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1. Standard Chartered Axes 15,000 Jobs, Announces $5.1 billion Capital Raise
Asia-focused British bank Standard Chartered said Tuesday it would axe 15,000 jobs and raise $5.1 billion in capital after posting a “disappointing” third-quarter loss, as it struggles to return to growth.
The job losses are part of a major restructuring that will cost around $3 billion, the bank said.
The bank reported an unexpected pre-tax quarterly loss of $139 million compared with a $1.53 billion profit a year earlier, in a performance described as “disappointing” by group chief executive Bill Winters. Revenue was down 18.4 per cent to $3.68 billion and impairment losses increased from $536 million to $1.23 billion for the quarter.
2. Government Looks at 3 Options to Reduce Stake in IDBI Bank
The government is looking at three options to shed its stake in IDBI Bank and lower it to 49 per cent, in the first such exercise in the public sector banking space.
While no decision has been taken, sources said the easiest way to deal with the reduction in stake is to sell shares in small lots to the public through the stock exchange route. But the mode is seen to be time consuming and may not realise the best value for the government as the market would be able to beat the stocks.
The other option is to get state-run insurance companies, including Life Insurance Corporation, and other pension and provident funds to buy the shares at a premium. The third option is to look at the Maruti model of 2005-06, where the government had sold the shares to state-run entities such as State Bank of India through an auction process. Among the institutions, LIC already holds close to 6 per cent in IDBI Bank.
3. IKEA Seeks More Time to Meet 30% Mandatory Local Sourcing Norm
IKEA has told the Indian government it will need more time to meet the 30 per cent mandatory local sourcing rule because of its sustainability pledge, said chief executive Peter Agnefjall, who met Prime Minister Narendra Modi on Tuesday.
“Reaching 30 per cent local sourcing within five years from store opening will be tough, a real challenge, but it’s definitely doable,” he said in an interview to ET on his first visit to India as CEO. The company’s first store in India is likely to open in Hyderabad in 2017.
IKEA wants to use wood for the furniture that it sells from supplies that are being replenished and has been unable to find such raw material in India.
4. TinyOwl to Lay Off Another 100 Staff as it Scales Back from Four Cities
Online food-ordering startup TinyOwl has decided to lay off another 112 employees—its second round of staff cuts in two months—as part of a restructuring aimed at reducing expenses, cofounder and chief executive Harshvardhan Mandad told ET.
In September, TinyOwl laid off about 200 employees. The latest staff cuts will be in marketing, sales and human resources teams in Delhi, Hyderabad, Chennai and Pune.
After the latest layoffs, TinyOwl expects its total employee count to drop from around 1,000 earlier this year to around 650. The company in February raised Rs 100 crore in a funding round led by Matrix Partners, with Sequoia Capital and Nexus Venture Partners participating. TinyOwl also counts Snapdeal founders Kunal Bahl and Rohit Bansal as investors.
5. Adidas Gets Nod for Own Stores, Franchise Format to Co-Exist
German apparel major Adidas has been allowed to operate fully-owned stores in the first major approval by the National Democratic Alliance government for 100 per cent foreign direct investment single-brand retailing in India.
Adidas, in the news earlier for alleged fraud at Reebok, a brand it owns, made its application to the department of industrial policy and promotion in July.
The seller of sports shoes, clothing and accessories present in the country through franchises for two decades can now operate both fully-owned stores as well as franchise outlets in the country. So far, the single-brand retail policy did not permit a combination of business, and international chains were told to choose between fully-owned and franchise stores.
Nike was earlier turned down by the government, and it subsequently re-applied.
6. This Year, IPOs a Mixed Bag
The initial public offerings (IPOs) this year have been a mixed bag. The stock prices of eight of the 16 companies listed this year through the IPO route are below their issue prices. Interestingly, these eight companies had ended with losses on the day of their trading debut.
Coffee Day Enterprises, which operates the Café Coffee Day chain of restaurants, is the latest addition to the list of companies that have seen their share price slip below the IPO price. Meanwhile, experts say the listing day performance of InterGlobe Aviation and SH Kelkar will be critical in shaping investor appetite towards future IPOs. InterGlobe, which owns the country’s most profitable airline IndiGo, and SH Kelkar, the country’s largest fragrance maker, successfully managed to close their Rs 3,000-crore and Rs 500-crore IPOs, respectively, last week.
7. India Beats US Again, is World No. 1 in Consumer Confidence, Says Nielsen
India continued to lead the global consumer confidence index in the third quarter with 131 points, same as the previous quarter. It is followed by United States (119 points), Philippines (117) and Indonesia (116). Although more than 54 per cent polled said India’s economy is still in the slowdown zone, its consumer confidence score remained intact at 131, said global information and insights provider Nielsen. In the June quarter, 50 per cent people had expressed that they feel India is still in ‘economic recession’. “However, this quarter 67 per cent indicate that India will be out of the recession over the next 12 months, as against 61 per cent last quarter,” the report said.
8. Ratan Tata Puts Money in California-Based Wi-Fi Carrier
The list of Ratan Tata’s financial investments in new-age companies is getting longer by the day. The septuagenarian’s latest pick has been Sabse Technologies, a California based Wi-Fi carrier, founded by Hotmail.com’s co-founder Sabeer Bhatia. This deal comes days after Tata’s investment in US-based virtual currency company Abra.
“Ratan Tata possesses extensive experience in the telecom industry, having built Tata Communications into a leading global company. His expertise and insight will be immensely helpful as Sabse expands its Wi-Fi first cellular service to consumers worldwide,” stated Sabse Technologies.
Tata, through his investment company, RNT Associates, invests anywhere between a few lakhs and Rs 10 crore in promising startups. Some of his investments such as Ola Cabs, Snapdeal, Xiaomi and Paytm today are worth billions of dollars. Tata had said that he looks at the quality and intelligence of the entrepreneurs while making investments.
9. Banks’ Bad Loans to Slow Down, Green Shoots Visible
Fitch Ratings on Tuesday said the growth in non-performing loans (NPLs) of the Indian banking system will slow down in the current fiscal and some green shoots are visible with regard to their asset quality. “Fitch Ratings expects Indian banks’ stressed asset ratio to improve marginally to 10.9 per cent in the current fiscal from 11.1 per cent in FY 2014-15,” it said in a report on Indian banks’ asset quality.
It said the growth in new NPLs would slow down further with cyclical recovery, and a moderate pick-up in loan growth will also provide a support. “The stress in structurally weak sectors has not entirely subsided, though we believe that banks will use the available recourse to restructure and reschedule sector-specific loans,” it said.
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