QBiz: UK Govt to Buy Tata Steel Assets, SunEdison Files Bankruptcy
All the top business stories that you need to know.
1. UK Government Ready to Buy 25 Percent Stake in Tata Steel Assets
The UK and Welsh government on Thursday offered financial support to potential buyers of Tata Steel’s UK assets. The British government is willing to purchase about 25 percent of the steelmaker’s UK assets on commercial terms.
The announcement followed a second meeting between UK business secretary Sajid Javid and Tata group chairman Cyrus Mistry this week in Mumbai, where progress on the sale process was discussed. Tata Steel declined to comment on the UK government’s offer. Tata Steel said at the end of March that it was exiting its UK business, which has been hit by rising costs, a slump in steel demand that has caused prices to drop and a surge in Chinese steel imports. That put at risk 15,000 jobs, piling pressure on the government of David Cameron to step in.Livemint Report
2. Solar Developer SunEdison Files for Bankruptcy
Once the fastest-growing renewable energy company in the US, SunEdison has filed for Chapter 11 bankruptcy protection.
According to Reuters, SunEdison has claimed it has assets worth $20.7 billion dollar and liabilities of $16.1 billion dollar as of 30 September 2015. The firm ran a short-lived but aggressive binge of debt reduction but proved unsustainable.
The Chapter 11 filing caps SunEdison Chief Executive Officer (CEO) Ahmad Chatila’s seven-year quest to transform a struggling maker of silicon wafers into a renewable energy giant.
However, SunEdison’s two publicly traded subsidiaries, TerraForm Power and TerraForm Global, are not part of the bankruptcy. In a statement, the companies said the two subsidiaries had sufficient liquidity to operate and that their assets are not available to satisfy the claims of SunEdison creditors.
3. Banks Not Required to Know About Foreign Assets: Mallya to SC
Erstwhile liquor baron Vijay Mallya has submitted an affidavit to the Supreme Court, claiming that banks do not need to know about his foreign assets.
According to Economic Times, Mallya told the apex court that his family’s assets abroad amount to Rs 780 crore. However, since he and his wife and children are NRI, they do not need to disclose the details of the assets, said the business tycoon.
He also maintained that no part of the loan issued by banks to Kingfisher Airlines was used to acquire any assets abroad. The sitting MP in Rajya Sabha has, however, offered to reveal details of the asset to Supreme Court in a sealed envelop by 26 June.
Alleging a trial by media, Mallya claimed to have received no notice before his passport was suspended and a non-bailable warrant was issued against him.
Read more on The Quint.
4. SoftBank Investors Call for Internal Probe of Nikesh Arora
Investors of SoftBank Group Corporation have demanded an internal probe and possibly, ouster of company’s CEO, Nikesh Arora.
In a critical 11-page letter, some investors have called upon SoftBank’s board to “investigate and possibly dismiss Arora”, according to a Bloomberg report. In the letter which has not been made public, his track record and qualifications as president of the company have come under the scanner.
The Bloomberg report suggests that investors have questioned whether Arora “has conflicts of interest due to his existing role as a senior adviser to the private equity firm Silver Lake. It also suggests he may have been involved in past wrongdoing and generally poor business decisions.”
Arora has also faced criticism for allegedly “poor investment performance and a series of questionable transactions” during his tenure.
Read the full report on The Quint.
5. IT Recruitment Numbers Drop in FY16
The IT sector which is the largest job provider to engineers in India has recruited less employees in financial year 2016 as compared to financial year 2015. While the industry hired 2,30,000 recruits in FY15, only 2,00,000 employees were added in FY16.
Nasscom, a body representing the IT service industry, has also predicted a low hiring trend in the future.
Increasing use of automation and artificial intelligence seem to have hit hiring in the Indian information technology (IT) services industry, with all the top-tier players hinting at lower recruitments in FY17 and beyond. Tata Consultancy Services (TCS), India’s largest IT services provider and also the largest recruiter in the industry, said lateral hiring for FY17 will go down and, subsequently over the years, campus hiring too will.It is not just TCS that is saying its gross hirings will come down. Infosys and Wipro, too, have been hinting at a similar trend over the past few quarters. The drop comes at a time when all three are projecting strong growth for FY17.Business Standard Report
6. Facebook Teams up With Telecom Firms for Open-Source Designs
Facebook is joining hands with Intel, Nokia and operators Deutsche Telekom and SK Telekom in a collaboration on open-source designs of equipment linking our smartphones to mobile towers and transmitting text messages and YouTube videos.
Mark Zuckerberg wants the project to connect the billions of people who don’t have Internet access, especially in areas where building networks is hard because of climate or lack of reliable electricity. Today’s mobile networks are complicated and expensive to build. A typical 4G base station in a city costs about €100,000 ($113,000), not counting the fibre line connecting it to the network. Facebook’s goal is to simplify all this by creating blueprints for cheap base stations and other network gear. It won’t make the kit, but the designs will be open to use to anyone – so lowering the industry’s barriers to entry. It used a similar approach to rework the guts of the world’s data centers, the computing hubs used by Web services and corporate networks.Livemint Report
7. Power Transmission Fails to Attract Investment
Even though financial year 2015-16 witnessed a record generation capacity in conventional as well as renewable form of energy, the investment in the power transmission sector still lags behind.
While Minister of State for Coal, Power and Renewable Energy, Piyush Goyal promised auction of government projects worth Rs 1 lakh crore, only projects worth Rs 18,000 crore were tendered out.
A total of 13 projects went under tariff-based competitive bidding during 2015-16 at a cumulative estimated cost of Rs 18,300 crore. While auctioned projects witnessed close bidding, many players left the business for lack of opportunities. The CERC in 2011 ruled power transmission projects should be awarded through competitive bidding like generation projects. Power Grid was the only company operating in this area till then. The recently amended National Tariff Policy requires projects apart from those of strategic importance, which are to be nominated to Power Grid, be auctioned.Business Standard Report
8. Opinion: Has Raghuram Rajan Lost Out on a Second Term?
RBI governor Raghuram Rajan’s comment, comparing Indian economy to “one-eyed king”, created quite a buzz and attracted open criticism from commerce minister Nirmala Sitharaman.
Even though Rajan later clarified and explained the thought behind the statement, some feel that the damage has been done, according to a Livemint report.
Rajan, in an interview to financial news website Marketwatch on 17 April, had said that India’s economic growth stands out because of a rather subdued growth elsewhere, in response to a question about the country being a bright spot in an otherwise gloomy global economy.The comment generated comments on social media with commerce minister Nirmala Sitharaman openly criticising Rajan. “I may not be happy with his choice of words. I think whatever action is being taken by this government is showing results. FDI is improving, there are clear signs that manufacturing sector is reviving,” Sitharaman had saidLivemint Report
9. Opinion: Why Provident Fund Means Trouble for the Government?
In past month and a half, since the announcement of Budget 2016, the NDA government has had to roll back two provident fund-related announcements. First, the withdrawal of tax on EPF contributions as proposed in the Budget, and recently, the cancellation of EPF withdrawal restrictions.
Prashant Nanda explains why provident fund has become wafer-thin ice for the government, in an article in Livemint.
EPF is a mandatory deduction from organised sector workers salary – 12 percent contributed by a worker from his basic salary and a matching contribution by his or her employer. A mandatory saving locked in for 30-35 years (assuming that one has started work in mid 20s) puts EPF at somewhat disadvantage against other long-term saving products.Taking away a sizable portion of these workers salary as mandatory PF deductions creates resentment. Both opposition political parties and trade unions have realised that if there is any change in policy related to EPF, it becomes easier to convince workers to protest.Livemint Report
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