QBiz: SoftBank Files $1 Bn Loss in Snapdeal; Markets Surge

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

1. SoftBank Logs $1.4-Bn Loss in Snapdeal, Ola

Japanese telecom and internet giant SoftBank has written off nearly $1 billion in the value of Snapdeal (its best asset in India till recently), as it pushes to offload the Kunal Bahl-led company onto larger rival Flipkart.

In its annual filings on Wednesday, the Tokyo-based multinational also wrote off $400 million in the value of taxi aggregator Ola – the second-largest investment in India for Masayoshi Son-led company. Valuation has been a roadblock for the proposed merger of Snapdeal with the country’s largest e-commerce player Flipkart.

At its peak, Snapdeal was valued at around $6.5 billion, but at the current deal table, lead investors want to settle the transaction at no more than $1 billion. While the co-founders Bahl and Rohit Bansal are resisting the merger at that value, an early-stage investor in Snapdeal – Nexus Venture Capital – has used its veto power to block the deal so far. But things may change now, said analysts.

(Source: Business Standard)

2. Markets Scale New Peak on Monsoon Forecast

Equities continue to scale new peaks, defying warnings by many market pundits of a possible consolidation. The S&P BSE Sensex on Wednesday gained 315 points, or 1.05 per cent, to close at 30,248, and the Nifty breached 9,400 for the first time to close at 9,407.3,

90.4 points, or 1 per cent, higher than its previous closing. The broader markets witnessed a similar trend with the mid- and small-cap indices rallying 0.87 per cent and 0.75 per cent, respectively.

(Source: Business Standard)

3. Regulatory Restrictions Loom over 17 Indian Banks, Says Moody's

Seventeen lenders could follow IDBI Bank Ltd. in facing Reserve Bank of India’s restrictions on paying dividends and may be asked by the regulator to raise more capital after a surge in soured debt led to slump in profitability, Moody’s Investors Service said.

State-backed IDBI Bank became the first lender to fall under the Indian central bank’s so-called Prompt Corrective Action announced in April “in view of high net non-performing assets and negative return on assets,” the Mumbai-based bank said in an exchange filing on Tuesday. Rules allow the RBI to mandate a range of measures including requiring the lender’s owners to bring in fresh capital, restricting branch expansion, curtail management compensation and director’s fees.

(Source: BloombergQuint)

4. Paytm Signs Non-Exclusive Term Sheet to Acquire FreeCharge

Alibaba Group-backed Paytm has signed a non-exclusive term sheet to acquire rival FreeCharge, the digital payments platform owned and operated by beleaguered online marketplace Snapdeal, in what is expected to be an all-cash deal.

Paytm will begin financial and commercial due diligence of FreeCharge next week, according to four people aware of the developments. If successful, the deal, estimated at between $45 million and $90 million, could be finalised in a month, said one of the sources.

(Source: The Economic Times)

5. ArcelorMittal Re-Elects LN Mittal On Board For Next Three Years

Shareholders of ArcellorMittal on Wednesday re-elected founder Lakshmi N Mittal along with two others to its board for the next three years.

Mittal is the chairman and chief executive officer of the world's largest steelmaker ArcelorMittal with an annual revenue of $56.8 billion and crude steel production of 90.8 million tonnes.

"The shareholders re-elected Lakshmi N Mittal, Bruno Lafont and M Wurth as directors of ArcelorMittal for a term of three years each," ArcelorMittal said after its annual and extraordinary general meetings held at its headquarters at Luxembourg.

(Source: BloombergQuint)

6. Flipkart Hikes Myntra's Annual Budget by 25 per Cent

Myntra.com said that its parent company, Flipkart, had hiked its annual budget by a quarter in a bid to bolster Myntra's position as the country's largest online fashion retailer. The hike comes amid reports earlier this year that Flipkart intends to cut its annual outlay for Myntra.

"This year we got 25% extra money from the Flipkart board," said Ananth Narayanan, chief executive of Myntra that was acquired by Flipkart for $300 million in 2014. He declined to specify Myntra's total annual budget.

Narayanan said Myntra would use the additional money to upgrade technology and to also invest in 3-4 small to medium ethnic brands to ramp up the company's ethnic offerings.

(Source: The Economic Times)

7. Renault Duster Fails Global NCAP Crash Tests

The base variant of Renault India Pvt. Ltd’s Duster, which comes with no airbags, recorded a zero star rating for adult occupant protection in tests conducted by UK-based vehicle safety assessor Global NCAP, but Renault claimed its products “exceed” Indian safety standards.

The absence of airbags means driver injuries would have been unacceptably high in a crash, Global NCAP said in a statement.

The Duster scored 2 stars out of a maximum 5 for rear seat child occupant protection.

(Source: Livemint)

8. Hero-Backed Start-Up Ather Energy Wants to Clone Tesla Charging Model in India

Ather Energy, promoted by India’s largest two-wheeler company Hero MotoCorp Ltd, plans to replicate Tesla Inc.’s charging infrastructure business model in India.

The Bengaluru-based electric scooter maker is preparing a blueprint to install charging stations at malls, restaurants, cinemas, offices and business parks, and have at least some of them ready before its so-called smart electric scooter S340 hits the road in 2018.

Pawan Munjal-promoted Hero MotoCorp picked up a 26-30% stake in Ather Energy through a Rs205-crore “strategic investment” in October 2016.

(Source: LIvemint)

9. The Iconic India Coffee House Brewing Plans for Revamp, Expansion

The iconic India Coffee House is set for a makeover.

The state-run Coffee Board, which operates some 12 India Coffee House outlets in various locations, including Parliament House, is exploring options to revamp and expand as part of its efforts to leverage the brand and promote coffee consumption across the country.

The board intends to go in for a revenue-sharing model and on a minimum investment basis for the proposed expansion.

It has initiated consultations with private players and has sought estimates on the capital expenditure and operational expenses for running a 1,000-1,500 sq feet store and smaller format kiosks of around 200-300 sq ft in 75-100 cities.

(Source: The Hindu BusinessLine)