QBiz: RBI Cuts Rates, Lenders Say No to Mallya’s Repayment Bid

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Business
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The Reserve Bank of India (RBI) seal is pictured on a gate outside the RBI headquarters in Mumbai. (Photo: Reuters)

1. RBI Cuts Rates, Eases Liquidity: BS

The Reserve Bank of India (RBI) on Tuesday cut its policy repo rate by 25 basis points to bring it down to 6.50 percent at the first bi-monthly monetary policy meeting of the fiscal year.

As expected, the RBI said it would maintain an ‘accomodative stance’ on monetary policy, meaning it was open to more rate cuts in future depending on macroeconomic conditions. The Cash Reserve Ratio has been kept unchanged. Statutory Liquidity Ratio (SLR) however, has been reduced by 25 basis points from 21.5 percent to 21.25 percent of NDTL.

More importantly, the central bank announced steps to boost liquidity in the system which would help banks pass on the benefits of lower rates to its borrowers. RBI has also reduced the daily maintenance of cash reserve ratio (CRR) from 95 percent of the requirement to 90 percent with effect from the fortnight beginning 16 April 2016.

2. Lenders Say No to Kingfisher’s Rs 4,000-Cr Part Repayment Bid: FE

Lenders have written to Kingfisher Airlines chairman Vijay Mallya’s legal counsel and separately to Kingfisher Airlines offices in Bengaluru, rejecting a proposal to repay Rs 4,000 crore. According to a senior banker, the letters have already been couriered, emailed and will also be delivered by hand.

The banker told The Financial Express that the lenders are looking for a repayment of the principal outstanding of around Rs 5,000 crore and more than half the interest of Rs 2,500 crore. “We are expecting Rs 7,500 crore and are willing to discuss this with the Kingfisher management,” he said.

Another banker said that the Rs 4,000-crore settlement plan does not make sense because Mallya wants banks to deduct the Rs 544 crore recovered through sale of shares from the total outstanding, which has been already deducted. “When we had filed the debt recovery tribunal (DRT) suit, we had already deducted the recovered loans and that cannot be adjusted again. So his actual offer is only Rs 3,456 crore,” the banker explained to The Financial Express.

Read more here.

3. JLR Workers Warn Cyrus Mistry Against Tata Steel ‘Fire Sale’: FE

Supporting colleagues at troubled British unit of Tata Steel Europe, workers at JLR on Tuesday warned Tata Group Chairman against a ‘fire sale’ of its UK steel business, saying “it wasn’t the responsible thing to do”.

Representatives for thousands of car workers at Jaguar Land Rover (JLR) wrote to Mistry, demanding the conglomerate acts responsibly by selling Tata Steel UK as a whole entity and allowing time for a credible buyer to be found, Unite, Britain and Ireland’s largest trade union which claims to have over 1.4 million members, said in a statement.

Expressing alarm over reports that the Tata Group is ‘going through the motions’ and was looking to ‘dispose’ of its UK steel operations in a matter of weeks, the Unite representatives warned Mistry against a ‘fire sale’ of its UK steel business, saying it wasn’t the responsible thing to do.
Car workers’ statement

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4. Swiss PE Fund in Talks With Infosys, TCS to Sell CSS Corp at a Valuation of $400-450 Million: ET

Swiss private equity fund Partners Group has initiated discussions to sell domestic IT services company CSS Corp, which it had acquired three years ago. The deal values CSS at $400-450 million.

Preliminary feelers have gone out to home-grown IT bellwethers like Infosys and TCS and bulge bracket private equity funds including the Blackstone Group, Carlyle and Apax Partners. Avendus Capital has been tasked with managing the auction process, multiple sources told ET.

“Yes, they are testing the waters. It’s at very initial stages but there is enough traction towards the IT services sector, managed by a professional owner,” said one of the sources.

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5. Kishore Biyani’s Future Group to Buy FabFurnish.com: Livemint

The Kishore Biyani-led Future Group is buying online furniture store FabFurnish.com—its first acquisition of an Internet store.

Future Group, which owns a home and furnishing business under the brand HomeTown, confirmed the deal.

We will leverage FabFurnish’s online platform and delivery model to grow our presence in markets where we do not have offline stores or have minimal reach. 
Kishore Biyani, Chief Executive Officer, Future Group

Future Group may pay anywhere between Rs 15 crore and Rs 20 crore in cash to buy the Rocket Internet-backed start-up, two people aware of the development said on condition of anonymity.

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6. PEs Pump Funds Into Realty Despite Prolonged Slump: Livemint

Private equity (PE) activity in real estate remained high in the first three months of 2016, though less than the corresponding period last year, as global funds and domestic investors continued to infuse capital in the hope of a recovery, even as the sector battles a two-year long slowdown.

Investment outlook for 2016 is strong, despite a comparatively slow first quarter, when many large domestic firms were in fund-raising mode and finished deploying their capital last year. These funds, which are expected to raise over $4 billion from Indian and offshore investors, will start deploying fresh capital in a few months from now.

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7. ‘Make in India’ Boost: Boeing & Lockheed Martin Offer to Locally Manufacture F16 and F/A 18 Jets: ET

In the first government facilitated talks on producing an American fighter jet in India, rivals Boeing and Lockheed Martin (LM) jointly met top defence ministry officials in the capital on Tuesday, offering to locally manufacture the F16 ‘Super Viper’ and a customised F/A 18 ‘Super Hornet’ for Indian Air Force requirements.

The formal meetings, held in the presence of Pentagon’s Director for International Cooperation Keith Webster at South Block, is the first step towards a possible foreign military sales (FMS) proposal for producing American jets under the Make in India initiative.

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8. Releasing Defaulter Names Can ‘Chill Business Activity’ Says Raghuram Rajan: Livemint

Reserve Bank of India (RBI) governor Raghuram Rajan on Tuesday defended the central bank’s position to keep names of large bank defaulters private, saying that such disclosures, if not seen in context, can “chill business activity”.

Last week, RBI submitted the names of large defaulters to the Supreme Court, but requested the court to keep the names confidential. Explaining the central bank’s stance, Rajan said that publishing names of defaulters can lead to anxiety and panic within the system.

If simply any act of default, without understanding the severity or reasons, is put up for public consumption, it may result in a loss of business as well as undue anxiety and panic and therefore chill business activity.
Raghuram Rajan, Governor, Reserve Bank of India 

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9. Tata’s UK Steel Assets Can Be Saved, Says Sanjeev Gupta: BS

Sanjeev Gupta, a potential buyer of Tata Steel’s British assets, is meeting Britain’s business secretary on Tuesday to discuss his plan to turn around the struggling operations without the loss of thousands of jobs.

Prime Minister David Cameron’s government has said it was working to broker a deal with potential buyers after India’s Tata Steel put its British operations up for sale last week, threatening thousands of jobs.

Gupta, head of the Liberty House Group which has bought other steel assets in Britain, told BBC Radio he believed the business could be saved but said he had not yet carried out due diligence or held talks with the sellers of the business, which includes the huge Port Talbot site in Wales.

Read more here.

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