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Monday, February 10, 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


India's Rs 6,500-crore fraud chase could end in Montenegro

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Rashmi Rajput & Jaikishan YadavMUMBAI: Agencies probing the alleged bank fraud involving Winsome Diamonds & Jewellery promoter Jatin Mehta and his family members suspect that the Mehtas could have moved their base to the Balkan country of Montenegro in Southeast Europe, source privy to the development told ET.According to these sources and documents reviewed by ET, a few companies floated in Montenegro capital Podgorica are linked to Mehta and his family. Information available on the website of the registrar of companies, Podgorica, shows that two limited liability companies — Pegasus Consultancy Ltd and Adamas International, bearing registration numbers 50816580 and 50816614, respectively — were registered on December 25, 2017.The 'face in society' of Pegasus Consultancy is Jatin Rajnikant Mehta while that of Adamas International is his wife Sonia who owns 100% of the firm. Both companies are into the business of non-specialised wholesale trade, share the same address, and are headquartered at the plush George Washington Bulevar No 108.Another limited liability company registered in Podgorica in 2017, Mehta Global Company has Mehta's aide Munish Kumar is its director, holding 100% shares. It is into restaurant and food services activities. 74073290 "Post the scam came to light, the Mehtas were suspected to have fled to St Kitts and Nevis island around 2013," said an official privy to the development. "Information has now come to light that they have managed to procure the citizenship of Montenegro and have managed to float a few companies there."While the Mehtas have "maintained their traditional business of lab grown diamonds, there is also information to suggest that they have also ventured into real estate and have acquired land parcels where they are building properties for sale", the official said.The Gujarat-based diamond merchant owes more than Rs 6,500 crore to a consortium of banks. In 2016, Winsome Diamonds was declared a "wilful defaulter".At least four central agencies — Enforcement Directorate (ED), Central Bureau of Investigation (CBI), Serious Fraud Investigation Office (SFIO) and the income-tax department — are probing the Mehtas.In 2018, the CBI filed a chargesheet against 21 people, including Mehta, his wife Sonia, two former chairman and managing directors of Canara Bank and 15 public servants. In the same month, CBI had sought a Red Corner Notice (RCN) against him but till date the Interpol hasn't acceded to the request.Recently, CBI had learnt that in June 2018 Mehta travelled in his private jet to London Gatwick airport. "His aircraft record shows that he travelled to London in June 2018 but there is no clarity on which country he flew back to," one of the officials said. "That bit is still under the scope of investigation."

RBI gets a call from US for Lakshmi Vilas

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MUMBAI: US fund house Tilden Park Capital Management has sounded out the Reserve Bank of India (RBI) for buying a sizeable stake in Lakshmi Vilas Bank (LVB), an old private sector lender which is scouting for investors to shore up capital.An official of the New York-headquartered asset manager and senior members of LVB management recently met RBI to explore the possibility.Tilden was introduced to LVB by Cantor Fitzgerald, the New York-based financial services firm where former Deutsche Bank co-CEO Anshu Jain is part of the top leadership team.In any 'control transaction', where the investor plans to acquire a substantial — even if not a majority — interest, the regulator as well as the investee bank have to do a detailed check of the background and credentials of the investor. In such cases, RBI may even consult the regulator of the overseas investor's home country. Any investment of 5% or more in a private bank requires prior approval of RBI.There is regulatory precedence of allowing a strategic investor to acquire a large stake in a private bank with the condition that it has to dilute holding to 15% over a period of time following a lock-in term.According to regulatory circles, after RBI disallowed the merger of LVB with Indiabulls Housing Finance, the bank wants to make sure that the regulator approves the investor. 74072999 Talks with Tilden at preliminary stageIt is understood that talks with Tilden are at a preliminary stage and key issues such as pricing or fund infusion have not been discussed.LVB is operating under regulatory restrictions laid down in RBI's prompt corrective action (PCA) framework. The bank, with an asset size of Rs 31,500 crore, will need at least Rs 1,000-1,500 crore of immediate fund infusion with its capital adequacy level at 5.56% at the end of September against the minimum 8% required under regulations. It suffered a loss of Rs 357 crore after providing Rs 312 crore for bad loans in the quarter ended September.DBS of Singapore, which is keen to expand its presence in India, has also shown interest in the Indian bank. "LVB's 560-odd branches is an attraction for the Singapore bank. DBS, which functions as a subsidiary of the Singapore parent, is believed to have approached Indian authorities on the matter," said an industry source.ET's email queries to Tilden went unanswered till the time of going to press while LVB CEO S Sundar could not be reached. A DBS spokesperson said: "As a matter of policy, we do not comment on such matters."The LVB stock has declined 69% to Rs 18 in the past one year. During the period, entities belonging to Capri Group led by Rajesh Sharma have bought more than 4.6% of LVB shares from the open market. Last year, Capri had expressed interest to infuse capital in the bank, but this was not pursued by the board which had initiated talks with Indiabulls.

Will Delhi pick Kejriwal again? Results today

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Corona outbreak to cast its shadow over 5G rollout

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KOLKATA: The government is likely to face tough times auctioning costly 5G spectrum before January-February 2021 with the deadly coronavirus outbreak in China showing no signs of abating, analysts and industry insiders said.A prolonged epidemic, they said, could slow down 5G rollouts and devices ecosystem development globally, including in India as Chinese vendors such as Huawei have been leading the charge on the 5G front. Such a scenario could potentially spoil the business case and returns prospects for struggling Indian telcos to bid aggressively in a 5G airwaves sale any time soon, they added."If the coronavirus menace continues for a few more months, the government may find it challenging to auction expensive 5G spectrum before January-February 2021 since a prolonged epidemic would hit 5G network deployments and devices availability in India too, further reducing the business case for local telcos to participate meaningfully in any early 5G airwaves sale this year," Rajiv Sharma, research head at SBICap Securities told ET.Nitin Soni, director (corporates) at global rating agency Fitch, backed the view, saying "the continuing coronavirus outbreak in China would further delay 5G (services) in India as production of 5G network equipment at Huawei may be hit".Soni expects the next auction "to be delayed anyways as 5G spectrum is expensive coupled with the limited business case for 5G (technology) in India".The government plans to offer 4G spectrum across the 700 MHz, 800 MHz, 900 MHz, 1800 MHz, 2100 MHz, 2300 MHz and 2500 MHz band, besides 5G airwaves in the 3.3-3.6 GHz bands. The sale, planned in the first quarter of FY21, is slated to see some 8,293.95 units of airwaves at an estimated total base price of Rs 5.86 lakh-crore.Telcos though downplayed the coronavirus impact on 5G network rollouts in India, saying non-Chinese vendors could easily step up production levels, though they conceded devices availability could take a hit.Rajan Mathews, director general of Cellular Operators Association of India (COAI), said "availability of 5G smartphones in India may be impacted" if the coronavirus epidemic continues for some more months but does not foresee a serious impact on 5G rollouts. "Ericsson, Nokia and Samsung can collectively cater to India's 5G gear needs in case of supply challenges from Huawei and ZTE".COAI represents Big 3 telcos, Airtel, Jio and Vodafone Idea."We are not too perturbed about the coronavirus impact as actual 5G rollouts in India are at least 18 months away, but the DoT needs to speed up clearance for the 5G trials that is held up for over a month, reduce 5G spectrum base price and include efficient 26 GHz millimetre wave spectrum in the pool of bands for the next auction to boost the 5G business case in India," said Mathews.

Efficiency parameters soon to aid EV battery swapping

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New Delhi: The government will soon frame efficiency parameters for batteries powering electric vehicles (EVs) as it invites bids for setting up gigafactories or giant battery plants in India. A high-level panel has been set up under the Bureau of Energy Efficiency to frame performance criteria and efficiency parameters that can help battery swapping in EVs.A senior government official told ET that there was an agreement at a NITI Aayog CEO Amitabh Kant-led meeting last month on battery swapping option to be adopted for quicker uptake of EVs and hence the need for standardisation of advanced chemistry cells."A high-level panel has been set up to determine this," said the official. "Standardisation of form factor would allow interoperability, thus catalysing the uptake of EVs."Battery swapping will allow consumers to replace depleted batteries with fully charged ones in just a few minutes instead of recharging, which can take several hours, But this can only happen once standards and parameters are in place and adhered to by all battery manufacturers.74073320 According to the official, the government wants Made in India batteries to be technologically agnostic wherein the efficiency of the cell as well as life cycle is defined. While safety and mechanical parameters for lithium-ion batteries are already in place, the government now wants to define the performance parameters for batteries or advanced chemistry cells.NITI Aayog, the government's premier think tank, has been driving the government's mission on transformative mobility with quicker transition to EVs with the objective of cleaning up Indian cities and ensuring India reduces its dependence on imported fuel.The Aayog will soon invite bids for setting up gigafactories in India with cumulative battery production of 50 GWH. Typically, a gigafactory with 10 GWH capacity requires an investment of $1 billion.Companies will be awarded the contract based on their net worth, production capacity, scale-up plan and extent of localisation. One gigawatt hour of battery capacity can power a million homes for an hour and around 30,000 electric cars.The government has laid out a road map which envisages the share of EVs in total vehicles sold in the country after 2030 to be 30%. Conservative estimate shows that by 2030 India would need 60 GWH of battery for 10 years starting this year.It is estimated that once battery manufacturing picks up pace in India it will be possible to bring down the cost of these batteries from $276 per kilowatt-hour (kWh) to $76 per kilowatt-hour. This is expected to bring the cost of EVs almost on a par with combustion (engine) cars in the next three-four years. Batteries account for more than half the cost of an EV.The finance ministry has already given its go-ahead to the Aayog's Rs 700 crore per annum proposal to subsidise battery manufacturing in India starting 2022.

Winsome diamonds fraud case: Mehta family may have moved to Montenegro

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Rashmi Rajput & Jaikishan YadavMUMBAI: Agencies probing the alleged bank fraud involving Winsome Diamonds & Jewellery promoter Jatin Mehta and his family members suspect that the Mehtas could have moved their base to the Balkan country of Montenegro in Southeast Europe, source privy to the development told ET.According to these sources and documents reviewed by ET, a few companies floated in Montenegro capital Podgorica are linked to Mehta and his family. Information available on the website of the registrar of companies, Podgorica, shows that two limited liability companies — Pegasus Consultancy Ltd and Adamas International, bearing registration numbers 50816580 and 50816614, respectively — were registered on December 25, 2017.The 'face in society' of Pegasus Consultancy is Jatin Rajnikant Mehta while that of Adamas International is his wife Sonia who owns 100% of the firm. Both companies are into the business of non-specialised wholesale trade, share the same address, and are headquartered at the plush George Washington Bulevar No 108.Another limited liability company registered in Podgorica in 2017, Mehta Global Company has Mehta's aide Munish Kumar is its director, holding 100% shares. It is into restaurant and food services activities. 74073290 "Post the scam came to light, the Mehtas were suspected to have fled to St Kitts and Nevis island around 2013," said an official privy to the development. "Information has now come to light that they have managed to procure the citizenship of Montenegro and have managed to float a few companies there."While the Mehtas have "maintained their traditional business of lab grown diamonds, there is also information to suggest that they have also ventured into real estate and have acquired land parcels where they are building properties for sale", the official said.The Gujarat-based diamond merchant owes more than Rs 6,500 crore to a consortium of banks. In 2016, Winsome Diamonds was declared a "wilful defaulter".At least four central agencies — Enforcement Directorate (ED), Central Bureau of Investigation (CBI), Serious Fraud Investigation Office (SFIO) and the income-tax department — are probing the Mehtas.In 2018, the CBI filed a chargesheet against 21 people, including Mehta, his wife Sonia, two former chairman and managing directors of Canara Bank and 15 public servants. In the same month, CBI had sought a Red Corner Notice (RCN) against him but till date the Interpol hasn't acceded to the request.Recently, CBI had learnt that in June 2018 Mehta travelled in his private jet to London Gatwick airport. "His aircraft record shows that he travelled to London in June 2018 but there is no clarity on which country he flew back to," one of the officials said. "That bit is still under the scope of investigation."

Coronavirus risks persist; crude oil may hit $46 in the short term

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Crude oil prices declined for a fifth straight week, posting their longest weekly losing streak since 2018. The commodity is bearing the brunt of coronavirus, casting doubts over demand outlook, even as the market waits for a decision from Russia to go together with Opec for a further output cut of 6,00,000 bpd. The deeper reductions are key to restoring confidence to prop up the crude oil market, which is in a bear hug. Chinese fuel demand is expected to drop by 1.4 mbpd from a year ago. A temporary decline of three million bpd in global oil demand for a month or more cannot be ruled out at this stage. The outbreak has already eaten into a significant chunk of oil demand at a time when growth was expected to be moderate. If demand weakens further, even a bigger Opec bazooka might not have enough power to remedy oil demand malaise. Majors including Total and BP projected a significant hit to global oil demand this year due to the virus, compounding fears of a supply glut, plunging the market's structure into a bearish contango. Both state-owned and private refineries in China have scaled back processing by at least two mbpd over the past week. Throughput could fall further, as demand for aviation and transportation fuels continued to shrink, as entire cities are in lockdown and travel remained restricted. Independent refiners in China have stopped making fresh orders as they are struggling to sell products that are already in their tanks, traders said. This high inventory situation has triggered drastic run cuts at the worst hit refiners. Opec+ Saudi-led efforts to implement deeper oil cuts to tackle the coronavirus' impact remained in limbo, with key ally Russia not yet on board with a proposal for 600,000 bpd in new supply curbs. The+ group's existing 1.7 million bpd cut accord, which is scheduled to expire at the end of March, would be also extended, bringing the total supply curbs to 2.3 million. The market is not sure about Russia's stance, but it will be a market moving event. If Russia decides to go along with the production cuts then traders can look for a short-covering rally. If the country passes on the cuts, prices could plunge to multi-year lows. For the first time, this week's Opec meeting was extended for a third, unscheduled day by Russia's dragging of its feet on the supply reduction plan. Notwithstanding the drama, Putin could decide by as early this week that the additional 600,000 bpd cut is necessary. Opec supply continued to fall, but non-Opec production grew once again in January. While oil prices will determine the path of non-Opec output, previous upstream investment is likely to support sustained production growth, especially due to increasing US, Brazilian and Norwegian production. Most estimates point to another increase of almost two million bpd in 2020. Coronavirus and ChinaThe virus has spread to more countries, and although most of the cases are in China, the ripples are being felt even in distant countries. Travel disruptions – more than two dozen airlines have suspended or reduced their flights to China – a lockdown in the province of Wuhan and an extra week's shutdown in provinces accounting for over two-thirds of the country's GDP has severely disrupted the global supply chain. China is a dominant part of the global manufacturing supply chain and the reverberations will be felt across markets and economies. Taiwan, Singapore, Thailand and Hong Kong show the highest beta to China's growth and may experience the largest knock-on effect from China's expected near-term downturn. It is estimated that mainland China accounts for 30-40 per cent of global exports of textiles and footwear products, and 20 per cent of the world's exports of machinery and electrical equipment. The country's role in the electronics supply chain is especially critical. Nearly half of Apple's 800 global production bases are located in China. From the aviation side, hundreds more Hong Kong flights are set to be dropped as the floodgates open on airlines cancelling services. Carriers based in Asia, Australia, South Africa and the Middle East revealed that they would cut all or some of their flights to the city. Cathay Pacific is the latest to wield the axe, announcing new suspensions of major Hong Kong routes to London, New York and across mainland China because of the virus. Among the Middle East carriers, Emirates was halving its four daily Airbus A380 flights to Hong Kong from next week until March 28. Wuhan is one of the leading centers of the automobile industry in China, along with Shanghai, Guangzhou and Changchun. There are about a hundred factories of suppliers of automotive components in the region. Natural gasPrices continued its fall as cold weather has simply not arrived in the US. In fact, after the second warmest November on record, nine of the 10 weeks ending November 23 to January 25 were all warmer than normal. By the close of January, US gas inventories stood almost 25 per cent above the same time last year, and 10 per cent above the five-year average. On January 21, Henry Hub spot prices crashed below $2 per MMBtu for the first time since the end of May 2016. After rising some 13-15 per cent in 2018 output rose another 10-12 per cent in 2019 to almost 93 Bcfpd. This has led to a 3-4 Bcfpd oversupply in terms of US gas production rising above consumption. ConclusionFor the oil market, overall demand is so negative that it will outweigh any positives. The 2019-nCoV pandemic has suddenly become a serious threat to the Chinese, global and US economies. The outbreak can lower global economy growth forecast to 2.5 per cent from 2.8 per cent. Further, the fundamental outlook for the oil market is not constructive, with expectations that the market will return to surplus over H12020. Global oil demand growth is still languishing and the market will be closely watching what Russia does next. We expect WTI prices to touch $46 if there are more cases of coronavirus. which will hamper global demand. (Investors are advised to consult financial advisers before taking an investment calls based on these observations)

F&O: Nifty needs to hold above 12,100 to hit 12,200-12,250 zone

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By Chandan Taparia NSE Nifty opened on a flattish note and started correcting from initial trades. The index remained in the negative zone throughout the day, and formed a bearish candle on a daily chart. The headline index has been making lower highs and lower lows from the last two trading sessions, and closed a tad below its immediate support at 50-DEMA. Going forward, immediate support is placed at 11,950 and then 11,900. On the flipside, a sustainable move above 12,100 may lead to an upmove towards 12,200 and then 12,250 levels. On the options front, maximum Put open interest (OI) was at 12,000 followed by 11,500 strike, while maximum Call OI stood at 12,500 followed by 12,200 strike. Put writing was seen at 12,000 and then 11,700 strike, while Call writing stood at 12,000 followed by 12,200 strike. Options data indicates a wider trading range between 11,800 and 12,300 levels. India VIX moved up by 3.35 per cent to the 14.21 level.Bank Nifty witnessed selling pressure from the initial trades and corrected below the 31,000 level. The index negated its higher lows formation after four sessions, and formed a bearish candle on the daily chart. At the current juncture, it is sustaining above the Falling Channel breakout level and 50-DEMA. Support remains intact at 31,000–30,800 zone, and sustenance above the zone may lead to extension in ongoing move towards 31,500 and then 31,750. Nifty futures fell 0.39 per cent to the 12,048 level. Long builtup was seen in UPL, MRF, GAIL, United Spirits and NTPC, while ZEEL, Tata Steel, Just Dial, SAIL, M&M witnessed formation of short positions.(Chandan Taparia is Technical & Derivative Analyst at MOFSL. Investors are advised to consult financial advisers before taking an investment calls based on these observations)

Big handset makers may discontinue sub-Rs 5k models

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New Delhi: Major mobile handset makers may move away from the sub- Rs 5,000 segment this year, industry executives and analysts say, as the entry-level space shrinks due to low demand and higher distribution costs.As a result, buyers in this pricesensitive category may have to settle for used or refurbished devices on the back fewer variants for first-time smartphone buyers with low budgets. "Almost all brands have decided to move away...due to reasons like low natural demand, inertia of migrating to smartphones and the relative cost of offline distribution for potential consumers in this segment," said Navkender Singh, research director at International Data Corporation (IDC), India. The segment may see only tepid growth this year unless brands or telecom operators offer a bundled service plan with smartphones for less than Rs 2,500 to address the lifetime or maintenance cost of ownership, Singh added.Sale of smartphones priced below Rs 5,000 declined 45% on year in 2019. This comes after a 25% fall in 2018, according to Counterpoint Research. This year, the fall is likely to be sharper as the segment's share in the overall smartphone pie is predicted to shrink to just 2%, from 4% in 2019. This comes as average selling prices of smartphones in India are expected to touch $170 in 2020, compared with $160 in 2019 and $159 in 2018, according to IDC data.Xiaomi, which was the last tier-1 brand to launch a smartphone priced below ?5,000, is also moving towards higher-priced categories now, said Neil Shah, research director at Counterpoint Technology Market Research.The Chinese handset-maker has around 40% share in the entry-level category, while Indian brands — Lava and Micromax — together hold less than 2%, data from Counterpoint Research showed.Refurbished devices are also competing fiercely with low-cost smartphones, which are not tech-heavy and cannot offer a satisfactory digital experience, experts say.However, the market dynamics may not altogether favour refurbished phones over new ones since the consumers who prefer refurbished phones are distinct from those seeking to buy new phones, according to CyberMedia Research."The refurbished phone market caters to aspirational buyers who seek to buy premium smartphones from the likes of Apple and Samsung at very low, affordable prices," said Prabhu Ram, head of Industry Intelligence Group, CMR.Some analysts believe that there is still huge potential in the entry-level space, as the market is primarily driven by upgrade opportunity among a wide base of over 450 million feature phone users.