1) India expects $500 million AIIB loan for solar power projects in 2016.
- India is hopeful of receiving the first loan issued by the newly formed Asian Infrastructure Investment Bank (AIIB) in the second half of the year, Reuters reported, citing Indian officials. The country is looking for funds on lower interest rates for its ambitious solar power project that intends to scale the capacity to 100 gigawatts by 2022.
- In about six months, funds could start flowing from AIIB.The loan amount is expected to be approximately $500 million. Interest on the loan would likely be around 2-2.5 per cent, linked to LIBOR, for a term of 15 years. LIBOR is a floating benchmark based on the rate at which commercial banks lend each other.
- The AIIB, headquartered in Beijing, without specifically commenting on Indian loan, reiterated its president Jin Liqun statement that the lender bank was developing a project pipeline in a number of countries. Another official at the finance ministry, who liaisons with the AIIB,.
- India needs $100 billion for its ambitious solar power projects over next six to seven years. The country hopes to increase its solar power capacity 100 gigawatts, roughly 17 times higher than the existing 5,800 megawatts capacity.
- With an authorized capital of $100 billion, the AIIB is expected to start its operation in the second quarter of 2016 and lend up to $15 billion a year for the next half a decade.
- India is the second biggest shareholder in the investment bank after China.
2) Earning more than Rs. 50 lakh Now declare your net worth.
- If you earn more than Rs. 50 lakh a year, the I-T Department wants you to declare the break-up of your net worth. In the new set of ITR forms launched, the CBDT has added a new schedule - schedule AL to all ITR forms (including ITR 1).
- Under this new section, individuals will have to declare all their assets and liabilities, as on end of financial year 2015-16. The section applies to all individuals and HUFs earning more than Rs. 50 lakh a year.
- Under the section assets have been classified under two categories - moveable and immovable. One will have to declare any land or building (includes house property) under immovable assets. Movable assets list includes cash in hand (money in your savings account), vehicles (including yacht, boats and aircraft), jewellery, bullion and other valuable metals. Liabilities will include any outstanding loans you have.
- While further instructions on how to value assets are awaited, taxpayers will find it challenging to value their assets themselves, especially jewellery and vehicles. Salaried individuals do not usually maintain fair market value of jewellery owned or written down allowance (depreciation) of vehicles owned by them.
- The taxman also wants to know the details of the businesses you earn from, in case you have more than one. A new section has been added to the ITR-4S seeking code, nature and description of the three main businesses - activities or products that you earn from. This section earlier existed in only ITR-4 only, a much lengthier form compared to ITR-4S. Moreover, the new ITR-4S can now be filed by partnership firms too. All they have to declare is the salary and interest paid to the partners.
- ITR-4S was earlier a succinct form, now with three additions - specifying nature of business, salary and interest paid to partners (applicable only to firms) and schedule AL,it will need a lot more efforts from those who preferred to file it.
3) Flipkart acquires mobile payment startup PhonePe.
- Flipkart has acquired of PhonePe, a Bangalore based mobile payments company started by its former employees as it looks to build a payment business to catch up with local rivals Snapdeal and PayTM.
- PhonePe will function as an independent business unit. The details of the transaction were not disclosed, but the deal is not cash transaction.
- PhonePe`s founders include Sameer Nigam, Rahul Chari and Burzin Engineer, all three of who earlier founded Mime360, digital media distribution firm. This is the second time the trio has sold a startup to Flipkart, as Mime360 was also acquired by Flipkart in 2011 to build its later aborted digital music distribution platform Flyte.
- Phonepe is building a product where payments can be made by just using just mobile number. This is based on Unified Payments Interface (UPI), a new process in electronic funds transfer being launched by National Payments Corporation of India.
- This was because closed wallets can only be used to purchase its own products and does not allow purchases from third party merchants, for which companies need a semi-closed wallet license from the RBI.
- Flipkart had applied for license through its payment gateway business Payzippy, however it was unsuccessful to secure a license until the e-commerce major shut Payzippy.
- The online retailer has started to build a business in this space again last year, with acquisition of Punjab-based FX Mart last year for over Rs. 48.5 crore. FX Mart, which holds a license from RBI for operating a pre-paid payment instrument.
4) Germany’s Development Bank KfW to provide loan assistance to metro system for Nagpur.
- German Government’s Development Bank KfW will provide a loan assistance of EUR 500 million (about Rs. 3,750 crore) for the modern and sustainable metro system for Nagpur city being executed by Nagpur Metro Rail Corporation Limited (NMRCL). An agreement in this regard was signed in New Delhi by the Department of Economic Affairs and KfW.
- The loan period is 20 years with a moratorium of five years and disbursal will be based on the progress of the project over three years.
- Costing Rs. 8,680 crore (EUR 1,240 million), Nagpur Metro is the first metro to be financed under the Indo German partnership for clean, socially inclusive and climate friendly mobility for people in cities.
- Sanctioned by the Government of India 2014, Nagpur Metro Project envisages two corridors i.e 19.70 km North-South section from Automotive Square to Khapri and 18.60 km long line between Prajapati Nagar and Lokmanya Nagar. Physical works commenced and the whole Metro would be operational by 2019.
5) Nifty launches new index for mid and small cap stocks.
- The National Stock Exchange (NSE) added a new index to its broad market indices - Nifty Mid Smallcap 400 to represent the mid and small market capitalization segments.
- The new index will comprise of 400 companies which are the constituents of Nifty Midcap 150 and Nifty Smallcap 250 indices.
- The Nifty MidSmallcap 400 is a well-representative index consisting of 150 midcap and 250 smallcap stocks across 18 sectors.
- The new index joins the family of restructured broad-based Nifty indices, which will facilitate introduction of investment products.
- IISL will initially publish value of the Nifty MidSmallcap 400 at end of the day`s trade and subsequently disseminate it online along with existing indices.
- Nifty MidSmallcap 400 index would be an appropriate benchmark for mutual fund schemes which predominantly invests in small-cap and mid-cap companies equity stocks.
6) PE investments up 24% in Q1 of 2016.
- Private equity (PE) investment in India increased 24 per cent to $3.6 billion in the first quarter 2016, against $2.92 billion in the same quarter last year.
- This was largely due to 12 mega deals ($100 million or more) across e-commerce, financial services, healthcare and infrastructure, according to data released by Venture Intelligence, a Chennai-based research service focused on private company financials, transactions and their valuations. The investment in the first quarter of 2016 was 9 per cent higher than in the preceding quarter, which saw investments of $3.32 billion across 152 transactions.
- PE firms invested across 144 deals in the latest quarter, against 191 transactions in first quarter of 2015.
- There were 12 PE investments worth $100 million or more during Q1 of 2016 compared to seven in the previous year period. The largest investment during Q1 2016 was the estimated $350-million buyout of the commercial lending business of GE Capital in India by Aion Capital Partners.
7) Blackstone To Acquire HP`s 60% Stake In Mphasis.
- Blackstone India, the Indian arm of global private equity fund Blackstone Group L.P. will buy 60.5% stake in Bengaluru-based information technology services provider Mphasis Ltd.
- Blackstone will buy the shares from Hewlett Packard Enterprise (HPE) at Rs. 430 per share. This will be followed by a mandatory open offer for 26% more shares of Mphasis. Depending on the open offer subscription, Blackstone will spend between Rs. 5,466 crore and Rs. 7,071 crore (approximately $825 million - $1.1 billion) for the acquisition.
- Mint had reported Blackstone’s plans to acquire a controlling stake in Mphasis Ltd by backing the existing management headed by chief executive Ganesh Ayyar.
- Its deep relationship with marquee global customers has enabled Mphasis to deliver growth above the industry average in its Direct International segment. We see large potential going forward driven by Mphasis’ world-class delivery capabilities and its access to Blackstone’s portfolio of companies across the globe.
8) Government releases Rs. 25,834 crore to FCI as Food Subsidy.
- To ensure smooth procurement and distribution of foodgrains, the government released Rs. 25,834 crore as food subsidy to state-owned Food Corporation of India (FCI) for this fiscal.
- The government has earmarked Rs. 1,34,834.61 crore as food subsidy for 2016-17 fiscal. The corporation is facing a subsidy arrear of Rs. 58,650 crore till 2016.
- The government has released Rs. 25,834 crore to FCI as food subsidy.
- In addition to this, the government will shortly release a wage and means advance of Rs. 10,000 crore. FCI is also raising short-term loans from banks up to a maximum limit of Rs. 30,000 crore. Recourse to these loans will be made by FCI as and when required.
- Taken together these funds, there will be sufficient resources to manage Rabi (winter) procurement which has just started.
- In the last fiscal, the government had initially allocated Rs. 97,000 crore to FCI, which was later increased to Rs. 1,12,000 crore at the revised estimate stage. This helped bring down subsidy arrear to Rs. 58,650 crore till 2016.
- The bulk of the food subsidy is paid to FCI for buying foodgrains at support price and running the public distribution system (PDS).
9) India signs $100 million draft export pact with IDB.
- India has signed an agreement with the Islamic Development Bank (IDB) for a possible USD 100 million line of credit to facilitate exports to IDB`s member countries.
- The MoU was inked between the IDB`s private sector arm, the Islamic Corporation for the Development of the Private Sector (ICD) and the Export-Import Bank of India (EXIM Bank), a specialized financial institution, wholly owned by the government of India to finance and facilitate foreign trade.
- ICD`s mandate is to support economic development and promote the development of the private sector in its member countries through providing financing facilities and/or investments which are in accordance with the principles of Sharia`a.
- The MoU envisages cooperation to explore the feasibility of extending a commercial line of credit of USD 100 million to ICD with the aim of facilitating the export of goods and services from India to ICD`s member countries.
- Typically, the recipients of EXIM Bank`s commercial lines of credit act as intermediaries and on lend to overseas buyers for the import of Indian goods and services. Under the agreement, co-operation will also be achieved through the exchange of information on trade-related matters and the identification of business opportunities for Indian companies to pursue in ICD`s member countries.
- Saudi Arabia, UAE, Egypt, Kuwait and Qatar are among the 56-members of the IDB.
- EXIM Bank has been both a catalyst and a key player in the promotion of cross border trade and investment.
10) Union Cabinet allowed Oil PSUs to have independent crude import policy.
- In a bid to improve operational efficiency, the government gave freedom to public sector oil firms to have their own independent crude import policy based on their commercial requirements.
- State-owned firms like Indian Oil Corporation (IOC) have traditionally been allowed to source crude only from national companies of oil-producing nations.The government permitted state refiners to buy oil from top 10 foreign firms.
- It was long felt that the list of companies from whom the PSUs can buy crude on term contracts needs to be expanded to include global giants like Italy`s Eni and Russian companies. This will provide a more efficient, flexible and dynamic policy for crude procurement, eventually benefiting consumers.
- Oil PSUs shall be empowered to evolve their own policies for import of crude oil, consistent with CVC guidelines and get them approved by the respective boards.
- This will increase operational and commercial flexibility of oil companies and enable them to adopt the most effective procurement practices for import of crude oil, it explained.
- The existing policy for import of crude oil was approved by the Cabinet in 1979. In 2001, the Cabinet cleared amendments to permit state refiners to buy crude oil from top 10 foreign firms.
11) CCEA approved Andrew Yule proposal to convert Bank of Baroda’s loan into equit.
- The Cabinet Committee on Economic Affairs, chaired by the Prime Minister Shri Narendra Modi, has given its approval for conversion of Working Capital Term Loan (WCTL) amounting to Rs. 29.91 crore from Bank of Baroda (BoB) into equity by issuing requisite number of equity shares of Andrew Yule & Co. Ltd. (AYCL) as preferential issues to BoB as Qualified Institutional Buyer. The price will be based on market price determined as per Securities and Exchange Board of India (SEBI) Guidelines on the date of acquiring of shares by BoB with face value of Rs. 2/- per share.
Conversion of WCTL into equity will:
- Bring down the cost of debt servicing by AYCL by Rs. 2.86 crore per annum, resulting in improved profitability and liquidity of AYCL in coming years and thereby providing an opportunity to finance working capital needs of existing and new businesses.
- Result in improved Debt Equity ratio for AYCL. This along with substantial amount of Securities Premium will form part of net worth of Company and will enhance the strength of its balance sheet.
- This is expected to increase growth and profitability of AYCL and in turn is likely to translate into better share price of AYCL at the time of further disinvestment of GoI shares of AYCL as per SEBI Guidelines. This will be implemented within a period of three months.
Background:
- AYCL, established in 1863, became a Public Sector Enterprise in 1979 and is presently engaged in manufacturing of Industrial Fans, Ventilation Equipment, Air Pollution Control Equipment & Systems etc. Paid up capital of the Company is Rs. 66.73 crore in which GoI holding is 87.98%. AYCL shares (Face value of Rs.2/- each) are listed in Mumbai Stock Exchange.
- As a part of implementation of Financial Restructuring Scheme, Bank of Baroda extended a loan of Rs. 52.49 crore to AYCL in 2009, out of which Rs. 29.91 crore was Working Capital Term Loan. With the approval of its Board of Company, AYCL has proposed for conversion of WCTL of Rs. 29.91 crore it has taken from BoBinto Equity. The conversion should take place at the price determined by SEBI guidelines on the date of acquiring of shares by BoB. This proposition has been agreed to by BoB.
12) Future Group Has Acquired FabFurnish.
- Marking its first buyout of an internet store, Kishore Biyani-led Future Group is set to buy online furniture store, FabFurnish.com.
- The Group may pay anywhere between Rs. 15 and Rs. 20 crore in cash and will be largely doing so for the brand FabFurnish, the report adds, citing two people aware of the development.
- However, the net valuation would be much lower as the online furnishing firm has close to Rs. 10-15 crore in the bank.
- Future Group will retain FabFurnish’s brand name and will be using this platform to sell products from its home and furnishing business brand HomeTown. FabFurnish’s management team and about 100 employees are likely to join the Future Group.
- Meanwhile, the move will also help the Group to build a wall ahead of retail giant IKEA foray into India in 2017.
- Gurgaon-based firm FabFurnish was founded in 2012 by MehulAgrawal, VikramChopra and VaibhavAggrawal. The company has, so far, raised over $30 million from Rocket Internet and Kinnevik.
- The deal will see Berlin-based Rocket Internet’s making its first exit in India. The company has a portfolio of online companies which include FabFurnish, Foodpanda and Jabong.
13) Union Cabinet approved Funding of exports to Iran through Export Development Fund of Exim Bank.
- The Union Cabinet chaired by the Prime Minister Shri Narendra Modi has given its approval for increasing the framework agreement between Exim Bank of India and a consortium of Iranian banks lead by Central Bank of Iran for financing the purchase of goods and services from India to Rs. 3000 crore from Rs. 900 crore.
- This will be done by utilizing the Export Development Fund (EDF). The proposal provides for domiciling two contracts of export of steel rails by STC and for the Chabahar Port Development project previously approved by the Cabinet under EDF.
- The proposal will promote the country`s exports with Iran. It will also deepen India`s relationship with Iran as a strategic partner.
14) Altico Capital invests Rs. 575 crore in real estate sector.
- Altico Capital India, a company that lends to leading real estate developers, closed three transactions last week aggregating over Rs. 575 crore for projects in Mumbai, Pune and Bengaluru.
- Altico continues to focus on its core strategy and looks to build a stable business deploying Rs. 2,500 crore in Tier 1 cities each year. We expect to close out similar amounts of disbursements of around Rs. 600 crore in this upcoming quarter.
- In Pune, Altico has entered into a multi-project financing arrangement with Marvel Developers.
- Altico now has a net worth over Rs. 2,000 crore and the asset quality remains in good health as it has zero NPAs and zero restructured assets. Going forward, it plans to gradually expand within its areas of expertise.
- The Altico Capital board has approved raising of funds up to Rs. 2,000 crore through a mix of instruments and funding sources including bank lines, commercial paper and NCDs to support the asset growth plans.
- Altico Capital India Pvt Ltd is a non-banking financial company backed by Clearwater Capital Partners, Varde Partners and Abu Dhabi Investment Council.
15) Union Cabinet approved recommendations of 14th Finance Commission on fiscal deficit targets.
- The Union Cabinet chaired by the Honorable Prime Minister Shri Narendra Modi has given its approval to Recommendations on Fiscal Deficit Targets and Additional Fiscal Deficit to States during Fourteenth Finance Commission (FFC) award period 2015-20.
- FFC has adopted the fiscal deficit threshold limit of 3 per cent of Gross State Domestic Product (GSDP) for the States. Further, FFC has provided a year-to-year flexibility for additional fiscal deficit to States.
- FFC, taking into account the development needs and the current macro- economic requirement, provided additional headroom to a maximum of 0.5 per cent over and above the normal limit of 3 per cent in any given year to the States that have a favorable debt-GSDP ratio and interest payments-revenue receipts ratio in the previous two years.
- Since the year 2015-16 is already over, the States will not get any benefit of additional borrowings for 2015-16. However, the implications for the remaining period of FFC award, i.e., 2016-17 to 2019-20, would depend upon respective States’ eligibility based on the criteria prescribed by FFC.
16) $200 million Pact Inked To Study TAPI Project.
- Shareholders of the Turkmenistan-Afghanistan-Pakistan-India (TAPI) Pipeline Company Limited signed an agreement to invest $200 million in studies and engineering for the $10 billion project to transport natural gas to energy-hungry countries like India.
- The agreement signing ceremony was witnessed by petroleum ministers and senior government officials of Turkmenistan, Afghanistan, Pakistan, India and Asian Development Bank officials in Ashgabat, capital of Turkmenistan.
- The agreement would pave the way for delivery of long-term natural gas supplies to Pakistan by addressing its energy shortages.
- TAPI will help bring 13.8 billioncubic meters of gas from Turkmenistan to Pakistan to meet the growing energy demand.
- It will boost Pakistan`s energy security, bring economic benefits to the people through job opportunities, and upgrade the associated infrastructure.
- TAPI will unlock economic opportunities and diversify the energy market for Turkmenistan by enhancing energy security for the region.
- The ground breaking for the 1,814 kilometre-long TAPI pipeline, a project aimed at easing the energy deficit in South Asia.
- The TAPI pipeline will have a capacity to carry 90 million standard cubic metres a day (mmscmd) gas for 30 years and is planned to become operational in 2018. India and Pakistan were originally to get 38 mmscmd each while the remaining 14 mmscmd was to be supplied to Afghanistan.
- The pipeline will travel 773 km in Afghanistan and 827 km in Pakistan before ending at Fazilka (Punjab) in India.