General Awareness

BUSINESS AND ECONOMY - October 2018

Oct 2018

Jun 08, 2019

Nippon Makes Open Offer to Buy Stake in RNAM

Nippon Life Insurance Co. announced an open offer to acquire nearly 22.49 per cent stake in Reliance Nippon Life Asset Management Ltd. under a deal with Anil Ambani's Reliance Capital Ltd. which is exiting the mutual fund business.
Nippon Life would acquire up to 13.82 crore equity shares, or about 22.49 per cent of RNAM at Rs. 230 apiece.
The transaction is to be payable in cash for a total consideration of Rs 3,179.41 crore. Reliance Capital had in May, 2019 announced its plan to exit the mutual fund business by selling its stake in RNAM to its joint venture partner Japan's Nippon Life Insurance.

SEBI and MCA Sign Pact

The Securities and Exchange Board of India (SEBI) and the Ministry of Corporate Affairs (MCA) signed a memorandum of understanding (MoU) to facilitate seamless sharing of data and information for carrying out scrutiny, inspection, investigation and prosecution.
This assumes significance as the MCA has the database of all registered firms while SEBI only regulates listed entities that may have unlisted subsidiaries, with the MCA having access to all the data of such unlisted entities.
The MoU comes in the wake of increasing need for surveillance in the context of corporate frauds affecting important sectors of the economy.

Home Loan Linked to Repo Rate

Home loan shoppers will have a new product to opt for come July 1. The State Bank of India will introduce a product where the interest rate is linked to the repo rate of the Reserve Bank of India.
Repo rates are benchmark rates set by the RBI and those opting for the SBI's new home loan product will see interest rates moving instantly in sync with the repo rate.
Now, the SBI's home loan rates are linked to its marginal cost of funds based lending rate (MCLR) due to which transmission of rate cuts are slower.
All banks link their retail lending rates to their MCLR rates.
The SBI has also cut by 25 basis points (bps) its rates on cash credit and overdraft accounts of over Rs. 1 lakh linked to the repo rate.
Also, Bank of Maharashtra reduced its lending rate by 10 bps to 8.6%. The interest rate will come down for all loans having a residual maturity of more than six months.

RBI Revises Stressed Asset Resolution Norms

After the Supreme Court struck down the controversial 2018 circular of Reserve Bank of India (RBI) on stressed asset resolution, the banking regulator released revised set of norms which are substantially less stringent from the previous one.
In particular, neither there is a mandate to start resolution which results in higher provisioning if there is a single day default nor a mandate for initiating insolvency proceeding if resolution plan is not implemented for large accounts within a time frame.
However, the RBI has sought to nudge banks towards the insolvency courts by introducing a disincentive in the form of additional provisions for delayed resolution.
At the same time, the central bank said that it would issue directions to banks for initiation of insolvency proceedings against borrowers for specific defaults so that the momentum towards effective resolution remains uncompromised.
The new circular asked lenders to undertake a prima facie review of the borrower account within 30 days from a default, which is termed as "review period."
During this review period, lenders may decide on the resolution strategy, including the nature of the resolution plan (RP), the approach for implementation of the RP etc.

Promoters Sell Stake in Indiabulls Real Estate Arm

Indiabulls Real Estate promoters have sold 14% stake in open market transactions to Embassy Group for Rs. 950 crore, as part of the group's strategy to focus on financial services and exit from the realty business.
Promoters have around 39% stake in Indiabulls Real Estate, of which 14%, or over 6.3 crore shares, was offloaded in a bulk deal.
Indiabulls Group is looking to exit the real estate business to get regulatory approvals for the proposed merger of Indiabulls Housing Finance with Lakshmi Vilas Bank.

RBI Slaps Penalty on Kotak Mahindra Bank

The Reserve Bank of India (RBI) has imposed a monetary penalty of Rs. 2 crore on Kotak Mahindra Bank for not complying with its directions on furnishing information about dilution of promoters' shareholding.
The central bank said that the penalty was imposed in exercise of powers vested in it under the provisions of the Banking Regulation Act, 1949.
This action is based on the deficiencies in regulatory compliance and is not intended to pronounce upon the validity of any transaction or agreement entered into by the bank.
As per the statement, Kotak Mahindra Bank was directed to convey its commitment to achieve the dilution as per the timelines stipulated.
However, the bank failed to comply and a show cause notice was issued to the bank as to why penalty should not be imposed for non-compliance with the said directions.

Bharat Forge JV with Refu Electronik

Auto components major Bharat Forge formed a joint venture with Germany's Refu Electronik GmbH for the development and manufacture of electric vehicle (EV) components with an investment of 11.35 million euros (about Rs. 89 crore).
The JV will be into developing, manufacturing and selling of on-board controllers and components.

Jun 07, 2019

Tata Sons Offers to Buy Back NCDs from Insurers

Tata Sons has offered to buy non-convertible debentures (NCDs) worth Rs. 7,520 crore, held for long by leading public and private insurers.
Most insurers have sold their bond exposure back to Tata Sons, while a few are in the process to sell since Tata Sons, which converted into a private company from a deemed public company in September 2017, can no longer hold public deposits or investment instruments.
Among private sector life insurers, SBI Life had the highest exposure of Rs. 821 crore, followed by Aditya Birla Sun Life at Rs. 395 crore and HDFC Standard Life at Rs. 325 crore.
Among general insurers, ICICI Lombard held papers worth Rs.325 crore, followed by Oriental Insurance at Rs. 246 crore.

RBI Cuts Rate to a 9-Year Low

Corporate and Consumer loans will get cheaper with the RBI, expectedly, cutting the policy rate by 0.25 percentage points to 5.75%, its third consecutive rate cut in 2019, in an attempt to reverse the slow down in economic growth and boost consumer spending.
The policy rate is the lowest it has been since July 2010, a year when the RBI effected a staggering six interest rate increases to combat stubborn inflation.
The RBI also changed its stance to "accomodative" from "neutral" which means that it could cut the rate again, and then again, if growth doesn't pick up.
Meanwhile, RBI raised its consumer price index (CPI) inflation projection for the first half of the year to 3-3.1% from 2.9-3% while marginally reduced the second-half inflation outlook to 3.4-3.7% from 3.5-3.8%, with risks broadly balanced.
The reason for the revision was factors such as sharper-than-expected seasonal rise in vegetable prices and pick-up in prices in several food items while weakening of domestic and external demand and forecast of normal monsoon.
Expectations are that banks will pass on the rate cut by lowering their lending rates and in turn possibly lowering the equated monthly instalments (EMI) that individuals pay on home and consumer loans.

Twitter may Invest More than $50 m in ShareChat

Twitter is likely leading a $100 million (Rs 692 crore) financing round in local language social networking app Share-Chat, in what could be the microblogging site's first investment to pick up a minority stake in an Indian startup.
This round is expected to value ShareChat at $600-650 million, and give it funds to take on China's ByteDance which is growing its India market share and user engagement rapidly.
The investment could help Twitter leverage Share-Chat's reach in India to make inroads into cities beyond the metros.
Another likely new investor is Hong Kong-based investment management firm Hillhouse Capital.
The San Francisco-based firm's interest in ShareChat comes after the Indian startup's discussions with Chinese Internet group Tencent to raise funds fell through twice in a span of around one year. So far, ShareChat has raised around $120 million from investors.
ShareChat, founded in 2015 by Ankush Sachdeva, Bhanu Singh and Farid Ahsan, is among a new crop of regional-language content players tapping the next 100 million Internet users in India, buoyed by the availability cheap data after the launch of Reliance Jio Infocomm.

Uber's First Helicopter Rides Set for New York

Uber said it is readying its first helicopter rides, which will carry passengers between New York's JFK Airport and lower Manhattan.
The news of the Uber Air debut was first reported by the New York Times, and confirmed by Uber chief executive Dara Khosrowshahi.
The flights — which last about eight minutes — would begin July 9 with "dynamic pricing" expected to be around $200 to $225, with ground transportation included in the city and airport.

RBI waives RTGS, NEFT charges

The RBI has decided to waive all charges on Real Time Gross Settlement System (RTGS) and National Electronic Funds Transfer (NEFT) transactions — two preferred routes for instantly transferring funds digitally.
The central bank, which levies a minimum charge on banks for transactions routed through its RTGS meant for large-value, instantaneous fund transfers and the NEFT system for other fund transfers, had directed all banks to pass these benefits to their customers.
RTGS is an electronic form of funds transfer on a real-time basis. The system is primarily meant for large-value transactions.
The minimum amount to be remitted through RTGS is Rs 2 lakh with no upper or maximum ceiling.
NEFT is a nation-wide payments system facilitating one-to-one funds transfer, usually on the same day.
Under this, individuals, firms and corporates can electronically transfer funds from any bank branch to any individual, firm or corporate having an account with any other bank branch in the country.
The operating hours of NEFT is from 8am to 7pm.
The move comes on the heels of the RBI-appointed Nandan Nilekani-led committee report for deepening digital payments, which earlier recommended that banks incentivise digitisation of payments by not charging their customers and small merchants on digital transactions.
The high-level committee report had stated that the volume of NEFT transactions has steadily grown at a CAGR of 26% over the past four years.
However, the number of transactions is small, though the size of transactions is large.
The average size of an NEFT transaction over the past five years has varied between Rs 60,000 and Rs 1 lakh.
Among banks, SBI had recorded the highest number of online transactions — both NEFT and RTGS.

Google to Acquire Data Analytics Company Looker

Alphabet Inc's Google said it would buy Looker, a privately-held big-data analytics company, for $2.6 billion in cash, in the first major acquisition for new Google Cloud Chief Executive Thomas Kurian.
Google's cloud computing division is a distant third globally to Amazon and Microsoft in terms of revenue from renting infrastructure and other computing tools to businesses.
But Google Cloud's BigQuery, a tool for managing large datasets, has been among bright spots in attracting customers, according to cloud industry analysts.

Blackstone-Embassy JV to acquire stake in IBREL

US private equity giant Blackstone Group Lp and Bengaluru-based property developer Embassy Group are set to jointly acquire the stake of Indiabulls Group chairman Sameer Gehlaut in Indiabulls Real Estate Ltd (IBREL), a move that will also see Indiabulls exit the real estate business to focus entirely on financial services.
The Blackstone-Embassy joint venture will buy promoter Gehlaut's 39% stake in IBREL for around Rs. 2,700 crore at an equity valuation of Rs. 7,000 crore.
The Blackstone-Embassy duo has come together for the Indiabulls deal, after Embassy Office Parks (a joint entity of Blackstone and Embassy) launched India's maiden real estate investment trust (REIT) earlier in 2019.
Once the deal is completed, a quarter of IBREL will be held by foreign institutions while the remainder will be with public shareholders and mutual funds among others.
This is not the first time Blackstone and Indiabulls have entered into a transaction.
In March 2018, IBREL sold a 50% stake in its marquee office properties in central Mumbai to Blackstone for $730 million or Rs. 4,750 crore.
Blackstone also bought IBREL's commercial office property in Chennai One Indiabulls Park for around Rs. 900 crore.

Jun 06, 2019

Kapiva Makes Strong Entry into the US

Kapiva, an Ayurveda brand, made a strong entry in the U.S. market, where there is a growing demand for its wellness products.
As per Ameve Sharma, founder and CEO of Adret Retail Pvt. Ltd., the start-up that owns the Kapiva brand, there is substantial demand for its products like ghee, juices and edible oils in the U.S.
The two-year-old start-up is targeting a Rs. 30 crore turnover by this fiscal against Rs. 20 crore in 2018-19.
It markets 90 ayurveda food products (known as functional foods) under five categories, juices, ghee, honey, oil and tea.

Chinese Importers to Apply for Tariff Waivers

Chinese importers are preparing applications for waivers on import tariffs levied on more than 700 US goods in the Sino-U.S trade war, after the finance ministry said that it would start taking submissions.
The Ministry of Finance, earlier in June, posted a list of goods for which waivers could be granted that includes meats such as beef and pork, soybeans, coal and copper scrap.
The waivers are for tariffs imposed in July 2018 on $50 billion worth of US goods in retaliation for similar measures taken by Washington. Beijing has since imposed additional tariffs on thousands of goods as a bitter trade war has escalated.
In May, Beijing said that it would start a waiver programme, amid growing worries over the cost of the protracted trade war on its already slowing economy. Other goods on the list include tractors, motorcycles, mountain bikes and some pieces of medical equipment.

FPIs Pump in Record Sums

The current financial year has had the best start in a long time in terms of inflows from foreign portfolio investors (FPIs), and it is playing a key role in pushing the benchmark indices to record levels.
In the first two months of the current fiscal, FPIs have invested a net amount of Rs. 29,113 crore in Indian equities, the highest-ever in the last 17 years since data became available.
Moreover, this is only the fourth time that net foreign inflows had crossed Rs. 20,000-crore in just two months at the start of a financial year.
The previous high in terms of cumulative flows from FPIs in April and May was seen in 2013-14 when such institutional investors poured Rs. 27,583 crore in Indian equities.

JLR Inks Pact with BMW

Tata Motors-owned Jaguar Land Rover (JLR) joined hands with BMW to develop next generation electric drive systems.
The collaboration seeks to advance the development of electrification technology to support transition to an autonomous, connected, electric, shared (ACES) future.
The two partners would invest jointly in research and development, engineering and procurement with an aim to provide the necessary economies of scale to support increased consumer adoption of electric vehicles (EVs).
The strategic collaboration would build on the considerable knowledge and expertise in electrification at both the companies.

Wipro to Buy ITI

IT major Wipro would acquire U.S.-based International TechneGroup Incorporated for $45 million (around Rs. 312 crore).
International TechneGroup Incorporated (ITI) provides Computer Aided Design and Product Lifecycle Management interoperability software services.
The acquisition complements Wipro's core strengths in Industry 4.0 and would allow Wipro to offer end-to-end solutions in Digital Engineering and Manufacturing.

Jun 05, 2019

CVL Steps into Ayurveda Sector

Marking its entry into the Ayurvedic medicines' segment, CESC Ventures Ltd. (CVL), a RP-Sanjiv Goenka Group company, acquired stake in Herbolab India Pvt. Ltd. that makes Ayurvedic medicines and products.
In a regulatory filing, CVL said that a 64.6% stake had been bought for Rs. 32.2 crore. The company, which has a pan-Indian presence, clocked a turnover of Rs. 1.94 crore in 2018-19. It has the brand name of 'Dr. Vaidya's.'
The investment in Herbolab will help the company expand its existing portfolio into the ayurvedic products segment.
CVL, which was listed in January 2019 as part of the recast of the group's flagship CESC Ltd., has three business segments, business process management, property and FMCG under which there are brands like Too Yumm and Evita. Too Yumm marked the group's entry into packaged snack foods business in 2017.

Bank of China Starts India Operations

Bank of China, one of the four largest state-run commercial banks of China, started India operations with a maiden branch in Mumbai.
The launch of Chinese bank in India comes after a series of successful meetings between Indian Prime Minister Narendra Modi and Chinese President Xi Jinping in 2018 to strengthen the strategic engagement between the 2 countries.

MG Motor Unveils its First Dealership in India

MG Motor India Ltd, a unit of China's SAIC Motor Corp. Ltd, opened its first experience centre and dealership in Gurugram ahead of the official launch of the company's operations in India.
The carmaker would start with 120 premium dealerships in the country and would increase it to 250 by September 2019.
The company also started taking bookings of its first vehicle Hector, a midsize compact utility vehicle.

Manipal to Buy Stake in Cigna

TTK Group decided to exit from the Cigna TTK health insurance joint venture (JV) by selling its 31.5% stake to Manipal Group for Rs. 500 crore.
Manipal Education & Medical Group (MEMG) chairman Ranjan Pai said that his company would increase its holding in the JV to 51% from the existing 19.5%.
The Cigna Corporation of the U.S. would continue to hold 49% stake.
Manipal is buying the stake from TTK Group as they are exiting. However, all these, except the name change of the joint venture, are subject to further approvals from the regulator.
With TTK's exit, the name of the JV has been changed to ManipalCigna Health Insurance Company Limited.
The venture adopted a new corporate identity, a new logo and a new website.
These changes are effective immediately and all future business activities will be under the new company name.

Global Growth to Slow

The World Bank Group downgraded global real GDP growth to 2.6% for 2019, down by 0.3 percentage points from its previous forecast in January.
Growth is expected to increase marginally to 2.7% in 2020. India's growth forecasts are projected to be 7.5% per annum in 2019, 2020 and 2021 – not having been downgraded from their January estimates.
The multilateral development bank's June 2019 Global Economic Prospects (GEP) report, titled, 'Heightened Tensions, Subdued Investment' said that the global economy has continued to soften and momentum remains weak and investment, sluggish.

Sahara Forays into Electric Vehicles

Sahara India forayed into electric vehicles (EVs) by introducing a platform under the brand name 'Sahara Evols' to capitalise on the demand for clean mobility in the country.
The platform includes a range of electric scooters, motorcycles, three-wheelers and cargo carriers developed and supplied by select partners as well as a service and battery charging infrastructure.
The company also started swapping stations where EV owners can swap a fully-charged battery with a drained one.
Starting from Lucknow, Sahara would establish the EV charging and vehicle service ecosystem in tier II and tier III cities, mostly in North India, by the end of this financial year, in a phased manner.

Lulu Group to Open GO Sport Superstores

Tablez, the retail arm of Abu Dhabi-based LuLu Group, will open 25 GO Sport multi-brand superstores in India in the next five years at an investment of Rs. 250 crore.
The first store was launched in Mumbai in May, the second would be opened in June in Bengaluru while another three GO Sport outlets would come up in other cities by the end of 2019.

CCI Fines Pharma Firms

The Competition Commission of India (CCI) has levied a total fine of more than Rs. 74 crore on pharma firms, Himalaya Drug Company and Intas Pharmaceuticals, along with its senior officials as well as two Madhya Pradesh-based drug groupings for indulging in anti-competitive trade practices.
The regulator held the drug associations and pharma firms responsible for mandating the requirement of obtaining no objection certificate prior to the appointment as stockists which resulted in limiting and controlling the supply of drugs and medicines in Madhya Pradesh.

Jun 04, 2019

Mitsubishi Hikes Stake in TVS Auto

Mitsubishi Corporation of Japan will increase its stake in the city-based TVS Automobile Solutions Pvt. Ltd. (TASL), an independent aftermarket player, from 3% to 25%.
TVS has entered into a strategic partnership with Mitsubishi Corporation.
The fresh round of funding by Mitsubishi was done partly through buying of shares from undisclosed existing shareholders and partly through subscription to fresh equity.

RBI Bars SR Batliboi & Co.

The Reserve Bank of India (RBI) barred audit firm SRBatliboi & Co. Llp, a member firm of EY, from auditing commercial banks for a year starting April 1, 2019, citing lapses in a statutory audit.
RBI did not specify the name of the audited entity.
The central bank added that the action taken in the matter has been communicated to the Institute of Chartered Accountants of India.
SR Batliboi is EY's network company performing the audit function in India, Deloitte Haskins & Sells Llp is part of Deloitte's network, BSR & Co. Llp is part of KPMG's network and PriceWaterhouse is part of PwC's network.

Facebook in Talks with US Regulator

Facebook Inc is in talks with the U.S. derivatives regulator, the Commodity Futures Trading Commission (CFTC), over the social media company's plans for a digital currency.
The regulator is in the early stages of talks with Facebook in an effort to understand whether the company's plans for digital coin would fall under the CFTC's scope.
In May, Facebook set up a financial technology company in Switzerland focusing on blockchain and payments as well as data analytics and investing.

Mahindra Arm and Mitsui in Solar Pact

Mahindra Susten, a portfolio company of Mahindra Partners, the private equity division of Mahindra Group, entered into a partnership with Mitsui & Co. Ltd, of Japan to jointly develop and operate distributed solar power generation projects in India.
Mahindra Susten will hold 51% stake in Marvel Solren Private Ltd. with Mitsui holding the rest. Marvel operates four distributed solar projects in India with a combined capacity of 16 MW that helps private clients reduce their carbon footprint by providing renewable energy through long-term power purchase pacts.

RBI Sets Banks' Group Exposure Limit

The Reserve Bank of India decided to reduce banks' exposure to a group of connected parties to 25% of its capital base, while the exposure to a single party has been capped at 20%.
However, banks' boards can allow an additional 5% exposure in exceptional cases.
Till now, a bank's exposure to a single borrower and a borrower group was restricted to 15% and 40% of capital funds, respectively.
The central bank, which notified a new framework for large exposures of banks, decided to exclude entities connected with the sovereign from definition of group of connected counterparties.
The RBI has introduced economic interdependence criteria in definition of connected counterparties in the new guidelines.

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