Sell its Stake in Shriram Capital

After exiting Shriram Transport Finance earlier this month, Piramal Enterprises has now proposed to sell its entire 20% stake in Shriram Capital.
Following the sale of the entire shareholding held by the company in Shriram Transport Finance Company Limited (STFC), as a part of the long-term strategy of the company to fund growth of its financial services business, the company is evaluating the feasibility of sale of the entire (effective 20%) stake held by the company in Shriram Capital Limited.
The proposed transaction would be subject to receipt of necessary approvals, including the approval of the board of directors of the company at the appropriate stage, and necessary disclosures would be made by the company at the relevant time, in accordance with applicable law.
Piramal had acquired 20% stake in Shriram Capital, the financial services arm of the Shriram group, in 2014 for Rs. 2,014 crore.

Microsoft VC arm sharpens focus in India

Microsoft would expand its start-up financing initiative in India through its venture capital arm, M12. The VC entity, set up in July 2016, invested in 80 start-ups across North America, Europe and Israel. However, the programme was made available to entrepreneurs in India only in January this year (2019). Microsoft's M12 made its first India investment of $10 million in a healthcare platform start-up, Innovacer. M12 fund focusses on A to C stage funding and the fund size ranges $2-$10 million.

TCS to Buy More Stake in Japanese Arm

TCS' wholly owned subsidiary TCS Asia Pacific Pte. Ltd (TCS APAC), wouldl acquire 15% stake from MC in TCS Japan for a total consideration of JPY 3.5 billion ($32.6 million) and consequently, the holding of TCS APAC in TCS Japan will go up from the current 51% to 66.
A company statement said that the current governance of operations and management would remain unchanged by the share acquisition.
The increased equity is the latest in a series of investments that TCS made in recent years to cater to the specific needs of Japanese corporations. To augment the local workforce and gain scale, a Japan-centric Delivery Center (JDC), with enhanced language support and heavy localisation of global business practices, was set up in 2015 within TCS Sahyadri Park in Pune, India.

L&T Bags Power Project

Engineering and construction major Larsen and Toubro Ltd. (L&T) bagged an EPC (engineering, procurement and construction) order from SJVN Thermal Pvt. Ltd. to set up a 2x660 MW ultra super-critical power plant in Buxar district of Bihar.
The deal, bagged by L&T's power division, is worth more than Rs. 7,000 crore.
SJVN Thermal Pvt. Ltd. is a wholly-owned subsidiary of SJVN Ltd., a joint venture between the Government of India and Himachal Pradesh Government, and a mini-ratna public sector undertaking.

Emami Promoters Cut 10% Stake

The promoters of Emami Group raised nearly Rs. 1,230 crore by selling 10% of their stake in Emami Ltd. The money thus raised is proposed to be used primarily for further paring debt at the promoter level.
This is the second round of stake sale with the promoters offloading 10% in February to raise about Rs. 1,600 crore.
The total promoter stake in Emami Ltd., subsequent to the stake sale, stands at 52.7%.

Pact between Farmacêutica and Novartis

Glenmark Farmacêutica Ltda, the Brazilian subsidiary of Glenmark Pharmaceuticals Ltd., entered into an exclusive agreement with Novartis Biosciences S.A, a subsidiary of Novartis AG, for commercialising and marketing three respiratory products for treatment of symptoms of chronic obstructive pulmonary disease (COPD) in Brazil.
This agreement will be effective July 01, 2019.
The products are Seebri (Glycopyrronium bromide), Onbrize (Indacaterol) and Ultibro (combination of Indacaterol and Glycopyrronium), which are for relief of symptoms in adults with chronic obstructive pulmonary disease.
Under the agreement, Novartis remains the holder of the registration of these medicines and would be responsible for their manufacture. Glenmark would be responsible for promoting, commercialising and distributing these products in Brazil.

RBI Panel Defers Reserves Report for Fourth Time

A Reserve Bank of India (RBI) panel deciding on guidelines for transfer of the central bank's surplus funds to the government has further delayed submitting its report.
The six-member panel, headed by Former RBI Governor Bimal Jalan, which was originally supposed to submit the report in April, delayed it for the fourth time due to lack of consensus.
The panel would submit the report after the federal budget in July.

Jun 24, 2019

IIFL Arm Buys Majority Stake in Infigo

IIFL India Private Equity Fund, a private equity fund managed by IIFL Asset Management Ltd (IIFL AMC), bought a majority stake in eye care hospital chain Infigo Lifesciences for Rs. 70 crore.
The fund plans to make the investment in several tranches based on the company attaining predetermined business milestones of setting up over 20 eye care hospitals.
The chain is promoted by Thakur, former chief operating officer at Vasan Eye Care, and Anil Kamath, former managing director at Wockhardt Hospitals. It plans to open 15 comprehensive speciality eye care centres in Maharashtra within a year, with two eye care hospitals slated to open in August 2019.
Of the fifteen, ten centres would be opened in Mumbai and the across Maharashtra, adding to its existing portfolio of six centres in Mumbai.

Amazon Invests in India Payments Unit

American retail giant Amazon has infused Rs. 450 crore into its payments unit in India, Amazon Pay. Amazon Pay (India) Pvt. Ltd allotted 45 crore shares of Rs. 10 each aggregating to Rs. 450 crore to Amazon Corporate Holdings Pvt. Ltd and Amazon.com Inc.
Amazon Corporate Holdings pumped in Rs. 449.95 crore, while the remaining came from Amazon.com Inc.
The funding comes at a time when companies like Paytm, Flipkart-owned PhonePe, Google Pay and others are making significant investments to tap into the booming digital payments market in India.

G. V. Siddartha Pauses on Sale of realty Venture

Cafe Coffee Day (CCD) founder VG Siddhartha has deferred plans to sell his real estate venture Tanglin Developments to New York based private equity giant Blackstone Group Lp for an estimated Rs. 2,700-2,800 crore.
The decision follows Siddhartha garnering about Rs. 3,200 crore by selling the 20.32% stake held by him and two CCD affiliate firms (Coffee Day Enterprises Ltd and Coffee Day Trading Ltd) in software services company Mindtree Ltd to Larsen and Toubro Ltd (L&T) in March 2019.
The deal helped Siddhartha repay his debt of about Rs. 2,900 crore, vastly improving his financial condition.
Siddhartha was in desperate need to raise capital, but after the stake sale happened, he is not actively looking to sell the real estate asset for now.

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