QBiz: President Approves GST Bill; Mahindra and Ola Join Hands

The Quint brings you the top business news from dailies across India. 

5 min read
President Pranab Mukherjee gave his assent  to the constitution amendment bill. (Photo: Reuters)

1. President Pranab Mukherjee Approves Landmark GST Bill

A key milestone in the roll-out of the Goods and Services Tax (GST) was achieved after President Pranab Mukherjee gave his assent on Thursday to the Constitution Amendment Bill that enables the implementation of this indirect tax reform.

So far, the government has managed to close out processes within deadlines, raising expectations that the GST will be rolled out on 1 April next year.

The enactment of the bill sets the stage for setting up of the all-powerful GST council – a representative body comprising state finance ministers and the Union finance minister – which will finalise the design of GST.

(Source: Livemint)

2. Rules May Be Eased for Banks and NBFCs Under GST

The government may look at relaxing some rules in the goods and services tax (GST) framework that could make life a little easier for banks, NBFCs and insurance companies, people in the know said.

In the revised model law set to be released in the first weeks of October, two main changes – single registration and centralised audit – may be announced for banks, NBFCs and the insurance companies, a person close to the development said.

“While it has not been finalised how exactly would the government go about it, broadly there seems to be a consensus that banks, especially large ones, would find it very tough under GST,” he said.

3. ONGC Calls For Revision Of Gas Pricing Formula

India’s largest oil and gas explorer, Oil and Natural Gas Corporation Ltd (ONGC), is gearing up to deal with yet another hit on revenue with the scheduled gas price revision in October 2016.

The company has written to the government to revise the domestic gas pricing formula, ONGC Chairman DK Sarraf told BloombergQuint in an interview after the company’s shareholder meeting.

We expect the gas price to go down further by 20 percent from $3.06/mmbtu to $2.5/mmbtu or somewhat lower than that after the gas price revision of 1 October 2016. We have asked the government to have another look into the gas price formula as this does not leave us any money to carry out more projects.
DK Sarraf, Chairman, ONGC

ONGC’s revenue will be stressed on account of the gas price revision October this year.

(Source: BloombergQuint)

4. Reliance Jio Launch Good for Consumers, Not So Good for Investors: Martin Pieters

In the end it has happened: Reliance Industries (RIL) has announced the official opening of its telecoms franchise, Jio. Few things have kept stakeholders in the Indian telecoms industry so busy as the re-entrance into the market of RIL.

As far as I know, it is also one of the most costly startup projects of a new telecoms company in the world. So, what can we expect from this? First of all, I have to assume that the journey till today has been just as much a learning experience for RIL as it was a negative overhang for the existing operators. I remember the speculation that was already there five years ago. What would be the business model?

What would be the effect on pricing? And the rumours that Jio would come with a revolutionary tower, driving a very low cost operating model. And so on.

5. Cairn-Vedanta Merger Gets LIC Backing

Life Insurance Corp of India (LIC) will vote in favour of a proposed merger of Anil Agarwal-controlled Vedanta Ltd and Cairn India Ltd, said two people familiar with the development.

The support of LIC, which owns a 9.06 percent stake in Cairn India, is crucial for the merger to go through. The merger requires approval from at least 51 percent of Cairn India’s minority shareholders.

The state-owned insurer’s decision comes after Vedanta sweetened an earlier offer for Cairn India’s shareholders to salvage the merger that would give Vedanta access to Cairn India’s $3.5 billion cash pile. The cash will potentially help Vedanta repay debt and reduce interest costs.

(Source: Livemint)

6. Mahindra and Ola Ink Strategic Agreement; Will Target $400 Million Sales In 2 Years

Mahindra & Mahindra Ltd has entered into a strategic alliance with Ola as part of its attempt to tap the growing ride hailing service market.

The alliance will look to cover 40,000 drivers across India by 2018, Mahindra said in a press release. The alliance will also target $400 million (Rs 2600 crore) in sales in the same two-year period.

The “Mahindra Ola” package promises Mahindra cars at highly affordable prices with up to zero down payment. Other features that will be offered to drivers include subsidised insurance premiums, comprehensive maintenance packages, exclusive benefits on the Ola platform and accident insurance for drivers along with scholarship for their children

(Source: BloombergQuint)

7. Yes Bank Defers $1bn Share Sale as Stock Crashes

Yes Bank’s $1-billion fund-raising plan through the qualified institutional placement (QIP) route, which was to be the largest such offer this year, flopped on Thursday after the stock crashed 7.7 percent in two sessions to Thursday to close much below the floor price of Rs 1372.

The bank said it deferred the offer due to ‘extreme volatility’ during Thursday’s trading “because of misinterpretation of new QIP guidelines”. The offer opened on Thursday morning and was set to close on Friday. Brokers and dealers said that the huge supply of Yes Bank shares weighed on the stock price, which promoted investors to sell the stock in the market even as the offer was open.

The bank was to issue about 4.8 crore shares to raise $1 billion, leading to a 11.7 percent dilution of its equity base.

8. Brookfield Set to Buy Majority Stake in RCom Towers

Brookfield, the world’s second biggest manager of alternative assets like real estate and private equity from Canada, is closing in to buy a majority stake in Anil Ambani’s telecom tower business, said sources aware of the developments.

What may be interesting is the fact that the deal construct has changed a bit, as unlike in the past discussions, R-Com may not exit the business entirely but sell only a majority stake while retaining 20-25 percent economic interests.

Both sides are currently in bilateral negotiations after signing a non-binding agreement in July. The due-diligence exercise that is currently ongoing and likely to conclude by this month end.

9. IRB Infrastructure Looks to Raise up to Rs 4300 Crore

IRB Infrastructure Developers Ltd on Thursday said its infrastructure investment trust (InvIT) fund has filed a draft red herring prospectus (DRHP) with market regulator Securities and Exchange Board of India (Sebi) to raise as much as Rs 4300 crore.

IRB Infrastructure’s shares rose as much as 9.8 percent on Thursday after the announcement. It is the first company to file a DRHP for an InvIT.

InvITs are trusts that manage income-generating infrastructure assets, typically offering investors regular yield and a liquid method of investing in infrastructure projects.

(Source: Livemint)

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