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Thursday, January 9, 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


Cyrus Mistry's Irish passport was a sore point for Ratan Tata

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Mumbai: One of the peeves that some Tata group directors held against Cyrus Mistry, the ousted chairman of Tata Sons, was about not honouring his stated intention to relinquish his Irish citizenship that he expressed while being considered for the top job, people aware of the matter said.In an interview held in the first week of September 2011 to shortlist a chairman candidate for Tata Sons, the selection committee comprising of N A Soonawala, R K Krishnakumar, Lord Bhattacharyya and Shirin Bharucha had raised a question on Mistry's Irish citizenship and whether he would relinquish his foreign nationality. 73180894 Mistry had allayed all apprehensions then by stating that regardless of whether he got the job (Tata Sons chairmanship), he was considering this (relinquishing his foreign citizenship status) for some time.ET has reviewed the note that summarised the interview.The Tatas have not raised this issue in any legal forum so far, but legal sources close to the group said many such intentions expressed by Mistry were never backed up by any concrete action from his side.Mistry continues to be an Irish citizen and has been touted by the Irish media as one of the richest Irish nationals, Tata Group sources said.People close to Shapoorji Pallonji group claimed that Mistry did submit his papers for Indian citizenship. "That didn't happen because as per the law, Mistry would have to stay in the country for 11 months after application," one of them said.The Tata Group selection committee had also interviewed many international candidates for the Tata chairman's role, lawyers close to SP group said, indicating that the group was at that time open to hiring an expatriate for the top job.Officials at SP group also said Noel Tata, half-brother of Ratan Tata, is an Irish citizen. He is married to Aloo, Mistry's sister. "If Tatas are so concerned about Cyrus's citizenship, how come they have Noel, an Irish citizen, on the Tata Trusts," an official riposted.However, the other side contended that Noel Tata was not a contender for the chairman's post and therefore it was a wrong comparison.Responding to ET's queries, lawyers from SP Group said: "All the issues raised by the Tata Group in legal proceedings have been deliberated at length and rejected by the hon'ble courts. Any new allegation, however, baseless it may be, will be dealt with at the appropriate forum."The Mistry family had to give up their Indian citizenship and become Irish citizens in 2003 because the Indian government did not approve of dual citizenship.Some people close to Tata Trusts have strongly reacted to the statement Mistry made on Sunday, that he is not interested in returning as the chairman of Tata Sons but would "vigorously pursue all options to protect our rights as a minority shareholder including a seat on the board". They refuted the existence of any agreement or legal right for the Mistry family to demand a board seat. A Tata Trusts official alleged that Mistry is "mischievously attempting to portray an incorrect picture of the affairs of Tata Sons in order to wrestle a board seat for his family entities."A strong legal rejoinder in the Supreme Court is underway and officers preparing legal submissions for Tata Group and the Trusts referred to their submissions before the National Company Law Appellate Tribunal (NCLAT) that prove that the Mistry family companies became shareholders of Tata Sons in 1965.Yet, it was only in 1980, 15 years later, that Pallonji Mistry (Cyrus Mistry's father) was invited to the board of Tata Sons. That was in his professional capacity, with no linkages to the shareholding of his family companies in Tata Sons, a legal officer said. Pallonji senior exited the board of Tata Sons in 2004, and it was only in 2006 that Cyrus Mistry was invited to join the board of directors.The group has challenged Mistry to produce any written document that establishes any legal right his family entities have to nominate a director on the board of Tata Sons. To bolster their case, they have cited court papers that indicate that the SP group has voted in favour of every right of Tata Trusts incorporated in Articles of Association of Tata Sons.

Start a new business in India in just 5 days

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You may now be able to start a new business in five days with minimal processes. The government is set to slash the requirements & time taken for starting a new business from 10 process and 18 days to five processes and as many days.Ten key services, including name reservation, incorporation as well as registration for various taxes such as goods and services tax, will soon be available via two forms instead of multiple individual ones at present.The Ministry of Corporate Affairs will in a month unveil the two new forms — 'Spice Plus' and 'Agile Pro' — which will replace six forms currently required to avail of these services, a government official said.These two forms will provide access to GSTIN, PAN, TAN, ESIC, EPFO, DIN, bank accounts and professional tax."The new forms will be web-based and much easier to use. The Spice Plus (incorporation form) will allow you to apply for name and incorporation in the same form besides other paservices," the official said. Businesses will now have to register with the Employee State Insurance Corporation (ESIC) and Employees' Provident Fund Organisation (EPFO) at the time of incorporation, the official said. Inclusion of director identification number (DIN) and registration for professional tax along with registrations of permanent account number (PAN), tax deduction and collection account number (TAN) and GST identification number (GSTIN) at the time of incorporation would greatly improve the ease of setting up a business. 73178951 World Bank's latest Ease of Doing Business (EoDB) report has measured the number of days required to set up a business in India at 18, and the number of processes at 10.On the World Bank's list, India is ranked 136th out of 190 economies in the category of ease of starting a business.Improving ease of doing business has been a key agenda of the government, with India climbing 14 ranks to 63rd in the latest rankings.The official said the ministries of corporate affairs, finance and labour, as well as the state government of Maharashtra had coordinated to bring about this reform.The government had also tied up with eight banks to help newly registered businesses apply for bank accounts at the time of incorporation, the official said.

What Sachin Bansal got from DHFL fire sale

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MUMBAI: Flipkart cofounder Sachin Bansal has acquired DHFL General Insurance from Wadhawan Global Capital (WGC) for around Rs. 100 crore, people in the know of the deal said. The transaction is seen as a distress sale for WGC, which used to run bankrupt home financier Dewan Housing Finance, one of the persons said.Bansal's bet on the insurance firm is part of his broader ambition in financial services industry, and comes on the back of multiple investments he has made to bulk up his portfolio of firms in the sector. 73180951 The deal has been routed through Navi Technologies, formerly BAC Acquisitions which Bansal had founded along with IIT-Delhi batchmate Ankit Agarwal after selling stake in Flipkart in 2018.Sources said Bansal has bought out the entire stake in the insurer, held by Kapil Wadhawan-owned WGC."Navi is actively scouting for opportunities in BFSI space," a spokesperson for the company said when contacted by ET. "Specifically, it is interested in the intersection of technology and financial services, where we believe technology can be harnessed to improve access and availability of financial services," the spokesperson said.Rs 400 Cr AUMA spokesperson for WGC did not comment. Dewan Housing, which was the flagship company of WGC, is currently facing bankruptcy resolution in the National Company Law Tribunal (NCLT). WGC, which owns 39% in the mortgage lender, used to manage more than $22 billion of assets through its lending, investment and protection platforms before Dewan Housing was taken to the NCLT.DHFL General Insurance has about Rs 400 crore assets under management."Bansal wants to get a footing into the banking and financial services sector. There has been a lot of talk about him being keen on obtaining a banking licence and has been looking at opportunities in the asset management space," a source said.Bansal's move to step into the insurance sector comes on the back of Navi Technologies acquiring a majority stake in Chaitanya Rural Intermediation Development Services, which runs a microfinance platform. Having picked up more than 90% stake in Chaitanya, he took over as its chief executive last year. He had at the time said he would invest ?739 crore in the NBFC.Recently, Navi bought out Bengaluru-based MavenHive for an undisclosed sum, bringing on board employees along with founders Bhavin Javia and Anandha Krishnan.Among the most active entrepreneur investors, Bansal has been actively backing startups for the past few years. After his departure from Flipkart, he began focussing on financing through debt in the past year, backing startups like Bounce, Vogo and a host of financial services companies such as Altico Capital and IndoStar Finance.In one of his largest investments, he had pumped in Rs 650 crore into Ola.As for WGC, early last year it sold a 49.04% stake in Avanse Financial Services, another group company where Dewan Housing held 30.63%. The Warburg Pincus group was the buyer.PE funds managed by Blackstone acquired a 97.7% stake in Aadhar Housing Finance, which included the entire stake held by existing controlling shareholders, WGC and Dewan Housing, in June last year.

CCI’s ‘soft view’ on Ecomm rules irks phone retailers

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NEW DELHI: Mobile phone retailer bodies are disappointed with the competition watchdog's call to ecommerce companies to self-regulate discounting and transparency, and have urged the government to form a separate regulatory body to oversee fairness in retail practices of the likes of Amazon and Flipkart.The Competition Commission of India (CCI) on Wednesday released a study on etailers' business practices, advising them to adopt a self-regulatory approach and come up with transparent policies on search ranking, discounting and treatment of user data.The All-India Mobile Retailer Association (AIMRA) and the Confederation of All India Traders (CAIT) have, in the past, moved CCI and the Department of Industries and Internal Trade (DPIIT) with a demand for a separate watchdog to ensure a level playing field for offline and online trade.On Thursday, they said CCI's recommendations were no solution. "Knowing well the unfair and monopolising business tactics of ecommerce companies, what is preventing CCI from taking action? Why these recommendations and soft view on irregularities?" CAIT secretary general Praveen Khandelwal tweeted.CAIT national secretary Sumit Agarwal also tweeted, "The report gives enough details as to how ecommerce marketplaces are indulging in unethical business practices such as predatory pricing and deep discounting."The CCI report said it can probe unfair practices by etailers on case-to-case basis to investigate issues such as deep discounts, exclusive agreements between platforms and suppliers, business terms and platform neutrality. But traders believe CCI's provision is against their interests, as poor traders do not have the resources to file lawsuits against ecommerce giants and indulge in long battles which might take years to get resolved.73178834 "If they (ecommerce players) wanted to self-regulate, they would have never indulged in unfair practices and flouted FDI norms in the first place," said Arvinder Khurana, president, AIMRA. Khurana said CAIT and AIMRA representatives are likely to meet commerce minister Piyush Goyal next week to put forward their concerns."Regulatory mechanisms cannot change in India overnight as it can hurt FDI interests," said a person who did not wish to be identified. "That is the reason the government will do due diligence before taking any such step."Retailer associations have been relentlessly campaigning against exclusive deals, cashback offers and 15-20 day prior launches by mobile brands on their online channels. Post multiple grievances submitted to mobile manufacturers, Vivo, Oppo and Realme have assured their retail partners that they will simultaneously launch products,variants at the same price across channels.As per AIMRA, more than 30,000 brickand-mortar store traders have shut shop since the 2019 festive season due to pricing pressure, which is killing offline trade. Around two million mobile traders closed their stores on Wednesday in solidarity with the campaign against etailer malpractices. Offline channels contribute 60% in the overall mobile sales, according to industry estimates.

CCI’s ‘soft view’ on E-comm rules irks phone retailers

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NEW DELHI: Mobile phone retailer bodies are disappointed with the competition watchdog's call to ecommerce companies to self-regulate discounting and transparency, and have urged the government to form a separate regulatory body to oversee fairness in retail practices of the likes of Amazon and Flipkart.The Competition Commission of India (CCI) on Wednesday released a study on etailers' business practices, advising them to adopt a self-regulatory approach and come up with transparent policies on search ranking, discounting and treatment of user data.The All-India Mobile Retailer Association (AIMRA) and the Confederation of All India Traders (CAIT) have, in the past, moved CCI and the Department of Industries and Internal Trade (DPIIT) with a demand for a separate watchdog to ensure a level playing field for offline and online trade.On Thursday, they said CCI's recommendations were no solution. "Knowing well the unfair and monopolising business tactics of ecommerce companies, what is preventing CCI from taking action? Why these recommendations and soft view on irregularities?" CAIT secretary general Praveen Khandelwal tweeted.CAIT national secretary Sumit Agarwal also tweeted, "The report gives enough details as to how ecommerce marketplaces are indulging in unethical business practices such as predatory pricing and deep discounting."The CCI report said it can probe unfair practices by etailers on case-to-case basis to investigate issues such as deep discounts, exclusive agreements between platforms and suppliers, business terms and platform neutrality. But traders believe CCI's provision is against their interests, as poor traders do not have the resources to file lawsuits against ecommerce giants and indulge in long battles which might take years to get resolved.73178834 "If they (ecommerce players) wanted to self-regulate, they would have never indulged in unfair practices and flouted FDI norms in the first place," said Arvinder Khurana, president, AIMRA. Khurana said CAIT and AIMRA representatives are likely to meet commerce minister Piyush Goyal next week to put forward their concerns."Regulatory mechanisms cannot change in India overnight as it can hurt FDI interests," said a person who did not wish to be identified. "That is the reason the government will do due diligence before taking any such step."Retailer associations have been relentlessly campaigning against exclusive deals, cashback offers and 15-20 day prior launches by mobile brands on their online channels. Post multiple grievances submitted to mobile manufacturers, Vivo, Oppo and Realme have assured their retail partners that they will simultaneously launch products,variants at the same price across channels.As per AIMRA, more than 30,000 brickand-mortar store traders have shut shop since the 2019 festive season due to pricing pressure, which is killing offline trade. Around two million mobile traders closed their stores on Wednesday in solidarity with the campaign against etailer malpractices. Offline channels contribute 60% in the overall mobile sales, according to industry estimates.

No financial and technical yardstick for coal auctions

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NEW DELHI: India's upcoming coal auctions will have no financial or technical qualification criteria for bidders, easing entry for interested firms, but will impose penalties strict enough to prevent companies from squatting on mines."The coal ministry has decided against keeping any entry restrictions based on technical or financial criteria, which means there are not likely to be any net worth requirement for firms. The government will incentivise expeditious coal production by firms than restricting entry to ensure serious players," a senior coal ministry official said.The coal ministry will soon issue draft auction rules and they will be discussed with stakeholders before finalisation, he said. The rules will propose relaxed norms to ensure wider participation in the auctions to increase coal availability. The centre expects coal demand of 1,250 million tonnes in 2024, which can in no way be met by state-run Coal India alone, forcing the country to move to this market-driven approach.73178667 The Mineral Laws (Amendment) Ordinance 2020 promulgated by Union Cabinet on Wednesday proposed removal of the requirement to auction mines to companies 'already engaged' in coal mining in India. The ordinance opens up the coal sector completely for commercial coal mining for all local and global firms by clearing restrictions on end-use and prior experience in auctions. The ordinance had not received President's consent till this report went to press.The official said companies that have enough money to pay upfront payment, in instalments, and deposit performance guarantee or earnest money deposit can participate in the auctions. "The upfront payment will be asked in instalments and the performance guarantee will be kept at levels that dissuade bidders from defaulting or squatting on mines," another official in the ministry said.Welcoming the ordinance, Ashok Khurana of Association of Power Producers said the extent of private participation would be contingent on "auction design and 'quality of mines" put up for auction. ET had on November 19, 2019 reported that the coal ministry will auction coal blocks for commercial coal mining on revenue-sharing basis.

Retail stocks set for re-rating as consumer spends improve

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Continuation of the growth trend in the sector, huge valuation premium given to leaders like Reliance Retail and Avenue Supermart, more than Rs 1,500 crore of investments by Amazon into Future Retail and clear ecommerce plans would drive a re-rating in the shares of Indian retail companies, according to analysts.Shares of Trent, Future Retail, Shoppers Stop, Spencer's Retail and Aditya Birla Fashion have gained between 4 per cent and 6 per cent since January 1. Analysts expect Future Retail, Aditya Birla Fashion, VMart, Spencer's, Arvind Fashion and TCNS Clothing to likely outperform the market in 2020.Growth in the retail sector is expected to pick up in the first half of fiscal 2021, because of a likely improvement both in consumer sentiment and liquidity environment, said Kaustubh Pawaskar of Sharekhan. "Companies having sustained same-store-sales growth, steady improvement in operating margins and stable balance sheet will continue to trade at a premium to companies having volatile profitability and stress balance sheet." 73181623 Reliance Industries recently offered the shareholders of its Reliance Retail subsidiary an option to swap their units with the parent company's shares.The swap ratio valued the retail business at around Rs 2.5 lakh crore, or a price-to-earnings of 64x. Avenue Supermart, which runs the D'Mart retail chain, currently trades at a PE of 106 times with a market cap of Rs 1.18 lakh crore."Within the sector, players with strength in private labels will continue to outperform others," said Abhimanyu Sofat, the head of research at IIFL Securities. Over the long term, stocks like Avenue Supermarts and Trent will outperform other due to their unique business models, Sofat said.Retail fashion companies have accelerated the pace of store addition in the recent past, mainly in Tier II/III/IV cities. Westside has superior store economics in the fast-fashion segment, while Zudio and V-Mart enjoy that in the value-fashion category.The store economics of Aditya Birla Fashion-owned Pantaloon is likely to improve, as revenue contribution from mature stores increase with the highest ever store addition in in FY2019."Future Retail with the largest store network will be the biggest beneficiary of the increasing change in consumer spending habits," said Alok Shah of Edelweiss Securities. "Having cracked the hypermarket model with Big Bazaar, the company is on the journey of store expansion and turnaround in the convenience store format, Easy Day."As per a recent report by the World Economic Forum, rural per capita consumption will grow 4.3 times by 2030, outpacing urban India where it is projected to be three-and-a-half fold.While India's top 40 cities will form a $1.5 trillion opportunity by 2030, there will be an opportunity to unlock $1.2 trillion spending in developed rural areas with 240 million consumers, by improving access to organised and online retail."Like other retail operators, VMart is expected to be a beneficiary of high operating leverage once spending in non-metros picks up," Reliance Securities analyst Priyank Chheda said. "ABFRL's (Aditya Birla Fashion) lifestyle brands are likely to continue its leadership position in fashion segment. Pantaloons' segment is all set to witness profitable growth after years of investments leading to improved capital efficiency ratios and higher incremental RoCE (return on capital employed)."

Will new CEOs at Tata Global, BCC improve performance?

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ET Intelligence Group: Tata Global Beverages (TGB) and Bajaj Consumer Care (BCC) are getting outsiders from unrelated consumer businesses to helm their respective fast-moving consumer goods (FMCG) companies.The two CEOs are coming on board at a difficult time for the industry, when consumer demand has turned sluggish amid economic slowdown. Investors of each company are likely to have different expectations from the new appointees since stock of TGB hit a record high last month while that of BCC's has slid 55 per cent from its record high seen in January 2018.Sunil D'souza, currently the managing director of Whirlpool India, is replacing TGB CEO Ajoy Misra, a company veteran, who retires in April this year.D'souza has his task cut out at the mid-sized TGB. One involves overseeing the integration and subsequent leverage of the consumer brands of Tata Chemicals (in salt, spices, pulses, etc.) that are being acquired by TGB; second will be to improve the return on capital employed of the consolidated business.The brand presence and market penetration of the company's beverage and water brands need to be increased. The profitability of the business, which remains exposed to volatility in prices of tea and coffee in global markets, also warrants attention. Incidentally, D'souza leaves a successful legacy at Whirlpool. The stock of the consumer durable company soared 68 per cent in 2019 against the 19 per cent gain posted by the ET Consumer Durable Index and 12 per cent by the benchmark Nifty 50 index. 73181281 Jaideep Nandi, the new CEO of BCC who has joined the company this month, is a veteran from the paints industry leader Asian Paints. He is joining the smallsized FMCG company at a time when its business has been going through a difficult period of contracting growth in the hair oil category and slowdown in rural demand.Last April, BCC hired management consultant Bain & Co on board to chalk out its strategy for growth — appointment of a new CEO seems part of that strategy. Promoters have pared the company's debt through selling their stake. The new CEO needs to push the company's market share in the hair oil category as well as improve profitability through cost rationalisation and change in product mix.FMCG companies have traditionally changed CEOs during volatile times and that has often resulted in better shareholder returns.During 2013 and 2014, eight leading companies of the BSE FMCG Index appointed a new CEO. In four of these companies (HUL, Marico, Britannia and Nestle), the performance of the company's stock remarkably improved in the year following the change at the top.In five of these companies (HUL, Marico, Britannia, Godrej Consumer Products and Colgate Palmolive), a change at the top led to superior operational performance over the trailing four quarters, characterised by double-digit revenue growth and improvement in operating margin.

India to tweak proposed content regulations to ease burden on some: Sources

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BENGALURU: The government plans to change the proposed rules for policing online content such that the tough monitoring measures and takedown rules apply only to big social media firms, according to a senior government official.In 2018, the Ministry of Electronics and IT (MeitY) proposed to amend the Information Technology (Intermediaries Guidelines) Rules under Section 79 of the Information Technology Act, 2000 to make social media firms more accountable for the content that they host.The IT Act currently provides a legal shield for technology intermediaries. Industry associations and cloud companies have objected to the proposed rules, which apply to all technology platforms despite it being framed to tackle the problem of 'fake' news on social media."The rules are meant only for social media content and, therefore, other ecommerce or streaming technology firms such as Amazon and Netflix must not worry about content takedown, traceability and grievance officer," the official said.IT industry lobby group Nasscom and Amazon Web Services (AWS) said last year that the rules must apply only to social media companies and not to technology intermediaries such as cloud platforms and the IT and business process management (BPM) sectors.AWS said such intermediaries will have to bear the cost of complying with provisions that do not apply to them. Facebook, YouTube and TikTok are among the companies expected to be impacted by the amendments to the guidelines.Notification of the new rules is likely to be done by January 15, MeitY said in an affidavit to the Supreme Court last year.