Economy Current Affairs
Economy Current Affairs April 2nd Week 2016
Category : Economy Current Affairs
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1) Centre Releases Rs. 12,230 crore To States For MGNREGA.

  • Union Minister for Rural Development Birender Singh has released a central share of Rs. 12,230 crore to the states for implementation of its flagship programmes under the Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA).
  • Singh also underlined that this fund release will take care of the pending wage liability of the states for the previous Financial Year (2015-16) and help them to run the programme during fiscal 2016-17.
  • He reiterated that the government is committed to ensuring the flow of adequate resources for fulfilling the objectives of the programme.
  • The ministry has also decided to maintain 60:40 wage-material ratio at the district-level now to ensure creation of good quality assets in the rural areas.
  • Rebutting the reports published in a section of media that there are arrears of wages of over Rs. 8000 crore under MGNREGA for the 2015-2016 financial year, the year 2015-16 has registered expenditure under MGNREGA to the tune of Rs. 41,371 crore, which is the highest expenditure under the programme since its inception.
  • Out of this expenditure Rs. 30,139 crore has gone towards payment of wages. This has allowed for the highest employment generation over the past three years and the best achievement on key parameters over the last three years such as works taken up, women participation (55 per cent) and 95 percent of payments through electronic fund management system.
  • The ministry expanded the entitlement from 100 to 150 days of work to households in drought affected regions of ten states. 20.48 Lakh households in these regions have availed this opportunity and completed more than 100 days of work.
  • At the national level 44 Lakh households have completed 100 days. To further bring down the delay in payment of wages, the Ministry in line with the Cabinet decision has introduced National electronic Fund Management System (NeFMS) in the current financial year.
2) Airtel Buys Aircel’s 4G Spectrum in 8 Circles For Rs. 3,500 crore.
  • Bharti Airtel will buy Aircel`s 4G spectrum in eight circles for Rs. 3,500 crore through a trading deal, which would make India`s No. 1 phone company a pan-India 4G player ahead of an expected clash for data consumers with newcomer Reliance Jio.
  • The deal will help Aircel pare debt and may fulfil a condition for its merger with Reliance Communications. Aircel needed to reduce some Rs. 4,000 crore of its Rs. 18,000 crore debt.
  • Airtel will acquire Aircel`s 4G airwaves in Tamil Nadu (including Chennai), Bihar, J&K, West Bengal, Assam, North East, Andhra Pradesh and Odisha.
  • The airwaves are valid till 2030. Bharti Airtel and its subsidiary Bharti Hexacom have entered into definitive agreements with Aircel Ltd and its subsidiaries Dishnet Wireless Ltd and Aircel Cellular Ltd to acquire rights to use 20 MHz of 2300 band 4G spectrum for eight circles for an aggregate consideration of Rs. 3,500 crore.
  • The transfer of the right to use (4G spectrum) for Andhra Pradesh and Odisha is subject to revision of spectrum caps with the upcoming auction to be conducted by the telecom department.
  • Airtel was the first to start 4G services, on the 2300 MHz band, in 2012. It stepped up the rollout in the past few months, expanding to more than 350 cities and towns, anticipating competition from Jio, which is expected to soft launch its 4G services shortly and start wider commercial operations.
  • Airtel has rolled out 4G in 15 circles, Vodafone India in five and No.3 carrier, Idea Cellular, in 10 circles. RCom has entered into spectrum sharing and trading deals with Jio, which will be effective even if RCom`s deal to merge its wireless business with Aircel fructifies. Maxis-owned Aircel paid Rs. 3,438 crore to win airwaves in the 2300 MHz band in the 2010 spectrum auction.
3) Fairfax India To Invest $300 million in Sanmar Chemicals.
  • Fairfax India Holdings Corp would invest $300 million (Rs. 1,998. 29 crore) in privately-held Indian petrochemical major Sanmar Chemicals Group through a combination of equity and debt.
  • Fairfax India, a unit of Prem Watsa`s Fairfax Holdings, will acquire a 30% equity ownership in Sanmar and generate a fixed return on its investment.
  • Fairfax India, which is currently limited to investing no more than 25% (about $250 million) of its total assets in any single investment, will fund an initial tranche of $250 million upon the closing of the transaction, and the second tranche of $50 million will be funded within 90 days thereafter by Fairfax Financial Holdings Limited ("Fairfax") or another investor.
  • The first tranche is expected to be completed in second quarter of 2016 upon the satisfaction of certain conditions precedent, including the establishment of a term loan facility for $280 million between TCI Sanmar Chemicals Egypt, the Egyptian unit of Sanmar, and its lenders.
  • Sanmar, which is one of the largest suspension PVC manufacturers in India, is in the process of expanding its PVC capacity in Egypt from two lakh tonne per annum to four lakh tonne per annum.Once the expansion is completed, Sanmar will have a total PVC capacity of over 700,000 tonne per annum.

4) Mytrah Energy gets $175 million ADB loan.

  • Renewable energy company Mytrah has secured a $175 million Asian Development Bank (ADB) direct loan facility, which will help it fund the development of a portfolio of new wind and solar projects.
  • With this loan facility, the company expects to reach its medium term capacity target of 1000 MW (One Giga Watt) in the coming 12 months.
  • The loan will be provided to the projects individually on a project finance basis and detailed documentation for each is currently under negotiation.
  • In addition, Mytrah has entered into a contract with Risen Energy Co Ltd, a company-based in Zhejiang province, China, for the purchase of up to 175 MW of Solar PV Modules. Risen is a global manufacturer of solar photovoltaic products and provider of total business solutions for power generation.
  • This is another significant milestone in the development of the company. The involvement of ADB is further evidence of the growing maturity and quality of our business, and our contract with Risen is an exciting development in our solar division. Together, these underpin our growth plan and we now expect our operating capacity to reach 1000 MW within 12 months.
  • Mytrah Energy, listed on AIM of London Stock Exchange, has a portfolio of 616.5 MW of wind power generation across 11 projects in six States. The company has 211 wind masts installed in the country. Mytrah has a pipeline of about 3500 MW of wind and 500 MW of solar capacity.
5) Over Rs. 70,000 crore loans sanctioned for renewable energy projects since Feb.
  • Banks and non-banking financial companies (NBFCs) have sanctioned Rs. 71,201 crore to finance renewable energy projects and disbursed Rs. 29,529.57 crore.
  • The sanctioned amount accounts for 18.63 per cent of the total commitments made during the renewable energy investment summit Re-Invest 2015, hosted by the Ministry.
  • Monthly status reports
  • The loans have been sanctioned and disbursed by 40 major banks and NBFCs, which also gave a commitment to finance 78.75 GW or 78,750 MW of renewable energy projects over five years.
  • The Government has set a target of 175 GW of renewable energy generation capacity by 2022.
  • Achieving this target requires capital outlay of $160 billion, including equity of $40 billion. In addition, huge investment is required for transmission, upgradation of infrastructure in order to utilize power generated though renewable sources. Banks and NBFCs have to play a major role to provide low cost and long term financing for these projects.
6) Sun Life hikes stake in Birla venture to 49%.
  • Aditya Birla Nuvo (ABNL) announced that Canada-based Sun Life Financial has increased its stake in the life insurance joint venture, Birla Sun Life Insurance (BSLI) from 26 per cent to 49 per cent.
  • With the regulatory approvals in place, from Insurance Regulatory and Development Authority of India, the Foreign Investment Promotion Board and Competition Commission of India, ABNL sold approximately 437 million equity shares constituting 23 per cent of the issued and paid-up equity share capital of BSLI to Sun Life.
  • The Office of the Superintendent of Financial Institutions in Canada, the principal regulator of the Canadian insurer Sun Life, has also approved of the transaction.
  • ABNL, which continues to hold the controlling stake in BSLI at 51 per cent, has received a sum Rs. 1,664 crore from the stake sale, valuing BSLI at Rs. 7,235 crore.
  • The proceeds will reduce the net debt of ABNL substantially. Coupled with the free cash flow generation from divisions, the standalone balance sheet of ABNL stands strengthened to support its growth plans.
  • BSLI is one of the leading private life insurers in India, with a market share of 6.9 per cent for the nine months ended 2015. Its assets under management, stood at Rs. 30,421 crore.
7) Gayatri Projects bags Rs. 340 crore Nagaland project.
  • Gayatri Projects Ltd has secured a Rs. 340 crore contract for the four-laning of a highway from Dimapur to Kohitna in Nagaland from the National Highways and Infrastructure Development Corporation Ltd (NHIDCL) and the Ministry of Road Transport and Highways (MoRTH).
  • The contract is to be executed on an Engineering, Procurement and Construction (EPC) basis. The company has taken a decision to focus on EPC contracts instead of Build, Own and Transfer (BOT) mode projects in tune with its asset-light model.
  • This order comes on the heels of several new projects from a wide set of industries, ranging from National Highways to water distribution and underground mining.
8) India to notch up to 7.5 per cent growth in 2016-17: IMF.
  • Retaining its 7.5 per cent GDP expansion forecast for India in 2016 and 2017, IMF asked the government to cut down subsidies, initiate labour reforms and dismantle infrastructure bottlenecks to sustain strong growth.
  • Sustaining strong growth over the medium term will require labour market reforms and dismantling of infrastructure bottlenecks, especially in the power sector.
  • In 2015, India`s growth was 7.3 per cent, which would increase to 7.5 per cent in the next two years of 2016 and 2017, IMF had earlier forecast.
  • Retaining its last forecast, with the revival of sentiment and pick-up in industrial activity, a recovery of private investment is expected to further strengthen growth.
  • In India, growth is projected to notch up to 7.5 per cent in 2016-17, as forecast. Growth will continue to be driven by private consumption, which has benefited from lower energy prices and higher real incomes.
  • IMF pointed to lower commodity prices, a range of supply side measures and a relatively tight monetary stance resulting in a faster-than-expected fall in inflation in India, making room for nominal interest rate cuts.
  • IMF cut its 2016 global growth forecast for the fourth time in the past year to 3.2 per cent, citing China`s slowdown, persistently low oil prices and chronic weakness in advanced economies. This was down from 3.4 per cent projected in January.
  • IMF, however, upgraded its China growth forecast by 0.2 percentage point for this year and the next to 6.5 per cent and 6.2 per cent, respectively.
  • China clocked 6.9 per cent growth in 2015 when India had recorded 7.3 per cent expansion.

9) Madhucon gets Rs. 248 crore for 74% stake sale in road project to Cube Highways.

  • Madhucon Group has completed the strategic sale of its majority stake (74 per cent) in Madhucon-Agra Jaipur Expressway Ltd to Cube Highways and Infrastructure Pte Ltd, formerly known as ISQ Asia Infrastructure I-A Pte Ltd.
  • This is the first major strategic sale in Madhucon’s Highway portfolio. Cube Highways emerged as the successful bidder in buying the majority stake in the highway project, which attracted interest from several major investors in the country and abroad.
  • Madhucon and Cube Highways signed a share purchase agreement for Rs. 248 crore. Upon receiving all necessary approvals the transaction was concluded with 74 per cent stake transfer. Divestment of stake has enabled Madhucon to pare down its debt by Rs. 212 crore.
  • The focus of the group continues to be on its core competence in EPC and the upcoming NHAI Hybrid model projects, as well as creating liquidity and on reducing the leverage for the benefit of all stakeholders.
  • The project is an operational BOT (build, operate and transfer) mode project of NHAI between Bhartpur and Mahua in Rajasthan connecting the two tourist cities of Agra and Jaipur. The project started commercial operation and toll collection in 2009.
10) Issuance of rupee denominated bonds capped at Rs. 5,000 crore.
  • Following the fixing of aggregate limit of foreign investment in corporate debt in rupee terms, the maximum amount that can be borrowed by an entity in a financial year, under the automatic route by issuance of rupee denominated bonds, will be Rs. 5,000 crore, and not $750 million.
  • Further, the minimum maturity period for rupee denominated bonds issued overseas has been reduced to three years from five in order to align with the maturity prescription regarding foreign investment in corporate bonds, through the Foreign Portfolio Investment (FPI) route.
  • The current limit of $51 billion for foreign investment in corporate debt has been fixed in rupee terms at Rs. 2,44,323 crore. Issuance of rupee denominated bonds overseas will be within this aggregate limit of foreign investment.
  • The proposals to borrow beyond Rs. 5,000 crore in a financial year will require its prior approval.
  • Modified eligibility
  • In order to have consistency regarding eligibility of foreign investors in corporate debt, the RBI has modified the criteria for investors and location for issuance of these bonds. Rupee denominated bonds can now only be issued in a country and subscribed by a resident of a country that is a member of Financial Action Task Force (FATF) or a FATF-style regional body.
11) Electrosteel Steels posts 78% growth in sales.
  • Electrosteel Steels Ltd (ESL) has informed the stock markets that during 2015-16 financial year it recorded a 78 per cent growth in sales of steel products (in terms of weight).
  • The unaudited annual accounts of the company, according to sources, suggested that the gross turnover for 2015-16 stood at Rs. 2,800 crore.
  • The company had reported a gross audited turnover of Rs. 2,033 crore in 2014-15.
  • Based on this improvement, the company’s nine-member board of directors has approved an annual business plan for the financial year 2016-17.
  • The plan expected to achieve a gross turnover of around Rs. 4,500 crore in 2016-17.
  • ESL with a debt burden Rs. 10,500 crore and the monthly finance cost of Rs. 90 crore, made a net loss, but turned EBIDTA positive in 2015-16.
  • The board also approved, subject to lenders and shareholders, allotment of shares to Shandong Province Metallurgical Engineering Co Ltd of China against Rs. 159 crore arrear payable for supply of a number of project equipment.
12) Suzlon redeems FCCBs worth $28.8 million.
  • Wind energy major Suzlon has announced it has successfully repaid in cash, the Foreign Currency Convertible Bonds (FCCBs) worth $ 28.8 million in principal amount, along with the applicable 8.7 per cent redemption premium.
  • This was part of the 5 per cent April 2016 FCCB series which have now been redeemed in full and will cease to exist, and the repayment has been made in accordance with the terms and conditions of the FCCBs.
  • Suzlon had redeemed, in cash, $28.8 million of FCCBs through internal accruals. Further, most of our remaining debt maturity profile is back ended. This gives sufficient headroom to meet its operations and growth requirements. Its focused efforts towards debt reduction, liquidity optimization and business ramp up are bearing tremendous results. There is a visible ramp up in our execution volume, order inflow and resultantly the cash flows.
  • Suzlon had issued a five-year FCCB series in 2011 for $175 million with a five per cent coupon rate and April 2016 as maturity date.