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Sunday, February 26, 2017

L&T Infra Debt to Raise Rs 2,500 cr to Refinance Projects

The company's portfolio comprises projects with an average of four years of satisfactory operations

With refinancing of infrastructure projects gathering steam, L&T Infra Debt Fund (L&T IDF), a refinancing unit, is raising about Rs 2,500 crore through debentures to provide liquidity for road and renewable energy projects.

As on September 30, 2016, its net worth was Rs 660 crore (excluding preference shares), debt was Rs 2,455 crore, and outstanding loan book was Rs 2,942 crore (for 25 projects). 

The company's overall capital adequacy ratio stood at 45.87 per cent as on September 30, 2016.

Rating agency CRISIL has assigned "AAA" rating for the proposed bond offering, giving refinance support to operational projects like roads, power, renewable energy, ports and airports segment.

Reserve Bank of India's norms for IDF provide flexibility to finance projects outside a tripartite arrangement. These can invest in public-private partnership (PPP) infrastructure projects without a tripartite agreement, and also projects that have not been set up through the PPP route (non-PPP projects). However, these take exposure only to projects with at least one year of satisfactory operations.

The company's portfolio comprises projects with an average of four years of satisfactory operations, against the regulatory norm of one year. 

It has an experienced team, which has demonstrated ability to refinance projects and raise funds at competitive rates through long term bonds (with tenors of 5, 7, 8, 10, 15, and 20 years.) 

L&T Infra Finance holds 48 per cent stake in L&T Infra Debt. The remaining is held by other L&T group companies, including 23 per cent by L&T Finance Holdings.
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Friday, February 24, 2017

Is the Nano Heading Towards a Dead-End?

Sanand produced only 515 Nanos in January, and sold even lesser, around 391 units

As Sanand continues to make the Tiago, now expected to touch a production of 5,000 units a month, the flagship product of the site, the Nano has almost faded into the background.

Take a look at these numbers: Sanand produced only 515 Nanos in January, and sold even lesser, around 391 units. Cumulatively, between April 2016 and January 2017 it produced 7,472 units, down 62 per cent from 19,686 units in the year before period. A total of 7,105 Nanos were sold during the April-January period in FY17, down 62 per cent.

An Ahmedabad-based dealer, who did not want to be named, said new launches from the company's stable, including the Tiago and now the Hexa have drawn considerable footfalls to the showrooms. In fact, the company saw its sales surge 44 per cent to 1,04,395 units for the compact segment, which as per SIAM, includes the Indica, Indigo CS, Zest, Bolt and the Tiago. 

"The enquiries about the Nano seemed to have slowed down. The AMT variant had triggered good response and even today there is demand for the AMT version as a second car in the family and amongst college students, however, there is no euphoria," he said.

When asked if there has been any communication from the company on whether the Nano was to be discontinued, the dealer said nothing immediate was on the cards. "There is some demand for the car in the taxi segment, and Tata Motors might just want to tap that," he added.

While the Nano had always struggled to pick up momentum, with the launch of automatic manual transmission (AMT) and other peppy city variants, sales had seen some revival signs in 2015. The GenX Nano that sports a power steering, stylish interiors and comes with an AMT variant, was launched in May 2015. Tata Motors ended FY16 selling 21,012 Nanos, up from 16,901 in FY15.

Sales, however, started falling after that and so far have not shown any signs of revival.

Will Tata now focus on high- margin-modest-volume cars instead of the Nano that was pushed as a low-margin-high volume car?

A company spokesperson explained, "As we have stated earlier, the hatchback segment is very important for us and the regulations and customer preferences are going to play a major role in defining various sub-segments within this segment. We already have a well-defined approved PV strategy in place that will look at not only the best way of addressing the segments' requirements but an overall perspective of the portfolio and you will see the action happening from our side."
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Thursday, February 23, 2017

Uber Ties up with Bangalore Metro to Provide Connectivity to People

Uber booking counters at metro stations will be available by end of March 2017

Global taxi-hailing platform Uber said it has partnered with Bangalore Metro Rail Corporation Limited (BMRCL) across 12 metro stations to provide last mile connectivity to everyday commuters.

Consumers can avail the service through exclusive Uber booking counters at metro stations, Uber said in a statement.

It said Uber representatives will also be available at these counters to ensure metro commuters get a reliable and affordable ride to their next destination.

Uber booking counters at metro stations will be available by end of March 2017.

"This partnership is a great example of how the public and private transport can work together and complement each other's strengths in order to help solve major issues that citizens face, in this case, last mile connectivity," Uber (Bengaluru) General Manager Christian Freese said.

Uber booking kiosks will come up at Kempegowda Majestic Station, Baiyyapanahalli, Mysore Road, Indiranagar, Vijayanagar, MG Road, Mantri Mall station, Orion Mall (Sandal soap factory), Sir M Visweswaraiyya Central College, Jalahalli, Dasarahalli and Hosahalli station.

The service will be helpful for those who might have trouble accessing data on their phone, or might not have the Uber app, it said.

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Tuesday, February 21, 2017

Markets Trade Marginally Lower; Telecom Stocks Drag

BSE Midcap and the BSE Smallcap indices outperformed the frontline indices to rise 0.5% each

Benchmark indices were trading marginally lower during the afternoon trade dragged by telecom stocks ahead of the Reliance Jio announcement. The company is expected to disclose fresh subscriber numbers and also an update about its current plan which offers free data until the end of March.

Meanwhile, Asian shares were trading largely flat after a holiday in US markets.

At 10: 55 pm, the S&P BSE Sensex was trading at 28,616, down 46 points, while the broader Nifty50 was ruling at 8,868, down 11 points.

In the broader markets, the BSE Midcap and the BSE Smallcap indices outperformed the frontline indices to rise 0.4% and 0.5%, respectively.

The market breadth was positive as about 1336 shares advanced against 962 declining shares on the BSE.

ITC and Bharti Airtel were top losers on BSE Sensex, down 1-2% followed by TCS, Coal India, Sun Pharma and M&M while Axis Bank, Asian Paints and HUL were the top gainers.

Extending gains for the fifth straight session, JSPL was up as much as 10% in addition to 8% rally in previous session.

Jio's free data offer has hit rivals, raising concerns about competition and margins in the sector. On Tuesday, Bharti Airtel fell 2.4% while Idea Cellular was down 0.2%.

Meanwhile, Ambuja Cements fell 2.8% in its biggest intraday percentage drop since Dec. 12, 2016 on weak December-quarter sales.

However, the Nifty IT index rose as much as 1.2% to its highest since Aug. 25, 2016 at intra-day but later pared gains to turn flat. TCS on Monday announced that it would buy back shares worth up to Rs 16,000 crore ($2.39 billion) at a substantial premium, raising expectations rivals such as Infosys would follow suit.

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Sunday, February 19, 2017

Work in IT? Capgemini India Chief Says 65% Workforce Can't be Re-Trained

The company warned of high job losses at the middle and senior levels

French IT major, Capgemini has said that a majority of the workforce cannot imbibe the skill sets required for increasing use of digital technologies.
And warned of high job losses at the middle and senior levels. “I am not very pessimistic, but it is a challenging task and I tend to believe that 60-65 per cent of them are just not trainable,” Capgemini India’s Chief Executive Srinivas Kandula said. The domestic arm of the French IT major employs nearly 100,000 engineers in the country.
“A large number of them cannot be trained. Probably, India will witness the largest unemployment in the middle level to senior level,” he said at the Nasscom leadership summit in Mumbai.  

He also flagged concerns surrounding the quality of IT workforce, saying much of the 3.9 million IT employees come from low-grade engineering colleges which do not follow rigorous grading patterns for students in their zeal to maintain good records. 

The remarks come days after the industry lobby Nasscom said there is a need to re-train up to 1.5 million, or nearly half of its sectoral workforce. This is primarily on the back of a change in nature of work in newer, digital technologies.

Kandula said the industry, driven by yield-seeking investors, has not invested enough to upgrade the skill-sets of its employees.

He also said more number of students are now being hired from lower grade engineering colleges, which has ensured that the rise in wages has been negative by a huge margin.

Kandula said as against offers of Rs 2.25 lakh per annum that used to go out for freshers two decades ago, they have risen only to Rs 3.5 lakh now, which suggests a massive decrease in real wages from an inflation-adjusted perspective.

“For some unknown reasons, we call it a knowledge- driven industry. If you have that kind of talent, and then making them learn the existing technology itself is such a huge challenge,” he said.

The quality of the students who are coming in is so bad that many of them are not able to answer, when asked about the subjects taught to them when they were in the final semester of their engineering degrees, he said.

The critical remarks come months after a study found out that as much as 80 per cent of engineering graduates are unemployable.

Kandula had last week told PTI that his company would shift focus to hiring freshers from the laterals earlier due to the newer skill-sets which are required and the ease of training which the freshers offer. He, however, had maintained that the company will continue to hire.

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Saturday, February 18, 2017

Vodafone-Idea Merger to Be Lead by Martin Pieters

If the deal is successful, the combined entity will create the largest telecom player in the country

Telecom giant Vodafone has brought in Martin Pieters — former managing director (MD) and chief executive officer (CEO) of its Indian arm — to work on the proposed merger of Vodafone India with Idea Cellular.

Group Chief Vittorio Colao is likely to brief all business heads of the Indian arm over a conference call next week about the merger. “Pieters has reached India to oversee the proposed merger of Vodafone India with Idea Cellular. Vittorio will brief all business heads of Vodafone India over a conference call on the merger on February 24,” said a source. Vodafone declined to comment.

Pieters, longest serving CEO of a telecom firm in India, stepped down in 2015, will be succeeded by present Vodafone India MD and CEO Sunil Sood.

If the deal is successful, the combined entity will create the largest telecom player in the country, with revenue share of around 40 per cent and subscribers base of 380 million, according to India Ratings and Research.

However, given the present spectrum holding, revenue and subscriber base, both companies need to work on synergy to comply with the merger and acquisition rules.

Which say an entity should not hold more than 25 per cent of the spectrum allocated in a telecom circle and 50 per cent on spectrum allocated in a particular band in a service area.

The merged entity should not have more than 50 per cent revenue and subscriber market share. According to CLSA report, the merged entity would breach revenue market share, subscriber and spectrum caps in five markets.

The combined entity in the present scenario will breach the spectrum cap in 900 MHz band in Maharashtra, Gujarat, Kerala, Haryana and UP West. And in the 2500 Mhz band in Maharashtra and Gujarat, it said.

CLSA estimated that the excess spectrum which would need to be surrendered or sold off is valued around Rs 5,400 crore and for the merger both the companies will also have to shell out Rs 5,700 crore for liberalising radiowaves that they were allocated administratively.

According to sources, the companies are likely to request government to relax merger and acquisition rules.

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Friday, February 17, 2017

NBCC Trades 1:2 EX-Bonus; Stock Down 9%

The stock dipped 9% to Rs 175 on the BSE in intra-day trade.

 NBCC (India) dipped 9% to Rs 175 on the BSE in intra-day trade after the stock turned ex-bonus in the ratio of 1:2.

The board state-owned construction & engineering company on January 4, 2017 recommended the issue of bonus shares in the ratio of 1:2 i.e. 1 bonus share of Rs 2 each on every existing 2  fully paid-up equity shares of Rs 2 each.

The company has fixed February 21, 2017 as the record date for the purpose of issue of ascertaining the eligibility of shareholders for issuance of bonus shares.

Since January 4, the stock had outperformed the market by surging 17% as compared to 6% rise in the S&P BSE Sensex till Thursday.

The trading volumes on the counter nearly doubled with a combined 1.69 million shares changed hands on the NSE and BSE till 09:50 am.

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Thursday, February 16, 2017

Lufthansa Bets on India Growth; to Boost Ties With Jet Airways

Lufthansa operates 60 flights to and from India per week

Bullish on an Indian market, European airliner group Lufthansa plans to enhance bilateral ties with Jet Airways for increased connectivity to new cities and launch flight from Brussels to Mumbai next month.

Lufthansa Group, which operates 60 flights to and from India per week, has recently introduced the fuel-efficient A350-900 aircraft on Munich-Delhi route.

"We are also looking to intensify the bilateral relationship between Jet Airways and Lufthansa," Chairman of the Executive Board and CEO of Deutsche Lufthansa AG Carsten Spohr said on Wednesday.

Already, Lufthansa and Jet Airways operate code share flights on certain routes and this collaboration is likely to be expanded further.

Code share allows an airline to book its passengers for destination where it does not fly through a partner carrier.

Recently, the European major had expanded its partnership with Gulf carrier Etihad Airways — which is a strategic partner of Jet Airways.

All the three carriers have significant presence in the European market.

"We have some code share going with Jet Airways. We would like to intensify and may be enlarge our portfolio of code share... That means flights to second-tier cities which we are not operating directly could be destinations where we cooperate in terms of code share," Senior Director (South Asia) at Lufthansa Group Wolfgang Will said at a press meet.

He also noted code share has been a healthy component in their services.

Soon, Lufthansa would be introducing the A350-900 plane on Munich-Mumbai route apart from increasing the frequencies of its services between Pune and Frankfurt.

"The services between Brussels and Mumbai would start by end of March," he noted.

Besides, the group would be naming one of its big aircraft flying to India as 'Delhi'.

"This shows the importance of Delhi as a hub and India as a market to us," Spohr said.

Meanwhile, the Airbus 350-900 plane has been configured to seat 293 passengers, including 224 in Economy Class. This aircraft consumes 25 per cent less fuel, emits 25 per cent less carbon dioxide and generates 50 per cent less noise.

In the Asia-Pacific, Lufthansa Group flies to 18 destinations in eight countries, operating 249 weekly flights from this region to Europe.

Currently, Lufthansa Group accounts for about 15 per cent market share of traffic between India and Europe.

Vice-president (Sales Asia Pacific) at Lufthansa Group Dieter Vranckx said India is a heavily growing market and the country accounts for around 15-20 per cent share of total business done in the Asia-Pacific region.

The region includes Japan, China and Australia.

"In the business we do out of Asia Pacific, India accounts for 15-20 per cent.... (India is) heavily growing market," he noted.

There is a growing middle class and a "very open and supportive aviation environment", he added.

When asked about the national civil aviation policy, Vranckx said there are provisions which it looks at in a very positive way.

Responding to a query on Indian government's earlier proposal to auction unused bilateral rights, Will said they were surprised as they had not heard it before.

On whether the airline is in favour of having increased bilateral rights with respect to Indian market, Will said the group is comfortable with the current bilateral rights.

"There is at the moment no issue of limiting our growth in India," he added.

Meanwhile, officials said Lufthansa is bringing down the unit cost by 2-3 per cent every year and with increased efficiency, it would be able to offer better prices to customers.

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Tuesday, February 14, 2017

Vedanta Q3 PAT Jumps Over Four-Fold to Rs 1,866 Crore

Higher revenues lend strong support for 83 per cent rise in yoy EBITDA

 Vedanta Ltd today reported a lower-than-expected consolidated net profit of Rs 1,866 crore in the December quarter mainly on the back of higher net sales. The reported bottom line, however, was a more than four-fold jump from Rs 411 crore in same period last year as it hit the highest level in eight quarters.
Anil Agarwal-led
Net sales of the company stood at Rs 20,296 crore in the period under review, up 30 percent from the corresponding period last year as performance of all its businesses remained upbeat.
As per Bloombergy estimates, Vedanta's topline was seen at Rs 19,393 crore in the quarter gone by, while its net profit was expected at Rs 1,990 crore.
The company's EBITDA jumped 83 percent on a year-on-year basis to Rs 6,002 crore in the period under review on account of higher commodity prices and increased volumes at iron ore due to recommencement of operations, ramp up of volumes and cost efficiencies at the aluminium and power business along with decline in discount to Brent at Oil & Gas.
The company managed to post a much higher bottom-line line on year-on-year basis despite a forex loss of Rs 117 crore and higher tax outgo of Rs 897 crore as against Rs 49 crore in the corresponding period last year.
During the quarter, rupee depreciated by 1.9 percent, primarily on restatement of MAT assets at Oil & Gas business, informed Vedanta.
"Volume ramp-up and cost efficiencies across our operations, aided by higher commodity prices, have significantly driven up EBITDA y-o-y," the release quoted Tom Albanese, chief executive officer of Vedanta as saying. "Our financial position remains robust and we continue to strengthen our balance sheet by maximising free cash flow and reducing debt. With our focus on simplifying the group structure, the Vedanta Limited and Cairn India merger is expected to be completed in the first quarter of CY 2017," he added.
Coming to specific business verticals, company's iron ore operations achieved annual mining production cap in January and received additional mining allocation in Goa for FY2017.
In aluminium, the third line of the 1.25 mtpa Jharsuguda-II smelter commenced ramp up in December.
The company's total cash and liquid investments stood at Rs 53,452 crore as on Dec 31, 2016. Out of the total debt of Rs 64,966 crore, the INR/USD split is approximately 82%/ 18%, said the company. Further, the gross debt comprises of long term loans of Rs 62,614 crore and short term loans of Rs 2,352 crore.
Vedanta has presence in several businesses such as oil&gas, zinc, power, iron ore, aluminium, and copper. The company's consolidated earnings include earnings from Cairn India and Hindustan Zinc.

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Sunday, February 12, 2017

Idea Cellular Slips into Red with Q3 Net Loss of Rs 384 cr

Idea, for first time, witnessed decline of 5.5 mn mobile data customers on sequential quarter basis

Telecom operator Idea Cellular today logged a consolidated net loss of Rs 383.87 crore for the December 2016 quarter compared to a net profit of Rs 659.35 crore in the year-ago period, hurt by newcomer Reliance Jio's free voice and data promotions.

Total income also has decreased to Rs 8,706.36 crore for the quarter, from Rs 9,032.43 crore in the same period in the previous year, as per a BSE filing.

"The Indian mobile industry witnessed an unprecedented disruption in the quarter of October to December 2016, primarily due to free voice and mobile data promotions by the new entrant in the sector," Idea Cellular said in a statement.

Consequently, revenue KPIs (key performance indicators) and financial parameters for all mobile operators have sharply declined, and for the first time in its history, the flourishing Indian wireless sector is trending towards an annual revenue decline of 3-5 per cent in 2016-17 (vs 2015-16), it added.

"The sector can expect to recover revenues only once the new operator starts charging for its pan-India mobile services. As a result of this current industry upheaval, the standalone Idea revenue dropped to an unforeseen level at Rs 8,662.7 crore, a decline of 6.9 per cent on sequential quarterly basis," it said.

Idea, which is in talks with rival Vodafone for a merger, said it was "forced to reduce" its voice rates on sequential quarterly basis by 10.6 per cent to 29.6 paise per minute (versus 33.1 paise in the second quarter of 2016-17) and drop in mobile data rates by 15.2 per cent q-o-q to 15.9 paise per megabyte (vs 18.7 paise).

"Despite an unprecedented outgoing voice rate fall, the lure of free offerings resulted in lower than normal volume elasticity with the quarterly sequential voice minutes growing only by 7.3 per cent to 210 billion minutes (vs 195.5 billion minutes in second quarter of 2016-17), that too led by double-digit growth in incoming call volume," Idea said.

Also, the higher blended voice realisation rate fall was also an outcome of the "tsunami of minutes" terminating on Idea's network from the new operator, resulting in overall higher ratio of subsidised incoming minutes recovered at below cost IUC settlement rates.

Idea, for the first time, witnessed a decline of 5.5 million mobile data customers on sequential quarter basis with overall mobile data subscriber (2G+3G+4G) base receding to 48.6 million (vs 54.1 million in second quarter of 2016-17).

Its net debt stood at Rs 49,140 crore at the end of December 2016, including a larger proportion of this debt from DoT under 'Deferred payment obligation' for spectrum acquired in last four spectrum auctions.

Idea's capex spend was Rs 2,000 crore (excluding forex and interest capitalisation) in the reported quarter, partially funded by cash profit of Rs 1,230 crore.

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Friday, February 10, 2017

Rewa Solar Project Ends With Ultra-Low Tariffs

The project design is good but nobody expected tariffs to drop so low, says Sunil Jain

At a record low of Rs 2.97 (4.4 cents) a kilowatt-hour, the Rewa ultra mega solar power project has become not only one of the biggest solar parks in the world but also one of those with the lowest tariffs.

Mahindra Renewables, ACME Solar Holdings, and Solengeri Power bagged the project’s three units at tariffs of Rs 2.979, Rs 2.97 and Rs 2.974 for the first year.

These tariffs are on a par with Rs 3.94 a unit that emerged in a tender floated by the Uttar Pradesh Power Corporation last year for coal-based power. The project has no government subsidy since it does not offer viability gap funding.

“The project design is good but nobody expected tariffs to drop so low,” Sunil Jain, chief executive officer, Hero Future Energies, told Business Standard. His company was among the 18 bidders that qualified for the reverse auction that began on Thursday and ran throughout the night to close after 33 hours on Friday evening.

At Rs 3.15-3.20 per unit, companies can make margins based on the fall in panel prices. The bids, however, “lost rationality”, added Jain. The contract allows for a 5 per cent year on year escalation, which works out to 75 paise in the 15th year. The levelised tariff will be around Rs 3.3 for 25 years. Jain said companies would not be able to make margins since panel costs might come down to 27 cents.

According to Manu Srivastava, chairman, Rewa Ultra Mega Solar (RUMS), and principal secretary in the state government, the project has its strengths. “There is payment security by way of a state government guarantee. The final consumers are also known, unlike in other contracts. Besides, in case something goes wrong, third party sales and compensation are available to the operators.”

He said viability should not be an issue since safeguards were already in place. In case a company does not sign a power purchase agreement (PPA), it will forfeit its bid security of Rs 25 crore for each unit. Besides, there will be a performance guarantee of Rs 75 crore, which will be forfeited in the event of the project not taking off.  “Solar panel prices have come down and these are serious players,” he added. Bidders are required to have a net worth of Rs 300 crore for one unit, Rs 550 crore for two units and Rs 750 crore for three units.

Srivastava said open access contracts were already in place and Power Grid’s transmission line and sub-station at the site would be up by October. Ninety-seven per cent of the land was already available, he said. RUMS is a state-owned company with Solar Energy Corporation of India as a 50 per cent partner. “We do not have even one employee. State government employees are working with it part time.”

The World Bank-funded project will have three units of grid-mounted solar photovoltaic power plants of 250 mw each.

The selected bidders will sign two sets of PPAs with Delhi Metro Rail Corporation and Madhya Pradesh Power Management Corporation Ltd (MPPMCL). While DMRC is likely to buy 121 million units (kilowatt per hour) from each of the three units, MPPMCL will book 80 per cent of the generation capacity.

Located in Gurh Tehsil in Rewa, the project will supply solar power to meet almost the entire daytime requirement of Delhi Metro. This will also enable the project to supply the bulk of the power within the state during peak demand hours.

Twenty companies had put in bids for 10 times the required capacity of 750 mw. ReNew Power, SBG Cleantech and the Adani and Aditya Birla groups were among other bidders.
Power from the project is likely to be available from September 2017. The reverse auction for the project started with base prices for the three units at Rs 3.59, Rs 3.62 and Rs 3.64.

The lowest tariff for grid-connected solar power so far was Rs 4.34 per unit. Fortum India quoted the rate in January 2016 for the Badla solar park in Rajasthan. Competition among bidders can be gauged from the fact that a year later the highest tariff quoted for the Rewa project was only 5 paise more at Rs 4.39.
Shapoorji Pallonji Infrastructure and Torrent are out of the race since at Rs 4.39 and Rs 4.26 their quoted tariffs were the highest. According to the rules, bidders quoting the highest initial tariffs would not be allowed to bid.

In roof-top solar, Amplus Energy bid a record low of Rs 3 a unit in Uttarakhand, Himachal Pradesh and Puducherry in November 2016 to win a contract to install 14.5 MW of solar plants across 10 states. Rooftop generation is different from power generated in solar parks, which is not only connected to the grid but also much bigger in scale.

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Thursday, February 9, 2017

Pizza Hut, KFC Sales Grow in December Quarter

During 2016, system sales of KFC grew seven per cent

Despite a severe cash crunch that hurt sales of consumer goods in the country during the December quarter, quick service restaurant (QSR) chains KFC and Pizza Hut have managed to grow.

System sales of the two grew 16 per cent and nine per cent, respectively, during the period in India. System sales of Pizza Hut during the preceding quarter grew six per cent, after declining seven per cent in the June quarter. KFC’s sales grew 13 percent in September, after falling one percent in the previous quarter.

During 2016, system sales of KFC grew seven per cent, backed by an increase in sales during the second half of the year. Pizza Hut’s system sales grew one percent. The market here contributes about one percent of the global sales of Yum! Brands’, the US-headquartered QSR company that owns both. In 2015, system sales of Yum! in India declined five per cent. System sales growth figures exclude foreign currency translation. “This represents our second consecutive quarter of positive same-store sales growth. Over the past six months, we have driven growth by realigning our business structure and focusing on core offerings and relevant product innovations. In the wake of external factors like demonetisation that affected the industry in the past few months, this is a reiteration of the confidence that consumers have shown in our brand. Our focus for the coming year is to sustain this growth,” said Rahul Shinde, managing director, KFC India.

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Mazumdar-Shaw Denies Differences at Infosys

Refutes claims of differences between board, founders, and Sikka

Infosys, the country’s second-largest software exporter, has been transparent in its actions and there’s been no rift between the founders, the board of directors and its chief executive, Vishal Sikka.

“There is absolutely no (such) problem and yet the media seems to be giving the impression that there is a huge rift,” said Kiran Mazumdar-Shaw, board member, in a telephonic interview. 

“There have been issues in the past about the severance package given to former (finance head) Rajiv Bansal,” recalled Mazumdar-Shaw, also chairman of the country’s second largest biotechnology company, Biocon. “There were a lot of concerns about other issues that reflected in the voting pattern, where (some of) the founders abstained from voting. But, all that happened about a year ago.”

Some of the founders of Infosys, who have moved away from running the organisation, and independent analysts had raised concerns over the compensation for Sikka, the package settlements for former finance head Rajiv Bansal and general counsel David Kennedy.

“Nandan Nilekani and Mrs Sudha Murty voted on everything, even though the others abstained (on some resolutions). But, that is one-year-old news. All those motions were carried forward because the majority of the shareholders voted in favour,” said Shaw. “They did express their concerns, like why have you given such a generous severance pay to Rajiv Bansal or given such a generous remuneration to Vishal Sikka. But, we answered all those questions.”

Another official, who did not want to be named, says Sikka’s salary is linked to tough targets, with a higher proportion of variable pay. 

"If the targets are delivered clearly, the CEO deserves to be paid. If they are not met, it will be correspondingly lower and in the process, the cash component has been brought in. This is far more in line with the investors’ expectations and far more in line with contemporary practice, and that is why the investors overwhelmingly supported,” said the senior official.

However, a former director, T V Mohandas Pai, has justified the questions raised by the founders. "They (the board of directors) have to give a detailed answer as to why they have taken such and such decisions and what is the cost benefit. The founders and shareholders are perfectly justified in raising issues, and the board has to listen to them," Pai was quoted by news agency PTI.

Adding: "And, if you look at how shareholders have suffered in the past five years, compared to the salaries paid to the management now and what was paid to the management earlier, the high compensation paid to people is excessive. Shareholders have not benefited from high salaries paid to people. The board should look at high salaries and look at what shareholders have got out of it.”

Separately, there have been questions asked on the appointment of D N Prahlad and Punita Kumar Sinha, respectively the head of an investment advisory company and wife of Union minister Jayant Sinha, of American scholar Jeffrey S Lehman and Roopa Kudva, managing director of Omidyar Network in India, on the board of the company.

Prahlad, a former Infosys employee and a relative of founder N R Narayana Murthy, was recommended to the board by the founders but a final decision to appoint him was taken by the board.

“The Board will not recruit somebody just based on the recommendation and we go into looking at the merits. The representative committees and I have personally interviewed Mr Prahlad and we felt he is the right person to add value (to Infosys). It is a very good selection process, just like we did it with Punita,” said Mazumdar-Shaw. 

Both the official and she said the company was focused on growth and maintaining of margins in an uncertain business environment.
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Tuesday, February 7, 2017

Jubilant Food's Profit Plunges 32% in Q3

The firm had posted Rs 29.3-crore profit during the same quarter last year

Hit by demonetisation and growing material costs, Jubilant FoodWorks’ net profit plunged 31.7% year-on-year to Rs 20 crore in the quarter ended 31 December. 

The firm had posted Rs 29.3-crore profit during the same quarter last year. Its net sales stood at Rs 659 crore – 4% higher than Rs 634 crore reported in the same quarter previous year.

 “The quarter mirrored the challenges faced by economy related to liquidity crunch. However, being part of the organised space along with our continued thrust on digitisation, gave us the requisite agility to accept online payments and thereby contain the impact as the sector migrated to more and more cashless payment mode”, said Ajay Kaul, chief executive, Jubilant FoodWorks Limited.

During the quarter, same-store growth declined 3.3% compared to a 2% increase during October-December, 2015. Its cost of materials grew 12.8% y-o-y to Rs 145 crore from Rs 128 crore.

Jubilant added 32 new Dominos restaurants during the period and it closed down one, taking its total outlet count to 1,107 compared to 990 at the end of 2015. It also entered 10 new cities during the quarter. 

As of December-end, its restaurant footprint is spread across 259 cities – up from 225 cities a year ago. Online orders out of the total delivery orders grew to 49% from 36% during the year-ago period.

Jubilant FoodWorks’ stock closed at Rs 1,007.20 at the end of the day on Bombay Stock Exchange – 9.61% higher.

    Oct-Dec, 2015
    Oct-Dec, 2016
    Net Sales

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Monday, February 6, 2017

Tata Sons Shareholders Vote to Remove Cyrus Mistry from Board of Directors

Bombay House EGM last in a series to oust Mistry from group

Shareholders of Tata Sons, in an extraordinary general meeting (EGM) on Monday afternoon, voted to remove former chairman Cyrus Mistry as director of the company. The meeting took place at the Bombay House, the headquarters of the $103-billion group.

The meeting was attended by Tata Sons interim chairman Ratan Tata, N Chandrasekaran, who will take over as Tata Sons chairman on February 21, and other Tata Sons directors, including Ajay Piramal. Mistry did not attend the meeting. A one-line statement from Tata Sons said Mistry has been removed with a “requisite majority”, without giving any details. The EGM was called by the Tata Trusts, chaired by Tata.

The exit of Mistry from the board was a foregone conclusion as the Tata Trusts hold a 66% stake in the company, while the Tata group companies hold another 14%. The Mistry family owns an 18.5% stake, while the rest is owned by Tata family members.

The Mistrys do not have any nomination right on the board of Tata Sons. Sources said Mistry’s brother-in-law and Ratan Tata’s half-brother, Noel Tata, voted in favour of the resolution through proxies, though he directly holds minuscule shares in the company.

Old relations between the Tatas and the Mistrys seem to have reached a bitter end on Monday.


The Mistry family had first acquired shares in Tata Sons in 1965 and Pallonji Mistry, Cyrus’s father, was appointed as Tata Sons director in 1980. He retired in 2004. Cyrus, 48, joined two years later as director and became chairman in 2012. Mistry was ousted as a chairman on October 24 last year, in a surprise move by the Tata Sons board.

Mistry later moved the National Company Law Tribunal (NCLT) against Tata Sons’ EGM, but did not get any interim relief. The next hearing is scheduled on February 13 in Mumbai.

Mistry’s allegations and counter allegations, meanwhile, hurt the Tata brand which dropped in Brand Finance’s top 100 global listing to 103 from last year’s 82.  

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Thursday, February 2, 2017

Govt spend to lead infrastructure sector, private investment to wait

The decision to set up an integrated oil major company is expected to boost economic activity

Huge allocation for the infrastructure segment was a welcome move but the Budget fell short of making any big bang announcements for the sector, say experts. This year again, government spending is likely to lead the investment cycle, as private investment is likely to wait.

Finance minister Arun Jaitley also gave affordable housing much-needed relief and granted it infrastructure status. The industry had been for long asking for these changes.

The total allocation for infrastructure development in 2017-18 stands at Rs 3,96,135 crore. “This magnitude of investment will spur a huge amount of economic activity across the country and create more job opportunities,” Jaitley said in his Budget speech.

“The announcements are very good on intent, but implementation will be key. The first and major round of investments will come from the government side. Investments would be led by the government; I do not see private companies opening up their purses,” said R Shankar Raman, chief financial officer, Larsen & Toubro (L&T).

M S Unnikrishnan, managing director, and CEO, Thermax, rued the fact that the Budget lacked any big bang announcements for infrastructure. “There were various small announcements for infrastructure, but a big bang announcement is missing that could have helped kick-start the private investment cycle,” Unnikrishnan said.

However, affordable housing with its new status may see more immediate private interest. “Granting infrastructure status to affordable housing will provide a boost to the volume of construction activity across the country. A good boost to the construction industry that was struggling with fewer product launches in the last couple of years” said Joe Verghese, managing director, Colliers International India.

Some infrastructure sectoral concerns also remain unaddressed. “Happy with the quantum of allocation, with 18 per cent of the total budget being made to infrastructure and to sectors which have shown satisfactory performance. What has not been addressed are the hot buttons in infrastructure,” said Vinayak Chatterjee, Chairman at Feedback Infrastructure Services. The Budget statement also did not make any mention of the Kelkar Committee recommendations for private-public partnership and issues faced in the thermal power sector several experts pointed out. Raman added the Budget missed out on addressing the prerequisites for the government’s “Make in India” initiative.

The Budget gives a huge impetus to the renewable segment of power, with duty reduction in some related equipment manufacturing. “The government’s commitment to rural electrification and solar target is a welcome step. However, strengthening the Renewable Purchase Obligations mechanism is key and should be part of government’s larger vision for renewable energy,” said Anil Sardana, managing director, Tata Power.

The reduction in the basic customs duty on liquified natural gas is also expected to bring down energy costs, said Lalit Kumar Gupta, managing director and chief executive officer, Essar Oil. The government’s decision to set up an integrated oil major company and create more strategic oil reserves is expected to boost economic activity and create huge employment opportunities.

Part of the infrastructure announcements is a mechanism to streamline institutional arrangements for the resolution of disputes in infrastructure-related construction contracts, PPP, and public utility contracts through an amendment to the Arbitration and Conciliation Act 1996. Sector experts see the move being partially useful in addressing dispute resolution as a concern. “Not having multiple bodies help, but there needs to be focus on quick and efficient dispute resolution,” Raman from L&T said.

Even as private investments in the infrastructure sector may take longer, the Budget announcements are expected to give the right push for sectors like steel and cement. “Given that steel will be one of the key requirements for these sectors, we expect that domestic demand scenario of steel will improve handsomely,” said PK Singh, chairman, Steel Authority of India.

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Monday, January 30, 2017

SpiceJet Ready to Shift Part of its Operations to Delhi's Terminal 2

DIAL has asked three airlines to shift operations from T1D to T2 to carry out expansion work

SpiceJet is willing to shift part of its operations from Delhi's domestic terminal T1D to T2 so that the airport operator can undertake modernisation work.

The airport operator GMR-led Delhi International Airport (DIAL) has asked IndiGo, SpiceJet and GoAir to shift operations from Terminal-1 (T1D) they currently operate so that the expansion work of the terminal can begin.

"We are willing to shift our operations to Kolkata, Mumbai and Bengaluru, provided we get more time to undertake the process," said SpiceJet CMD Ajay Singh.

Singh felt the time given to undertake the process was too less. "One has to realign all the flights that has is connected to these three cities, we need some time for that operation," he said. DIAL Chief Executive Officer Prabhakara Rao wrote to the heads of the three airlines that as there was no consensus between them over who would shift, all three would have to partly shift operations from February 15.

"After careful consideration, it has been decided that flights operating to BOM (Mumbai), BLR (Bengaluru) and CCU (Kolkata) of all three airlines will be shifted to Terminal-2 from February 15 and accordingly, all resources will be allocated to T2," Rao wrote. 

The letter has been addressed to IndiGo President Aditya Ghosh, SpiceJet Chairman and Managing Director Ajay Singh and GoAir CEO Wolfgang Prock-Schauer. While earlier, DIAL had asked SpiceJet and GoAir to shift operations, both the airlines refused to accept the demand terming that as a preferential treatment to IndiGo- the largest carrier by fleet size and market share. 

IndiGo had earlier said that they will oppose the proposal of split domestic operations citing passenger inconvenience. "We will support any effort to make things better without splitting our domestic operations in Delhi and creating inconvenience for our customers," an IndiGo spokesperson had told this paper on January 20. 

On January 30, Times of India reported citing sources said that the airline is willing to shift to Terminal 2 provided that it is exclusively provided to IndiGo. Singh also said that split operations will not impact the on-time performance of the airline. 

"It happens in many places across the world, it will not have any impact," he said. According to the master plan of expansion, T1's area would be increased to 133,000 sqm from 53,000 sqm, and it would be able to handle 23 million passengers. Ten aerobridges would be constructed and the number of boarding gates would be increased from eight to 25. Carriers would be shifted to Terminal 1 after the expansion.
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Sunday, January 29, 2017

L&T Profit up 39%; Revises its Revenue, Order Inflow Guidance

Management noted demonetisation caused disruption, would be difficult to quantify scale of impact
Engineering major Larsen & Toubro (L&T) on Saturday revised downwards its guidance for order inflow and revenue growth in the current financial year citing delays in ordering activity and other execution headwinds. For quarter ended December 2016, the company reported a 39 per cent jump in net profit owing to a better operational performance.

The management noted demonetisation has caused disruption but said it would be difficult to quantify the scale of the impact.

L&T in the October-December 2016 quarter reported a consolidated net profit of Rs 972. 47 crore against Rs 700.34 crore reported in the same period a year ago. Revenue from operations for the December quarter was at Rs 26,286 crore compared to Rs 25,928 crore in the corresponding quarter -- a rise of just 1 per cent. The company missed Street expectations for its net profit numbers. 

Earnings before interest, tax, depreciation and ammortisation or Ebitda was higher at Rs 2,520 crore, against Rs 2,130 crore a year ago. The company attributed the growth in Ebitda to the turnaround seen in sectors like engineering and hydrocarbon which were badly hit in the corresponding quarter.

The L&T management has also revised its growth guidance for both its expected order inflow and revenue for the current financial year. “It is possible for us to end the year with a 10 per cent growth in order inflow against the 15 per cent we had guided earlier,” Shankar Raman, chief financial officer, L&T, said at a press conference. Raman also revised the company’s revenue growth guidance to 10 per cent from the earlier 12 per cent. Guidance for margins growth on a year-on-year basis was maintained at 50 basis points for the current financial year. The consolidated orderbook stood at Rs 2.58 lakh crore, 1.4% higher from a year ago. “We are at 6% for the nine months period, factoring the surge in order inflow that we typically see in the fourth quarter we will think we will reach 10 per cent growth in order inflow,” he added. The company’s order inflow for the December quarter was at Rs 34,890 crore, which is 10 per cent lower than Rs 38,710 crore seen in the same quarter a year ago. ”Order Inflow decline due to muted domestic capex and delay in awards,” Raman said.  He added revenue guidance has been lowered due to current execution challenges and the company does not expect these headwinds to go away anytime soon. 

“Land acquisition issues, right of way issues continue to be a challenge. Second challenge is of liquidity where there is an NPA overhang on new completion of new financial closures.  Some clients are pacing execution to suit their needs, clearance of work certificates are taking longer,” he said.

On demonetisation, Raman added there has been an impact and in some sectors like roads and real estate a more visible one. “The impact on toll road alone is Rs 100 crore, residential bookings in the realty has slowed down but how much of it is due to demonetisation and how much due to opportunistic assessment of price correction we do not know yet,” Raman said. L&T has so far received Rs 20 crore from the government as compensation for the Rs 100 crore lost on toll road projects. “The Rs 20 crore was as O&M costs, once the decision to pay for full revenue loss was taken, the payment of O&M cost has slowed down,” Raman added.

In terms of the outlook on the investment climate, Raman added, “It remains challenging. Private sector capital investment is still shying away, government outlay on large programme continues to remain elusive, announced with delays and award timelines are extending,” he said.
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Tuesday, January 24, 2017

Jet Airways Appoints M Shivakumar as Financial Controller

M Shivakumar had earlier served the airline as senior vice-president, as its financial controller

Naresh Goyal-promoted Jet Airways has appointed M Shivakumar, who had earlier served the airline as senior vice-president, as its financial controller.

Sources said Shivakumar is expected to assume the new position soon.

He returns to the Mumbai-based full-service carrier after more than four years. He had quit the company as senior vice president of finance in July 2012 along with then company secretary Monica Chopra.

When contacted, Shivakumar did not offer any comments about his appointment.

In his capacity as company's financial controller, Shivakumar would be in-charge of budgetary control, management information system and financial reporting, among others.

He is joining back Jet Airways from Sanmar Group that has business interests in chemicals, shipping, engineering, and metals.

Shiv Kumar had also served GVK-run Mumbai International Airport as well as Tata Group's Taj Hotels Resorts & Palaces.

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Monday, January 23, 2017

Amazon ropes in YouTubers Kanan, Biswa, Azeem, Sapan for comedy specials

The series will premiere exclusively on Amazon Prime Video India by May 2017

Amazon Prime Video India has roped in Only Much Louder as its partner for the subscription streaming home for 14 stand-up comedy specials with India's top comedians, which include YouTubers Kanan Gill, Biswa Kalyan Rath, Sapan Verma, Azeem Banatwalla and many more.

Amazon announced that it is a long-term arrangement with OML, which will feature hour-long specials of each of the comedians.

The series will premiere exclusively on the platform by May 2017. It will be available to viewers on Amazon Prime Video India and globally across 200 countries and territories.

Looks like Amazon Prime Video is geared up to become the one-stop destination for best stand-up comedy in India.

"We want to change the way customers consume entertainment by bringing this fantastic collection by OML's best comedy talent to prime members exclusively and on-demand," Nitesh Kripalani, director and country head, Amazon Prime Video India.

The stand-up comedy scene in India has transformed in the last few years and this joint initiative will change the game of viewing stand-up in the country.

"We are very excited to partner with Amazon Prime Video on this series of stand-up specials. Stand-up comedy in India has become massive over the last few years with a huge fan base across the country and the comics have worked tremendously hard to create and perform the funniest material for their fans," said Ajay Nair, COO, Only Much Louder.

The list of stand-up comedians also include Sorabh Pant, Kenny Sebastian, Zakir Khan, Naveen Richard, Anuvab Pal, Varun Thakur, Neville Shah, Aadar Malik and S Aravind.

The series will also feature "EIC Outrage" special, a live show based on East India Comedy's popular EIC Outrage stories.

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Friday, January 20, 2017

Adani Power Q3 net loss at Rs 325 cr

Total income decreased to Rs 5,872 cr as against Rs 6,210 cr a year ago.

Adani Power on Friday reported a consolidated net loss of Rs 325.27 crore in the quarter ended December 31, mainly on account of lower plant load factor and higher financial costs.

The group had posted a net profit of Rs 103.87 crore in the year-ago period, the company said in a BSE filing.

According to the statement, the company's total income in quarter under review was Rs 5,872.57 crore as against Rs 6,210.76 crore a year ago.

The company said, "The consolidated total income for the quarter reduced marginally to Rs 5,873 crore as compared to Rs 6,211 crore in the corresponding quarter of previous year largely on account of lower PLF."

However, it said, the overall plant availability during the quarter was 94 per cent as against 93 per cent during three month period previous financial year and it sold 14.9 billion units in said quarter as against 16.6 billion units a year ago.

The company further said, "EBIDTA (Earnings before interest, taxes and amortisation) during the quarter has reduced by 15.9 per cent from Rs 2,030 crore in Q3 FY16 to Rs 1,708 crore in Q3 FY17, mainly due to lower merchant tariff and prior quarter income recognised in Q3 FY16."

Elaborating further, the firm stated the finance costs have increased from Rs 1,318 crore in third quarter of last fiscal to Rs 1,430 crore in third quarter of the ongoing financial year on account of higher working capital utilisation and impact of mark to market on foreign currency derivatives.

According to the statement, due to lower EBIDTA and higher finance costs, consolidated net result in third quarter reported a loss of Rs 325 crore as compared to net profit of Rs 104 crore year ago.

Adani Power Chairman Gautam Adani said, "Adani Power is firmly positioned to achieve its future growth plans and contribute significantly to nation building by providing electricity at competitive rates."

Adani Power CEO Vneet Jaain, said, "We are navigating a challenging environment which is marked by non-availability of domestic fuel linkages, regulatory complexity and lower power demand. These challenges are temporary deterrents which shall be resolved with intervention of key stakeholders and the company is hopeful of achieving its long-term vision."

Pursuant to the acquisition of 100 per cent stake of UPCL (Udupi Power Corporation Ltd) by the company on April 20, 2015, the figures for the nine months ended December 31, 2016 are not fully comparable with the figures of corresponding nine months of the previous year, the company said.

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Thursday, January 19, 2017

Pharma Industry Grows 29% to Rs 2.04 Lakh Cr in 2015-16

The sector saw FDI equity inflows of $2.25 bn from Apr 2014-Mar 2016, says report

Indian pharmaceutical industry grew by 29 per cent to Rs 2,04,627 crore in 2015-16 from Rs 1,77,734 crore in 2014-15, while it attracted FDI of $2.25 billion during April 2014 to March 2016.

The country "is one of the largest producers of pharmaceutical products and a leading player in the global generics market, exporting nearly 50 per cent of its production", according to the achievement report of the sector under the government's 'Make in India' initiative.

"The Indian pharmaceutical industry has witnessed a robust growth in recent years growing from Rs 1,77,734 crore in FY 2014-15 to Rs 2,04,627 crore in FY 2015-16, registering a growth of 29 per cent as compared to the growth of 12 per cent from Rs 1,58,671 crore during FY 2013-14," the report said.

In terms of FDI Inflows, it said: "The sector saw FDI equity inflows of $2.25 billion from April 2014 to March 2016."

Among the top FDI inflows were UK's Abbot Asia Holdings $447.48 million, the Netherlands-based Mylan group's $372.63 million and Singapore-based Hospira's $301.61 million.

On the export front, it said: "In FY2015-16, the exports of drugs, pharmaceuticals and fine chemicals was Rs 1,06,212.4 crore.

"In the generics market, India exports 20 per cent of global generics, making it the largest provider of generic medicines globally."

The report jointly prepared by the Department of Industrial Policy and Promotion and Department of Pharmaceuticals said when it came to FDI policy, 100 per cent FDI has been allowed through automatic route for greenfield pharmaceuticals projects.

"For brownfield pharmaceuticals projects, FDI has been allowed up to 74 per cent through automatic route and beyond that through government approval," it added.

Highlighting fiscal incentives provided to promote domestic manufacturing, the report said inverted duty structure in medical device industry has been corrected.

Basic customs duty has been reduced to 2.5% along with full exemption from Special Additional Duty (SAD) on raw materials, parts and accessories for manufacture of certain medical devices with effect from January 19, 2016.

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Tuesday, January 17, 2017

Ola Partners with Apollo to Train Drivers for On-Road Medical Emergencies

Partnership will offer medical benefits, accident insurance at discounted rates to driver partners

After Uber, Ola has now partnered with Apollo Hospitals to train drivers to provide medical assistance in case of on-road emergencies.

Besides, the partnership will also offer medical benefits and accident insurance at discounted rates to driver partners.

“Ola has partnered with Apollo Hospitals to create India’s first ever comprehensive medical programme for driver- partners,” Ola said in a statement.

The programme will be conducted in five cities including Bengaluru, Mumbai, Delhi, Hyderabad and Chennai and will be expanded to other cities over the course of the next few months, it added.

“Driver partners will be also be able to opt for a ‘My Apollo Card’ which will provide them with medical benefits, while Apollo Munich will entitle them to accident insurance at discounted rates,” it said.

Last week, Uber had announced a similar programme in partnership with Apollo Hospitals.

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Baba Ramdev's Patanjali eyes investments in Chhattisgarh

Yoga guru Ramdev meets state CM Raman Singh, may set up unit running on forest produce

Top officials from the industry department were also present in the meeting, in which Patanjali was invited to invest in the state, which is endowed with rich forest produce.
Patanjali Ayurved Limited is exploring investment opportunities in Chhattisgarh, following a high-level meeting its promoter, yoga guru Ramdev had with the state's Chief Minister Raman Singh.

A state government spokesperson said Ramdev had evinced interest in investing in industries based on agro and forest produce. Singh said the state government was also promoting the agro-forest sector and had offered attractive sops to investors who would help the local community by adding value addition to their produce.

“Baba Ramdev has assured that he would help the Chhattisgarh government in its move to promote industries based on agro and forest produce,” the spokesperson said. The company, reported to be the fastest growing FMCG company in the country, would explore the possibility of setting up a unit in the state.

Patanjali has its manufacturing unit and headquarters located in the industrial area of Haridwar. Its registered office is in Delhi. The company, which manufactures mineral and herbal products, also has units in Nepal under the trademark Nepal Gramudhyog. It imports most of the herbs it uses as raw material in its unit in Haridwar from the Himalayas of Nepal.

Chhattisgarh is suitable for growing mango, banana, guava and other fruits and a variety of vegetables. With 44 percent of its area under forests, Chhattisgarh is one of the most bio-diverse areas in the country. It has abundant minor forest produce like Tendu leaves, and Sal seed. Medicinal plants, bamboo, lac and honey are other potential money earners for the state.

The trade volume of non-wood forest produce in the state is estimated at Rs 1,500 crore per annum.

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Sunday, January 15, 2017

ICICI Bank blocks Transactions Through Flipkart Wallet PhonePe

These moves are seen as banks getting nervous of being disrupted by new-age digital payments players

ICICI Bank has blocked transactions on Flipkart-owned digital payments app PhonePe, accusing it of indulging in restrictive practices and breaking the Unified Payment Interface (UPI) guidelines of interoperability.

The bank began blocking transactions on PhonePe starting Friday, with Flipkart Online CEO Sameer Nigam taking to Twitter to protest the move. He claimed that the bank hadn’t provided the company with any prior warning or information, saying the move was “on purpose”.

Nigam said, “PhonePe has not received any official notice in this regards from NPCI or its banking partner YES Bank yet. Since Friday afternoon, ICICI Bank has blocked all their customers from using PhonePe, and even blocked any other bank’s customers from sending money to ICICI Bank’s customers using PhonePe.”

ICICI Bank stated: “This entity (PhonePe) is following restrictive practices allowing users to make payments with only its UPI handle, which is in contravention to the UPI guidelines of interoperability and choice that empowers a customer to choose any app to make payments through UPI.” 

This is the second instance of mainstream banks blocking services to new-age digital payments companies. Previously, State Bank of India stopped allowing users from topping up their Paytm wallets using the internet banking feature. The bank claimed it did so because of security concerns.

“And what about blockage for other universal interface called net banking?” Paytm founder Vijay Shekhar Sharma responded to Nigam’s plea on Twitter.

These moves are being seen as traditional banks getting nervous of being disrupted by new-age digital payments players. After the government’s demonetisation scheme, players such as Paytm, Freecharge and PhonePe have been racking up millions of transactions and roping in hoards of new users due to the convenience they offer.

Airtel and Paytm have started their payments bank services, offering customers the same convenience of using a wallet with some benefits of traditional banks, too. Airtel, for instance, will offer users 7.5 per cent interest per annum on money they park in their payments bank/wallet accounts.

While the government is backing BHIM, a UPI app built by the National Payments Corporation of India, people expect the move to only fuel the adoption of other digital payment apps as users begin to look for more options to transact. “We’re a full feature app in the sense that you can do recharges, bill payments or pay directly to a mobile number, whereas they (BHIM) are base vanilla,” Nigam said in a recent telephonic interview with Business Standard.
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Friday, January 13, 2017

SpiceJet Sweetens Partnership with Boeing, Places $22-Billion Order

SpiceJet has announced a fresh order for 150 aircraft from the American aerospace company

Expanding its relationship with Boeing, domestic low-cost carrier SpiceJet has announced a fresh order for 150 aircraft from the American aerospace company. Today's purchase decision, along with an earlier order of 55 aircraft from Spicejet, makes it a $22-billion deal, probably the largest commercial aircraft deal for Boeing in India.
Of the total orders placed on Friday, the order for 100 Boeing 737-8 MAX aircraft is firm, while the purchase of 50 wide-body long-haul aircraft is purchase rights (optional). MAX aircraft allows a five-hour flight and will allow the company to explore new international destinations.
"SpiceJet will have purchase rights for the remaining 50 aircraft, which will be converted depending on the airline's capability to add long-haul aircraft in the future," said Ajay Singh, chairman of SpiceJet. Singh chose Boeing over Airbus for this order. "Boeing gave us an extremely commercial and aggressive offer."
Deliveries for the aircraft will begin in the third quarter of the calendar year 2018 and will be completed by 2024. It is not immediately clear how the company will finance the purchase of these aircraft. "There are various financing models available. One of them is the sale-and-leaseback model. The other models available are funding through EXIM Bank and foreign debt, which are cheaper," said Singh. He said the airline would not opt for debt or equity route to fund the purchases.
"The new aircraft order is on expected lines and significant directionally. A positive and long-term story is likely to emerge with this order," said Kapil Kaul, chief executive officer and director at CAPA, South Asia. Spicejet currently has a share of 12.8 per cent in the domestic aviation market and is looking to expand share. Singh, however, said the company is not after market share and is squarely aiming for profitable operations. "One of the problems of the previous management was that they went after market share, even if by losing money."
SpiceJet posted a record profit of Rs 59 crore in the Q2 of FY17. Singh has worked on cost reduction by renegotiating various contracts and streamlining operations. It has beefed up its ancillary revenues from single-digit a year ago to 16 per cent now. Benign fuel prices also helped. Spicejet's stock gained 2.5 per cent to close at Rs 65.5 on the BSE on Friday even as the market ended flat.
SpiceJet, which was on the verge of a closure in late 2014 has seen a quick turnaround under Singh. Singh, who took over the company from Marans, grew market share from 9 to 13 per cent in 2016 calendar year. The budget carrier has a fleet of 32 Boeing 737 aircraft and 17 Bombardier aircraft. Singh said the company is looking at adding aircraft in their Bombardier fleet too and is speaking to Bombardier, ATR and Embraer.
On Fuel prices
We feel that it (crude oil) will still remain in the range of $60-65 a barrel mark, said Singh. The company said it is comfortable and allows the company to pass minor fluctuations. However, beyond a point, the demand gets impacted. "If it crosses $70, it starts hurting."
Regarding on time performance
"I don't understand what the controversy is all about. This is the same data that had been used by the same airline (Indigo) saying they are number one for years," he said. "I am happy for anybody to evaluate the data. We are only quoting the government data."
On FDI Norms
No other country allows 100 per cent FDI in aviation and it takes away the level playing field. It creates problems in bilaterals. "We are not allowed the same privilege outside. We hope the government will take an appropriate decision," Singh said.


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