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Friday, March 15, 2019

economic news of india - world economic news - economics news for students - indian economy news

economic news of india - world economic news - economics news for students - indian economy news


Lakshmi Mittal steps closer to a hard-fought homecoming

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NEW DELHI: The National Company Law Appellate Tribunal (NCLAT) told Essar Steel Asia Holdings (ESAH) to withdraw its appeal against the rejection of its Rs 54,389-crore offer for Essar Steel, possibly making it harder for the Ruias to regain control of the asset. However, the tribunal said ESAH may be heard during a parallel appeal against the approval of ArcelorMittal's Rs 42,000-crore resolution plan.The Ahmedabad bench of the National Company Law Tribunal (NCLT) had in January rejected ESAH's plea to consider its bid, taking Essar Steel out of the bankruptcy process. Under the Insolvency and Bankruptcy Code (IBC) only the lenders that had moved NCLT could withdraw Essar Steel from the process, the bankruptcy court had said."No application should have been entertained," said the twomember NCLAT bench led by justice SJ Mukhopadhaya on Friday. "You can withdraw it and argue the main case (against the ArcelorMittal plan)." ESAH may not do so, according to sources close to the entity, but there's been no official word on this.The bench also asked Essar Steel's committee of creditors (CoC) to consider modifying the distribution of funds under the ArcelorMittal plan.This will involve treating Standard Chartered Bank, which has also opposed the plan, on par with other financial creditors.It suggested that 10% of the payment offered by ArcelorMittal be used to pay operational creditors with dues of more than Rs 1 crore. ArcelorMittal has already agreed to make whole operational creditors of Essar Steel with dues under Rs 1 crore over and above its 42,000 crore bid."It cannot be that you (other financial creditors) get 92% (of your dues) and they (Standard Chartered) get 1.7%," said Mukhopadhaya, adding that operational creditors have to be given the same or similar treatment. Standard Chartered stands to get only Rs 60 crore against its claims of Rs 3,187 crore from Essar Steel under the ArcelorMittal resolution plan.A pro-rata distribution of the ArcelorMittal bid amount to all financial creditors will lead to each lender receiving 85.6% of its dues."You cannot classify (financial creditors) on the basis of secured and unsecured," said the bench, adding that operational creditors had to be given similar treatment. "Talk to the financial creditors, either 85.6% (pro-rata payment) or it will go (be liquidated) or we will modify the resolution plan. Please consider 10% (of the bid) to go to the operational creditors which have dues of over Rs 1 crore."68434988 Senior counsel for the CoC, Ravi Kadam, said the current distribution plan is fair. "It is not discriminatory, doing it the other way around is discriminatory," he said.He added that the CoC may reject the resolution plan if payments to constituents are reduced because of modifications.In response to this, the court said: "Either you will be agreeing or we will be exercising our power (to modify or reject the plan)."The bench also dismissed an appeal by erstwhile directors of Essar Steel that they had been unjustifiably removed from insolvency proceedings and were not given access to the resolution application as they had failed to lodge their protest at that time."You have not filed any appeal (at that stage). Your case is not bad... it is a rotten case," the tribunal said.The bench also emphasised the need to complete the Essar Steel insolvency case, which has been tied up in legal proceedings for almost two years."Our reputation is at stake because of this case," the bench said. "It has taken more than 500 days."In response to calls from the bench for ArcelorMittal to consider raising its bid to match that of ESAH, Arcelor's counsel Harish Salve said that the company has already paid an additional Rs 7,500 crore to resolve NPAs that they were not obliged to pay and that it valued the project at Rs 42,000 crore.ArcelorMittal paid Rs 7,500 crore to resolve bad debts of related parties Uttam Galva and KSS Petron to become eligible to bid for Essar Steel.

Man behind Flipkart's tale writes a new story

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BENGALURU | NEW DELHI: Lee Fixel, the secretive American investor, best known in India as the man who powered the rise of ecommerce giant Flipkart, is poised to return to his old hunting grounds in a new avatar, said several members of the country's startup fraternity who are directly aware of his plans.On Thursday, Tiger Global, the New York-based investment firm where Fixel has worked for over 13 years, said the technology investor would leave the firm on June 30.Fixel was responsible for scaling up the hedge fund's private market portfolio which now constitutes half of the fund's $26 billion assets under management. In a letter to its limited partners, or sponsors of the fund, the firm said: "Lee expects to actively invest his own capital and may start an investment firm in the future.""He is likely to make a comeback scouting for early and growth-stage technology investments in India, Bay Area and South East Asia via his own fund," four people in the know of his plans told ET. "His understanding, network and reputation across these geographies are strong, and he will soon separately raise capital for his fund," said one of the persons.Fixel, who is estimated to be armed with a personal capital of $800 million to $1 billion, "began informing a select group of founders from Tiger Global's Indian portfolio (of his impending exit from the firm) a week ago," the sources said."He had earlier asked them to scout for bets in healthcare and fintech sectors," the sources added.The 39-year-old is credited with backing some of the world's most stellar startups like Spotify and Stripe, in addition to single-handedly crafting Tiger Global's Indian portfolio, beginning with early investments in Just Dial, MakeMyTrip and later, Flipkart cofounded by Sachin Bansal and Binny Bansal."I would say he is the pioneer who single handedly put the Indian startup scene on the global map," said Binny Bansal."When Lee started investing in India not many global VCs looked at India favourably and even if some did, the consumer internet space was certainly not top of mind. Lee helped change that, with his long-term investments in Flipkart, Myntra, Ola, and MakeMyTrip among others," he said.Famously qualified as the 'Maharaja' (King) of Indian ecommerce, Fixel was the most important investor in Flipkart, working through close aide Kalyan Krishnamurthy, the present group CEO at the etailing major.The reticent fund manager went on to orchestrate Flipkart's sale to US retail giant Walmart for $16 billion in May last year."(Fixel) will continue to be on the board of Flipkart Group. We have immensely benefited from his vision, insights and global credibility for several years and we look forward to his continued engagement," said Krishnamurthy.Fixel's bullishness on India was fuelled by the exponential growth of Chinese ecommerce and Tiger Global's backing of JD.com in 2009, an investment which is considered the most successful for Tiger after the etailer went for a $25-billion IPO in 2014.Along with his then colleague Feroze Dewan, Fixel started Tiger's operations in India, possibly looking for a beachhead in the "next China". This led to Fixel's wager on Flipkart. In a few years, he had emerged as one of the most soughtafter tech investors locally, credited for the funding boom of 2014-15, a move for which he also drew criticism for driving up valuations of young startups.Fixel hit a pause button as things also started to look down for Flipkart. By 2016, he had pumped more than $1 billion in Flipkart with no exit in sight, which also meant that India started taking a backseat for the fund. From striking around 40 new investments in India in 2015, Tiger Global came down to laying zero bets in 2016.68435131 After almost three years, Tiger Global renewed its focus on the country with its mega $3.75 billion Private Investment Partners XI fund, with India as one of the focus areas. This came on the back of Flipkart's acquisition by Walmart.Indian entrepreneurs who have worked with him speak highly of his venture investing skills. "Lee works very differently. He never demands that we have board meetings every quarter to update him. If he needed to be updated, a call or even WhatsApp messages often sufficed," said Harshil Mathur, chief executive of RazorPay.Startup investors for their part credit him with having "caused a huge mindshift change in India"."He has been a VC in the true sense of the term, having always been willing to place adventurous bets. Before him, everyone was taking very conservative bets," said Rehan Yar Khan, partner at Orios Venture Partners.Fixel will continue to assist in the management and serve on boards of certain existing portfolio companies but will not be an active part of Tiger Global's investment team beyond PIP XI.Scott Shleifer and Chase Coleman will continue as co-portfolio managers of Tiger's private equity business, and Shleifer will become the head of private equity."They've (Tiger) been slow anyhow over the last few years focusing more on follow-ons... If Fixel builds a new avatar, he will likely come back," said Karthik Reddy, partner at Blume Ventures.More recently, on the philanthropy front, the Lauren and Lee Fixel Family Foundation gifted $20 million to the University of Florida and UF Health that will be used to establish the Norman Fixel Institute for Neurological Diseases at UF Health, an institute focused on advancing research, technological innovation and clinical care for Parkinson's disease and other neurodegenerative diseases, including Alzheimer's, Lewy body, ALS, dystonia and concussions.

Anil Ambani needs Rs 453cr in 4 days to avoid jail

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NEW DELHI: An appellate tribunal has refused to direct State Bank of India and other lenders to Reliance Communications to release Rs 260 cr of tax refunds, held in a trust fund, to pay the telco's dues to Ericsson.The order passed by National Company Law Appellate Tribunal (NCLAT) on Friday is a setback for RCom, which must pay the Swedish telecom gear maker its remaining dues of Rs 453 crore by Tuesday to ensure its chairman Anil Ambani doesn't go to jail.The telco has already paid Rs 118 crore of the total Rs 571 crore dues."No direction can be given to any party to the settlement (particularly the third party) to perform certain duties to ensure settlement between other parties," NCLAT said in its order.The appellate tribunal also decided not to vacate its last year's order staying insolvency proceedings against RCom and its subsidiaries."Supreme Court is in seisin of the matter…we are not vacating the interim order dated May 30, 2018 nor passing any direction to refund any amount to any one or other party, till some order is passed by the...Supreme Court," it said.68434715 The appellate tribunal also said RCom is free to request the Supreme Court to order SBI to release the funds. "This order will not come in the way of the appellants to ask for relief as sought for in this interim application from…Supreme Court," it said.RCom had moved NCLAT, seeking directions to the 37 lenders led by SBI to release Rs 260 crore directly to Ericsson. Lenders have refused to do so, saying public money can't be used to settle payment to a private party.NCLAT also asked the three parties — RCom, lenders and Ericsson — to find a way to ensure that the matter does not go back to the corporate insolvency process.If NCLAT passes an order pushing RCom back into insolvency, then Ericsson would need to refund any funds that it would have got from RCom, the bench observed.Interestingly, RCom has said it wants to voluntarily go back into the insolvency process, saying it will help it sell its assets in a time bound manner.Under the Insolvency and Bankruptcy Code 2016, financial lenders such as SBI have priority in getting repaid from the sale of assets, while operational creditors like Ericsson are way down the list.

Xiaomi to expand offline presence in India

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The country's largest smartphone maker Xiaomi plans to significantly expand its offline retail footprint this year to expand sales, including for television.The company plans to expand its various retail formats in the country. As per plans, the number of large format exclusive flagship stores under Mi Home this year is expected to touch 100, while it wants to open 5,000 smaller size Mi Stores in rural India. The company also wants to significantly expand its presence in multi-brand stores through the Mi preferred partner programme, a company spokesperson said. At present, Xiaomi has over 50 Mi Home stores and 500 Mi Stores. It also has more than 4,000 preferred partner stores across 50-plus markets. "2019 will also witness more ambitious retail expansion of our offline channel to extend support for newer categories such as Mi LED TVs. In smartphones, Xiaomi is the second largest brand in the offline market with nearly 18% market share as of January GFK smartphone tracker," the spokesperson said. Xiaomi's arch rival Samsung leads the offline smartphone sales, while it is the second largest smartphone maker in the overall Indian market. The person said Xiaomi has grown 40 time in offline sales in last two years when it first forayed into this channel in India and offline now contributes to over 30% of smartphone sales."Xiaomi has an extremely lean offline model, and we continue to spend minimal dollars on marketing and operational costs which include running interesting promotional schemes. However, with the scale of offline sales becoming bigger, investments in offline will accordingly grow," the company said.ET earlier reported that Xiaomi has rejigged its offline sales leadership team in India with erstwhile South business head and chief of Mi Store Sunil Baby now the chief of offline sales. Erstwhile sales head Deepak Nakra has been made the chief of the offline consumer electronics business.The company spokesperson said in 2018 Xiaomi saw its entire business model shaping up in India across hardware, internet services and retail business. "This year, we hope to further build on all three dimensions, and bring in stronger product offerings and evaluate newer categories across hardware and internet services," the person said.

NuPower-Videocon probe: Ministry of corporate affairs likely to submit report soon

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MUMBAI: The Mumbai office of the ministry of corporate affairs will soon submit its report on alleged irregularities found in the functioning of Deepak Kochhar owned NuPower Renewables (NRL) and VN Dhoot's Videocon Industries, people aware of the development told ET.The agency found over a dozen violations under the Companies Act and is finalising its recommendations, the people said. However, Dhoot denied that there were any major irregularities.Kochhar and Dhoot are being investigated for a quid-pro-quo arrangement in connection with loans granted by ICICI Bank to Videocon.Kochhar's wife Chanda Kochhar, was sacked as CEO and MD of ICICI Bank in January for failing to disclose any conflict of interest when the loans were sanctioned."In certain cases, we have found irregularities pertaining to false disclosures regarding certain transactions. In some cases, financial irregularities were noted.These amount to prosecution action and we have recommended the same. The final decision is yet to be taken," one person said.The probe was carried out under six heads, of which four have been completed and two are almost complete. "The final report with recommendations will be submitted soon to the head office to take a final call," the person said. According to the person, irregularities were observed in the conduct of board meetings, while in some of the financial statements and annual reports submitted, the disclosures were inadequate or misleading.Some members of the board were suspected to be shadow directors, the person said. Dhoot said that only some minor, technical irregularities had been found."They have not found any irregularity as regards to the Companies Act sections, which carries compulsory prosecution, so there is no question of prosecution," Dhoot told ET in a text message. Messages sent to Kochhar didn't yield any response as of press time.Meanwhile, the Enforcement Directorate, which is probing a case of money-laundering against the Kochhars and Dhoot, found that other than Chanda Kochhar, no other ICICI Bank employee benefited from the loans advanced to companies related to Videocon.

RCom-Ericsson case:NCLAT declines to direct SBI to release Rs 259 cr

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NEW DELHI: An appellate tribunal has refused to direct State Bank of India and other lenders to Reliance Communications to release Rs 260 cr of tax refunds, held in a trust fund, to pay the telco's dues to Ericsson.The order passed by National Company Law Appellate Tribunal (NCLAT) on Friday is a setback for RCom, which must pay the Swedish telecom gear maker its remaining dues of Rs 453 crore by Tuesday to ensure its chairman Anil Ambani doesn't go to jail.The telco has already paid Rs 118 crore of the total Rs 571 crore dues."No direction can be given to any party to the settlement (particularly the third party) to perform certain duties to ensure settlement between other parties," NCLAT said in its order.The appellate tribunal also decided not to vacate its last year's order staying insolvency proceedings against RCom and its subsidiaries."Supreme Court is in seisin of the matter…we are not vacating the interim order dated May 30, 2018 nor passing any direction to refund any amount to any one or other party, till some order is passed by the...Supreme Court," it said.68434715 The appellate tribunal also said RCom is free to request the Supreme Court to order SBI to release the funds. "This order will not come in the way of the appellants to ask for relief as sought for in this interim application from…Supreme Court," it said.RCom had moved NCLAT, seeking directions to the 37 lenders led by SBI to release Rs 260 crore directly to Ericsson. Lenders have refused to do so, saying public money can't be used to settle payment to a private party.NCLAT also asked the three parties — RCom, lenders and Ericsson — to find a way to ensure that the matter does not go back to the corporate insolvency process.If NCLAT passes an order pushing RCom back into insolvency, then Ericsson would need to refund any funds that it would have got from RCom, the bench observed.Interestingly, RCom has said it wants to voluntarily go back into the insolvency process, saying it will help it sell its assets in a time bound manner.Under the Insolvency and Bankruptcy Code 2016, financial lenders such as SBI have priority in getting repaid from the sale of assets, while operational creditors like Ericsson are way down the list.

Oil demand concerns overdone, Brent to rise above $70: Goldman

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Higher oil demand coupled with declining production and supply cuts could help Brent prices rally above $70 per barrel in the near term, Goldman Sachs said.Demand is off to a strong start in 2019, with recent oil data suggesting current demand concerns should ease further, Goldman said in a note on Thursday.Based on available demand data that shows an increase in consumption in January of 1.55 million barrels per day (bpd) from a year earlier, the U.S. bank estimates that overall global demand increased by nearly 2 million bpd during the month. This growth was visible in both emerging and developed markets.Meanwhile, supply losses in 2019 are large with producers in the Organization of the Petroleum Exporting Countries (OPEC)exceeding their cut commitment and on accelerating declines in Venezuelan output, Goldman said."The political stalemate in Venezuela increasingly creates risks that the decline in output due to the U.S. oil sanctions more than offsets the rebound in Libya, which would bring global output below our expectations and further tighten heavy crude supplies," it added.Oil prices were stable on Friday, propped up by production cuts led by OPEC and as U.S. sanctions against Venezuela and Iran likely created a slight deficit in global supply in the first quarter of 2019.Crude oil prices are on course for the best quarter since mid-2016, with a 25 percent gain so far."Physical markets have driven the rally in prices this year while net speculative length has remained at depressed levels given high fundamental uncertainty and last year's volatile fourth quarter," Goldman said.The investment bank expects the current fundamentals to tighten physical markets further, in turn driving the Brent forward curve into further backwardation.Backwardation is a market structure where prompt prices are higher than later prices and suggests that demand for a commodity is high or that prompt supply has declined.

Gold price dip attracts buyers amid wedding season demand

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MUMBAI/BENGALURU: Physical gold demand improved this week in India as a correction in local prices attracted buyers, particularly with the wedding season underway, while premiums in China rose on steady buying in the world's leading consumer.Gold futures in India fell to Rs 31,742 per 10 grams on Friday, the lowest level since Jan. 9."Demand has been improving. Dealers are charging premium due to the limited supplies," James Jose, the secretary of the Association of Gold Refineries and Mints.India's February gold imports fell 10.81 percent to $2.58 bln, according to government data.In India, the world's second biggest gold consumer, dealers were charging a premium of up to $2 an ounce over official domestic prices this week, up from last week's premium of up to $1. The domestic price includes a 10 percent import tax.The appreciation in the rupee has offset the impact of a price rise in the overseas market, said a Mumbai-based dealer with a gold importing bank. The rupee rose to its highest in seven months on Friday, making overseas purchases cheaper."Jewellers are building inventory for the wedding season," the dealer said. Gold is an essential part of weddings in India.Meanwhile, consistent buying in China lifted premiums to $14-$15 over the global benchmark this week from the previous week's $9-$13.Some modest bank demand was supporting, MKS PAM Group traders said in a note.Chinese bullion importing banks generally get fresh quotas during the beginning of the year, analysts and traders said.Traders said higher prices dampened demand in Hong Kong and premiums were at 60 cents-$1.10 an ounce, versus 50 cents to $1.30 in the previous week.Global benchmark spot gold has risen as much as 0.4 percent this week on global economic slowdown worries and Brexit uncertainties.In Singapore, premiums narrowed marginally to around 60-70 cents from 60-80 cents previously."We are still expecting businesses to buy at this point of time as we need fresh stock when festivals come up. So, with any drop in prices, especially in local currencies, we expect buying," said Brian Lan, managing director at dealer GoldSilver Central in Singapore.In Japan, demand was subdued and the physical metal was sold at par with the global benchmark as gold prices moved in a very narrow range, a Tokyo-based trader said.

Samsung steps up localisation game; inks app store deal with IndusOS

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New Delhi: Samsung is deepening its localisation efforts and has tied up with domestic operating system developer IndusOS to offer its app store in 12 Indian languages on the entire Galaxy smartphone range in a bid to overthrow market leader Xiaomi.Samsung's Chinese rivals Xiaomi, Oppo and Vivo are behind in terms of localising apps and offering vernacular services, a gap that the former No. 1 smartphone maker seeks to exploit, especially with only 15% of the population fluent in English, analysts said. The South Korean company hopes to tap the next generation of smartphone users expected mostly from rural India."The tremendous growth in demand for the vernacular app economy is expected with a spurt in a number of users from smaller towns and cities… we have completely revamped the Galaxy Apps store and focused on making search and navigation seamlessly possible in vernacular languages," Sanjay Razdan, senior director at Samsung India, told ET.With the IndusOS app store, Samsung Galaxy smartphone users won't require email-based sign-ins to download free apps, a move that will make access less complex, especially for millions in the hinterland who may not have email IDs."As the friction of sign-in is removed, more consumers will go online and hence more eyeballs for developers," Razdan added.India is one of the fastest-growing markets for mobile apps, with annual revenue growth of 41%. In terms of absolute downloads, India is expected to have the highest growth rate and reach 37.2 billion in 2022, according to third-party estimates."Samsung wants to create more Indian services and products and the new partnership is in line with their strategy… This is their first such partnership," Rakesh Deshmukh, cofounder of Indus OS, told ET.He added that the Samsung partnership will provide IndusOS access to 30% of the market base in India. In terms of absolute revenue generated, the sale of mobile apps in India was estimated at over $47 million in Q1 of 2018, according to Deshmukh.Deshmukh said India is dominated by a single app store, Google Play Store, which is not good for the market. In comparison, nine regional app stores control over 93% of China's app store market.According to Tarun Pathak, associate director at Counterpoint Technology Market Research, localisation is a big differentiating factor in the competitive smartphone segment."With only 15% of the population being fluent in English, localised app store experience and content can bring stickiness for Samsung users who are comfortable in local languages," he said.After losing the No. 1 spot, Samsung grew faster than the overall smartphone market and held a 22% market share in Q4 of 2018 against Xiaomi's 27%, according to Counterpoint. Pathak said Samsung continues to be the leading brand in terms of the installed smartphone base in India.