QBiz: RBI to Sell Rs 10k Crore Bonds; FM Lists Note Ban, GST Gains

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

The RBI headquarters in Mumbai. 

(Photo: Reuters)

1. RBI Plans to Sell Rs 10,000 Crore Bonds in August

The Reserve Bank of India will sell sovereign bonds on 10 August via open market operations (OMO) in the third such sale this financial year to drain excess liquidity from the banking system.

Based on the current assessment of prevailing and evolving liquidity conditions, the Reserve Bank has decided to conduct sale of government securities for an aggregate amount of Rs 10,000 crore, the central bank said in a statement on Friday. The OMO is a liquidity management tool used by the central bank.

Earlier in July, it conducted two OMO sales of Rs 10,000 crore each.

Source: The Times of India

2. Demonetisation, GST to Make Cash Dealings
Tough: Arun Jaitley

The impact of the demonetisation drive and the rollout of the goods and services tax (GST) will make it tough to deal in cash, leading to greater compliance, digitisation and widening of the tax base, Union Finance Minister Arun Jaitley said on Saturday.

“Net impact of the demonetisation exercise coupled with the GST exercise... will certainly lead to greater compliances, greater digitisation. The first signs of greater digitisation, expansion of the base of direct and indirect taxes are already visible,” Jaitley said in his opening address at Delhi Economics Conclave, a gathering of top economists and policymakers.

Detailing the rationale behind taking tough measures, Jaitley said there was a very large amount of tax non-compliance, huge amounts of transactions outside the system, and almost a helplessness in trying to deal with the situation.

Source: The Times of India

3. Telecom Companies May See Earnings Pressure Ease In Q1

Reliance Jio Infocomm Ltd’s decision to start charging customers has eased competition in the telecom industry. This is likely to slow down the pace at which its two listed rivals, Bharti Airtel Ltd and Idea Cellular Ltd, are losing revenue.

Revenue of Bharti Airtel, India’s largest telecom operator, is expected to fall marginally to Rs 21,927 crore, while that of Idea Cellular may fall by 1 percent to Rs 8,063 crore in the first quarter of financial year 2017. It will be the fourth straight quarterly decline for the two companies.

Reliance Jio started charging for services from April 2017 after offering free services for the first six months. Rivals then came out with more unlimited bundled plans. Brokerages expect this to push data and voice usage, though at a lower realisations.

Which means, Bharti Airtel and Idea Cellular will see their blended average revenue per user (ARPU) further decline for the fourth quarter in row.

Source: BloombergQuint

4. Ola Pumps Rs 100 Crore Into Car Leasing Business

Cab aggregator Ola has invested Rs 100 crore in its car leasing subsidiary, Ola Fleet Technologies in a bid to strengthen its position against competitors.

The investment comes at a time when the homegrown firm is locked in an intense battle with US-based Uber for leadership in the Indian market. The proposal for Ola investing Rs 100 crore into Ola Fleet Technologies was accepted by the board of the car leasing arm last month, as per documents filed with the Corporate Affairs Ministry.

The SoftBank-backed Ola had invested Rs 50 crore in the unit in February this year. The company did not reply to an emailed query in this regard.

Source: BloombergQuint

5. Amazon Offers $70-$80 Million for FreeCharge

Online e-commerce giant Amazon has made a late bid for FreeCharge, the digital payments platform owned by troubled e-commerce marketplace Snapdeal, a development that comes at a time when the Gurgaon-based company is also in discussions to sell its payments unit to Axis Bank and telecom operator Bharti Airtel’s mobile wallet Airtel Money.

According to two sources aware of the development, Amazon’s bid is in the range of $70-$80 million (Rs 466 crore - Rs 532 crore), with a term sheet signed by the Seattle-headquartered e-commerce behemoth and Jasper Infotech, which owns and operates both Snapdeal and Free-Charge, last week.

Source: Economic Times

6. Snapdeal Sale to Flipkart Hits Roadblock as Founders Want Infibeam Buyout

The board of struggling online marketplace Snapdeal (Jasper Infotech Pvt Ltd) is again divided about the company’s proposed sale, casting doubt about its future.

Snapdeal co-founders Kunal Bahl and Rohit Bansal are pushing for a sale to Infibeam Inc. or getting Snapdeal to survive as an independent company by cutting both a majority of jobs and the size of its business, two people familiar with the matter said.

Snapdeal’s largest investor SoftBank Group Corp, on the other hand, continues to push for a sale to bigger rival Flipkart, the people said, requesting anonymity.

Infibeam, the only listed Indian e-commerce firm, made an offer of roughly $700 million in stock for Snapdeal last week, they said.

While that is lower than Flipkart’s $850-million bid, Bahl and Bansal are keen on selling the company to Infibeam as they may retain control of Snapdeal in that case, the people said. Whereas, the two entrepreneurs would have to leave Snapdeal if the sale to Flipkart goes through, the people said.

Source: Livemint

7. India Inc Pay Gap: CEOs
Earn up to 1,200 Times
of Average Staff

A huge pay gap between CEOs and other employees at Indian companies has come to the fore, with the biggest listed blue-chip firms doling out to their top executives salary packages of up to 1,200-times of their median employee remunerations.

An analysis of remuneration disclosures made by top listed companies forming part of the blue-chip index Sensex – under directions of the capital markets regulator Sebi – shows that the pay packages of senior-most personnel such as CEOs and executive chairmen continue to remain high and rose further at most private sector firms during 2016-17.

On the contrary, the median employee remuneration fell or remained almost same during the last fiscal, while the ratio of the top executive’s pay to the median employee remuneration remained at astronomically high levels of hundreds-times in many cases.

Source: PTI

8. Jet Airways Asks Junior Pilots to Furnish Rs1 Crore Bonds

Jet Airways has asked junior pilots to furnish surety bonds worth up to Rs 1 crore and serve the airline for at least five to seven years, union officials said.

The development comes at a time when many of its junior pilots have been asked to take 10 days off every month, a move that would result in up to 30 percent pay cut, as part of cost saving measures.

Officials at the National Aviator’s Guild (NAG), the pilots’ union of Jet Airways, said the bond requirement has been communicated to the junior pilots.

These pilots have been asked to furnish surety bonds worth Rs 1 crore and the development also comes as the airline has “unilaterally” decided on salary cuts for them, officials told PTI.

Source: PTI

9. KKR, Warburg Pincus Show Interest in Air India Privatisation

Private equity funds KKR and Co and Warbug Pincus are the latest to express interest in acquiring Air India’s businesses, according to two people directly aware of the development.

The two buyout firms have separately sought details of the proposed privatisation process of the national carrier that was cleared by the cabinet in end June, the people cited above said on condition of anonymity.

“Air India’s businesses make attractive investment opportunity for the PE funds,” said one of the two people. “However, the discussions are currently at a very early stage and will expectedly gain momentum once there is further clarity on the divestment process.”

A successful sale of Air India will hinge on whether the government writes off a part of the airline’s debt,which stood at Rs 48,876.81 crore as of 31 March.

Source: Livemint