Sensex Sinks 308 Points In Early Trade Ahead Of RBI Policy

The benchmark BSE Sensex plunged over 308 points in early trade on Tuesday (29 September) on sustained selling by funds and retail investors ahead of RBI's monetary policy review amid a weak trend overseas. Besides, depreciation in the rupee, which fell by 32 paise to 66.37 against the US dollar, weighed on sentiments. Continuing yesterday's weakness, the 30-share index fell by 308.90 points, or 1.20 per cent, to 25,307.94, with all the sectoral indices, led by metal, banking and auto, trading in negative zone with losses up to 2 per cent. The gauge had lost 246.66 points in the previous session. Also, the National Stock Exchange index Nifty dropped by 94.80 points, or 1.21 per cent, to 7,700.90 in early trade. Brokers said besides weak trend on other Asian bourses, tracking heavy selling in Europe and the US on renewed concerns about China's slowing economy, continued selling by cautious funds and retail investors ahead of RBI's policy review later in the day, influenced sentiments. Among other Asian markets, Hong Kong's Hang Seng was down 3 per cent, Japan's Nikkei shed 2.77 per cent, while Shanghai Composite index fell 1.87 per cent in early trade today. The US Dow Jones Industrial Average ended 1.92 per cent lower in yesterday's trade. Asian shares skidded to 3-1/2-year lows and the dollar sagged on Tuesday, pulled down by a sharp losses on Wall Street after weak Chinese data rekindled worries about its fragile economy. Commodities struggled after fears of weaker demand pushed them to multi-year lows overnight. Adding to the gloom, commodity trader Glencore's Hong Kong-listed shares were around 28-percent lower on Tuesday, after its London-listed stock plunged on debt worries a day earlier.. MSCI's broadest index of Asia-Pacific shares outside Japan slumped 2.2 percent, touching its lowest levels since June 2012 and extending early declines after Chinese shares opened lower. China's blue-chip CSI300 index and the Shanghai Composite Index were both down 1.8 percent. Japan's Nikkei stock index tumbled 2.8 percent to 8-month lows. On Wall Street on Monday, major indexes all closed sharply down. The S&P 500 index hit a one-month low on bullish U.S. consumer spending data in August as it raised concerns the Federal Reserve could hike rates at a time of slackening global growth. The Fed held off from raising interest rates at its meeting earlier this month, citing worries about the global economy, particularly China. But New York Fed President William Dudley said the central bank remains on track for a likely rate hike this year and could move as soon as next month. 

Mountain Trail Foods Raises $10 Mn In Second Round Of Funding

Mountain Trail Foods Pvt Ltd, that owns Chai Point network of tea stores, has raised $10 million from Fidelity’s proprietary investment arm Eight Roads Ventures – that was earlier known as Fidelity Growth Partners India. This is the second round of funding for the Bangalore-based company. Existing investors Saama Capital and DSG Consumer Partners have also participated in this round, as per a press statement.  Investment bank o3 Capital acted as the exclusive advisor on the transaction. Established  in 2010 by Amuleek Singh Bijral, Chai Point is a tea retail chain operating in Delhi-NCR, Bengaluru, Pune and Mumbai. It works through a network of service stores, delivery-only hubs and also has 'Chai on Call' and 'Chai at Work' businesses. As per the company, it receives orders for 1.5 lakh glasses of chai per day, including 40 per cent of delivery orders from the mobile app. The money raised will be used to expand its geographic reach to 7 cities, to grow the delivery component of business - Chai on Call as well as Chai at Work that caters to the corporate clientele, as per a release issued by the investment bank. Chai Point is focused on serving the tea market in India that consumes roughly 20 per cent of the world's tea. The market in India is estimated to be worth Rs 33,000 crore and has been growing at 15 per cent annually. Tea consumption in India is 8-9 times that of coffee. As more Indians with higher disposable income take to dining out, the hitherto-fragmented food and beverages market is becoming an attractive investment area for risk capital investors, say analysts. “With the culture of dining out picking up in India with changing lifestyle and increased disposable income, this is one space which is definitely garnering a lot of investor attention,” says Raja Lahiri, partner at advisory services firm Grant Thornton. According to consultancy firm Technopak Advisors, the Indian food-service industry is estimated to grow to $78 billion by 2018 from its current level of $48 billion, registering a compounded annual growth rate of 11 per cent. The latest data available from research firm Venture Intelligence probably explains the rush of investor money into restaurant chains. In the last seven and a half months (Jan-August) in the current calendar year, as many as 13 investments have been sealed in the sector, more than double of what was in the corresponding period last year. In the Jan-August period in 2014, there were a mere 5 deals worth $45 million. In terms of deal size, the total amount that private equity and venture capital funds have invested so far in 2015 amounts up to $123 million, as per research firm Venture Intelligence.

Former ET Editor Rahul Joshi Dons Corporate Hat At Network18

Network18 has kicked off the week with some significant changes in its senior management. The high profile move of Rahul Joshi, Editor-in-Chief, Economic Times, who was also on the Board of Directors of the Bennett, Coleman & Company Ltd, to Network18 as CEO-News and Group Editor-in-Chief has come in effect. This not only marks new leadership in the company but also a first ever corporate role for Joshi. The development coincides with AP Parigi moving out of Network18 as its Group CEO into an advisory role. Network18 informed in an announcement over the weekend that Parigi would now be advisor to Adil Zainulbhai, Chairman, Network18. Soon after the announcement of Joshi’s appointment, Senthil Chengalvarayan, Editor in Chief, Business Newsroom, Network18, decided to move on after a 21-year stint with the Group.  In an internal email sent to Network18 employees, Zainulbhai stated, “As the CEO-News and Group Editor-in-Chief, Rahul will spearhead and ultimately drive with ‘ownership mindset’ of all aspects of our company's rich and diverse portfolio. For this to succeed, he would need the complete support of each one of you, especially from co-owners and leaders of each business and editorial products.” Following Mumbai, the leadership team will also be in the Delhi office in the week to meet Network18 employees in the two cities.   

NIRAV MODI Opens Its First Hong Kong Boutique In Elements

Since its launch in 2010, NIRAV MODI has become renowned for its exquisitely designed and perfectly crafted jewellery. As the only Indian jeweller featured on the covers of Christie's and Sotheby's catalogues, and with the hugely successful sales at Hong Kong auctions, NIRAV MODI has chosen Elements as the destination for their first Hong Kong launch.The boutique is meticulously designed to offer an exclusive experience to customers when viewing the brand's iconic creations. To celebrate the grand opening of the first boutique in Elements, well-known Hong Kong actress Anita Yuen was the special guest for the opening ceremony held on 16th September.  A jewellery lover, Anita was wearing the mughal choker that draws inspiration from the art forms developed during the Mughal era. When asked, Anita picked the embrace collection as her favourite because of its ingenious design, which ensures the bangles and rings can stretch to slip easily over a wrist or finger.  (Anita Yuen and Nirav Modi at the grand opening ceremony of NIRAV MODI first Hong Kong boutique)Nirav Modi himself was born in India and raised in Europe; he is son and grandson of diamantaires. Inspired by the his Indian heritage and drawing from his international exposure, NIRAV MODI jewellery offers a unique aesthetic that is simultaneously modern yet entirely timeless, with each creation speaking to the individual beauty of a woman. Each stone used is individually selected for its purity, clarity and exceptional shine, and only diamonds of the highest quality and exclusivity make it through the rigorous selection process.With the passion and commitment to create extraordinary and exquisite jewels, NIRAV MODI speaks to a refined international clientele, captivated by the sophisticated, feminine style and distinctive jewellery that plays with light and movement.

SP Opposes BJP’s Land Bill At Centre, But Disregards Court Order On Farmers’ Land In UP

The Samajwadi Party may have opposed NDA’s proposed land bill tooth and nail at the Centre, but its government in Uttar Pradesh is turning a blind eye to a High Court order that quashes the acquisition of a stretch of land acquired near Allahabad for a power plant. Uttar Pradesh government authorities told Businessworld that “the due process (of law) was” on, but activists and farmers on the ground at Karchhana near Allahabad said that the state government was resorting to oppressive tactics, and even preventing social activists like Medha Patkar to meet with the aggrieved activists. The state government had acquired land for a power plant for at Karchana in 2007. However, no plant came up for nearly five years. The farmers, who were protesting the “forcible acquisition”, moved court and later the Allahabad High Court ordered that the land be returned to the farmers if they retuned the compensation amount. The farmers, in the meantime, wrote two letters – one to the state Governor and another to the PM. The letters said that since the farmers had been denied the opportunity to till their land for five years, they should be allowed to deduct the money which would have accrued to them through their farm produce in the last five years, from the compensation amount which they would return to the government. The Governor agreed with the farmers’ point. The PMO, however, passed on the letter to the CM, who passed it on to the DM, where the matter rests now. UP Government’s Principal Secretary, Information, Navneet Sehgal told Businessworld that “the due process of law was on at Karchhana, and that he would have to gather more details to answer more questions”. He, however, said that the land acquisition model in UP was far superior to those prevalent in other states, “because the government paid farmers four times the circle rate”. The National Alliance of People’s Movement’s Anshu Malviya, on the other hand, said that the local police had unleased a reign of terror in and around Karchhana, and on Sept 9, 42 people including 13 children – all from the project-affected families – were beaten up and put behind bars. When Medha Patkar wanted to hold a meeting with the aggrieved families there, she was denied the permission to visit the village. She along with 16 other activists, was arrested and later let off, on Saturday in Allahabad. The local administration later claimed that they had been detained so that a dialogue process can be initiated, said Malviya. Farmers have been protesting against three thermal power plants being constructed in the vicinity of Allahabad. These power plants, of 1320 MW each, at Karchana, Bara (both of Jaypee group) and Bara (of NTPC) impact more than 20 villages and some 5,000 families. The plants at Bara have come up, but nothing has come up at Karchana, leading to the Allahabad High Court’s intervention after the farmers petitioned the court. Farmers now allege that district authority is not complying with the court order, the administration claims that due process of law is being followed. Chief Minister Akhilesh Yadav has not spoken on the issue so far. In fact, no UP minister has spoken on the issue, though local SP representatives have condemned “police high-handedness”. 

Is Modi Govt's Make In India On Right Track?

Prime Minister Narendra Modi launched his ambitious Make in India campaign last September, pledging to lower barriers to doing business and promote foreign investment. He was hoping to transform Asia's third-largest economy into a manufacturing powerhouse like China. Modi now has less than four years before the next Lok Sabha elections to make good on his campaign pledge. If he doesn't show results soon, the young electorate that swept him into office could just as easily vote him out. Experts say around 10 million people are added to labour force every year, India needs to generate 30,000 jobs every day. The Narendra Modi-led National Democratic Alliance (NDA) government will have to increase manufacturing's contribution to gross domestic product (GDP) to 33 per cent. On the first anniversary of the signature programme, Modi is in the US seeking to strengthen bilateral ties, and wooing companies to invest more in India. It has been almost a year since the programme was launched, so it's fair to ask if it has yielded any results. Quite a few commentators and media columnists are of the view that without a strong manufacturing sector — which has forward as well as backward linkages to construction, transport and related service industries — there just won't be jobs for the 10 million-odd people entering our workforce every year. In simple terms, the economic impact of manufacturing in India will go beyond direct employment. It will create jobs in the services sector and allied services like logistics, transportation, retail and so on.  "Despite the conventional wisdom that says India's place in the global economy revolves around digital bits and services rather than material atoms, the country is starting to attract more attention for its manufacturing potential for a number of reasons: India is the third-largest economy in purchasing power parity after the US and China, it has a large population of engineers and factory workers, its intellectual property is widely respected, and it is easy to find English-speaking managers there," write Vijay Govindarajan and Gunjan Bagla in an article in Harvard Business Review. So what impact has the Make in India mission had so far? On the foreign direct investment (FDI) front, there has been a 48 per cent rise in FDI in India during October 2014 to April 2015 against a year ago. According to the Centre for Monitoring of Indian Economy, investment projects worth Rs 63,172 crore were completed in the manufacturing sector in April-June 2015, highest since Janurary-March 2010 quarter. In June, Japan's SoftBank Corporation teamed up with Bharti Enterprises and Taiwan's Foxconn to invest around $20 billion in solar energy projects in the country. The government plans to expand the renewable energy sector five-fold by 2022. The joint venture will initially put up solar parks with imported equipment but subsequently look at manufacturing solar panels in India itself. The government has awarded a record 56 defence manufacturing permits to private sector entities in the past year, which is more than the 47 licences its predecessor United Progressive Alliance government granted in the preceding three years combined and underlines its determination to have indigenous defence production as a cornerstone of its 'Make in India' drive. Analysts believe that the success of Make in India programme depends heavily on building infrastructure by creating an enabling policy framework and a conducive environment to expand the domestic manufacturing sector, which will eventually enable millions of young Indians to find employment.  Over the next five years, India needs to invest around $1 trillion in infrastructure development, which has largely been funded domestically till now. As manufacturing would require free flow of raw materials and finished goods, improving logistics infrastructure such as port-to-inland connectivity, cargo airports, and so on would be imperative and these developments promise to transform India into a global manufacturing hub. Electronics is perhaps the biggest success story of Modi's Make in India initiative, with assured investments of over Rs 90,000 crore over the next five to 10 years. India's large and growing market - for everything from mobile phones and LED TVs to steel, chemicals and power equipment - no doubt makes it a compelling place for producing stuff that can be directly sold here. So far, it seems that apart from FDI, Make in India has not been able to boost manufacturing. Factory output has been tepid, but the silver lining is the June and July IIP, which increased by 4.3 per cent and 4.2 per cent respectively.  Exports from India are still not out of the woods, with as many as 23 key sectors, including petroleum, engineering and leather, declining in August mainly due to a fall in global prices and a demand downturn. Also, overseas consignments of Made in India goods have been in the red since December, 2014. India's economy expanded 7 per cent in the first quarter, well below expectations and slower than the preceding three-month period, putting a dent in the Modi government's optimism about a strong recovery. The government's latest attempt to amend income tax laws to exempt foreign companies from MAT retrospectively from 2001 may aid sentiment further, but a weak global environment may trip up the government's ambitious plans in the short-term. Foreign investors have been circumspect about committing project funds to India because it languishes at a lowly 142 in the global rankings brought out in World Bank's Doing Business study - way behind China (ranked 90), Sri Lanka (99) and Pakistan (128). Modi has promised to speed up decision making and reduce the role the government plays in business. “The world is not going to wait for us. I know that,” Modi told the CEOs of 42 American companies with a collective net worth of $4.5 trillion. 

Oxigen Appoints Sachin Tendulkar As Brand Ambassador

India's Largest Payments Solutions Provider, Oxigen Services India Pvt Ltd. has signed master-blaster – Sachin Tendulkar – as its brand ambassador.  Bringing the world’s greatest batsman on board, Oxigen signals a paradigm shift in creating a powerful drive for cashless transactions. Oxigen has aligned its vision to aggressively push for Digital India and financial inclusion, a key agenda on the radar of Indian Prime Minister. This theme could not have had a more befitting Brand Ambassador than Sachin Tendulkar himself.  Elaborating on the association, Pramod Saxena, Founder & CMD of Oxigen Services India Pvt. Ltd. commented, “We are absolutely proud and honored to be associated with the god of cricket himself who is renowned not only in India, but across the globe. It is not just his VALUES that inspired us to get him on board, but also his strong commitment towards larger national issues such as education and  upliftment of rural India that resonate with our own programs. Together we are set to take our initiatives towards Financial Inclusion, Digital India and Swachh Bharat Abhiyan to the next level.” Forging this relationship, Sachin Tendulkar said "I am excited to be associated with Oxigen Services which is at the threshold of exponential growth. Oxigen's effort to align with the needs of the common Indian and focus on offering convenience, flexibility and ease in payment solutions is admirable. With the Oxigen wallet providing so many features, I am sure it will be the preferred mode for payment emphatically replacing the present day need to carry physical forms of cash and plastic money." “Oxigen wallet has seen many firsts, the first to develop a wallet in the country way back in 2008, the first non-bank to connect with NPCI for instant money transfers, the first to launch a social media connect, the first to host a digital concert for its customers and the first to brand & play the host nation to an International Cricket Team from South Africa. We are proud to add one more first to our mobile wallet & that is a first by the way of endorsement, by not just a celebrity, but by the best India has seen, Sachin Tendulkar. We look forward to demonstrating the best and incomparable in true Sachin tradition for a long time to come”, added Ankur Saxena, CEO, Oxigen Wallet.  

Volkswagen Finance’s Ratings in India Unlikely To Be Affected: Ind-Ra

Mint newspaper reported on Friday (25 September) that the government has ordered a probe into Volkswagen emissionsVolkswagen Financial Services AG’s (VWFSAG) ability to extend support to Volkswagen Finance Private Limited (VWFPL) is unlikely to be deteriorated because of the recent crisis relating to Volkswagen AG (Volkswagen), says India Ratings and Research (Ind-Ra). The agency rates VWFPL at ‘IND AAA’/Stable. VWFSAG is VWFPL’s parent and drives its long-term ratings. Ind-Ra expects VWFPL’s ratings to remain at the highest end of the national scale with a Stable Outlook. Rating change, if any, will depend on a significant rating downgrade of Volkswagen or a decline in its ownership by and support from Volkswagen or VWFSAG. Meanwhile, the government has ordered a probe into Volkswagen emissions after the carmaker admitted cheating on US pollution tests,  citing officials familiar with the matter. The government has asked testing agency Automotive Research Association of India to evaluate Volkswagen cars, the newspaper said. "We have written to the ARAI to find out whether Volkswagen is selling the same models in India that have been found violating U.S. rules," said Ambuj Sharma, additional secretary at the Ministry of Heavy Industry.Volkswagen was not immediately reachable for a comment. Fitch Places VW On Rating Watch NegativeFitch Ratings Ltd placed Volkswagen’s ratings (Issuer Default Rating: ‘A’) on Rating Watch Negative on 23 September 2015. The agency expects Volkswagen's brand image and reputation with regulators and consumers worldwide to be seriously undermined by this crisis, although the magnitude and length of the operational and financial effect are difficult to assess. The agency does not expect the US Environmental Protection Agency’s fine to amount to the maximum amount of USD18bn reported in the press. Volkswagen's financial structure is sound and its free cash flow generation is robust. The US market represents only around 6% of the total group sales and a limited contagion from the US to other regions should curb the impact on Volkswagen's business and financial profiles and could lead to affirmation of its ratings.  As a captive finance company of Volkswagen group in India, VWFPL is closely integrated with the parent for the planning and execution of business strategies for the Indian market. VWFSAG has no financing exposure to the US (to which the events mainly pertain) and its Indian operations (VWFPL; forms less than 1% of VWFSAG global operations) are unlikely to be impacted.   VWFSAG continues to provide unconditional and irrevocable guarantees to banks in India for VWFPL's rupee-based loans facilities and Ind-Ra believes the parent is committed to inject capital as and when necessary. According to the statement issued by Volkswagen on 22 September 2015, the discrepancies relate to vehicles with Type EA 189 engines and involve around 11 million vehicles worldwide. The company plans to rectify these deviations through technical measures and plans to set aside EUR6.5billion in provisions to be recognised in the income statement for 3Q15 for this purpose. 

Ford Figo Hatchback Relaunched At Starting Price Of Rs 4.29 Lakh

ARCs Need Capital Infusion To Take on System-wide Stressed Loans: Ind-Ra

Asset reconstruction companies (ARCs) are going to play a limited role in absorbing the non-performing assets (NPAs) of banks due to capital constraints and rising acquisition costs, says India Ratings and Research (Ind-Ra). Capital is constrained due to higher investment requirements in security receipts for ARCs and shareholding ceiling for sponsors at below 50 per cent. ARCs are now tapping debt markets to raise funds, which is a shift to leverage from the near zero debt model earlier. Also, interest coverage may be a concern due to the lack of predictability in ARCs’ cash flows.  ARCs play a crucial role in the financial sector and help banks clean up stress loans, which is the need of the hour. The Reserve Bank of India is clear that the forbearance regime has ended and the central bank  is unlikely to provide any further relaxation to banks on the classification of restructured assets. Banks are turning to ARCs but capital remains a key challenge for the industry.  Banks’ stressed loans (NPAs+restructured) as of March 2015 stood at 11.1 per cent of the outstanding credit of INR65.25trn, while all ARCs put together have a capital base of mere Rs 4000 crore. ARCs at best have the ability to purchase NPAs worth around Rs 1.2 trillion which is a mere 17 per cent of the total stressed assets in the system. Acquisition cost has also been rising due to the shift of stressed assets into new NPAs where recovery is likely to be higher than for earlier seasoned NPAs. Acquisition cost has now gone up to around 60 per cent from 40 per cent earlier. Acquisition cost has risen given bankers are now selling stressed loans at an early stage post changes in regulations. Also, earlier banks would offer NPAs which were more seasoned, while of late they have resorted to offer even fresh NPAs. This shift has pushed up acquisition cost and led to bankers asking for higher amounts due to a higher probability of recovery. Investment requirement by ARCs of the total security receipts issued increased to 15 per cent with effect from August 2014 from 5 per cent earlier. This has limited ARCs’ potential of buying large NPAs as capital remains a constraint. However, this guideline has also helped ARCs to refrain from aggressive bidding, bringing in the discipline needed in the industry. Banks are looking to clean up their books but are unwilling to sell NPAs at a significant discount. Headline stress loans on balance sheet are thus unlikely to decline. Credit costs will also remain elevated due to amortisation charges arising out of the losses on sale. Asset Reconstruction Company (India) Limited (ARCIL) (‘IND A+’/Stable) has been active in buying bad loans for over a decade, while a majority of new ARCs have been growing at a fast pace in recent times. The key players in the market are Edelweiss Asset Reconstruction Company Limited, ARCIL, JM Financial Asset Reconstruction Company Private Limited, Phoenix ARC Private Limited (‘IND A+’/Stable) and Reliance Asset Reconstruction Company Limited (‘IND A+’/Stable). Public sector banks are more aggressive in cleaning up their books than their private counterparts. The 10 largest public sector banks sold 6,040 accounts to ARCs in FY15 with a book value of Rs 1,11,400 crore, up 64 per cent yoy. The top five private banks have sold a much smaller quantity of assets, with 1,100 accounts sold to ARCs in FY15 with a book value of Rs 11,100 crore, little over double the amount sold in the previous year. In the last five years, there has been a 5x jump in the number of issues and their sizes which shows the high appetite for such products.