QBiz: Walmart Nears Flipkart Deal; New SEBI Framework & More

Here’s a round-up of the top business stories today.

Published
Business
5 min read
Flipkart has bought back shares worth $350 million from several minority investors.
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1. Walmart Moves a Step Closer to Flipkart Deal

Flipkart has bought back shares worth $350 million from several minority investors, including DST Global, IDG Ventures and ICONIQ Capital, as India’s most valuable internet start-up prepares to sell a majority stake to Walmart Inc.

The country’s largest online retailer has bought back about 1.9 million preference shares from minority investors in a transaction that values Flipkart at $17.69 billion, according to documents filed with Singapore’s Accounting and Corporate Regulatory Authority that were sourced from data intelligence platform Paper.VC.

According to the documents, the buyback is a significant step towards Flipkart converting itself into a private company as per Singapore law, paving the way for its proposed sale to Walmart.

(Source: Livemint)

2. GST Council to Take up 5% Sugar Cess to Compensate Farmers

The GST Council will at its meeting on Friday, 4 May, consider a proposal to impose a sugar cess to compensate cane farmers.

The proposal by the Ministry of Consumer Affairs, Food and Public Distribution for a 5 percent sugar cess will be outside the purview of the compensation cess under the goods and services tax, and hence will need a separate law.

“The sugar cess proposal will be taken up by the council. It will be a different cess from the compensation cess and will need a separate act of Parliament or by way of a provision in the Finance Act,” said a government official. The government may choose to go ahead with this by way of an ordinance, he added.

(Source: Business Standard)

3. Coca-Cola Unveils Vitingo at Rs 5 in Bid to Boost Reach

Coca-Cola India Pvt Ltd on Thursday, 3 May, introduced the Minute Maid Vitingo, a water soluble powder priced at Rs 5 per sachet, reviving a popular yet controversial price point that it discontinued 14 years ago. The purpose: get more people to try Coca-Cola products.

In 2000, the Indian unit of American beverages maker The Coca-Cola Co had introduced Rs 5 bottles of Coca-Cola, which was followed by rival PepsiCo with its own beverage at the same price. Coca-Cola ended the Rs 5 bottles in 2004.

“The Rs 5 price point will increase our reach, especially to the segment which cannot afford most of the packaged beverages. Nutrition is a category we would be focusing on in future. The aim is to bring products that have connects with the country’s socio-economic needs. And Vitingo fits in perfectly,” said T Krishnakumar, president, Coca-Cola India and south-west Asia.

(Source: Livemint)

4. China Removes Import Duties on 28 Medicines

China on Thursday, 3 May, said it has removed import duties on as many as 28 medicines, including all cancer drugs, from 1 May, a move which would help India to export these pharmaceuticals to the neighbouring country.

“China has exempted import tariffs (duties) for 28 drugs, including all cancer drugs, from 1 May. Good news for India’s pharmaceutical industry and medicine export to China. I believe this will help reduce trade imbalance between China and India in the future,” Chinese Ambassador to India Luo Zhaohui said in a tweet.

The development assumes significance as India has time and again asked for greater market access for its goods and services, including IT, pharmaceuticals and agriculture, in the Chinese market to reduce the widening trade deficit.

(Source: Financial Express)

5. Airline Stocks Hit Multiple Air Pockets in March Quarter

A poor March quarter (Q4) performance by InterGlobe Aviation (IndiGo) because of a spike in crude oil prices and higher competitive intensity impacted aviation stocks, as the market feared that the pressure would also reflect on other airline companies.

While shares of IndiGo and Jet Airways lost 10-12 percent each, SpiceJet shed 6 percent at close on Thursday, 3 May. Higher fuel costs has prompted analysts to cut IndiGo’s FY19 earnings estimates by 14 percent. Though the sector is enjoying record load factors and demand which resulted in strong revenue growth for IndiGo, higher crude oil prices and severe pricing pressures have dented the company’s operating performance.

Both operating and net profit declined by 73-74 percent over the year-ago quarter. Operating profit margins, too, shrunk by over 800 basis points (bps) compared to the year-ago period. Analysts at IIFL believe margins could fall further.

(Source: Business Standard)

6. Bullet Train Land Row: Rlys Says Farmers to Get Higher Compensation

Farmers giving away land for the Mumbai-Ahmedabad bullet train will get an additional 25 per cent of the market value of the land over and above the compensation they were entitled to, the Railways said on Thursday, 3 May, a day after Congress MP Ahmed Patel wrote to the prime minister expressing concern over the process of land acquisition for the ambitious project.

In the statement, a spokesperson for the National High Speed Rail Corporation Limited (NHRCL), which is implementing the high speed train corridor project, said due care had been taken to cause the least inconvenience to farmers and farm labourers and simultaneously protect their rights.

In the letter to the prime minister, Patel had alleged that farmers' representatives had complained that rules and procedures under the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitati and Resettlement Act, 2013, were not being adhered to while land was being acquired for the project.

(Source: The Economic Times)

7. Tata Motors Sells Defence Business to Tata Advanced Systems

Tata Motors Ltd on Wednesday, 3 May, said that it will sell its non-core defence business to an entity promoted by the parent Tata Sons for over Rs 725 crore.

The asset sale to Tata Advanced Systems was approved by the board and includes getting Rs 100 crore for capital expenditure and Rs 625 crore for transfer of share in wholly owned subsidiary TAL Manufacturing Solutions, an official statement said.

The move comes a month after Tata Power Ltd also announced a similar move to sell off assets to TASL, which will be housing all of the diversified group’s defence assets. Sale of non-core assets also help reduce debt of companies and reduce cross holdings.

(Source: BloombergQuint)

8. Cognizant Acquires Belgium-Based Hedera Consulting

IT firm Cognizant on Thursday, 3 May, said it has acquired privately-held Hedera Consulting, a move that will strengthen the former’s consulting and digital transformation capabilities for clients in Belgium and the Netherlands.

The size of the deal was, however, not disclosed.

“The purchase further expands Cognizant’s consulting, business insight and digital transformation capabilities for clients in Belgium and the Netherlands...Hedera Consulting is now part of the Cognizant Consulting business unit,” the US-based IT firm said in a statement.

Cognizant president, global growth markets, Santosh Thomas said that companies in the Belgian and Dutch markets are re-designing their business and IT operating models for the digital era.

(Source: Livemint)

9. SEBI Puts in Place New Framework to Check Non-Compliance of Listing Rules

Markets regulator SEBI has put in place a stronger mechanism to check non-compliance of listing conditions, wherein exchanges will have powers to freeze promoter shareholding and even delist the shares of such defaulting companies.

The move is aimed at maintaining consistency and adopting a uniform approach in the matter of levy of fines for non-compliance with certain provisions of the listing regulations.

Under the new framework, exchanges would have the power to freeze the entire shareholding of the promoter and promoter group in non-compliant listed entity also holding in other securities, the Securities and Exchange Board of India said in a circular.

Besides, exchanges can levy fines on non-compliant company, move the stocks of such firms to restricted trading category and suspend trading in the shares of such entities.

(Source: BloombergQuint)

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