QBiz: Govt Tightens E-Commerce Norms; Patanjali Sales Dip
Here are the top business stories of the day.
1. Flipkart, Amazon Hit as Govt Tightens E-Commerce Norms
The government on Wednesday, 26 December, barred online retailers such as Flipkart and Amazon from selling products of companies in which they own stakes and disallowed them from entering into exclusive deals for merchandise, unveiling norms that industry figures warned could upend India’s $18 billion e-commerce industry.
Barring e-commerce marketplaces from selling products of firms in which they own stakes could hit Amazon in particular, given that it has several such joint ventures, including Cloudtail and Appario. Cloudtail is a joint venture between Amazon and N.R. Narayana Murthy’s Catamaran Ventures.
The commerce and industry ministry’s decision to introduce the new norms follows complaints by small traders, who contend that deep discounts offered by the likes of Amazon and Flipkart are driving them out of business.
2. Public Sector Banks Recovery Against NPAs Doubles This Year
Public sector banks reported recovery of Rs 60,713 crore against non-performing assets (NPAs) in the first half of the current year, which is double of the amount recovered in the corresponding period last year and more significant returns on high-value accounts are expected, the government has said.
“As per RBI data on global operations (with provisional data for September 2018), during the last three and a half financial years, NPAs of scheduled commercial banks reduced by Rs 2,83,770 crore due to recoveries,” the government told BJP MPs Kirti Azad and Bharatiben Shiyal.
The government said measures such as asset quality review (AQR) initiated in 2015 for clean and fully provisioned balance sheets revealed a high incidence of NPAs that were piling up since 2008 — a period when UPA was in office.
(Source: The Times of India)
3. Bimal Jalan to Head Panel on RBI’s Economic Capital Framework
The Reserve Bank of India (RBI), in consultation with the government, has set up a six-member committee to review the economic capital framework of the central bank.
Former RBI Governor Bimal Jalan will be the committee’s chairman and former Deputy Governor Rakesh Mohan deputy chairman.
The committee would submit its report within 90 days from the date of its first meeting, the RBI said in a statement on Wednesday, 26 December.
The terms of reference of the committee would be to review status, need and justification of various provisions, reserves and buffers presently provided for by the RBI, keeping in mind ‘public policy mandate of the RBI, including financial stability considerations.’
(Source: The Hindu)
4. HUL Mulls Legal Action Against GST Order
Hindustan Unilever (HUL), which has been ordered by the National Anti-Profiteering Authority (NAA) to deposit around Rs 223 crore in consumer welfare funds of the government for failing to pass on the entire benefit of GST reduction last year, is considering taking a legal course of action.
An HUL company spokesperson said, “The NAA order refers to the need to pass on the benefit of reduction in rates to consumers which is fully consistent with HUL’s stand and actions.”
“However, it makes a narrow interpretation of the law and does not take into account well-established industry practice backed by law. Also, no methodology has been determined by NAA as required under law to determine if the benefit has been passed or not. Given there is a divergence on some basic issues, HUL will consider legal options available to it.”
(Source: The Times of India)
5. Companies CSR Expenditure Rises 47% in 4 Years to FY18
Companies in India spent Rs 75.36 billion on corporate social responsibility (CSR) activities in 2017-18, a 47 percent rise compared to 201415, says a survey.
"This is a significant rise, clearly demonstrating higher expenditure towards CSR activities from the mandated year, 2014," said the KPMG India CSR Reporting Survey 2018.
The cumulative expenditure by top 100 companies from 2014-15 to 2017-18 is about Rs 263.85 billion, the survey said.
The average amount spent per company has gone up to Rs 761 million as compared to Rs 588 million during 201415, up 29 percent, it said.
The survey further said that the total unspent amount has reduced by Rs 7.49 billion to Rs 9.89 billion during 2017-18 from Rs 17.38 billion in 2014-15.
6. Anand Rathi Wealth Services Withdraws Proposed Rs 425 Cr IPO
Anand Rathi Wealth Services Ltd, the wealth management arm of Mumbai-based financial services group Anand Rathi, said it has decided to withdraw its proposed initial public offering (IPO) and made an application in this regard to the Securities and Exchange Board of India (Sebi).
The company said it had filed its initial share sale documents in September when the markets were doing well, but with IPO markets entering a wait and watch mode, it has decided to explore an IPO at a later stage.
The wealth management business IPO aimed at raising a total of Rs 425 crore through both primary and secondary issuance of shares.
Anand Rathi Wealth planned to raise Rs 125 crore in fresh capital and an offer for sale of up to Rs 300 crore by the promoter entity Anand Rathi Financial Services.
7. Scooter Startup Ather Plans to Raise up to Rs 300 Crore
Electric scooter startup Ather Energy, which is owned a third by Hero MotoCorp Ltd, is gearing up to raise between Rs 200 crore and Rs 300 crore over the next 10 months to a year to expand into newer markets such as Chennai and Pune, said a person with direct knowledge of the matter.
The next round of funding would support Ather’s needs for a year, and the Bengaluru-based company would need to do another round in the coming years for its future expansion and product development plans including foraying into Delhi, said the person.
The company which was co-founded in 2013 has so far received funding of around $66 million from Hero MotoCorp, US hedge fund Tiger Global and Flipkart founders Sachin and Binny Bansal.
(Source: Hindustan Times)
8. Patanjali Sales Dip as Rivals Advance into Natural Space
Patanjali Ayurved reported a dip in its sales and profits for the year ended March 2018 due to increased competition with many rivals, mostly multinationals, rolling out natural and herbal products as well as its own distribution troubles post GST rollout.
The Baba Ramdev-led enterprise’s revenues fell 10 percent to Rs 8,135 crore in the last fiscal from Rs 9,030 crore in 2016-17, according to financials sourced from research platform Tofler.
According to provisional data sourced by CARE Ratings, Patanjali’s net profit more than halved at Rs 529 crore in FY18 from Rs 1,190 crore a year earlier.
“The decline in turnover was primarily because of the company’s inability to timely adapt to the GST regime and develop infrastructure and supply chain,” a report by Care Ratings said.
(Source: The Economic Times)
9. IL&FS Names Retd IAS Officer Bijay Kumar as Deputy MD
Cash-strapped Infrastructure Leasing & Financial Services (IL&FS) on Wednesday, 26 December, said it has appointed retired Indian Administrative Service (IAS) official Bijay Kumar as deputy managing director of the company.
The company has also appointed N Srinivasan as a non-executive director of the company.
The decision on both the appointments were taken in the board meeting held on 24 December 2018, the company said in a filing to exchanges.
Earlier this month, the group had appointed N Sivaraman as the group chief operating officer (COO). He had earlier worked with the L&T Group.
The group debt stood at Rs 94,215.6 crore as of 8 October 2018.
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