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Thursday, January 16, 2020

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


Vodafone Idea has just one week to save itself from extinction

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NEW DELHI | MUMBAI: Vodafone Idea is likely to approach the Supreme Court for extension of deadline to meet its obligations on adjusted gross revenue (AGR), and may also file a curative plea after its review petition on the court's October 24 ruling was dismissed on Thursday.The government has estimated Vodafone Idea's dues in the AGR matter to be more than Rs 53,000 crore, including over Rs 28,000 crore in licence fee, interest and penalties and the rest on spectrum usage charges (SUC). However, the company's internal calculation pegs it at Rs 44,000 crore. This, after the top court's judgment widened the definition of the revenue on which telecom companies need to pay their licence fee and spectrum usage charge to include non-core items."The immediate course of action for the company is to file for an extension of timeline, which is currently a week away, so that the company may find routes to raise the money and have some time to think the future course of action," a person familiar with the company's plan told ET. 73316189 Later in the day, Vodafone Idea said in a statement to the stock exchanges that it "is exploring further options, including filing of a curative petition".An email query sent to Vodafone Idea remained unanswered till press time.The person cited earlier said that in case the top court rejects the company's plea seeking an extension of deadline, Vodafone Idea might be forced into insolvency, as has been stated by the company's chairman, Kumar Mangalam Birla, earlier.Last month Birla had said, "If we are not getting anything, then I think it is end of story for Vodafone Idea. It does not make sense to put good money after bad… We will shut shop".Birla's remark had come close on the heels of Vodafone Group CEO Nick Read's statement in November last year that the joint venture between the Aditya Birla Group and Vodafone Plc may head for liquidation of India business if the government does not ease spectrum fees. Read had called the situation "critical, if you don't get the remedies being suggested".Nitin Soni, director (corporates) at Fitch, said that if Vodafone Idea's promoters don't inject fresh equity, the company's exit from the telecom space would be "imminent".Along with loss of jobs of about 10,000 employees, it could also be worrying for Indian banks to which the company has an exposure of close to Rs 30,000 crore out of the Rs 1,17,300 crore of gross debt sitting in its books.Vodafone Idea is also in the process of selling its data centres and optic-fibre assets, besides its 11% stake in Indus Towers, to help pare the debt. It had also raised Rs 25,000 crore in March, 2019, via a rights issue, a part of which it can use to pay the AGR dues, as per the modified objectives of the issue.The company which along with Bharti Airtel has been knocking at the government's door for a relief package for the telecom sector, which has seen a degrowth in its revenue owing to the intense price war unleashed after the entry of Reliance Jio Infocomm.Vodafone Idea last year posted India's worst ever corporate loss of over Rs 50,000 crore in the September quarter as it set aside nearly Rs 26,000 crore toward AGR dues. It had expressed doubts about continuing as a going concern if made to pay the entire AGR due amount."Vodafone Idea in all meetings with us has made it very clear that it has no money to pay," a senior telecom department official told ET.If Vodafone Idea does not meet the January 23 payment deadline, DoT will have to send demand notices. It then has the option of invoking bank guarantees and revoking its permits as a last resort, the official said.The final amount the company needs to pay will be calculated by the telecom department once concerned companies pay up dues after their internal assessments.The telco had filed a review petition in the Supreme Court, hoping for a reduction in penalties and interest, which account for 75% of the dues.

India Inc put off by Goyal's Amazon jibe

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NEW DELHI: Top executives at several multinational and Indian companies on Thursday took umbrage at commerce minister Piyush Goyal's comment that Amazon was not doing any favour to India by announcing a fresh $1 billion investment in the country."Until now it used to be a matter of pride to announce such big investments into India," said the chief executive of an MNC. "But if this is the response companies are going to get from the current dispensation, they will think twice before making or announcing investments here."The top executive of another company said this did not "reflect well" on India. "It will only drive foreign investments away," he said.On Thursday, while speaking at a security conference in New Delhi, Goyal sounded unimpressed by Amazon's pledge. "They may have put in a billion dollars but then if they make a loss of a billion dollars every year, then they jolly well have to finance that billion dollars," Goyal said. "So, it;s not as if they are doing a great favour to India when they invest a billion dollars." 73315924 Several of the business leaders ET talked to said they were offended by the minister's statement. They spoke on the condition of anonymity."This is not Indian culture. Mr Goyal's choice of words could have been better," said the chief executive of an Indian company.Over the months, the government has been taking a tough stand on alleged circumventing of Indian ecommerce rules by Amazon and Walmart-owned Flipkart. The chorus against Amazon and Flipkart is also getting louder every day from small traders to politicians.Earlier on Thursday, Vijay Chauthaiwale, the in charge of BJP's foreign affairs department, responded to a tweet by Amazon's founder Jeff Bezos that many believed was suggesting the world's richest businessman to rein in the Washington Post – also owned by Bezos – from making critical coverage on India. "Mr @JeffBezos, please tell this to your employees in Washington DC. Otherwise your charm offensive is likely to be waste of time and money," Chauthaiwale wrote, while reacting to tweet of a video by Bezos announcing the $1 billion investment in India. The American businessman has also made a comment that the 21st century belonged to India.A CEO of a large consumer-facing company said Goyal was making those comments out of compulsions to please small retailers and traders, who form the backbone of BJP's vote-bank, as the segment is perceived to be hurt by deep discounting and alleged predatory pricing by Amazon and Flipkart. "The government doesn't want to antagonise the trading community," he said. "But such statements would send a wrong signal to investors."The chief executive of a frontline consumer electronics maker lauded Amazon's investment plans and said any such capital infusion, especially at a time when the country was battling one of its worst slowdowns in years, should be welcomed. "Statements like these may impact MNC investor sentiments, especially at a time when the government is trying to promote Make in India 2.0," he said.

For Kishore Biyani, Phygital is Future

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NEW DELHI: Kishore Biyani, chief executive of the Future Group, Thursday said that traditional offline retailing and web commerce are not as distinct as they once were, with the odds shortening that the two channels to reach end consumers would head toward total convergence in the near future."Physical stores have their own advantages and nuances and digital has its own advantages," Biyani said in New Delhi at a conference organized by Amazon. "Both have come in different eras and in another 3-4 years, it will become phygital," referring to a retailing term visualises merger the two formats. "It has happened in the (other parts of the) world and it will happen faster in India."Biyani is one of India's most successful retailing pioneers, and is often credited with bringing organized retailing to a country serviced by millions of mom-and-pop kirana, or neighbourhood, stores. His web commerce ventures have been more circumspect, however.Now, Biyani is partnering with Amazon to expand his omnichannel business. Last year, Amazon invested around Rs 1,500 crore to buy a 49% stake in promoter company Future Coupons, a purchase that indirectly gave Amazon about 3.6% in Biyani's flagship entity Future Retail.As part of the agreement between the two companies, Amazon will be an authorised online sales channel for Future Retail, while its stores and warehouses will be used as distribution centres by Amazon for quicker delivery. Both retailers are already testing this service across 22 stores and have said that they will roll out the initiative across Future Retail's store network on agreed timelines.Biyani said that it was tough to build any brand in the initial days and labels struggled to find takers."Today, the customer is searching for brands," Biyani said. He added that the emergence of ecommerce in India has "changed the rules of the game" in terms of brand building. "Today, you search for a product (online) and discover a brand and start using it," he said. "So, the rules of engagement have changed."

Should Amazon's Jeff Bezos worry about India?

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By Andy MukherjeeJeff Bezos is in India at an awkward moment. Just before his visit, the country's antitrust authority ordered a probe into the business practices of its two main American-owned shopping websites. One of them is his.How worried should the Amazon.com Inc. boss be?If the Competition Commission's recently released study on e-commerce is any guide, Bezos shouldn't lose any sleep over the $6.5 billion he has committed so far — including $1 billion just this week — to win the only billion-person market that's open to Western tech firms. The document, which forms the basis for the antitrust investigation, has much fodder for action, but nothing that hasn't already been chewed over.Amazon India and Walmart Inc.-owned Flipkart Online Services Pvt. are required to be neutral online marketplaces. Sellers they own can't offer goods on their websites. That's the law, and sure enough, last year Bezos hastily sold a big chunk of Amazon's stake in Cloudtail, its top Indian partner, to stay on the right side of it. Flipkart, too, found a way to tiptoe around the requirement that foreign-owned platforms only facilitate e-commerce; they aren't allowed to control inventory or influence prices. 73315777 Yet many small retailers, who compete online, believe their products are outgunned in customer searches by preferred sellers — such as Cloudtail and Appario Retail Pvt for Amazon and OmniTech Retail India Ltd. for Flipkart — and their heavily discounted offerings. Here's how the Competition Commission's study frames the problem: "The price points at which these sellers sell the products on the marketplace platforms are in many instances lower than the cost price for the brick-and-mortar retailers. These retailers maintain that, therefore, they either have to match the online discounts at a significant loss or the online market would be foreclosed for them. This was pointed out to be a particularly pressing concern in the case of mobile phones, where online markets constitute around 40% of the total sales in the country."With a traders' association announcing sit-ins and protest rallies in 300 cities, Bezos understands the need to manage the anger of stakeholders in an important market. At a summit of sellers in New Delhi on Wednesday, he announced a fresh $1 billion investment to help bring small businesses online. To political authorities, Amazon wants to demonstrate the social usefulness of e-commerce by committing to export $10 billion of made-in-India goods by 2025. Can the competition investigation upend existing business models? There's a hint of a stick in the watchdog's study, which notes that, "Any potentially anti-competitive unilateral conduct of platforms or platforms' vertical arrangements with sellers/service providers will receive enforcement attention." Yet, in closing, the commission just asks the industry to police itself by working on things like describing search-ranking parameters "in plain and intelligible language."It'll be unrealistic to expect anything more dramatic from the formal inquiry. After all, the final customer isn't complaining. She would rather receive a bigger discount on a new mobile phone than ask why it's being exclusively sold online. More than any antitrust order, the real challenge for Bezos will come from "phygital" retail, a combination of physical and digital commerce that Mukesh Ambani, Asia's richest man, is currently piloting. Ambani's ambition is to link up 30 million neighborhood stores to the 360 million-plus customers of his 4G telecom network, Jio. If he can dominate grocery and fast-moving consumer goods by offering discounts, cashless payment, in-store credit and the convenience of home delivery, small shops around the country could become one gigantic storefront for his JioMart. If they share their purchase, sales and inventory data with Ambani, they may even get to enjoy lower borrowing costs from banks and nonbank financiers. They won't be as independent as they now are, but they will be bigger and more profitable, and more competitive against pure e-commerce. This future isn't too far away. The takeaway for the antitrust authority is that they can't put up new restrictions on Amazon and Flipkart based on the 7% of a $1.2 trillion retail market that's gone online. Major changes are afoot in the remaining 93% of the industry that's currently offline. Wait for the churn that comes after JioMart goes live. Bezos, too, will be waiting.

Jet Airways to sell Netherlands business to KLM

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Bankrupt Indian airline Jet Airways Ltd said it had agreed to sell its assets in Netherlands to Dutch airline KLM. If the deal is finalised, it will only involve a sale of part of the company's business and not impact the shareholding pattern, Jet said in a statement dated Jan. 16. It did not detail the assets held in Netherlands. Once India's biggest private carrier, Jet stopped flying in April after running out of cash, leaving thousands without jobs and pushing up air fares across the country. It was admitted to bankruptcy court in June after its lenders, led by State Bank of India SBI.NS, failed to agree on a revival plan. KLM, a part of Air France KLM, was once codeshare partners with the defunct airline and in the wake of Jet's collapse had added flights to India.

Kishore Biyani sees a ‘Phygital’ future for retail

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NEW DELHI: Kishore Biyani, chief executive of the Future Group, Thursday said that traditional offline retailing and web commerce are not as distinct as they once were, with the odds shortening that the two channels to reach end consumers would head toward total convergence in the near future."Physical stores have their own advantages and nuances and digital has its own advantages," Biyani said in New Delhi at a conference organized by Amazon. "Both have come in different eras and in another 3-4 years, it will become phygital," referring to a retailing term visualises merger the two formats. "It has happened in the (other parts of the) world and it will happen faster in India."Biyani is one of India's most successful retailing pioneers, and is often credited with bringing organized retailing to a country serviced by millions of mom-and-pop kirana, or neighbourhood, stores. His web commerce ventures have been more circumspect, however.Now, Biyani is partnering with Amazon to expand his omnichannel business. Last year, Amazon invested around Rs 1,500 crore to buy a 49% stake in promoter company Future Coupons, a purchase that indirectly gave Amazon about 3.6% in Biyani's flagship entity Future Retail.As part of the agreement between the two companies, Amazon will be an authorised online sales channel for Future Retail, while its stores and warehouses will be used as distribution centres by Amazon for quicker delivery. Both retailers are already testing this service across 22 stores and have said that they will roll out the initiative across Future Retail's store network on agreed timelines.Biyani said that it was tough to build any brand in the initial days and labels struggled to find takers."Today, the customer is searching for brands," Biyani said. He added that the emergence of ecommerce in India has "changed the rules of the game" in terms of brand building. "Today, you search for a product (online) and discover a brand and start using it," he said. "So, the rules of engagement have changed."

How global investors traded Rel Cap bonds at 70% discount

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Mumbai: Global distressed asset buyers are picking up Reliance Capital's junk-rated debt securities following an assurance by its home finance unit that 98% of retail debenture holders will get their money back, dealers said. Reliance Capital bonds worth Rs 565 crore changed hands in the secondary market in seven transactions at 70% discount this week.They said Deutsche Bank made the purchases from local investors on behalf of overseas investors on the hunt for distressed assets. Deutsche Bank declined to comment on the matter."With the chances of the company's revival having brightened to an extent, the level of discount is coming down," said the head of debt capital market at a local financial services company.Reliance Home Finance CEO Ravindra Sudhalkar said at a presentation two days ago that "98% of debenture holders would get their full payment," an investor who was present cited him as saying. "The company CEO addressed investors and made a PowerPoint presentation, which in turn gave investors a bit of comfort," the person said.The discount narrowed to 70% in the latest transactions from 80% in trades that took place in November last year, dealers said.Three deals took place on Monday and another three on Wednesday, each worth about Rs 90 crore. One deal of Rs 25 crore was sealed Thursday in unlisted bonds, dealers said. Reliance Capital was downgraded to 'D' or default on September 20 last year amid a liquidity crunch that has gripped nonbanking finance companies (NBFCs) for more than a year."The European bank has bought those papers because it will mostly sell those to its overseas clients, which are distressed asset buyers," said an executive with the direct knowledge of the matter.The weighted average price in the six deals on Monday and Wednesday was Rs 29.90 per Rs 100 face value. The latest deal on Thursday was at Rs 29.10."If you include the accrued interest into it, the deep discount will be marginally over 70%," said a debt market dealer.IDBI Trusteeship took Reliance Home Finance to the National Company Law Tribunal (NCLT), seeking to recover investments of Rs 3,500 crore after the Reliance Capital unit missed repayments, ET reported on January 10. It's acting on behalf of about 20,000 bondholders.The bankruptcy court, which heard the matter on Thursday, has given the company 10 days to respond.Reliance Home Finance is said to be receiving cash flows of about Rs 150 crore every month. The company has informed investors of its latest financial status."The monthly inflows should benefit the efforts to revive the company," said an investor who has about Rs 1 crore at stake.The company is working on reaching an inter-creditor agreement with banks and is believed to have made a settlement offer to the consortium of lenders lead by Bank of Baroda that involves converting loans to equity.eom

Trade setup: Nifty may continue to consolidate; stay stock specific

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The domestic stock market on Thursday consolidated on expected lines, as NSE Nifty opened on a positive note, but pared gains as the day progressed. After spending the entire session in a capped range, the headline index finally ended with a marginal gain of 12.20 points or 0.10 per cent at 12,355.50.The 50-stock pack has remained in a broadening formation, and is currently below the upper trend line of this formation. The rising nature of this trend line is preventing a clean breakout.It is also important to note that Nifty has formed this candle for the second day in a row, which suggests a loss in momentum at current levels. The present technical structure signals towards some consolidation.Friday's session is again likely to see a quiet start, with 12,390 and 12,410 levels acting as resistance. Support may come in much lower at 12,310 and 12,235. Any corrective move is likely to make the trading range wider than usual.73306695 The Relative Strength Index (RSI) on the daily chart was at 61.03 and stayed neutral, showing no divergence against the price. The daily MACD was bullish and traded above its signal line.A Spinning Top pattern was formed on the charts. The formation of this candle after a 'Hanging Man' in the previous trading session, suggests loss of momentum. Even though this would require confirmation on the next trading day, these candles have the potential to stall the rally.As per pattern analysis, Nifty has continued to resist the upper trend line of the current broadening formation over the past couple of weeks. The rising nature of the upper trend line is preventing a clean breakout in the index.Nifty has risen over 225 points over the past couple of sessions with a very little or no corrective moves at all. With the current loss of momentum, the consolidation looks imminent.Traders can expect some minor corrective moves in the front line index or some consolidate in a broad range. We would recommend traders to avoid aggressive builtup of positions and adopt a cautious view.(Milan Vaishnav, CMT, MSTA, is a Consulting Technical Analyst and founder of Gemstone Equity Research & Advisory Services, Vadodara. He can be reached at milan.vaishnav@equityresearch.asia)

Digital will soon cross 50% of Infosys revenue: Salil Parekh

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Infosys is seeing strong demand from clients since it started investing in digital technologies, helping offset a contraction in its core business, CEO Salil Parekh told. Parekh said that the digital business would cross more than 50% of its revenue as the IT services provider wins large deals from clients investing in technology to differentiate. Excerpts:It's looking up for the technology sector, isn't it?Demand is good, clients are buying (technology services). Most companies seem to be in a good place right now. We can certainly see from a client perspective that there is lot of interest (for our services). The pace of new investments is faster. People are ready to put money into making the change (towards digital).You had charted out a three-year journey. How is that progressing?We had laid out three or four elements on the journey and on each of those we seem to be progressing quite well. The one that is the most successful from a client perspective is the digital one, where we see a lot of traction. If you see, just over 40% of our company now is doing projects in digital, which is a big change. We will see more than half our company doing digital projects. The second one, which has also gone quite well, is the focus on large deals. In the first nine months, we have 56% more in large deals than the previous nine months, so the parameters there are in good shape. You have to keep executing. There is no change in the strategic direction, this is just execution.What are the other factors that helped?The good news was that there was a good macro-environment. If you have a negative macro-environment, then it is more difficult or takes longer. The thing that really helped was the inherent strength of Infosys because, as you know, we have inherently the same team that is driving it.Will you be able to maintain double-digit growth, and as digital grows, will you see margins expand?My focus is on this fiscal year. We are not saying anything on growth beyond. What I am very clear on is, where we have made the investments and created the differentiation, we see good traction. Three areas are giving us a lot of momentum — cloud, it is even faster than the area of digital; data, there is not one client that is not talking about transforming their data; and the third is (user) experience and how they look at technology.Digital is growing, even though your core is shrinking. How do you manage this transition?The main driver for this is clients changing their spend and that is more in the new areas. From our perspective, our core is still extremely strong and competitive, especially building on automation and artificial intelligence.Reskilling (of employees) is going at an extraordinary pace. Over 200,000 of our employees have downloaded and are using the online Lex (Infosys' learning platform) tool regularly. In the last quarter, we had about130,000 employees take some course-work from that. During weekdays, people do almost 35 minutes of training, on weekends almost 60 minutes. Because people are getting reskilled, there is demand for them to get on projects.Both have to happen in parallel. Clients changing their perspective and us being ready with our investments, so we can go after this work and then having this talent pool who can do this work for clients.Does this help stem attrition?We have already seen huge progress. In the last quarter, we were at 15% in the voluntary attrition level. It is down quite dramatically from a few quarters ago. One of the things is the reskilling and new work. To ensure that the journey of employees is very straightforward and smooth and the journey is well understood and clear, we are looking at building more and more teams from inside. All of those things have come into play.Are the restrictions on visas a concern for employees?We have added 12,000 new recruits in India. We also have a large number of applications (for US visas) still going on. There are a lot of opportunities in markets such as Europe, Canada and Australia, and we have a lot of those available for employees.With the elections in the US, do you think there will be rhetoric about immigration starting up again?I don't think we have seen anything different. Of course, it is the election year, so we will have to see what comes about it. But we have seen some of the (immigration) processes become more refined. The regulations are the same, but the processes are more refined. My guess is that this will continue. We have been quite focused and we have applied, as you know, for a large number of visas.Analysts say clients may hold off spending...Right now, our main focus is to close out the fiscal year. For this year, we have increased our guidance and we see good traction in many of our segments. Between now and the end of March, we look at how the next fiscal year is going to look, obviously the election falls right in the middle of that.Our process is also a combination of bottom-up — working with each of our segments and service offerings — and also a little bit outside in working with clients and seeing what the patterns are.

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