IndUS Business Journal

Around 59 percent people working in micro and small sectors are skilled

Mar 22, 2016 0

New Delhi– Around 59 percent of employees working in micro medium and small enterprises (MSMEs) are skilled, 21 percent are on job training and 20 percent are unskilled, says a collaborative research report by PHD Chamber and Avian Media.

“About 42 percent of the respondent MSMEs conduct skill development training programmes for their employees, of them 69 percent believe that these structured programmes benefit their organisations in terms of improving know-how, reducing knowledge gaps among employees and enhancing their capabilities to handle responsibilities,” the report stated.

Corporate Social Responsibility (CSR) has emerged as a tool for addressing various long standing problems of the MSMEs in the country in the wake of the changing dynamics under the Make in India initiative, it said.

The report titled “Bolstering MSMEs for Make in India – with special focus on Corporate Social Responsibility” was released by R.K. Panigrahi, director, MSME Development Institute, Ministry of MSME.

The survey was conducted for MSMEs situated across Faridabad and Okhla regions of northern central region.

According to the survey report, CSR funding to the MSMEs will give the sector exposure to new methods, processes, technology, excellence and other key parameters of large enterprises, which would enable the SMEs to enhance their capacities and overall productivity.

“MSME sector has immense potential to play a significant role to push India’s growth in strong and sustainable growth trajectory. The sector must be facilitated in terms of their credit demand, enhanced scope for capital requirements, availability of land and labour and ease of doing business,” said Mahesh Gupta, president, PHD Chamber.

To pursue the targets of Make in India, the government has identified various sectors which are to be focused, including automobiles and auto components, food processing, leather and textiles among others.

Since, almost all these identified sectors are majorly operating under the MSMEs segment of the country, this sector will play a critical role in making the Make in India initiative a success, the report further said.

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Virtusa’s open offer to purchase 26 percent Polaris stake

Mar 22, 2016 0

WESTBOROUGH, MA –Virtusa Corp, Westborough, MA-based technology outsourcing company, has floated an open offer to purchase 26 percent stake in Polaris Consulting & Services at Rs.220.73 per share and amounting to a total outlay of Rs.590 crore, a release said on Tuesday.

The offer which started on March 11, closes on March 28.

Kris A. Canekeratne

Kris A. Canekeratne

The open offer price of Rs.220.73 for the shares of Polaris reflects a premium of about 31 percent over the price of 6 months ago and about 40 percent over the price one year ago, the statement said.

“The earning numbers of Polaris have been average to below average over the last few quarters. Overall the small-cap and mid-cap IT companies have been laggards over the last six to nine months.

“The good performance of Polaris on the bourses is mainly on account of the ongoing open offer, After March 28, we expect the stock of Polaris to retreat,” said Dinkar Shanbhag, head- Institutional Equity, at Mumbai-based broking firm Lotus Global.

On March 3, Virtusa announced that its India subsidiary, Virtusa Consulting Services Private Limited (“Virtusa India”), has acquired all of the outstanding shares of Polaris Consulting & Services, Ltd. (“Polaris”) (BSE: POLARIS NSE: POLARIS MSEI: POLARIS) held by Mr. Arun Jain, founder and chairman of Polaris, Orbitech Private Limited, and certain other minority stockholders, representing an aggregate of approximately 51.7% of the fully diluted outstanding shares of Polaris for an average of $3.12 per share (INR 213.883 per share), for an aggregate purchase consideration of $165.89 million (INR 11,364 million).

Jitin Goyal will remain CEO of Polaris, and was appointed President, BFS, to lead Virtusa’s and Polaris’ business operations serving the banking and financial services verticals. Raj Rajgopal, President of Virtusa, was appointed President, ETS, and will lead Virtusa’s and Polaris’ operations serving the insurance, communications & technology, and media, information & other verticals. In their respective roles, Mr. Goyal and Mr. Rajgopal will be responsible for executing Virtusa’s and Polaris’ growth strategies, which will include driving over $100 million of cumulative revenue synergies over the next three fiscal years from the business combination.

Kris Canekeratne, Virtusa’s Chairman and CEO, stated, “We are extremely pleased to close phase one of the Polaris transaction and we look forward to completing the mandatory open offer to Polaris’ public shareholders. Combined, Virtusa and Polaris create a robust platform and a unique and compelling value proposition. We are enthusiastic about providing end-to-end solutions and services in banking and financial services, greatly expanding our addressable market and positioning us well to pursue larger consulting and outsourcing opportunities.”

Mr. Canekeratne continued, “I would also like to congratulate Jitin and Raj on their respective appointments. Their unparalleled industry expertise, leadership skills, and proven track record of driving business growth will be invaluable as we embark on our next phase of expansion.”

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Abraaj Group leads BigBasket’s $150 million fundraising

Mar 22, 2016 0

Bengaluru– Global private equity investment firm Abraaj Group on Tuesday led a $150 million fundraising drive by Indian E-commerce grocery startup BigBasket.

“We are excited about the investment opportunities in India, a key geography for us, where we continue to identify and partner with market leading companies,” Abraaj Group Asia head Omar Lodhi in a statement.

“Abraaj will leverage its strong experience in the consumer sector to enable BigBasket to further enhance its strong domestic position,” he added.

In addition to the participation of existing investors Bessemer Venture Partners, Helion Advisors, Zodius Capital and Ascent Capital in the BigBasket’s latest fundraising, new investors, World Bank subsidiary International Finance Corporation (IFC) and Sands Capital also marked their entry.

“We intend to increase the reach of our just-launched one-hour express delivery service and also launch our marketplace for specialty stores in the coming months,” said BigBasker co-founder V.S. Sudhakar about the utilisation of the raised funds.

“The proceeds of this round of fundraising will be used to finance BigBasket’s growth through further penetration into existing markets, expansion into Tier II cities across India, scaling-up of its recently launched express delivery and specialty store business that caters to top-up and emergency purchases, and increasing the product range offered to customers,” he added.

Founded in 2011, the online grocery startup currently operates in eight metro and 10 tier two cities retailing over 19,000 products from a range of 1,000 brands which include fruits, vegetables, meat, beverages and personalAcare products.

For Abraaj Group, this is the third investment in E-commerce, after acquiring stakes in Turkish online retailer Hepsiburada and Dubai-based cab hailing app Careem.

After entering India in 2006, this is its latest move is the here, following investment in Hyderabad based Care Hospitals and a gigawatt scale renewable energy platform partnership with Aditya Birla Group.

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Edelweiss to acquire JP Morgan’s Indian assets

Mar 22, 2016 0

Mumbai– Edelweiss Asset Management Limited (EAML) on Tuesday announced an agreement to acquire JP Morgan Asset Management (JPMAM) managed Indian onshore fund schemes, onshore mutual fund business and international fund of funds.

“Given the complementary business advantages and the significant business that JPMAM has built, this acquisition is a natural win for both Edelweiss and JP Morgan,” said Edelweiss Group chief executive Rashesh Shah in a statement about the deal which is subject to regulatory approvals.

JPMAM’s assets under management (AUM) stand at Rs.7,081 crore while the combined valued of JP MorganA and Edelweiss AUM amount to Rs.8,757 crore.

According to the statement, the acquisition will further bolster Edelweiss Group’s Rs.31,000 crore global asset management businesses.

To ensure business continuity and further growth, EAML has expressed its commitment to absorb majority of JPMAM’s employees.

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20th Annual Wharton India Economic Forum Starts on Saturday

Mar 22, 2016 0

PHILADELPHIA, PA—The 20th Annual Wharton India Economic Forum, which will focus on the next chapter of Indian development and growth, will kick off on Saturday in Philadelphia, PA. The event is organized by Wharton School.

Indian Ambassador Arun Singh (file photo)

Indian Ambassador Arun Singh (file photo)

Key speakers include Arun Kumar Singh, Indian Ambassador to the US, and Sri Rajan, Chairman of Bain India.

The annual conference will be held on Saturday, March 26, in Philadelphia and provide an in-depth look into the next chapter of Indian development and growth and will provide a birds-eye view of the Indian economic and business landscape, as well as India-US relations.

Key speakers and their topics this year are:

  • Arun Kumar Singh, Indian Ambassador to the US, who will speak about evolving India-US relations
  • Sudhanshu Vats, Group CEO at Viacom 18, a leading television network and media company based in Mumbai, who will discuss India’s rapidly developing media landscape
  • Sri Rajan, Chairman of Bain & Company’s India office, who will speak about the Indian business and economic landscape today
  • Kamal Haasan, Indian actor who will speak about his inspirational film and philanthropic careers

Other sessions will touch on infrastructure, education, and investing outlook, and also presenting will be Ketto (crowdfunding) and Kheyti, (a greenhouse technology solution for farmers) the two winners of the India Startup Competition held in Mumbai in January.

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Start-up funding being explored for oil, gas sector

Mar 22, 2016 0

New Delhi–State-run oil and gas companies are planning to create a venture capital fund to encourage start-ups to develop new business models and infuse innovation into India’s hydrocarbons sector, Petroleum Minister Dharmendra Pradhan said on Tuesday.

“PSUs (public sector undertakings), in consultations with the petroleum ministry, are planning the creation of a start-up fund for the oil and gas industry,” Pradhan said at the Indian Oil Corp’s second gas conclave here.

Indian Petroleum Minister Dharmendra Pradhan

Indian Petroleum Minister Dharmendra Pradhan

Making the case for start-ups in the hydrocarbons sector, he cited the example of the telecom sector and of industrialists like Ratan Tata who are investing in new enterprises.

Speaking to reporters later, Pradhan said the time had come to change the marketing strategy from liquid fuels to gas and encourage new business models in the sector to promote innovation and create infrastructure.

“PSUs are working on setting up a venture capital fund to encourage start-ups to develop new business models, marketing plan, technology and innovation into hydrocarbons. They should invest and join as partners for start-ups,” he said.

“Indian intellectual capacity is contributing immensely to the global oil and gas economy. We would like the Indian energy market too to benefit from that capacity.

“Any start-up needing hand-holding can seek support from the fund. Public sector companies will independently evaluate the commercial viability of the project and take a decision on their equity participation,” he added.

Pradhan said his ministry has advised public sector oil and gas companies to create a corpus that would be utilised to invest in new businesses with an innovative business model and bring efficiency.

Declaring that use of natural gas would contribute towards half of realising the target set by Prime Minister Narendra Modi of reducing oil imports by 10 percent by 2022, Pradhan said replacing oil by gas in this manner would contribute much towards India meeting its carbon emission commitments under COP 21.

“Gas is the future of the Indian economy,” he said, noting that in a state like Gujarat, which has been focusing on renewable energy, gas accounts for a quarter of the state’s energy basket.

“Small industry in Gujarat is supplied with domestic gas. We want to enhance our alternative energy basket, and it won’t take much time for the gas market and prices to stabilise,” he added.

In this connection, Pradhan informed the audience that the Petroleum and Natural Gas Regulatory Board will on Wednesday open the bids received for building a new gas pipeline on the east coast running from Contai in West Bengal via Dattapulia to Paradip on Odisha’s coast.

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India’s bulk drug exports to grow 12-14 percent till 2018-19

Mar 21, 2016 0

New Delhi– Driven by exports to regulated markets as well as continued growth in the semi-regulated markets, India’s bulk drug exports are likely to grow at a compounded annual growth rate (CAGR) of 12-14 percent till 2018-19, a joint study said here on Monday.

The study, titled ‘Indian Pharmaceutical Industry: Changing Dynamics and The Road Ahead,’ was conducted by Assocham along with Yes Bank.

“Share of regulated markets in Indian bulk drug exports might rise to about 51 percent by 2018-19, driven by Indian manufacturers’ better process chemistry skills, low manufacturing costs, higher number of drug master filings (DMFs), expected expansion of key generic markets and cost reduction initiatives by large global companies,” the study said.

Of late, Indian bulk drug exports have shifted in favour of regulated markets evidently as there has been an increase in the share of these markets to about 49 percent in 2013-14 from about 43 percent in 2008-09, it said.

Exports of bulk drugs used for manufacturing off-patent drugs will continue to grow at a 12-14 per cent CAGR in the next 5 years till 2018-19, while demand for active pharmaceutical ingredient (API) from on-patent drugs is expected to grow at a slower pace, the study highlighted.

This is mainly on account of the expected slowdown in the branded medicines market in both Europe and America. This coupled with pricing pressures is expected to impact pricing realisations for Indian API exporters.

However, strong growth in volumes is still expected in these markets as increasing competition from generics will lead to cost pressures on innovator companies, the study added.

“Growing at a CAGR of 12-14 percent between 2013-14 and 2018-19, domestic formulations market is likely to cross $20 billion mark by 2018-19 from a level of about $11 billion in 2013-14,” the joint study further noted.

It said: “The growth story of domestic formulations market is expected to remain strong, led by a rise in life-related diseases, better healthcare diagnostic infrastructure adding to increasing disease detection rate, new product introductions, volume growth driven by increasing penetration and better access to health care.”

Further, India’s formulation exports are expected to grow at a CAGR of 14-16 percent between 2013-14 and 2018-19.

During the 2012-2017, drugs generating annual sales of about $130 billion are likely to lose patent protection and will be exposed to generic competition, highlighted the study.

“Therefore sales of generics are expected to grow at a CAGR of 7-9 percent over next five years thereby outperforming the overall global pharmaceutical market, whose growth is expected to be limited to 3-5 percent.”

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CBDT panel for ‘equalisation levy’ on foreign e-commerce firms

Mar 21, 2016 0

New Delhi–A Central Board of Direct Taxes (CBDT) committee on taxation of e-commerce has suggested an “Equalisation Levy” of between 6-8 percent for business-to-business digital transactions, as per its report made public on Monday.

The committee had already submitted, in February, its report, which had formed the basis of Finance Minister Arun Jaitley’s Budget 2016-17 proposal for an equalisation levy of 6 percent in order to tax income accruing to foreign e-commerce companies from India.

Indian Finance Minister Arun Jaitley (File Photo)

Indian Finance Minister Arun Jaitley (File Photo)

“The committee included officers of the Central Board of Direct Taxes, representatives from the industry, the Institute of Chartered Accountants of India and tax experts,” said a finance ministry statement.

The committee has suggested that the levy be imposed on the amount paid to a non-resident by an Indian resident for specified digital services. It also suggested that this levy should not be a part of the Income Tax Act.

The specified services would include online advertising or any services, rights or use of software for online advertising, including advertising on radio and TV, designing, hosting or maintenance of websites, digital space for website, e-mails, blogs, facility for online sale of goods or services or collecting online payments.

It would also include use or right to use or download online music, online movies, online games and online software applications accessed or downloaded through the Internet or telecommunication networks.

The commitee has suggested introduction of the tax based on the Base Erosion and Profit Shifting (BEPS) principle earlier endorsed by G20 countries and the Paris-based Organisation for Economic Cooperation and Development (OECD).

The budget for the next fiscal has proposed that a person making payment to a non-resident, without a permanent establishment, exceeding in aggregate Rs.1 lakh in a year for online advertisement, will withhold tax at 6 percent of the gross amount paid as an equalisation levy. The levy will only apply to business-to-business transactions.

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India’s current account deficit falls in Q3

Mar 21, 2016 0

Mumbai– India’s current account deficit (CAD) dropped to $7.1 billion or 1.3 percent of GDP in the third quarter of 2015-16 on account of narrowing trade deficit, Reserve Bank of India (RBI) said on Monday.

“India’s current account deficit (CAD) at $7.1 billion or, 1.3 percent of GDP in Q3 (October-December) of 2015-16 was lower than $7.7 billion or, 1.5 percent of GDP in Q3 of 2014-15,” an RBI release said.

“The contraction in CAD was primarily on account of a lower trade deficit ($34 billion) than in Q3 of last year ($38.6 billion).”

The RBI also said foreign exchange reserves (on a balance of payment basis) increased by $4.1 billion in the October-December quarter of the current fiscal.

On a cumulative basis, the CAD contracted to 1.4 percent of GDP in the first nine months of the fiscal from 1.7 percent in the April-December period of 2014-15, on the back of a fall in the trade deficit.

During April-December, there was an accretion of $14.6 billion to foreign exchange reserves (on a balance of payment basis), as compared to $31.3 billion in the corresponding period of 2014-15.

Private transfer receipts, mainly representing remittances by Indians abroad, amounted to $15.8 billion, a decline from their level in the preceding quarter as well as from a year ago.

Net foreign direct investment (FDI) picked up in third quarter and stood at $10.8 billion, after earlier moderating in the second quarter.

“Non-resident Indian deposits moderated significantly in Q3 of 2015-16 over their level in Q3 last year as well as the preceding quarter,” RBI said.

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Online shopping in India to grow by 78 percent in 2016: Assocham

Mar 20, 2016 0

New Delhi– Average online purchases in India are expected to increase by 78 percent this year on the back of attractive deals and aggressive marketing of merchandise, industry chamber Assocham said on Sunday.

“Unfazed by slowdown, average online purchases are expected to increase by 78 percent in 2016 from 66 percent in 2015, due to attractive deals and aggressive marketing of ever-expanding range of merchandise from clothes to jewellery, from electronics to books,” said a study by Assocham and international accounting firm Pricewaterhouse Coopers (PwC).

D.S. Rawat (Photo: Financial Express)

D.S. Rawat (Photo: Financial Express)

Around 55 million consumers purchased online in 2015 and the number is expected to grow to 80 million this year with better logistics, broadband and Internet-ready devices, it said.

The report said the growth of e-commerce has been driven by aggressive merchandising and discounting from flash sales and daily deals, more online loyalty programmes and increasing popularity of smartphones and tablets among consumers.

“The smartphone and tablet shoppers will be strong growth drivers. Mobile phones already account for 11 percent of e-commerce sales, and their share will jump to 25 percent by 2017,” it said.

Overall the e-commerce industry, worth $25 billion, has been growing at a compound annual growth rate of about 35-40 percent a year, and is expected to cross the $100 billion mark in five years, it added.

“E-commerce is big business and getting bigger every day. Online shopping has been embraced by Indians with close to 8-10 million adults making a purchase via the Internet in the last year,” said Assocham secretary general D.S.Rawat.

The report also said computer and consumer electronics, along with apparel and accessories, will contribute 40 percent of the total retail e-commerce sales in 2016, from the current level of 35 percent.

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