QBiz: SpiceJet to Pay Rs 500 Cr to KAL; ITC Eyes Healthcare Biz

Here’s a look at the important business stories from the previous day.

5 min read
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1. SC Asks SpiceJet to Pay
Rs 579 Crore in Dispute With KAL Airways

The Supreme Court on Friday rejected SpiceJet’s appeal and directed the company to pay a sum of Rs 579 crore over a share transfer dispute arising out of a change in the airline’s ownership in 2015.

Arbitration proceedings between the parties are underway and are likely to be wrapped up within six months.

A bench headed by Justice Rohinton F Nariman upheld the 3 July order of the Delhi High Court directing deposit of Rs 250 crore in a cash deposit on or before 31 August and the balance of Rs 329 crore by way of a bank guarantee with the court towards the disputed amount.

“It was virtually a consent order passed by the Delhi High Court. I am without a penny from the last two years. They have shown the amount as payable under their balance sheet,” Abhishek Manu Singhvi, counsel for Kalanithi Maran and KAL Airways, told the apex court.

Source: Livemint


2. Idea Working With Handset-Makers for Cheaper Mobile Phones

Faced with the latest challenge of ultra-cheap 4G feature phones from Reliance Jio Infocomm Ltd, Idea Cellular Ltd on Friday said it is working with handset makers to bring down the cost of handsets.

However, the Aditya Birla Group company, set to be merged with bigger rival Vodafone, made it clear that it will not subsidise handsets.

"The practical solution that we are working on is to work with the handset industry and work with them to be able to bring down cost of handsets by bringing down the bill of material, so that the gap of the announced price of Jio feature phone versus a smartphone can be brought down to reasonable levels," its Managing Director Himanshu Kapania told analysts.

Kapania said the ideal price point for a handset will be Rs 2,500.

Source: PTI


3. LIC May Sell Rs 7,600-Cr Stakes To Meet Regulatory Requirements

State-run Life Insurance Corporation of India may have to sell around Rs 7,600-crore equity holdings in companies where it does not hold strategic interest to meet regulatory requirement.

The Insurance Regulatory and Development Authority of India had in April issued an advisory to LIC to pare stake below 15 percent in such companies.

India’s largest life insurer holds over 15 percent stake in 10 companies, including its subsidiary LIC Housing Finance Ltd, cigarette maker ITC Ltd, infrastructure giant Larsen & Toubro Ltd, Corporation Bank, and rubber and tea plantations owner Cochin Malabar Estates and Industries. The insurer did not say which companies it plans to sell stake in.

“We’ve replied to them (IRDAI), but again, we cannot disclose it because it is a price-sensitive information,” said chairman VK Sharma at a media conference in Mumbai.


4. Cigarette-Maker ITC Eyes Healthcare Biz

ITC Ltd plans to set up multi-speciality hospitals that will set “a new standard” in healthcare.

Announcing the cigarette maker ’s plans to enter the healthcare segment, Chairman YC Deveshwar on Friday said that patient well-being rather than revenue would will be the focus of ITC hospitals.

The company would “start with one” multi-speciality hospital. The investment outlay for the proposed healthcare project, location of the hospital and probable time frame for implementing the project are yet to be decided.

“There have been a lot of complaints against hospitals using patients as a tool for revenue. We will look at setting up a multi-speciality hospital where patient well-being rather than revenue will be the focus,” he told reporters at a press conference after the company’s annual general meeting.

ITC’s hospital, he said, would not link doctors’ remunerations to revenue from patients. Rather, it would follow a “different model”, being worked out.


5. Hero FinCorp Looks to
Raise Rs 800 Crore From ChrysCap

Hero FinCorp, the vehicle finance arm of two-wheeler maker Hero MotoCorp, is looking to raise about $120 million, or Rs 800 crore, from India-focused private equity (PE) firm ChrysCapital, two people aware of the development said.

In September 2016, Hero FinCorp had raised about Rs 1,000 crore in the first round from investors, including ChrysCapital. The PE firm and financial services firm Credit Suisse had invested around Rs 700 crore in the company, while about Rs 300 crore was invested by its parent, Hero Group. “Hero FinCorp has sent out feelers to ChrysCapital for the second round of investment. The deal is in an initial stage,” said a person close to the development.

The second round of fundraising is towards the company's plans for expansion and buying stake in other NBFCs, another person in the know said. “It makes perfect sense for Hero FinCorp to sell some stake at this point in time. The only problem is valuations; the sellers have quite high expectations,” said another person in the know.


6. L&T Q1 Net Profit Jumps 51% to 1,028 Crore

Engineering and construction conglomerate Larsen & Toubro (L&T) today reported a 50.59 percent jump in consolidated net profit to Rs 1,028.30 crore for the first quarter ended 30 June.

The company had posted net profit of Rs 682.81 crore in the corresponding period a year ago.

Its total income in the quarter under review increased 9.89 percent to Rs 24,374.64 crore, as against Rs 22,179.59 crore in the year-ago period, L&T said in a BSE filing.

Shares of the company closed 1.96 percent lower at Rs 1,159.10 on BSE.


7. Govt to Tighten Structuring of Companies as Shell Firms Surge

The Centre is working to tighten regulations governing the layers of subsidiaries that a company can have, in much the same way that it did with investment companies.

Reflecting this intent, a key proposal in the Companies (Amendment) Bill 2016, which sought to remove restrictions on the number of layers of subsidiaries of a company, has been dropped.

The amendments to the Companies (amendment) Bill 2016 were approved by a voice vote in the Lok Sabha on Thursday, and the amended Bill is expected to be taken up for passage in the Rajya Sabha.

The move to rein in the layering of both investment companies and subsidiaries is a pointer to a change in the government’s earlier perceived willingness to give corporates complete flexibility in designing efficient structures.


8. Higher Taxation Killing Indian Cigarette Brands

C Deveshwar, non-executive chairman at ITC, has alleged that the increased taxation on cigarettes has started to kill the Indian brands by giving fillip to international brands being smuggled in.

Addressing a press conference on Friday, Deveshwar alleged higher taxation encourages smuggling and illegal trade and that smuggled global brands already accounted for 20-25 percent of the total market.

He also said non-governmental organisations championing the anti-cigarette lobby in India have vested and competitive interest. “There is overseas funding into all,” he said.

“It’s good the government has already banned few such NGOs. But such indiscriminate taxation on cigarettes will kill Indian brands. Ultimately, foreign brands, overseas tobacco farmers, are gaining and there is forex outflow.”


9. Government May Prefer Another Airline as Air India Buyer

The government may prefer that an airline acquires Air India even if it means selling the domestic and international operations separately, senior officials said. “We also want continuity for the existing staff which could only happen if it is being taken over by another airline,” said one of them.

While IndiGo has said it may be interested in Air India’s international business, there have been reports that some private equity investors had been eyeing a possible stake-sale process. The Tata Group, which has stakes in Vistara and AirAsia India, has also been mentioned as a possible suitor.

Analysts said the government shouldn’t seek to keep out potential bidders, given the state of the carrier.

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Topics:  Air India    SpiceJet    Supreme Court 

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