HDFC sells Unitech loan

By: Priyanka Yadav

With Unitech defaulting on loan repayment, housing finance major HDFC on Saturday said it has sold the realty firm's outstanding loan of Rs 869 crore to JM Financial Asset Reconstruction Company (JMFARC).

JM Financial has paid HDFC Rs 155 crore upfront and has issued security receipts to HDFC amounting to Rs 705 crore which will be redeemable over the period of construction, according to the filing. All projects are located in prime locations and financially viable but require additional funding, according to HDFC. "JMFARC will arrange for funds to support and kickstart these projects. Progress of the projects and the resultant cash flows will thereafter be closely monitored," it said. As these projects are financially viable, HDFC said the future cash flows are likely to be sufficient to cover the repayment of the loan with interest thereon.

Gurgaon-based Unitech had a consolidated net debt of Rs 5265 crore at the end of the first quarter of this fiscal. Stating that its current exposure to the Unitech group involves certain projects across various locations, HDFC said "it has assigned the outstanding loans in these projects to JMFARC".

HDFC in a filing to BSE on Friday said, "In the recent past, the Unitech Group has faced sluggishness in the sale of apartments in its projects. This has affected the cashflows of the group, which is in turn has had an adverse impact on the progress of construction and has resulted in irregular servicing of the loans. HDFC has assigned the outstanding loans in these projects to JMFARC ."

HDFC further said that these accounts were standard assets at September end, and turned NPA (non-performing assets) only at the end of October, 2016. In view of irregular payment history, HDFC has made provisions of Rs 240 crore in respect of these accounts. "No further provisioning is required as a result of the sale of the loans to ARC," it added. It further said that after considering the provision of Rs 240 crore already made (34 per cent of SRs), the net carrying value of SRs will be Rs 465 crore.

When loans disbursed by a bank turn bad due to non-payment, banks usually resort to selling these accounts to asset reconstruction companies, which, in turn, purchase the loan amount in less than the actual value from the bank and take over the responsibility of recovering the loan from the client. This way the liability from bank's balance sheet is reduced.

Surgical strike on black money!

By: Priyanka Yadav

Prime Minister Narendra Modi on Tuesday announced that the currency notes of Rs. 500 and Rs. 1000 denominations will not be legal tender beginning November 9. He  also said new notes of Rs. 2000 and Rs. 500 will be circulated soon.

"With a view to curbing financing of terrorism through the proceeds of Fake Indian Currency Notes (FICN) and use of such funds for subversive activities such as espionage, smuggling of arms, drugs and other contrabands into India, and for eliminating Black Money which casts a long shadow of parallel economy on our real economy, it has been decided to cancel the legal tender character of the High Denomination bank notes of Rs.500 and Rs.1000 denominations issued by RBI till now" as mentioned in a press release by the Ministry of Finance.

'Across the border, our enemy uses fake currency and dodgy fuinstructions

or terror - this has been proven repeatedly. The process of cash circulation is also directly related to corruption in our country impacting the lower classes of our society. From midnight November 8 today, Rs. 500 and Rs. 1000 notes are no longer legal tender,’ Prime Minister Modi said while addressing the nation.

Important instructions

(i) Old High Denomination Bank Notes may be deposited by individuals into their bank accounts and/or exchanged in bank branches or Issue Offices of RBI till the close of business hours on 30th December, 2016.

(ii) Old High Denomination Bank Notes of aggregate value of Rs.4,000/- only or below held by a person can be exchanged at any bank branch or Issue Office of Reserve Bank of India for any denomination of bank notes having legal tender character, provided a Requisition Slip as per format to be specified by RBI is presented with proof of identity and along with the Old High Denomination Bank Notes. Similar facilities will also be made available in Post Offices.

(iii) The limit of Rs.4,000/- for exchanging Old High Denomination Bank Notes at bank branches or at issue offices of Reserve Bank of India will be reviewed after 15 days and appropriate notification issued, as may be necessary.

(iv) Cash withdrawal from a bank account, over the counter will be restricted to Rs.10,000/- subject to an overall limit of Rs. 20,000/- in a week for the first fortnight, i.e., until the end of business hours on November 24, 2016.

(v) Withdrawal from ATMs would be restricted to Rs.2,000 per day per card up to November 18, 2016. The limit will be raised to Rs.4,000 per day per card from November 19, 2016 onwards.

(vi) For those who are unable to exchange their Old High Denomination Bank Notes or deposit the same in their bank accounts on or before December 30, 2016, an opportunity will be given to them to do so at specified offices of the RBI on later dates along with necessary documentation as may be specified by the Reserve Bank of India.

(vii) Instruction is also being issued for closure of banks and Government Treasuries, on 9th November, 2016.

(viii) In addition, all ATMs, Cash Deposit Machines, Cash Recyclers and any other machine used for receipt and payment of cash will remain shut on 9th and 10thNovember, 2016.

(ix) The bank branches and Government Treasuries will function from 10thNovember, 2016.

(x) To avoid inconvenience to the public for the first 72 Hours, Old High Denomination Bank Notes will continue to be accepted at Government Hospitals and pharmacies in these hospitals/Railway ticketing counters/ticket counters of Government/Public Sector Undertaking buses and airline ticketing counters at airports; for purchases at consumer co-operative societies, at milk booths, at crematoria/burial grounds, at petrol/diesel/gas stations of Public Sector Oil Marketing Companies and for arriving and departing passengers at international airports and for foreign tourists to exchange foreign currency at airports up to a specified amount.

LOCAL PARTS IN MOBILES TO AID EXPORTS

By: Priyanka Yadav

The government has recently mandated the use of over 20 per cent indigenous components in mobile devices and 40 per cent in telecom equipment made in India for companies seeking 3 per cent interest subsidy on exports. The order also states that only the companies involved in complete manufacturing of products in India  will be eligible for the interest subsidy over those who just assemble their products in the country.

The mandate has come following a recommendation by DoT to the Commerce Ministry to impose minimum value addition criteria for telecom products for eligibility under "Interest equalisation scheme on pre & post shipment Rupee export credit" announced in November 2015. The Directorate General of Foreign Trade had informed the DoT that in February the Department of Commerce has accepted the telecom department suggestion to impose minimum value addition criteria for telecom products for eligibility under the scheme. However, eligibility for benefits under the scheme will be subject to notification by the DoT.

 The DoT said that to avail benefit under the scheme of interest subsidy, "The entire product ,including all populated printed circuit boards (circuits), should be manufactured in India at completely knocked down level, i.e full Electronic Manufacturing Services (EMS) done in India."

The decision was appreciated by the mobile industry body Indian Cellular Association, and electronic component makers body ELCINA. But more benefits were demanded to boost exports.

"It is a positive step towards mitigation of disabilities but very comprehensive package for export is required if we want to compete at global scale. This is a very small step," ICA National president Pankaj Mohindroo said. Electronic Industries Association of India (ELCINA) said that the new rules will ensure only those who are doing minimum acceptable value addition get the benefit of the Interest Equalisation Scheme.

At present, almost every telecom equipment maker and mobile phone manufacturer imports circuits of their products with components pre-mounted on it and put them as one piece at their factory in the country to make final product. The present practice leave scope for little value addition in products that are 'Made in India'.

"It is important that this additional benefit under Interest Equalisation Scheme is provided only to those manufacturers who achieve minimum local value addition and move up from SKD (semi-knocked down circuits imported with components fitted on it) to CKD manufacturing with use of some locally manufactured components," Goel said.

JAIL PRODUCTS CROSS RS 200 CRORE TURNOVER IN 2015

By: Himanshu Modi 

The locked-up labour force in the country made goods worth Rs 200 crore in 2015 through carpentry, weaving, farming and tailoring. The value of goods produced by jail inmates was Rs 201.8 crore, according to a report by the National Crime Records Bureau (NCRB), which is a 33% jump from Rs 151.8 crore in 2014.

Tamil Nadu alone contributed nearly a fourth, or Rs 47.8 crore, worth of merchandise sold with the highest per inmate earning of Rs 34,000 among the states. Not all inmates choose to work because it is voluntary. New Delhi ranked second with sales of Rs 31.1 crore with most products sold under brand TJ's, that started two decades ago. Nearly four years ago, Tihar Jail held roadshows in retail outlets such as Select CityWalk and Reliance Retail to market their wares. “The work is voluntary and has a soothing effect on convicts who can find a purpose in life through such vocation,” said Neeraj Kumar, former director-general of Tihar Jail. “The challenge, however, is high overhead cost to set up sales counters and convince consumers who might have reservations in terms of hygiene against products, especially food.”

For several years, prison-made products were mostly sold through in-house outlets, government offices, Kendriya Bhandar stores or supplied directly to hospitals. But there has been an increased retail push beyond the walls and iron gates of bleak prisons. The other high earning states were Kerala (Rs 9.50 crore and Bihar Rs 22.9 crore), Maharashtra Rs 19.45 crore) in 2015.

A bulk of the profit goes to staff welfare funds or is ploughed back for sourcing supplies. Nearly 71,100 inmates were trained under various vocational training programmes in jails across the country. Authorities hope vocational skills could ease inmates' transition back into everyday life and reduce relapse into criminal behaviour.

Boycott Chinese Products: Ire of Common Indians

By: Simarjeet Singh

In the light of recent tension between India and Pakistan, China has shown its support openly to Pakistan igniting the ire of the common Indians. A large section has taken to social media and also spreading the call for boycott by word of mouth.

The demand for the Chinese products is shrinking and the imports from China would see a big crash in the coming months according to a report, which revealed a significant shift in the consumption pattern of Indian consumers towards domestic products.

Major part of the decline in India's imports from China has been witnessed in products such as ships and boats, tobacco products, aquatic products, pearls and precious stones, musical instruments and parts thereof, mineral fuels and oils, lead and articles thereof, cocoa products, and wool and products

According to a analysis by PHD Research Bureau, India's imports from China increased more than 500 percent from USD 10 billion to USD 61 billion during the last ten years from 2005 to 2015. China's share in India's imports increased from 7 percent in 2005 to around 16 percent in 2015.

but in first six months of the current financial year 2016-17, The trend has been reversed and growth of imports from China decelerated by 8 percent

In response to the boycott from India, China said any such move will negatively impact the India-bound investments from its enterprises and also the Indo China Bilateral relations.

China also claimed that any such boycott would not have much signifance on its exports, but "without proper substitutes, the biggest losers of the boycott of Chinese goods will be Indian traders and consumers".

In its statement, Chinese embassy referred to reports that local sellers in Sadar Bazaar, the largest wholesale market of household items in India, have complained about their Chinese goods sale dropping by at least 20 per cent.

The Chinese embassy also said that "The boycott effect will not limit to Diwali related products, but extended to other Chinese products that are not related to the festival. In the long-run, boycott will not only hurt Chinese goods sale, but also cause negative effects to consumers in India".

Foreign interest rate costlier

By: Dhruv Kharayat

The overseas borrowing window for Indian companies is narrowing as rising US treasuries and Libor(London Interbank Offer Rate) make debt from abroad expensive and domestic interest rates are on their way down, bankers said. US rates have risen in line with expectations of a Federal Reserve rate hike sooner rather than later, while local borrowing costs have come down due to rate cuts by the Reserve Bank of India (RBI). 

Ten-year US treasury yields have risen to 1.85%, the highest since May and a jump from 1.35% in July as strong economic growth numbers make an interest rate increase inevitable. The benchmark Libor has also risen, with the six-month rate at 1.26%, the highest since June 2009. About a year ago, even post hedging, the rates were competitive. For example SBI raised some tier I capital at 8.75% from the domestic market a few days ago. It has also raised some tier I dollar funds at 5.5% which post hedging comes to around 11%. Both these bonds would have been approximately between 9% to 9.50%, that gap has now widened.

Indian companies have borrowed about $7.6 billion from overseas until September, on track to beat the $8.2 billion borrowed in 2015, mainly due to record low borrowing costs in the last two years. However, borrowing from abroad also involves hedging costs. On the other hand, local policy rate cuts seem to be getting transmitted with the highest rated companies paying 7.44% for five year money, the lowest since April 2009 and down from the 11% peak in mid-2013.

Because domestic rates have come down, the gap between overseas and domestic rates are wider. Cost of borrowing for Indian companies borrowing from abroad is going up, though there are enough funds out there for companies with decent ratings.

MUTUAL FUNDS VS LIC: MUTUTAL FUNDS TURN OUT AS WINNER

By: Divya Vohra

For the first time that the value of mutual fund equity portfolio in listed Indian firms crossed the portfolio holding of LIC

According to the data collected by Prime Database, at the end of September, the value of mutual fund equity portfolio in listed firms stood Rs.4.94 lakh crore compared to Rs.4.75 lakh crore held by PSU insurance behemoth Life Insurance Corp. of India (LIC).

– This was thus the first time that the country’s 44-firms strong mutual fund industry overtook LIC as a bigger owner of local stocks. Mutual fund holdings were spread across 1,088 companies while LIC has invested in 310 firms.

– On total assets managed, however, mutual funds continue to lag LIC. In the September quarter, the 44 mutual fund houses, managed an average Rs.16.10 trillion of investor assets (as disclosed in the data from the Association of Mutual Funds in India (AMFI). In comparison, LIC, which manages insurance contracts for at least 250 million people, had total assets worth Rs.21 lakh crore.

In words of Dhirendra Kumar, chief executive of Value Research Ltd, a New Delhi based mutual fund analytics firms, “This is a clear positive for equity markets”. Also, “Broad based institutional play improves the market’s efficiency to a great extent”. “Since mutual funds are required to follow regulatory disclosure for every investment and the fund managers are subjected to great probity by investors, the increase in mutual funds’ equity participation in such a scenario is a strongly positive development. Additionally, since the equity inflows are steady growing rather than abruptly jumping, it means the money coming to the fund industry is a sustainable asset.”

According to Pranav Haldea, managing director of Prime Database, during the September quarter, the holding of mutual funds went up in 338 companies and came down in 322 companies listed on NSE. Between July and September, LIC increased its stake in at least 38 firms while trimming its stake in 71 firms.

Time Warner: A Bold move by AT&T

By: Gursahib Singh Buttar

AT&T agreed to buy Time Warner for $US 85.4 billion ($112 billion) proving to be the boldest move yet by a telecommunications company to acquire streaming content and attract a growing number of online viewers. This could be the biggest deal of this year, if regulators approve it, which will give AT&T control of cable TV’s great channels HBO and CNN, film studio Warner Bros and other ”yet to discuss” media assets.

The tie-up could see AT&T gaining ownership over an array of household names like “Game of Thrones,” “Westworld” and “True Detective.” It would control some of the most successful TV content in history, such as “The Sopranos” and “The Wire.” It could also benefit from all the subscription revenue from HBO, the most profitable cable subscription business in history, whose 130 million subscribers on cable and on HBO's online streaming app are paying about $15 a month. Also potentially falling into AT&T's hands would be the news channel CNN and its multinational operations. From political debate coverage to on-scene reports about hurricanes, tuning into CNN would mean more revenue for AT&T.

AT&T could come to own all of Warner Bros., which includes not only the Warner Bros. movie studio (which include the hit “Harry Potter” films, “Inception” and “American Sniper”) but also New Line Cinema (which is responsible for the “Lord of the Rings” films). Warner Bros. also controls DC Comics, meaning AT&T would have the rights to Batman, Superman, Wonder Woman and a whole host of other pop culture icons, means more revenue and content control.

Time Warner was the fourth-largest media company in America last year, with roughly $28 billion in revenue. Its film division has averaged roughly $4.5 billion in annual box office sales over the last five years. This year, it is the second-highest-grossing studio, behind Disney, having pulled in more than $1.5 billion from movies such as “Batman v. Superman,” “Suicide Squad” and “Central Intelligence.”

The New Company will have complementary strengths to lead the next wave of innovation in converging media and communications industry—combination unlike any other –the world’s best premium content with the networks to deliver it to every screen, however customers want it.

The company will deliver significant benefits for customers like being a stronger competitive alternative to cable & other video provider, will provide better value, more choices, enhanced customer experience for over-the-top and mobile viewing. With ad-supported model in place the cost of content creation will shift more from customers to advertisers, which gives customers the largest amount of premium content at the best value.

Even after so much promising this deal may look but it can fail miserably just like the Facebook zero project of Mark Zuckerberg on the basis of content biasing and other allegations of network neutrality. It all depends now on the telecom regulators as it’s unlikely they would let AT&T put Time Warner's content on its wireless or home Internet platform on an exclusive basis, analysts say. Nor would the government be eager to allow AT&T to exempt Time Warner programming from cellular data caps. A merger like this have 50-50 odds of coming upon to the final stage.

Even if AT&T doesn't buy Time Warner, it could buy other programming companies over the next three to five years, to become a producer of programming, shifting its business model so that it owns some of the content it distributes.

The Big Billion (Data) Breach

By: Gursahib Singh Buttar

Last week on Thursday, 20^th October 2016, whole nation faced the biggest data breach till date for debit card details of nearly 3.2 million card holders of multiple financial platforms and banks. Of 3.2 Million debit cards, 2.6 Million are powered by Visa or MasterCard and rest 600,000 work on India’s own RuPay platform. The biggest banks hit by this breach includes State Bank of India (SBI), HDFC Bank, Yes Bank, ICICI Bank and Axis bank. All the banks have released reported the breach to RBI and the rest are requested to check for breach and report it immediately.

Hackers specifically used a malware to compromise the Hitachi Payment Services platform –which is used to power country's ATM, point-of-sale (PoS) machines and other financial transactions, to steal details debit cards. It is not yet clear who is behind the cyber-attack, but the reports are filed that a number of affected customers have observed unauthorized transactions made by their cards in various locations in China.

Bank cards which use Magnetic Stripe transmit your account number and secret PIN to merchants, could make it easy for fraudsters to hack them, making these cards easier to clone. Whereas, banks who are using EMV (Europay, MasterCard, and Visa) chip-equipped cards (better known as Chip-and-Pin cards) store your data in encrypted form and only transmit a unique code (one-time-use Token/Password) for every transaction, making these cards more secure and lot harder to clone.

SBI CTO Shiv Kumar Bhasin said: "It's a security breach, but not in our bank's systems. Many other banks also have this breach—right now and since a long time. A few ATMs have been affected by malware. When people use their card on infected switches or ATMs, there is a high probability that their data will be compromised."

MasterCard also denied that its systems were breached, issuing the following statement: "We're aware of the data compromise event. To be clear, MasterCard’s own systems have not been breached. At MasterCard, safety and security of payments are a top priority for us and we're working on the investigations with the regulators, issuers, acquirers, global and local law enforcement agencies and third party payment networks to assess the current situation."

SBI, have announced that they'll re-issue compromised 600,000 debit cards free of cost, which could take up to 3 weeks to do so. Others banks on the other hand, have urged their customers to change their ATM PINs and avoid using ATMs of other bank along with some important instructions. You can check these instructions here, published in Hindustan Times.

Meanwhile, the Payments Council of India has ordered a forensic audit on the Indian bank servers to measure the damage and investigate the origin of the cyber-attack. Bengaluru-based payment and security specialist SISA will conduct the forensic audit.

Flipkart.com Going Offline

By: Priyanka Yadav

E-commerce marketplace Flipkart, which touched the 100-million registered user mark last month, is considering options including opening brick-and-mortar stores in small cities as part of a so-called online-to-offline (o2o) strategy to attract more shoppers.

With an aim to increase its customer base, the new strategy will target remote parts of the country where awareness about e-commerce is low and users have inconsistent and limited access to the Internet. The proposed offline stores will be set up in the remote parts of the country and will enable Indian users to access Flipkart products, even with a limited access to the internet.

Flipkart’s engineering chief Ravi Garikipati confirmed that the company is working on the assisted commerce initiative, adding that the plan is still at a very early stage. The o2o strategy could take a different shape in the coming months, he added. Speaking about the development, he, mentioned, “Basically we want to have some sort of a connect with the offline world as well—this is one of our upcoming initiatives, but it’s not something that’s out there yet. As we are looking ahead and trying to grow the market and win over the next 3-5 years, there are a few things we need to do.”

Flipkart through this move is trying to promote assisted ecommerce through this initiative, thereby attracting more customers, according to a sources close to the development. In the next 3-5 years, the company does plan to add offline businesses to its portfolio under its expansion plans.

The company recently forged an alliance with e-commerce start-up StoreKing as part of its o2o strategy. Flipkart, however, is not the only e-commerce company betting on o2o. Amazon India has also signed a partnership with StoreKing, which has a presence in more than 10,000 rural outlets across south India.

E-commerce companies in India have largely struggled to expand the market this year, and investors who were betting that India would create the world’s next Alibaba have had to temper expectations amid valuation markdowns and a slowdown in funding.

Online retail sales fell to an annualized $12 billion in June compared with $15 billion in December, according to estimates by research and advisory firm RedSeer Management Consulting.

What it means is that we have folks who essentially spend some time on our website and then when they reach any store, we (want to) have the technology that can tag them as somebody who I know is interested in a particular product and spent so much time on the Web trying to understand what it is. So, it’s online-to-offline there,” said Garikipati

Ude Desh ka Aam Nagrik: An Initiative by Indian Government

By: Simarjeet Singh

The Government has started the Ude Desh ka Aam Nagrik (UDAN) scheme under the regional air connectivity (RCS) scheme in which the fares on the flights will be capped at Rs 2,500 for 1 hour, allowing only one operator to fly on a RCS route for three years. On Friday the Government invited initial proposals from operators to fly to airports which do not have regular flights.

This scheme will be funded by imposing a fee on aircraft landing at bigger airports. Aviation secretary RN Choubey on Friday said the levy, "which will be a very nominal one" will be announced by the month-end. It is estimated that if airlines pass on this levy to flyers, the increase in cost per ticket is unlikely to be more than Rs 60.

Aviation minister Jayant Sinha said. "We have taken three crucial steps to strike a balance between affordability for the common man and profitability for regional operators. Firstly, successful bidders will now have exclusive rights to operate on a regional route for three years, up from the previous plan of one year. Secondly, a UDAN flight operating from a small city to a metro like Delhi or Kolkata will have to pay no airport charges at the bigger airport. And finally, we have made it possible for entrepreneurs to lease planes in small numbers also to become regional operators. Earlier it was not possible to do so,"  

Operators have a six-week window (till December 2) to submit their initial proposals. The Government will take two-three days to scrutinise the proposals and the entire process is likely to take 10 weeks to complete. The aviation minister is hoping to have first flight (under RCS) by January.

The Aviation minister said that India has 16 airports not being utilised to their fullest, which get less than seven flights a week. "These include places like Agra, Gwalior, Allahabad and Tezpur. Then there are 15 to 20 airports which are ready but don't get regular flights (like Jaisalmer). From January, 30 airports will be ready to receive regional flights under UDAN scheme."

The UDAN scheme will promise new routes and more passengers for the marquee airlines and other leading airlines and on the other hand for the fresh airlines, there is the opportunity of new and scalable business. Airport operators will also see their business expanding. So it will also a push to our manufacturing sector as well as make in India.

However, the industry’s response to the proposals was not up to the mark. While Ashwani Lohani, Chairman and Managing Director, Air India, said his airline will “definitely” participate, Phee Teik, Chief Executive Officer, Vistara Airlines, said the airline will be able to make a comment on whether the policy was good or bad only after going through it.

Ajay Singh, Chairman, SpiceJet, while honouring the Government’s initiative felt that there were some issues with the scheme which he will raise with the Government and hoped that they would be resolved

“One of the major issues is slot availability because small towns must connect with large towns. At the big airports like Mumbai, Delhi, Bengaluru, Chennai and Hyderabad slots must be available for RCS. Private operators (of airports) have traditionally been reluctant to give such slots. We will see whether they provide them or not. Besides, it is not clear if the concessions are provided at the smaller and larger airports. That impacts economic viability of the whole project,” he added.

MakeMyTrip–Ibibo Travel Merger by Year End

By: Himanshu Modi

MakeMyTrip and Ibibo are merging, is what appears to be a consolidation of the two largest online travel players in India. The all-stock deal values the combined company at $1.5 billion, according to a source familiar with the deal. The deal will add popular online ticketing websites such as, goibibo.com and redbus.com, to MakeMyTrip's portfolio, which owns the flagship brand and the alternate accommodation site Rightstay. Analysts see the value of the deal at $720 million. Nasdaq-listed MakeMyTrip had a market capitalisation of about $861.3 million as of Monday's close. The transaction is expected to close by December 2016 and is subject to shareholder and regulatory approvals. Following the transaction, Naspers owned Ibibo will be merged into MakeMyTrip, and the Naspers-TenCent combine will become the single largest shareholder in the combined, listed entity, with 40% stake. Chinese OTA Ctrip, which invested $180 million into MakeMyTrip in January 2016, will own around 10% stake in the entity following the merger, after its convertible debentures are converted. MakeMyTrip said on Tuesday that the ibibo deal would help "unlock meaningful synergies". “Today’s announcement is a significant step forward for the rapidly growing travel industry in India... There are three well established brands, each a leader in their space that we value. These include MakeMyTrip, GoIbibo and RedBus and on the internet it is very important that you keep brands that add value and grow them and we are quite clear we would want to play to the advantage of each of these brands. If you look around the world, you will see keeping established brands have helped," said Makemytrip Group CEO Deep Kalra said in a statement. The combined company will command a market share of about 20 percent of the Indian online flight bookings, MakeMyTrip said on a call with analysts on Tuesday. The combined company's market share in online hotel and bus bookings will be in single digits, the companies added. Reuters report citing an analyst said the online travel market in India is estimated to be about $10 billion in terms of gross booking value. MakeMyTrip has been facing increased competition in its hotels booking business from established Indian companies such as Cox & Kings Ltd, Thomas Cook (India) Ltd and new entrant such as OYO Rooms. It has missed profit estimates for the last seven quarters partly due to higher marketing costs, says a report in Reuters. The report estimates the company to register a loss of 63 cents and revenue of $50 million in the second quarter. The deal could help the company bring down the costs. "This could give a clear strategic advantage to the combined entity on multiple counts – category level dominance which could lead to better bargaining power, back end integration helping in reducing overall costs and enhancing the scale of operations," Sreedhar Prasad, partner, e-commerce, research and consultancy firm KPMG, has been quoted as saying in a report in moneycontrol.com. This signals consolidation in the sector and this is good for the companies as it will bring down the desperate discount battles for market share. "The last 12 months had seen heavy discounting on the hotels segment as competition between these two OTAs had intensified. So, we expect less discounting and more sanity to prevail in hotel pricing and hence margin improvement for all travel players," said Bajpai of ixigo. According to Bajpai, customers and suppliers will benefit from more integrated product offerings, but at the same concentration of market share may impact pricing negatively for both suppliers and customers. "The customers may feel the pinch as the discounts may lessen though they may not be done away with completely. Suppliers may be affected as commissions would become higher," he said, adding the narrative in the online travel space will change from discounting to innovation in 2017.

13th Annual Sports Meet

The 13th Annual Sports Meet organised by GGSIPU

May the Best on the field win. May the true Sportsperson win.

The Kashmir Issue: Origin and Consequences.

By: Kartik Gupta

India pulls out of the SAARC summit​­-The news trending recently reflects the latest response of the Indian government with respect to the recent terror attacks at Uri by Pakistan based terrorist groups.   We've seen people pouring their discontent strongly over social media by posting statuses, tweets etc. condemning the violence near the town of Uri. But it's alarming to see how many people are still not clear as to what is the root of these unfortunate events in the beautiful valley of Kashmir.   A myopic view to the issue among many is that Pakistan has no right over Kashmir and India is the lone country that has any claim over the valley. This is true but the issue is not as simple as it is perceived to be. Through this article I aim to bring a clear picture about what exactly is the issue and what went wrong.  

 After the partition of India and Pakistan, as we all know democracy was established and all the 560 princely states had to sign an "Instrument of Accession" under the Government of India Act (1935) and the Indian Independence act (1947). At that time, Jammu and Kashmir was being ruled by ​Maharaja Hari Singh​ and he too was presented with the same instrument as was  presented to the other princely states. 

Hari Singh wanted his state to remain independent, for which he signed a stand­still agreement which stated that J&K need some time to think. Neither Pakistan nor India was ready to accept an independent Jammu and Kashmir. Few years later, there was a revolution by Muslims in the western part of Kashmir (Muzaffarabad). J&K was connected to India through a district of the Punjab, but its population was 70 per cent Muslim and it shared a boundary with Pakistan. Hence, it was anticipated that the Maharaja would accede to Pakistan when the British paramountcy ended on 15 August.   

When he hesitated to do this, Pakistan launched an attack by which they meant to frighten its ruler into submission. Hari Singh tried to counter the invasion but failed. As a result,on 26  October Maharaja appealed to Lord Mountbatten (the last Viceroy Of British India and First  Governor General of Independent India.), for assistance, Lord agreed on a condition that the  ruler accede to India. The ruler signed the accession. Indian soldiers were immediately transfered to Srinagar. India and Pakistan began their first war Indo­-Pak war 1947 in less than three months of coming into being as independent states.    

Local tribal militias and the Pakistani forces moved to take Srinagar but on reaching Uri they encountered defensive forces. Indian and Pakistani armies entered the war subsequently. The fronts solidified gradually.    

India approached the United Nations, asking it to solve the dispute. On 1 January 1949, a cease­fire line separating the Indian­ and Pakistani­ controlled parts of Kashmir was formally put into effect. In 1972, the then ­current border between the Indian­ and Pakistani­ controlled parts of Kashmir was designated as the "Line Of Control"

Subsequently the UNCIP charter was signed which called for the withdrawal of Pakistani forces from the valley and only after that would the Indian troops withdraw. Also the condition of plebiscite was subject to the conditions that must be fulfilled by both the nations, but as we know that never happened.  Pakistan tried to impose a military solution to J&K yet again in 1965 by instigating a war against India. By imposing a war, Pakistan negated the very purpose of the cease fire that was initiated by the UNSC in 1948, thus rendering the UN verdict useless.

Now, we're talking about going to war with Pakistan. But that is simply not an option because of the consequences on world peace. It won't be a reach to say that it may result in triggering a World War III mainly because of China's involvement with Pakistan in relation to the CPEC, (It is a $46 billion investment in Pakistan by China to build a trade route all the way from Kashghar in  China’s Xinjiang province to Gwadar port in Pakistan’s Balochistan province.). Also, the repercussions of the Sino­Indian war of 1962 doesn't help for India.    

Some argue that US will come to India's aid but that may not be true given the fact that it's  estimated that China's economy will overpower US economy and also the quantum of US debt  that China holds. Thus, it may verbally condemn the actions of Pakistan, but as far as the  question remains as to whether they would stand beside us in case of a military attack is still  under ambiguity. Same is the case with Russia.    

So, now we are in a fix and as much as we criticize the government for not taking a more aggressive approach towards this issue, it's also imperative that we understand the complexities behind it. People may argue that going to UN in 1948 was a premature step and that India had a good leverage and could've brokered a better deal when they signed the Shimla Agreement of 1972, the point remains that what's done is done and still there is no credible solution to this  issue.  

Infosys cuts revenue guidance

By: Priyanka Yadav

Infosys lowered its guidance for the second time in a fiscal, a move unprecedented in the company's history, hurt by volatile macroeconomic conditions in Europe post the Brexit vote, cancellation of a project with a major client and slower ramp-up in large deals.

India’s second largest software services exporter, Infosys, pulled down is revenue growth guidance for the current financial year to 8-9%, whereas it opened the year with a 11.5-13.5% forecast. Just a few weeks back Infosys had shrunk the revenue growth projection for the year to 10.5-12%. Shares of the company fell as much as 4.3% to Rs 1,007 in morning trade on BSE on Friday.

IMPACT

The cut in guidance meant Infosys was back to single digit growth rates, something that plagued the company between 2011 and 2014 before chief executive Vishal Sikka took over. It also casts doubt on the former SAP executive's plan to achieve the ambitious target of $20 billion annual revenue, 30% margins and $80,000 revenue per employee for the Bengaluru-based company by 2020.

"While we continue to navigate an uncertain external environment, we remain focused on executing our strategy and increasing momentum of our software plus services model. Considering our performance in the first half of the year and the near-term uncertain business outlook, we are revising our revenue guidance." Sikka said in a statement.

INFOSYS VS TCS

Infosys' sequential revenue growth was, however, better than its larger rival TCS, which reported 0.27% rise in revenue on Thursday, due to a drop in revenue from its banking, financial services and insurance (BFSI) clients in the US, softness in the retail segment and volatility in its India business.

EFFECT

Analysts widely expect this trend to negatively impact other Indian IT services company as well given the slowdown in technology spends in the BFSI segment, which brings in a majority of the revenue. Financial services companies in the US have been under pressure over the last few years as interest rates remain at record low levels and stricter regulations leave them with little room to manoeuvre.

Net profit rose 3.9% to $539 million from $519 million sequentially while operating margins increased 80 basis points to 24.9% in the same period. "Our margins expanded during the quarter on the back of further improvement in operational efficiency. Operating cash flows for the quarter were healthy and we effectively navigated a volatile currency environment through prudent hedging," " said chief financial officer MD Ranganath.

Indian economy loses $968 million to Internet Ban

By: Anjali Gupta

Brookings' , an independent research firm , based in Washington, studied the economic impact of complete national internet shutdown in the country from 22 disruptions out of the total 81 cases in 19 countries at the same time.

According to the research, the internet disruptions caused a total loss of $2.4 billion worldwide ,over the past year. India was the most affected out of the 19 countries. India suffered 22 internet shutdowns and this wiped out $968 million out of the Indian economy , from July 1, 2015 to June 30 , 2016.

Saudi Arabia lost $465 million followed by Morocco with a total loss of $320 million. Both India and Iraq had 22 cases of internet disruptions. The non- ISIS controlled part of Syria had 8 closely followed by Pakistan with 6 cases and Turkey with 3 . North Korea , Bangladesh, Brazil ,Uganda and Vietnam had 2 cases each.

According to West, the Internet disruptions post severe lags in growth, cost government tax revenue, weakens innovation and undermine consumer and business confidence in a country's economy.

Earlier,  this year, The United Nations Human Rights Council ( UNHRC) passed a non binding resolution condemning the Internet shutdown worldwide.

Samsung’s Note 7 Failure

By: Gursahib Singh Buttar

On 2^nd August, 2016 Samsung unveiled the Galaxy Note 7 at a New York media event, commencing sales from 19^th august in 10 markets. On 24^th august first report of a Note 7 explosion surfaces in South Korea leading to the fire fiasco which everyone knows by now. Samsung tried to rectify the exploding problem by replacing tested batteries, but all in vain as the “safe” replacements that they provided still showed the problem.

The firm announced that it will offer a credit of $100 for exchanging the Note 7 with any Samsung smartphone and also stopped the production and issued a global recall. Reports have surfaced that Samsung might kill the “NOTE” brand name altogether with the production, after a survey by the company reportedly found that over 50% of South Korean users have a negative view of “NOTE” brand.

 Apparently, Samsung’s smartphone shipment to India fall short of target by 4 million units in 2016, as hit by global recall and halt in production of its flagship Note 7 smartphone. While Samsung had unveiled the Galaxy Note 7 in July in India, it delayed selling of the handset in India after cases of battery exploding while charging were reported in various countries, but device was made available in September only.

This Note 7 debacle is going to hit Samsung’s revenue nearly by Rs.6500 crore, shrinking its market share by 4.2 percent and the impact will be spanning all across the other segments too. CyberMedia Research Principal Analyst for Telecoms Faisal Kawoosa said “The issue is faced with the flagship model of the year, that too around festive season and as a result, customers’ confidence is shaken”. He also added “A perception, right or wrong, gets built within the market that if the issue is with the high-end premium model, there could be issues in the other models too”.

The company disclosed on Friday a negative impact of approximately mid-3 trillion won ($3 billion) on operating profit through March 2017, on top of an already announced $2.3 billion cut for the preceding period, being a total of $5.3 Billion Profit Impact from Note 7 crisis. This is another capital loss after Samsung lost the patent case of $120 million to Apple, a week before.  

Samsung Electronics Co Ltd shares opened up 1 percent on Thursday, rebounding for the first time after three straight days of falls following its decision to permanently end sales of its fire-prone Galaxy Note 7 smartphones. Samsung is right now trying to quickly find the cause of the fires that led to it pulling its Galaxy Note 7 smartphones and get a new model to market, as shares in the company slipped to a one-month low.

India-Russia Signed Big Ticket Defence Agreement

By: Simarjeet Singh

India and Russia signed a number of valuable defence deals worth Rs 43000 crores in BRICS Summit 2016 Goa on 15^th October. The big ticket defence deal includes purchase of Anti defence missile systems, frigates and joint production of helicopters besides deciding to deepen cooperation in a range of crucial sectors even as the two close allies resolved to counter the nuisance of terrorism in unison.

The India-Russia defence pact covers the procurement from Russia of four stealth frigates and five units of the S-400 anti-aircraft system, and the announcement of a joint venture for the manufacture of 200 Kamov-226T helicopters in India.

“The S-400 procurement is an example of our commitment to the relationship. We might have a better relationship with the US but it doesn’t change the content of our relationship with Moscow,” top government sources said.

The deal for four Admiral Grigorovich-class (Project 11356) guided-missile stealth frigates will involve the direct supply of two vessels from Russia while another two will be made in India.

Prime Minister Narendra Modi and Russian President Vladimir Putin held wide-ranging meeting covering the entire extent of bilateral engagement following which the two sides signed a total of 16 MoUs and made three announcements to boost ties in sectors like trade and investment, hydrocarbons, space and smart cities.

Addressing the media in the presence of Putin, the Prime Minister appreciated Russia's understanding and support of India's actions to fight cross-border terrorism, an oblique reference to India's surgical strike across the LoC targeting terror launch pads.

"Russia's clear stand on the need to combat terrorism mirrors our own. We deeply appreciate Russia's understanding and support of our actions to fight cross-border terrorism, that threatens our entire region. We both affirmed the need for zero tolerance in dealing with terrorists and their supporters," Prime Minister said.

"These projects are new chapters in a long history of strong and diverse defence partnership that both sides can take much pride in," Prime Minister said.

He said, "We are working to model a partnership that befits our common ambition and meets our shared goals for the twenty-first (21st) century.

Russian Prime Minister on his end, said both countries have close cooperation in fighting terrorism.
Modi said the "highly productive" outcomes of the meeting clearly establish the special and privileged nature of strategic partnership between the two countries.

They also lay the foundations for deeper defence and economic ties in years ahead. The agreements on manufacturing of Kamov 226T helicopters; constructions of frigates; and acquisition and building of other defence platforms are in synergy with India's technology and security priorities.

RCom pact with Brookfield

By: Dhruv Kharayat

Reliance Communications (RCom) has signed a non-binding pact with Canada's Brookfield Infrastructure Group to sell a majority 51 per cent stake of its nationwide tower assets and related infrastructure of Anil Ambani’s company for Rs11,000 crore, making it one of the largest FDI in infrastructure sector. The news sparked a 2.6% rise in the RCom stock. 

RCom, the country's fourth-largest telco, has been seeking to pare its mammoth debt, pegged at Rs 42,000 crore. But the deal for tower assets, which was to have been closed by January 15, has had to be extended with both sides unable to take it to conclusion. As things stand, the entire Rs 11,000 crore will be used to lower RCom's net debt. The combination of RCom's wireless business with Aircel, which has already been signed and announced, will reduce the telecom operator's debt by another Rs14,000 crore. Both the deals combined will reduce RCom's debt to around Rs17,000 crore. 

Under the term sheet, the specified assets are intended to be transferred from Reliance Infratel Ltd. (RITL) on a going concern basis into a separate SPV, to be owned by Brookfield, said a RCom statement. It added that RCom will continue as an anchor tenant on the tower assets, under a long term MSA, for its integrated telecommunications business.

RCom and Brookfield believe expected considerable growth in tenancies based on increasing 4G offerings by all telecom operators, and the fast accelerating trends in data consumption. RCom and Brookfield also see several opportunities for consolidation in the towers industry in India that will further enhance growth and value creation in the future. After investing $2 billion in India since 2009-10 when it set up its local office, Brookfield is planning to invest $2 billion more in the country over the next two-three years to buy out upscale offices and commercial towers, stranded roads, power and utilities infrastructure. With assets under management of $250 billion, Brookfield, listed on the New York and Toronto exchanges, has surpassed Wall Street heavyweights Carlyle, KKR or even Apollo as the world's second-biggest manager of alternative assets.

Analyst believes that RCom financials will improve in FY17 given it does not require any major spend for spectrum or capex in the future, as post the merger with SSTL and Aircel being completed, and with spectrum sharing already implemented with RJio, it has extensive 2G, 3G and 4G networks already operational across the country.

PSLC: A Boost for Income of Niche Indian Banks

By: Divya Vohra

Small finance banks will start operations over next few months and they are planning to use Priority Sector Lending Certificates (PSLC) as a key business opportunity to boot their fee income.

The Priority Sector Lending Certificates are certificates issued by banks that have overreached their priority sector lending targets. PSLCs thus can be issued only up to the extent of their over lening to the stipulated sectors. Buyers of PSLCs are usually those banks who could not meet their priority sector lending targets. The price of PSLCs will be determined on the basis of demand and supply that will be reflected in the auction under the RBI’s e-Kuber trading platform.

As per the RBI guidelines, banks can issue four types of PSLCs including three subsector PSLCs- agriculture, small and marginal farmers, micro enterprises and one PSLC for general.

The RBI guidelines explains the objective of PSLCs and their trading “To enable banks to achieve the priority sector lending target and sub-targets by purchase of these instruments in the event of shortfall and at the same time incentivize the surplus banks; thereby enhancing lending to the categories under priority sector.”

  

Sellers and buyers of PSLCs are: Scheduled Commercial Banks (SCBs), Regional Rural Banks (RRBs), Local Area Banks (LABs), Small Finance Banks (when they become operational) and Urban Co-operative Banks who have originated PSL eligible category loans subject to such regulations as may be issued by the Bank.

"It will be an important source of consistent quarterly fee income, as 90℅ of our portfolio sector lending towards priority sector lending," said H.K.N. Raghavan, chief executive officer of Equitas Small Finance Bank.

In April 2015, the RBI changed the review period of priority sector lending of banks from annual to quarterly.

"Tenure will decide the pricing of the certificates as it will be used by banks for bridging the gaps in the priority sector targets. For a small finance bank perspective, it is a good fee earning opportunity," said Rajeev Yadav, chief executive officer of Disha Microfin Pvt ltd.

Alok Prasad, former chief officer of Microfinance Institutions Network added, "Selling PSLCs with microfinance loans as the underlying assets is a narrow, short-term opportunity. Looking ahead, the needs is to be able to build a balance sheet with the full range of PSL assets, as per RBI's norms".