QBiz: Sensex Meltdown, Jaypee-Ultratech’s Rs 15,000-cr Deal 

Top business stories of the day.

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Business
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Recent figures indicate the Sensex has had its worst loss in five years. (Photo: Reuters)

1. With New FDI Rules, E-commerce Firms May Not Be Able to Offer Promos: ET

Flipkart, Snapdeal, Amazon and others running online marketplaces are not only barred from giving discounts directly according to new rules but they may not be able to offer promotional programmes such as cash-back offers to lure shoppers either, reports Economic Times.

These incentives go against the intent of the policy aimed at curtailing any direct transaction between the marketplace and the consumer, a senior government official was quoted, while acknowledging that cash-back incentives don’t influence the price of goods or services.

The government wants etailers to have the same level of disengagement as in the case of a physical marketplace, such as a mall, where the operator has no interaction with the consumer.

2. Jaypee Group Sells Cement Plants to Ultratech for Rs 15,900 Cr: FE

Debt-ridden Jaiprakash Associates has announced the part sale of its cement business to the Kumarmangalam Birla-led Ultratech for Rs 15,900 crore, marking the biggest consolidation in the cement sector according to the Financial Express report.

However, the size of the deal announced last month has been reduced from Rs 16,500 crore as Jaiprakash Associates Ltd (JAL) decided not to sell its cement plant in Karnataka with a capacity of 1.2 million tonnes per annum (MTPA).

Board today approved the definitive agreement with Ultratech Cement Ltd (UTCL) for sale of part of its cement business comprising identified operating cement plants with an aggregate capacity of 17.2 MTPA spread over the states of UP, MP, HP, Uttarakhand and Andhra Pradesh, besides a grinding unit of 4 MTPA capacity, which is currently under implementation in UP
Jaiprakash Associates filing to the BSE

Both the parties have mutually agreed to exclude Shahabad plant in Karnataka from the transaction, it added.

Read more here.

3. Worst Loss in Five Years for Sensex: Livemint

India’s benchmark equity indices posted their worst loss in five financial years in the year-ended Thursday as foreign investors pulled money out of volatile emerging markets in a flight to safer havens, reports Livemint.

Domestic investors turned net buyers in the year, helping narrow losses, but it wasn’t enough to prevent the BSE’s Sensex and the National Stock Exchange’s Nifty from ending the year in the red.

The 30-share Sensex fell 9.36 percent in the year to 25,341.86 points on Thursday—its worst performance since 2011-2012, when it dropped 10.5 percent . The 50-share Nifty shed 8.86 percent in the financial year, its biggest decline since a 9.23 percent drop in 2011-2012.

4. ICICI Bank Puts on Hold Plans to Sell Home Finance Division: Livemint

ICICI Bank has put the plan to sell its subsidiary ICICI Home Finance on the backburner. According to Livemint, a valuation mismatch between the bank and potential private equity buyers prevented a deal from being struck, according to the two people quoted in the report.

The bank’s decision to sell the home finance arm at a valuation of Rs 2,400 crore, or a 2X of book value was not accepted by PE investors. PE firms’ offer of 20 percent discount to the valuation sought was not acceptable to ICICI, and the bank has decided not to go with the deal.
Source

Global PE investors, such as TPG, Partners Capital and Baring Private Equity Asia, were in discussions with ICICI Bank for a possible deal.

ICICI Home Finance is not an independent platform, but a portfolio originated from ICICI Bank. To make it an independent entity, you need your own distribution network,” as said by a private equity investor in the report.

5. Interest Rates on PPF, Other Savings to Be Lower From 1 April

Interest rate on small savings schemes, including PPF, Kisan Vikas Patra (KVP) and senior citizen deposits, will be cut by up to 1.3 percent starting 1 April as the government moves towards quarterly alignment of rates with the market.

The interest rate on Public Provident Fund (PPF) scheme will be 8.1 percent for the period 1 April to 30 June, down from 8.7 percent.

On KVP, it will be reduced to 7.8 percent from 8.7 percent while senior citizen savings scheme of five years would earn 8.6 percent interest compared to 9.3 percent. Girl-child saving scheme, Sukanya Samriddhi Account will see an interest rate of 8.6 percent as against 9.2 percent, according to a Finance Ministry order.  

However, unlike previous years when interest rates were set for the full year, the government will from now on set them every quarter, based on the previous 3-month yields on government securities or G-Sec.

Read more here.

6. Fiscal Deficit at End-Feb Exceeds Revised Estimate: BS

The Central government’s fiscal deficit for the first 11 months of FY16 has surpassed the revised estimates (RE) of the 2015-16 Union Budget by 7 percent, according to official data, reports Business Standard.

This was after the target was reduced, so that as a proportion of gross domestic product (GDP), it came to the same 3.9 percent as pegged in the original budget estimates (BE) due to falling nominal GDP growth rates. Against a 11 percent earlier growth estimate, nominal GDP is officially pegged to grow 8.6 percent.

By this time, the deficit had surpassed the RE by a little over 17 percent a year before. The deficit touched Rs 5.7 lakh crore by the end of February 2015-16, constituting 107.1 percent of the RE at Rs 5.3 lakh crore.

This means the government must have ensured a fiscal surplus of Rs 40,000 crore in March to meet the financial year’s target.

The government met the target in 2014-15 despite the deficit overshooting the RE by 17-plus percent by February.

7. Morgan Stanley Says RBI to Cut Repo Rate by 0.25% on April 5: ET

The Reserve Bank is expected to cut key interest rate by 0.25 percent in the next week’s policy review meet, which will be supportive of growth recovery, says a Morgan Stanley report.

According to the global financial services major, inflation is likely to be sustainably lower at 4.75 percent year-on-year in quarter ended March 2017.

In the upcoming policy review on 5 April, the RBI is expected to cut policy rates by 25 bps, the report said adding that 25-50 bps of rate cut is expected in 2016.

Read more here.

8. HCL Closes in on Crucial Geometric Deal: BS

HCL Technologies, has agreed to acquire Mumbai-headquartered engineering solutions company Geometric in a share swap deal that values it at $150-200 million, according to Business Standard.

The deal was expected to be announced in a couple of days, say sources quoted in the report.

HCL will acquire the 31.09 percent stake held by Godrej Investments and Godrej & Boyce Manufacturing Company along with the stake of founder and Chief Executive Officer Manu Parpia. The Parpia family owns a 6.73 percent stake in Geometric.

9. MFs Upset with Salary Disclosure Norms; But Won’t Challenge Sebi: BS

Executives in India’s Rs 13 lakh crore mutual fund industry are upset with a recent rule asking fund houses to disclose salaries of executives earning more than Rs 60 lakh a year, reports Business Standard.

Fund houses did not anticipate such a move from the Securities and Exchange Board of India (SEBI). They said the decision was unwarranted and did not serve any purpose.

The latest board meeting of the Association of Mutual Funds in India (Amfi) discussed the matter at length but fund houses failed to reach a consensus on how to approach SEBI on the issue.

A section of CEOs sees no problem in disclosing pay. Since they manage public money there is no harm if investors, distributors and other stakeholders know their pay packages, they feel.

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