IndUS Business Journal

Funding dips in Indian e-commerce sector

Jul 5, 2016 0

Bengaluru–Fund raising in the Indian e-commerce sector declined 50 per cent in the April-June quarter over the same period of last fiscal, investment bank and securities firm Jefferies Group said on Tuesday.

“Private funding in the Indian e-commerce sector has declined 50 per cent on yearly and quarterly basis, confirming the downward trend over the months,” the American firm said in a report.

Barring leading hotel rooms’ aggregator Oyo, which raised $100-million in April, there were fewer large transactions, indicating a slowdown in private funding in the emerging sector.

Arya Sen

Arya Sen

Data shows fund raising declined sharply to $500 million in the quarter (Q1) under review from $1 billion in the like period over the last two fiscal years, Jefferies said.

Oyo raised its equity fund from SoftBank, GreenOaks Capital, Lightspeed Venture Partners and Sequoia Capital.

Observing that challenges were greater for larger firms looking for raising $100 million, Jefferies equity analyst Arya Sen said the revenue growth for Just Dial would be key for fund raising for start-ups and entrepreneurs.

“In response to the slowdown in funding, there has been a shift in focus to profitability by the larger e-tailers over the last 6-9 months from growth and general merchandise volume (GMV),” Sen recalled.

“Though most e-commerce firms are targeting to break even over the next 12-24 months by reducing discount, change in mix towards profitable categories and customers, change in strategy and loss of market share to the global e-tailer Amazon have slowed growth for many,” the report pointed out.

Funding into travel suggests that high burn will continue for MakeMytrip despite an overall slowdown in the category.

“Funding into travel space has remained strong with Goibigo, Oyo, Stayzilla and Fab Hotels raising money in the last five months,” the report noted.

Global multinational internet and media group Napsers is reported to have committed $250 million to Goibibo.

Jefferies expects 15 per cent revenue growth for Just Dial, with contribution from JD Omni, though its management indicated a gradual return to 20 percent revenue growth in this fiscal (FY 2017).

“Traction from JD will be key to look out for Just Dial guidance of 25,000 customers by this fiscal end and 10 per cent revenue growth contribution from Omni,” the report added. (IANS)

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Foreign equity limit in Axis Bank raised to 74%

Jul 5, 2016 0

New Delhi– India’s cabinet on Tuesday permitted up to 74 percent foreign holding in Axis Bank, the country’s third largest in the private sector, from the current approved level of 62 percent.

The decision was taken at a meeting here of the Cabinet Committee on Economic Affairs, presided over by Prime Minister Narendra Modi.

“With the approval, foreign direct investment to the tune of Rs 12,973.14 crore will be received in the country with an estimated creation of 6,000 to 7,000 jobs over the next three years,” a cabinet statement said after the meeting.

“The foreign investment will be by way of foreign institutional investors, foreign portfolio investors, non-resident Indians, foreign director investment covering American depository receipts and global depository receipts, and indirect foreign investment,” the statement added.

The news came after the close of trading session in Indian bourses, where the shares of the bank fell Rs 4.30 percent, or 0.79 per cent, to Rs 539.60.

As per information available with the stock exchanges, the promoters hold 30.76 percent in Axis Bank, while 69.24 per cent is held by the public, as on March 31 this year.

The entire shares of the promoter group are held by banks and financial institutions, including 15.15 per cent by Life Insurance Corp and 11.93 per cent by the administrator of Unit Trust of India.

Then, within the public shareholding, foreign portfolio investors hold 42.27 per cent, domestic mutual funds hold 10.58 percent and non-institutional individuals another 10.63 per cent.

One of the first private sector banks in India, the entity started operations in 1994 as UTI Bank and eventually became Axis Bank. The operations are overseen by Shikha Sharma, Managing Director and Chief Executive.

The announcement also came on a day when Fitch Ratings affirmed a viability rating of ‘bbb-‘ to Axis Bank, thanks to its stronger core capitalisation, superior profitability and improving liability profile.

“Axis Bank is India’s third-largest private sector bank and its strong franchise and market position also underpin its viability rating.”

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India orders steel dumping probe again, China concerned

Jul 5, 2016 0

New Delhi– With the Directorate General of Anti-Dumping and Allied Duties (DGAD) again initiating a probe into dumping of colour-coated steel from China and European Union (EU), the former expressed concern over India’s trade remedy measures against its steel products.

Essar Steel India Ltd and JSW Steel Coated Products Ltd have filed a petition before the DGAD for initiation of anti-dumping investigation and imposition of anti-dumping duty on the alleged dumped imports of “Colour-coated/pre-painted flat products of alloy or non-alloy steel originating in or exported from China PR and European Union”.

The DGAD said that it “prima facie finds that sufficient evidence of dumping of the subject goods, originating in or exported” from the concerned countries.

“… the Authority hereby initiates an investigation into the alleged dumping causing consequent injury to the domestic industry… to determine the existence, degree and effect of dumping and recommend the amount of anti-dumping duty, which if levied, would be adequate to remove the injury to the domestic industry,” the DGAD said in a notification.

After the latest investigation ordered by Indian authorities, China’s Ministry of Commerce said on Monday that this is the fifth such probe against its exports by India this year, the highest among member countries of the World Trade Organisation.

It said the global steel industry was experiencing difficulties due to sluggish economic growth and weak demand, but abuse of trade remedy measures would not help resolve industrial overcapacity but hamper normal trade.

The products under consideration in the present investigation are pre-painted, painted, colour-coated or organic coated flat steels in coils or not in coils.

The period of investigation covers July-December period of 2015. The injury investigation period will also cover FY13, FY 14, FY 15 and April-December period of 2015.

A WTO report suggested that India, the US and Brazil were the leading initiators of anti-dumping investigations in 2015.

The WTO members started 107 new anti-dumping investigations from January-June 2015 as against 106 in the same period in 2014, the report said.

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Fitch Ratings downgrades Indian banking sector outlook to ‘Negative’

Jul 5, 2016 0

Chennai– Global credit rating agency Fitch Ratings on Tuesday said it has revised its outlook for Indian banking sector to “Negative” from “Stable” over mounting non-performing loans (NPL).

The rating agency has downgraded the Viability Ratings of Canara Bank and IDBI Bank by one notch to “bb’ and “bb-” respectively.

According to Fitch Ratings, the revision implies that there are more downside risks for bank Viability Ratings unless the risks of deteriorating asset quality and weak earnings are counterbalanced by sizeable capital infusions.

“Banking sector NPLs rose sharply in the financial year ended 31 March 2016 (FY16) as a result of stricter NPL recognition standards. Asset quality could deteriorate further over the next 12-18 months given the banks’ exposure to stressed sectors, such as infrastructure and iron and steel, and the difficult resolution process for stressed assets in the near term,” it said.

“Earnings for the sector are also likely to be weak due to muted loan growth and high credit costs,” the credit rating agency added.

However Fitch Ratings has affirmed the Long-Term Issuer Default Ratings (IDR) of Canara Bank and IDBI Bank and seven other Indian banks viz., State Bank of India (SBI), Bank of Baroda, Bank of Baroda (New Zealand) Limited (BoB NZ), Punjab National Bank (PNB), ICICI Bank Ltd. and Axis Bank Ltd at “BBB-“.

The Indian Bank’s IDR has been affirmed at “BB+”.

According to Fitch Ratings, the outlook on the IDRs is “Stable”.

Fitch Ratings said Indian banks’ capital positions have historically been weak, the situation has worsened for most public-sector banks due to delayed recognition of problem assets and high loan-loss provisions, and will remain weak in the near term unless the government makes significant capital investment in the banks.

Though the government is committed to inject $7 bn of capital in public-sector banks by FY19, out of a budgeted investment of $11 bn, but Fitch says the government or other related entities are likely to have to inject more funds because it estimates the banking system needs around $90 bn of capital while many public-sector banks are likely to find it difficult to access new capital from other sources.

Resolving both the asset quality and capital questions are important conditions for some banks to regain market access. The VRs could come under more pressure if the banks’ capital levels are not addressed.

The asset-quality and capital pressures on the system in the near term drive Fitch’s negative sector outlook, but the Reserve Bank of India’s reforms of the banking sector are likely to be positive over the long term.

If fully implemented, the reforms should lead to better lending practices, earlier recognition of problem exposures, improved creditor rights, greater transparency, and a better capitalised and more competitive banking system, the rating agency said. (IANS)

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Telangana charges Andhra with stealing online data

Jul 5, 2016 0

Hyderabad–The Telangana government on Tuesday alleged that the Andhra Pradesh government resorted to unethical means by stealing the online application submitted to the Centre for Ease of Doing Business (EoDB) ranking.

Taking a serious view of this, the Telangana government lodged a complaint with the Cyber Crime Police, which registered a case after preliminary enquiry that website information and template copyrights theft has been committed.

Telangana alleged that the acommercial court fee and process fee online payment’ application developed by its law department on June 28 and submitted the same to the Union government’s Department of Industrial Policy and Promotion (DIPP) for EoDB ranking was stolen by Andhra.

The officials pointed out that their Andhra counterparts even copied the spelling mistake on the page.

Telangana brought the issue to the central government’s notice with Industries Minister K. T. Rama Rao dashing off a letter to the Union Commerce Minister Nirmala Sitharaman.

The minister submitted the proofs and also explained the ways and means being resorted by certain states to top EoDB rankings.

Rama Rao, who is son of Chief Minister K. Chandrasekhar Rao, said the spirit of the EoDB is getting affected when some states are trying to resort to unethical practices. He appealed to the Union minister to give priority to only those states who have brought qualitative changes at the field level and not those states who resort to unethical means.

He requested that the reports submitted by the respective states after June 30 should be looked into thoroughly.

For awarding EoDB rankings to the states, the DIPP had given a questionnaire comprising 340 questions and set up an online dashboard to answer these questions.

Though the deadline for submission of EODB questionnaire ended on June 30, the DIPP has extended the deadline till July 7.

The Telangana government claimed it submitted Commercial Courts application on June 28 while Andhra had not done this till June 30. After the DIPP extended the deadline, Andhra copied and submitted the same, officials said.

They alleged that Andhra improved its ranking through unethical practices.

EoDB ranking on DIPP website on July 5 shows Telangana at second place and Andhra at third. Telangana was at second and Andhra at 19th position on June 12.

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India approves redevelopment of seven Delhi colonies

Jul 5, 2016 0

New Delhi– The Union cabinet on Tuesday approved redevelopment of seven General Pool Residential Accommodation colonies of the government employees in the national capital.

The colonies in Sarojini Nagar, Netaji Nagar and Nauroji Nagar will be redeveloped through the National Buildings Construction Corporation Limited (NBCC).

Those in Kasturba Nagar, Thyagraj Nagar, Srinivaspuri and Mohammadpur will be redeveloped by the Central Public Works Department, an official statement said here.

Thew new structures will replace the existing housing stock of 12,970 dwelling units of Type I to IV with Build-Up Area (BUA) of approximately 7.49 lakh sqare metres, 25,667 dwelling units of Type II to VI with BUA of approximately 29.18 lakh sqm with supporting social infrastructure, it added.

The project will also develop government office accommodation over nearly 2.42 lakh sqm at Netaji Nagar.

The estimated project cost is Rs 32,835 crore, including maintenance and operational costs for 30 years.

The project will be implemented on self-financing basis by the sale of commercial BUA in Nauroji Nagar and parts of Sarojini Nagar, adjoining the Ring Road.

The project will be completed in five years in a phased manner.

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Coal India exploring export options

Jul 5, 2016 0

Kolkata– State-run miner Coal India is exploring avenues to export the fossil fuel after it clocked a record production, a top official said on Tuesday.

“Consequent to record production of coal by Coal India Limited, it is now exploring avenues to export coal,” Coal Secretary Anil Swarup wrote on Twitter. Tepid demand in the energy sector has led to rising stockpiles at power plants and the company’s own mines.

The miner produced 125.65 million tonnes (mt) of coal in April-June quarter of the current fiscal against a target of 132.43 mt, thus achieving 95 percent of the production target set for the quarter. Its production grew by 3.5 percent in the period as compared to 121.33 mt produced in the corresponding period last year.

CIL’s off-take stood at 133.19 mt in the quarter ended June against a target of 149.88 mt. Its off-take grew by only 2.9 per cent in the quarter as compared to off-take of 129.48 mt in the year ago period.

Its June production stood at 42.72 mt while its off-take for the month was at 44.96 mt.

The miner set a target of 598.60 mt of production in the current fiscal. For FY17, the target of off-take of the company was set at 598.61 mt and out of this, 450 mt will be supplied to power sector utilities.

In the last fiscal, the miner had produced 536.51 mt of coal against a target of 550 mt and its off-take was at 532.26 mt. (IANS)

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India will not lower guard on global financial threats

Jul 5, 2016 0

New Delhi– India will not lower its preparedness in dealing with external economic vulnerabilities, including those arising from the recent British vote to exit the European Union, the Financial Stability Development Council (FSDC) chaired by Finance Minister Arun Jaitley said on Tuesday.

The FSDC convened here for its 15th meeting since inception in December 2010 to discuss India’s macro-economic situation, as well as financial developments globally.

Indian Finance Minister Arun Jaitley

Indian Finance Minister Arun Jaitley

Its members include heads of financial sector regulators — the Reserve Bank of India, Securities and Exchange Board of India, Pension Fund Regulatory Development Authority, Insurance Regulatory Development Authority and commodity futures markets regulator Forward Markets Commission.

Among the subjects discussed at the FSDC meeting was the rising bad loans of state-run banks.

In this connection, gross non-performing assets (GNPAs), or bad loans, of commercial banks may rise to 8.5 per cent of total assets by March 2017, from 7.6 percent in March 2016, the RBI said last week based on “stress tests” it has conducted.

“Risks to India’s banking sector have increased since the publication of the last Financial Stability Report (FSR) in December 2015, mainly on account of a further deterioration in asset quality and low profitability,” RBI said in its latest FSR 2016.

“The gross non-performing advances rose sharply to 7.6 per cent of gross advances in March 2016 from 5.1 per cent in September 2015, largely reflecting re-classification of restructured advances to NPAs following an asset quality review (AQR).

“If the macro situation deteriorates in the future, the GNPA ratio may increase further to 9.3 per cent by March 2017,” the report said.

Banks are currently focusing on cleaning their balance sheets following the AQR that showed up around $35 billion of new bad loans since September, pushing gross bad loans to 7.6 per cent in March from 5.1 per cent in September 2015.

Overall stressed assets – consisting of bad loans as well as restructured assets – rose to 11.5 per cent in March from 11.3 percent six months earlier.

“The stress in the banking sector, which mirrors the stress in the corporate sector, has to be dealt with in order to revive credit growth,” RBI Governor Raghuram Rajan, who had ordered the banks’ AQR last year, wrote in the report. (IANS)

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Madras High Court orders CBI probe into pre-poll seizure of Rs 570 crores

Jul 4, 2016 0

Chennai–The Madras High Court on Monday directed the Central Bureau of Investigation (CBI) to probe the transport of Rs 570 crore in three containers and its seizure near Tiruppur in Tamil Nadu in May 2016.

The court ordered the CBI to take action as per law if it finds sufficient material in support of the petition filed by a DMK leader.

RupeesThe court heard the petition filed by DMK spokesperson T.K.S. Elangovan alleging serious doubt about the genuineness of the belated claims of the State Bank of India (SBI) over the Rs 570 crore seized during the run-up to state assembly elections held on May 16.

On May 13, 2016, the Election Commission’s surveillance team at Tiruppur chased and seized three container lorries transporting cash to the tune of Rs 570 crore.

The seized lorries were brought and parked in the office of District Collector of Tiruppur from May 14-17, 2016.

The SBI has said that the cash belonged to it and it was being transported to its cash chest in Andhra Pradesh when it was seized by the Election Commission officials.

According to Elangovan, huge cash should be transported by rail and escorted by local police which was not done in this case.

He also alleged that the cash transfer was not supported by proper documentation.

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INFOCOM 2016 to explore dynamics of building empowered businesses

Jul 4, 2016 0

New Delhi–In a bid to explore the dynamics of building empowered businesses, INFOCOM 2016 — India’s leading business, technology and leadership conference — is set to be organised in the capital on July 7.

An initiative of the Ananda Bazar Patrika (ABP) Group, the second edition of “INFOCOM 2016-New Delhi chapter” event titled “Transform, Disrupt and Transform” will be inaugurated by Communication Minister Ravi Shankar Prasad at the India Habitat Centre, the organisers said in a statement.

Minister of State for Finance Jayant Sinha; Piyush Goyal, Minister of State with Independent Charge (Power, Coal, New and Renewable Energy); Dr Pawan Agarwal, motivational speaker and Vijay Sethi, Chief Information Officer and Head (CSR), Hero MotoCorp, among others will share their vision on the disruption and innovation technology.

The day-long event will have sessions titled “Disruption, Innovation and Industry Change,” “2020 Digital Bank”, “Digital Disruption in Manufacturing, Creating Breakthrough Experience in the Age of Digital”, “Building a Robust Cyber Security Defense Mechanism,” “Digital Economy: Embracing Innovations and the New Age of Industry with IoT,” “Nurturing SMEs – The Way Forward,” “How to Monetise IoT” and the “Inspirational Keynote: The Mumbai Dabbawalas Story”.

Expected to be attended by 300 delegates from large corporates, SMEs, policymakers, academia and media, the event will have over 30 speakers in industry leaders, ICT experts, top corporates, think tanks, entrepreneurs, government officials and academia from across the world.

Hari Om Rai, Founder, Chairman and Managing Director, Lava International; Anupam Shrivastava, Chairman and Managing Director, Bharat Sanchar Nigam Ltd; Dr Omkar Rai, Director General, Software Technology Parks of India and Dr Aruna Sharma, IAS, Secretary, Department of Electronics and IT (DeitY), will be present at the inaugural ceremony.

The welcome address is scheduled to be delivered by Dhruba Mukherjee, Vice President-The Telegraph, ABP Pvt Ltd.

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