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Updated: 52 min 49 sec ago

Beleaguered Jet finds suitors, but each edgy over detail

52 min 49 sec ago
MUMBAI: Jet Airways has received 6-7 initial bids or expressions of interest for the planned sale of its Jet Privilege rewards programme, said a person with knowledge of the matter.The potential investors were “global PE firms”, he said. However, all of them want more information about the airline’s revival plan, he added. The cashstrapped airline is seeking to sell stakes in the programme in order to raise funds.TPG Capital and Blackstone, which were said to have been in advanced talks for a stake purchase in the rewards programme, have now slowed down, seeking more clarity on the survival strategy of the beleaguered carrier, he said.Jet Airways owns 49.9% of Jet Privilege (JPPL). The rest is held by Etihad Airways, which also owns close to a quarter of Jet Airways. “They are satisfied with Jet Privilege but want to know the future of its airline parent, its plans of survival and business transformation. Just the fleet induction plan of adding 225 aircraft over the next decade is not enough,” said another person close to the development, referring to Jet’s Boeing order. 66279592 He added the plan was to finish the sale of Jet Privilege this December but it may now spill over to next year. Jet Airways has also extended the last date for the submission of bids from October 12 to the end of this month as it waits for more interested parties to apply.“Jet Airways has already developed its turnaround plan and your assumption of time frame beyond this year is totally incorrect,” said a spokesman of the airline, without elaborating.The carrier has appointed boutique investment bank Moelis & Co to manage the stake sale. Jet hasn’t publicly disclosed a valuation for its loyalty programme but to potential investors it has cited a report by global independent consultant On Point, which has pegged it at $1.13 billion. Jet Privilege was ranked at 31, ahead of Etihad’s loyalty business at 38, with a valuation of $765 million.Etihad bought its stake in JPPL in 2014, valuing it at $300 million. Memberships have trebled since then to 8.5 million from 2.8 million. JPPL posted a net profit of Rs 100 crore for the fiscal year ended March 31 with revenue up 25%. Meanwhile Jet’s planned stakesale in the airline is said to be facing problems too, with interested parties seeking a controlling stake, which it’s not ready to cede, said a second person in the know. Jet’s chairman Naresh Goyal currently owns 51% in the airline.The airline’s “stake-sale plans are on track,” the spokesman said, confirming for the first time that the “recapitalisation plans” it had spoken about involve divestment. There has been speculation of Jet wooing Delta Air Lines as well as Air France-KLM, which are its commercial, non-strategic partners.Jet Airways is currently going through one of its toughest financial phases and has delayed salaries multiple times this year. In August, senior management took pay cuts of as much as 25%.Earlier this month, credit rating agency ICRA Thursday said it had downgraded Jet Airways’ longterm debt. Jet is also facing investigation by the Ministry of Corporate Affairs over complaints about allegedly irregular transactions.Also, earlier this year, the country’s biggest lender State Bank of India said the airline was on its stressed loans list, which denied by Jet. The carrier then deferred its earnings announcement, saying auditors hadn’t presented them to the board. Jet later clarified it had sought more time from them.
Categories: Business News

At least 50 dead in train tragedy in Amritsar

52 min 49 sec ago
In a tragic accident, at least 50 people died and many got injured when a train run over them while they were celebrating Dussehra. The accident happened near Joda Phatak area of Amritsar a short while ago.A large number of people were watching the Ravan effigy in flames while standing along the railway tracks when the train crushed them.They reportedly could not hear the hooting of the train due to the exploding crackers. #WATCH The moment when the DMU train 74943 stuck people watching Dussehra celebrations in Choura Bazar near… https://t.co/ryoSXyy5Bw— ANI (@ANI) 1539960798000 Witnesses said the dead included children. There were reportedly around 700 people at the accident spot; new wire agency PTI however claimed that there were 300 at the spot.The injured have been taken to hospital and the toll is expected to rise further. #Punjab: Eyewitness say, "The administration and the Dussehra committee are at fault, they should have raised an al… https://t.co/q5c4UmC3Ba— ANI (@ANI) 1539960204000 TV news channels quoted some eyewittnesses claiming that Navjot Singh Sidhu and some other state leaders were present at the event when the accident happened.There is no news as of now as who organised the event and how the event was allowed so near the railway tracks. #Punjab: Police says, "There are more than 50 casualties. We are evacuating people, injured taken to the hospital",… https://t.co/4z4kNxyqOI— ANI (@ANI) 1539959784000 The train was coming from Jalandhar to Amritsar.A spokesperson of Northern Railway told ANI that the incident happened at gate no. 27 b/w Amritsar and Manawala. " As Dussehra celebration was taking place some incident had occurred and people started rushing towards closed gate number 27 while a DMU train number 74943 was passing the closed gate," the spokesperson was quoted as saying.With IANS Inputs
Categories: Business News

IL&FS Investment Managers' non-executive director Vibhav Kapoor resigns from board

52 min 49 sec ago
NEW DELHI: IL&FS Investment Managers Ltd Friday said non-executive director Vibhav Kapoor on its board has resigned."We hereby inform that Vibhav Kapoor, non-executive director of the company has resigned as a member of the board of directors," it said in a regulatory filing.The company did not give the reason for his resignation.This is in continuation to a spate of resignations of the board of directors from IL&FS and its group firms ever since the loan defaults started arising nearly a month ago.Independent directors of IL&FS Financial Services - Renu Challu, Surinder Singh Kohli, Shubhalakshmi Panse and Uday Ved have earlier stepped down.On October 3, IL&FS Engineering and Construction Company had announced the resignation of its Managing Director Murli Dhar Khattar.The IL&FS group is facing serious liquidity crisis and has defaulted on interest payment on various debt repayments since August 27. It has over Rs 91,000 crore in debt at the consolidated level.There are concerns that default by a large NBFC like IL&FS will create liquidity crunch in the financial markets.The country's largest lender SBI as well as insurance behemoth LIC, who are key shareholders in IL&FS, have come to the rescue of the debt-ridden IL&FS group to avoid the contagion effect that may arise if the group collapses.SBI (with 6.42 per cent stake) earlier this month said that it will buy good assets worth Rs 45,000 crore from IL&FS, while LIC (the largest shareholder at 25.34 per cent) is expected to up its stake further in the company.Among others shareholders of the IL&FS are Orix Corporation of Japan at 23.54 per cent, The Abu Dhabi Investment Authority 12.56 per cent, HDFC 9.02 per cent, and Central Bank of India 7.67 per cent.The RBI also had to intervene in the matter and has announced measures to boost capital flow to the NBFC sector.The regulator came up with further boost for the sector and allowed banks to use government securities equal to their incremental outstanding credit to NBFCs, over and above their outstanding credit to them as on October 19, which can be used to meet liquidity coverage ratio requirements.The RBI, it is learnt, also met with the large shareholders IL&FS in late September to decide on revival and capital infusion plans for the company.The government took over the management of IL&FS on October 1, following approval from the National Company Law Tribunal and have appointed six nominees on its board headed by banker Uday Kotak of Kotak Mahindra Bank.Kotak is the non-executive chairman of the new board and the other five members are former Executive Vice Chairman of Tech Mahindra Vineet Nayyar, former Sebi Chairman G N Bajpai, ICICI Bank Non-Executive Chairperson G C Chaturvedi, and IAS officer Malini Shankar, and retired bureaucrat Nand Kishore.The IL&FS Financial Services MD&CEO Ramesh C Bawa had resigned from the company on September 22 because of the loan defaults and corporate governance issues followed by resignations from several independent directors.Kapoor, who was also the non-executive director of IL&FS Financial Services board, had stepped down the same day.Stock of IL&FS Investment Managers closed 5 per cent down at Rs 7.22 on BSE Friday.
Categories: Business News

Facebook hires Nick Clegg as head of global affairs: Report

52 min 49 sec ago
Facebook Inc has hired former U.K. Deputy Prime Minister Nick Clegg to lead its global affairs and communications team, as the social network deals with a number of scandals related to privacy, fake news and election meddling.The appointment makes Clegg, former leader of Britain's Liberal Democrats and deputy to David Cameron between 2010 and 2015, the most senior European politician ever in a leadership role in Silicon Valley.Facebook said Chief Executive Officer Mark Zuckerberg and Chief Operating Officer Sheryl Sandberg were closely involved in the hiring process, and started talking to Clegg over the summer."Our company is on a critical journey. The challenges we face are serious and clear and now more than ever we need new perspectives to help us though this time of change," Sandberg said on a Facebook post congratulating Clegg.Clegg, 51, succeeds Elliot Schrage and will report to Sandberg beginning Monday.Clegg was ousted as deputy prime minister after the Conservatives won a majority in 2015 in an election that saw his party suffer a significant loss of support. Clegg lost his own seat in Britain's parliament in a general election last year."Throughout my public life I have relished grappling with difficult and controversial issues and seeking to communicate them to others. I hope to use some of those skills in my new role," Clegg said in a Facebook post.Schrage, who led the social network's response to its several scandals, stepped down from the role in June after a decade with the company. Schrage will stay as an adviser, Facebook said.Facebook has faced a barrage of criticism from users and lawmakers after it said last year that Russian agents used its platform to spread disinformation before and after the 2016 U.S. presidential election, an accusation Moscow denies.In March, the company faced new scrutiny over how it protects personal information after acknowledging that the data of up to 87 million people ended up in the hands of political consultancy Cambridge Analytica.
Categories: Business News

Why India's search for money couldn't have been more misguided

3 hours 53 min ago
by Mihir SharmaIndia’s government is caught in a bind. It needs money to appease voters ahead of a tighter-than-expected reelection campaign. But it’s also set praiseworthy deficit targets for itself that it’s already breached once. So it could use new ways to finance more spending.Such pressure often leads to bad decisions. This week, a senior official suggested that one solution might be to force big public-sector companies to buy back shares. In particular, the boards of Indian Oil Corp. Ltd., the Oil & Natural Gas Corp. Ltd., Oil India Ltd. and others might have to buy back shares worth about $2.7 billion.It’s hard to see this as anything but the government squeezing these companies and riding roughshod over the rights of their minority shareholders. These aren’t firms that don’t know what to do with their money. ONGC, for example, needs cash for exploration. Yet its once sizeable cash reserves declined by 90 percent in the year to June 2018, according to Bloomberg, in part because politicians ordered the company to buy out the state’s stake in the refining company Hindustan Petroleum Corp. Ltd. and to shell out a record dividend.Doing so will eat up about 42 percent of ONGC’s remaining liquidity. The oil behemoth will have to ration funds for exploration as a consequence, even as India continues to import over 80 percent of its oil -- a constant source of uncertainty for its economy.This isn’t the only way that the government is leaning on oil companies. Responding to noisy protests from opposition politicians about high fuel taxes, it recently ordered companies to reduce the price at which they sell diesel and petrol to consumers. The companies will have to swallow the losses they make as a consequence and minority shareholders will have to lump it.This is a reminder that in India, privatization doesn’t necessarily mean what it does in the rest of the world. Successive governments have preferred the term “disinvestment” -- meaning the reduction of the state’s stake in big, strategic companies. The idea is that listing public-sector companies on the markets and drawing down the government’s stake will gradually help inculcate a bit of market discipline into their operations. There’s little evidence to support such faith, however: Instead, the government continues to view public-sector companies as convenient piggy banks for populist spending rather than as normal corporate entities that they just happen to own.It’s increasingly hard to argue that the Indian government is a responsible steward of other people’s money. On this occasion, it’s ignoring minority shareholders’ interests. Over the past few months, it’s demonstrated that it can be equally irresponsible when it comes to protecting the interests of the millions of Indians who have entrusted their money to giant, state-run insurance companies. The Life Insurance Corp. of India, for example, has been told to buy a state-run bank that has the highest ratio of non-performing assets in the business -- a massive 28 percent. There’s no logical commercial reason for this; the shares would be a bad buy even if they were free. The message to anyone investing in a public-sector company or fund in India is loud and clear: It’s not your money, but ours.The implications for India’s macro-economy are dire. In the bigger public-sector companies, cash reserves would have eventually been used for investment. That would in turn have helped strengthen India’s fragile investment revival and perhaps ensure that growth in GDP was less dependent on government spending and household credit.Instead, share buybacks take money out of the markets and put it into the state’s hands. The government would argue that it’s being responsible: Meeting its fiscal deficit target should take precedence. But the idea behind deficit constraints is to ensure that government spending doesn’t crowd out more productive corporate investment. What’s the point of meeting those targets by reducing the amount of investible funds in the economy?If it truly wants to be responsible, the government should do what it’s pledged and live within its means. There are only two ways to reduce the deficit: Cut spending, or raise taxes. Instead of deceptive transactions involving listed public-sector companies, the government should try one or both of those instead.(Disclaimer: The opinions expressed in this column are that of the writer. The facts and opinions expressed here do not reflect the views of www.economictimes.com.)
Categories: Business News

So, good time for govt to kick its bad habit?

3 hours 53 min ago
Governments come and go, but one thing remains a constant – their love for tobacco. Irrespective of who rules, the industry is among the heavily taxed and thanks to human frailties it remains an exception to the law of demand. The arguments for taxing it ranges from being a deterrent to filling the coffers.So far so good.But how can governments which want to promote a healthy life style for its citizens through high taxation on smokers justify their ownership of a cigarette company? That too a firm not started by the government, but a stake that landed on its lap by default.Yes, it is the ITC debate that is back on the table. Swadeshi Jagran Manch, an organisation founded by S Gurumurthy, a man of clean habits, to promote native entrepreneurship and prevent multinational companies from gobbling up the locals, wants the government to raise its holding in the biggest cigarette maker. This is when the state is struggling to fund roads, hospitals, schools and there is a real threat of it breaching the fiscal deficit target.Why? The argument goes like this: UK’s British American Tobacco’s (BAT) decision to turn down ITC’s ESOP scheme was a “plan to destabilise the Indian management to achieve its longterm objective of taking over the company and re-converting ITC into a tobacco company, maximising returns for the parent company,” ET reported. The question is why shouldn’t BAT do it?If 80 percent of its profits come from cigarette sales while revenues is just about 40 per cent, it shows other businesses are a drain on the capital. No wonder, ITC, a consumer good company with no debt, is trading at 28 times its March earnings when peers such as Hindustan Unilever and Britannia are trading at more than 50 times.It is a mystery as to why governments — from Vajpayee to Manmohan Singh to Narendra Modi — are holding on to stakes in firms that found their way to government’s vault while bailing out Unit Trust of India. In 2002, when the state-run UTI was teetering the government bailed it out by paying investors what the investment institution promised.In return, the government got many assets, including stakes in ITC, Axis Bank, Larsen & Toubro that are held by an entity SUUTI.Over the years SUUTI sold some to realise the values. Why not a strategic stake sale in listed firms where there are willing buyers like BAT. Even a beginner to investing would tell you that a chunky sale would fetch a premium if it goes with control. So is the case with Axis Bank and other ownership. If BAT is interested in ITC, a Uday Kotak may be interested in buying Axis. Government ownership is pampering vested interests and harming taxpayers.SUUTI made a profit of Rs 3,940 crore selling shares in L&T. It also sold shares worth Rs 5, 521 crore by transferring Axis, ITC and L&T shares to Bharat ETF, data from its website shows.Neither the United Progressive Alliance nor the National Democratic Alliance administrations have come up with a convincing answer. The only speculation could be lobbying and vested interests.A sale of SUUTI’s holdings in ITC, Axis and L&T could fetch at least Rs 50,000 crore if not more. Other than these three, it also owns stakes in companies such as Crisil, Tata Global Beverages, Bloomberg data shows.If there’s a lesson on how to deal with exits after bailing out corporations with taxpayer money, look no further than Uncle Sam.When the US used hundreds of billions of dollars from the Troubled Assets Relief Programme during the global financial crisis to bail out firms like Citigroup and General Motors, there was an uproar. But the state soon sold out, and in many cases even made a profit.It is a pity that a government struggling to fix its finances and aiming to boost foreign currency reserves does not think about selling down the SUUTI holdings to strategic investors to maximise value. It may be time to wind up SUUTI.
Categories: Business News

RCEP stalls as Trump tariffs fuel India backlash

3 hours 53 min ago
by Shawn Donnan, Michelle Jamrisko and Karlis SalnaA Chinese push to conclude a new Asia-wide trade agreement this year is running into opposition from India fed partly by concerns over the fallout of Beijing’s deepening trade war with the U.S.The 16-country Regional Comprehensive Economic Agreement (RCEP) backed by Beijing is often seen as a rival to the Trans-Pacific Partnership, a vast regional pact once led by the U.S. that Donald Trump withdrew from early in his presidency.Together with the Belt and Road Initiative to build investment and trade links with countries along the old Silk Road to Europe, RCEP is a key element in China’s efforts to seize the geopolitical advantage following what many in the region see as a U.S. retreat under Trump. Beijing’s struggles to close the deal on a trade bloc that would cover almost half the world’s population illustrate the continuing suspicion among its Asian trading partners.China has been pushing for RCEP leaders to announce the “substantial conclusion” of the deal at November’s East Asia Summit in Singapore, a goal that leaders committed to this year. That push has gained a new urgency in recent months as the tariffs war between Beijing and Washington escalates.Stumbling BlocksAt a ministerial meeting in Singapore last weekend, however, India continued to resist pressure to make a more ambitious commitment to lower its tariffs on imported goods, according to regional trade officials. Likewise, other countries stopped short of offering the sort of opening up of their services sectors and commitments to rules allowing the free movement of professionals in the region that India has been seeking.According to a statement issued after last weekend’s ministerial by Indonesian trade minister Enggartiasto Lukita, who is chairing the negotiations, just four of RCEP’s 21 rules chapters have been concluded, while another five or six could be completed this year. But that requires changes in attitudes from all member countries to find solutions, Lukita added.The market access offers of some participating countries were also “still considered insignificant by the majority of participating countries,” he said.All parties exchanged thorough discussions at the talks and reiterated that they would push for a basket of deliverables by the end of this year and substantially finish the negotiations, Gao Feng, spokesman at the Ministry of Commerce, said at a regular briefing on Thursday when asked about whether RCEP can be wrapped up this year.“What I would like to emphasize is that pushing ahead bilateral, regional free-trade agreements is a strategic choice China has made based on its own development, not a contingency plan to cope with the current situation,” he said.India’s commerce ministry spokeswoman didn’t immediately respond to an email query on Friday, when the government’s shut for a local holiday. New Delhi doesn’t see the RCEP negotiations concluding this year, a government official had told reporters last month.Talks ContinueRCEP negotiators began a 24th round of talks in New Zealand on Thursday that’s due to continue through the end of next week. But ministers made clear after their last meeting that plenty of work remains and that wrapping up RCEP by the end of this year is unlikely.The stalemate appears unlikely to be unwound any time soon as RCEP member countries like Australia, India and Indonesia go into elections next year. That raises questions about the longer-term prospects for RCEP, which began life as an effort by the 10-country Association of South-East Asian Nations to bring its individual trade deals with China, India, Japan, South Korea, Australia and New Zealand under one umbrella.“You have elections in major countries that are super important for RCEP that are going to paralyze negotiations for the first half of 2019. So if you are not going to get it done in November, then when are you going to get it done?” said Deborah Elms, who tracks the negotiations at the Singapore-based Asian Trade Center.Among the issues surfacing in the negotiations, according to officials, are concerns being expressed by India and others over what the U.S.-China trade conflict could mean for other countries in Asia. While some countries such as Vietnam are hoping for a potential boon as companies move supply chains out of China to avoid U.S. tariffs, others are concerned that Chinese goods kept out of the U.S. by tariffs could end up being diverted into other markets.“In Asia, there is a mixed view of the U.S.-China war. On the one hand it’s fantastic news because companies are going to look to move out of China and relocate elsewhere in the region. On the other hand all that production in China has to go somewhere,” Elms said.Glass Half FullUnlike the TPP -- initially conceived in part as a way for Asia-Pacific nations to lessen economic dependence on China -- which goes beyond traditional trade issues to address intellectual property, labor rights and state-owned enterprises, RCEP is more limited with a focus on goods and services. It faces the added challenge of bridging the interests of developed economies such as Australia and Japan with emerging markets like Cambodia and Laos.Some in the region remain optimistic that a deal can be made and that leaders gathering in Singapore next month can announce at least significant progress toward an accord.“If there is a sense of urgency now, it is because we have spent so much time and energy. The glass is half full now, no turning back,” said Iman Pambagyo, Indonesia’s top RCEP negotiator.Mari Pangestu, a former Indonesian trade minister who now teaches at Columbia University, is also optimistic.“This is the Asian way. As long as there is progress you continue the process and you can ratchet it up or make it more ambitious later,” she said. “The world is in need of good news. We need to send a signal that, whatever is happening in the world, Asia is continuing the process of opening up.”
Categories: Business News

DoT asks MTNL to outline long-term roadmap as part of revival talks: CMD

3 hours 53 min ago
NEW DELHI: As part of the ongoing revival talks, telecom department has asked the ailing MTNL to outline a long-term roadmap on how the PSU plans to compete with other players that have a pan-India footprint, the operator's chairman said.Mahanagar Telephone Nigam Ltd (MTNL) has been incurring losses for a number of years and was declared as incipient sick as per the Department of Public Enterprises guidelines.A revival plan of MTNL, prepared by its consultant, is currently under consideration in Department of Telecom (DoT)."An internal committee on revival, too, has listed out various options and the finance branch of DoT has raised specific queries including what should be the long-term roadmap for MTNL, given that all other players now have pan-India operation," MTNL Chief P K Purwar said.MTNL has responded to the queries raised by the DoT, Purwar added."DoT's finance branch has said it should not be a one-off transaction... that it should be a long-term view from the ministry to take MTNL forward, in a scenario where everyone is a pan-India player," he noted.Bruised by a fierce competition from private sector players, MTNL's losses were pegged at Rs 2,893 crore in 2014-15, Rs 2,005 crore in 2015-16, and Rs 2,970 crore in 2016-17. MTNL's debt exceeds Rs 17,000 crore.Purwar said a long-term direction for MTNL has to first take into account issues ailing the company."There are three ailing factors for the company. One, is the employee wage bill. Secondly, the debt issues need to be taken care of, so that the company can work efficiently. The third, is the investment in network to create newer and modernised infrastructure," he said.Beyond that, there has to be a "top level view" on whether a company in mobile or fixed line service can function on two circle operations -- Delhi and Mumbai -- when all other operators have "pan India traffic and pan India tariff"."It has to be about making the company suitable, such that pan India operation can be worked out...either through operational synergy with BSNL or entity-level synergy," Purwar said but quickly added that a call on such issues is for the government to take."But, I will say synergy is certainly required for me. As a long term player, being present in telecom market in just two circles is not a viable proposition. Viability needs to be created by a synergistic approach, and BSNL, too, has a similar problem because they are not present in Delhi and Mumbai, which are two prime circles," he said.Once a household name, MTNL, which provides services in Delhi and Mumbai, has been relegated to a distant fourth operator in the market alongside Bharat Sanchar Nigam Ltd, another telecom PSU.This was when, one billion subscribers-plus mobile market in India - incidentally world's second largest after China, is growing exponentially as private operators like Vodafone Idea Ltd, Bharti Airtel and Reliance Jio compete fiercely to lure subscribers with rock-bottom data tariffs and attractive offers.The government in the past has categorically ruled out any plans to merge BSNL and MTNL, but has time and again talked of strategic plan for promoting synergy among the two state-owned telecom firms."Merger is a promoter's call not a manager's call. As a manager, I feel that operational synergy has to be there. If not, it will be difficult for both the organisations to continue to be competitive in the market in the long run...Because, you are creating a stack of cost to each other from customer point of view, while other operators which are a single entity don't have such costs," Purwar said.
Categories: Business News

Anil Agarwal indicates he is open to raising bid for Essar Steel

3 hours 53 min ago
NEW DELHI: Mining baron Anil Agarwal has indicated that he is open to raising bid for acquiring Essar Steel, saying his flagship Vedanta Ltd is the best suited to take over the indebted firm as it is an iron ore as well as natural gas producer - key ingredients for making steel.Agarwal said Vedanta's Rs 35,000-36,000 crore offer in the first round of bidding for Essar Steel was the highest in the three-way race for Essar Steel that lenders are auctioning to recover about Rs 50,800 crore of overdue loans.The bid was more than offers made by ArcelorMittal and Russia's VTB Capital-backed NuMetal Ltd in the first round.But during the legal battle over the eligibility of ArcelorMittal and NuMetal, the VTB Capital-based special purpose vehicle raised the offer to Rs 37,000 crore in the second round which subsequently was bettered by ArcelorMittal to Rs 42,000 crore.NuMetal has said it will match the ArcelorMittal's offer.The issue has reached the Supreme Court which asked ArcelorMittal and NuMetal to pay off loans for group companies in India to be eligible to bid for Essar Steel."See the Court has clearly said that the first round of bid will be the basis and it has allowed all three bidders to come into the ring. ArcelorMittal has to pay dues to come in the ring and NuMetal has to pay the outstanding loan to come into the ring," Agarwal said here.Vedanta, he said, remains eligible with its first round of bids. "We are already in the ring," he said. Once the condition set by the Supreme Court are met, the Committee of Essar Steel Creditors will take a view on the bids received."As far as we are concerned, we are definitely interested but I never wanted to get into a fight. I have enough and I am happy. I have not gone to court. I have never made noise (on acquiring Essar Steel)," he said.He said Vedanta is the best-suited company to take over Essar Steel as it produces iron ore - the raw material for making steel. Also, it produces natural gas which is used in the steel making process."I am an iron ore producer, I am a natural gas producer, both of which will be of advantage to Essar," he said. "I continue to be interested in Essar Steel (despite in bitter acquisition fight)."Asked if he would be open to raising the offer price, he said: "I am open to everything." But he wants to wait and see how the other two rivals act on the condition set by the Supreme Court for their eligibility.Agarwal said he has already set foot in steel manufacturing through a Rs 5,320 crore acquisition of Electrosteel, a firm that too was auctioned to recover unpaid loans."For us, steel making is a natural progression from being an iron ore producer," he said. Essar Steel has emerged as the most sought-after asset in the government's crackdown on delinquent borrowers. Of a dozen loan defaulters that have been pushed into bankruptcy proceedings, Essar Steel is the most bitterly fought for.The world's largest steelmaker ArcelorMittal and VTB Capital-led consortium NuMetal have opposed each other's eligibility under a rule that disallowed bidders with links to a defaulter from being part of the process.Lakshmi Mittal's steelmaker questioned the eligibility of Numetal Ltd because, in the initial round of bidding, it included a company that is backed by the son of one of Essar's founders.NuMetal opposed ArcelorMittal as its promoters were tied to loan defaulting firms like KSS Petron Pvt Ltd and Uttam Galva Steels Ltd.While the firm linked to Essar founders wasn't part of NuMetal in the second round, but the Supreme Court held that it remained a related party to Essar Steel.This meant that while ArcelorMittal has to clear dues of its associate firms, Numetal will have to pay off the bad loans of the entire Essar group if it wants to remain a bidder.While VTB Capital is now seeking to make a solo bid and has filed a clarificatory application in the Supreme Court, ArcelorMittal has agreed to pay off Rs 7,469 crore of loans of the two group companies.JSW Steel Ltd, which was part of NuMetal in the second round of bid, too is seeking legal opinion if it can bid solo. Essar Steel, which can produce 10 million metric tons of the alloy annually, owes creditors about Rs 50,800 crore.
Categories: Business News

Do not write off NBFCs yet, says Neelkanth Mishra

3 hours 53 min ago
We are extremely worried about earnings downgrades in consumption stocks as well as the very high price to earnings ratios, 66282127 66281321 66280891 Neelkanth Mishra, Managing Director and India economist and strategist, Credit Suisse, tells ET Now. Edited excerpts: Macro factors have posed question marks on India’s growth narrative going ahead. How are you viewing the current market correction? The growth concerns are very valid. The starting point is a balance of payments deficit which is the equivalent of a household consuming more than it produces which means the country or the household has current account deficit. To fund that current account deficit and keep consuming more than you produce, you need external sources of capital. Someone has to give you the money to do that and what a BOP deficit means is that that money is now starting to fall short. We have upto a $30 billion balance of payment deficit which is 1% plus of GDP. The best way to adjust that is to attract more capital on a sustainable basis which cannot happen in a short while. The next task is to grow exports so you have more production but again that is not something that can change very quickly and therefore the only option that remains is to curtail demand and any demand slowdown is quite painful. It is like telling an individual that since you cannot earn so much, you cannot eat this, you cannot wear that, you cannot live in this house and so on. That is what it will translate to for individuals and it is a very painful adjustment. The BOP deficit is what is a big overhang and till it adjusts, growth prospects would remain weak. This is the question that we have asked in our note two weeks back, is India’s energy self sufficiency that you cannot grow your GDP without consuming more energy -- be it for automation of household chores or for consumption of energy intensive materials? 9% of domestic energy demand is for steel production. These are things that are very hard to grow without and the problem is that not only do we lack the resources like oil, gas or metallurgical coal, even the thermal coal that we have, we do not do a very good job of producing it. We also do not do a very good job of pricing our energy appropriately. The latest bout of weakness in India has been due to risks arising from surge in oil. You are making a case that our dependence on imported crude will only rise. How big a negative could that be? This is a source of volatility. Lots of good things are happening in economy and we should be able to maintain a strong growth pace but these are challenges that we must face and find solutions to. The growth in imported energy by volume has been 8.5% a year in the last 15 years. Our energy demand has grown at 4.5%, our production has grown at 3% and therefore imports have grown at 8.5% a year. What this means is that in 10 years or so, your energy import volumes have more than doubled and which is why despite the fact that oil prices or energy prices in general are nearly half of what they were at their peaks in 2007-08, our energy import bill has already past its prior peak. So volumes have doubled, prices are half of what they were at the peak and still our energy bill continues to be high. Going forward in the next 20 years, if the same pattern continues, our import volumes will rise at about 6% a year. So, unless prices of global energy keep falling at 6% a year, our import dependency in terms of value will only keep rising and then we will have to find ways of paying for it. The recent surge in prices, has created a new set of issues. It brings forward some of the problems. If by good fortune, oil was to fall to $60 in next 6 or 12 months, the problem will be solved in two years. But the problem still exists, our energy import volumes keep rising at 6% and there is not much that we can do about it at this stage.What are your thoughts on flows? When you say they are partly cyclical, do you see some of them coming back in the coming months and quarters because FIIs have been big sellers up until now?The structural aspect is that it does not seem likely that the countries which were deploying a lot of capital through equities are going to be in big surplus any time in the next couple of years. That may be the structural angle that equities as an asset class may not see that kind of flows at an aggregate level. Whether India gets them or not is a different question, the point is at a global level also, it is worth debating whether structural downward adjustment has happened. On the debt side, it is almost primarily cyclical. There is a lot more debt that India can get including the foreign portfolio investors’ debt. We are not part of the bond indices. Over years, that may actually happen and lead to another surge of inflows. The outflows are definitely cyclical in nature. People have exited assuming that the currency may fall, that there is a lot of unnecessary volatility in the bond yields which is of course our own doing. This should not have happened, but has happened and that is cyclical. Once there is semblance of stability in the currency, some of those flows will actually come back. Has your own overall hypothesis changed? How have you reworked your numbers? The first thing is that the Nifty is more linked to what is happening globally. More than half the revenues in the Nifty are not in rupees and therefore 12 months after a bout of rupee weakness, the Nifty is actually up. Those views remain unchanged. Some of those stocks and companies should actually be doing well. On the domestic consumption side, we were very worried about valuations and our NBFC model portfolio. We have been underweight NBFCs now for more than 12 months. For the first six-seven months, it was a very painful call but since then, the performance of stocks have been aligned with what we expected, what has happened on the consumption side. What we expect to happen on the consumption side in the next 12 months is a bit more than just the valuation correction. There was assumption of very strong earnings growth but many of the staples and discretionary companies have barely reported any. Even cement companies have barely seen any earnings growth. Maybe, there has been a low single digit to high single digit earnings growth, CAGR in the last three years, but the expectations were from mid to high teens growth in the next three years.Those numbers will get revised down. That was not our expectation eight-nine months back when we did not think that we had BOP deficit. We have been worrying about BOP deficits since February and now we are extremely worried about earnings downgrades in consumption stocks as well as the very high price to earnings ratios. There is a momentum aspect to it because they were going up and people kept buying them. They kept going up. But, underlying that high PE multiple was also the assumption that India can keep growing, if not today, then tomorrow India will grow at 8%. For cement stocks, in particular, this holds very true. It is going to be a domestic sector and it is getting consolidated and eventually cement companies will make money. What we have seen on the energy side suggests that it may not be safe to make that argument that at some point it will grow because that point could be very far away. That view has not changed. It is just an evolution of the same trend. The NBFC troubles are catalysing or are partly a manifestation of the funding crunch as being discussed earlier, but we will engineer the demand slowdown that is necessary to bridge the BOP deficit. So in a way that becomes the mechanism for the slowdown that we have been expecting for a while. When you say the flows are partly cyclical, do you see some of them come back in the coming months and quarters because FIIs have been big sellers up until now? The structural aspect is that it does not seem likely that the countries which were deploying a lot of capital through equities are going to be in big surplus any time in the next couple of years. It may be a structural angle that equities as an asset class may not see that kind of flows at an aggregate level. Whether India gets them or not is of course a different question, but the point is that at a global level also, it is worth debating whether structural downward adjustment has happened. On the debt side, it is almost primarily cyclical. There is a lot more debt, foreign portfolio investors debt, that India can get if it wants to. We are not part of the bond indices. Over years, that may actually happen and lead to another surge of inflows. The outflows are definitely cyclical in nature. People have exited assuming that the currency may fall and that there is a lot of unnecessary volatility in the bond yields which is our own doing. This should not have happened but that is cyclical. Once there is a semblance of stability in the currency, some of those flows will actually come back.What is your view on the rupee as well as the rupee centric sectors? If you have a balance of payment deficit, the only way to control is to curtail consumption at least in the near term. In order to curtail consumption, you have to bring down imports. he first step is to impose import duties. Under the trading norms, it is perhaps not feasible to do a lot more than what has been done already although there can be other opportunities as well. The second is to let the currency fall so that imports become more expensive and then automatically demand comes down. The third is to actually signal that you are raising interest rates and that automatically causes the yields to go up. Interest rates start getting marked up, bringing down aggregate demand. Now whether that is advisable or not is debatable in the sense that some times higher interest rates could actually curtail your productive capacity and even hurt your exports. If the currency has to bear the full burden of the demand adjustment, then it needs to fall quite a lot and that is what we have seen given that even last month’s data was very encouraging at a headline level but the underlying trend showed that we may still have a $25-30 billion balance of payment adjustment. However, the rupee may need to fall more to be able to curtail demand sufficiently. How are you assessing the liquidity in the system right now, particularly for NBFCs? Would you say this is a cyclical air pocket that they have hit? No, I do not think there is any structural breakdown and it is not even a cyclical thing. I call it an episodal correction. In equities, when you see risk appetite going down, there are stocks that people would not buy even at 5 times earnings. They will say it should not be a 4 times earnings. Now there are like Russian stocks for example which are yielding double digit dollar dividend yields, but people do not want to pay more than 4 times earnings and debate whether it should be 4.5 or 5. Automakers in India trade at 20 plus times earnings. So when it goes into bear market, when risk appetite fades, you have a problem where PE ratios get corrected. On the bond side, the equivalent of risk appetite is who gets funded because the cost at which you get funded can only move up. So much so, that in a real strong bull market in the bond market, especially if our funding is for NBFCs, when risk appetite is very high, anyone can start an NBFC and get Rs 100 crore of bond issued. I am exaggerating but that is sort of what was starting to happen which from the perspective of financial system innovation in the sense of trying out new algorithms for lending, finding new approaches, all are phenomenal for the economy. The concern though is that when it stops, appetite just disappears and in India it takes not three months but perhaps a couple of years to come back. I would not write off NBFCs. Once every decade in the last two-three decades, we have seen a large number of NBFCs disappear by assets. Of course, most survive but a lot of smaller NBFCs just disappear. This is one of those phases. It is very possible that this current unwillingness of the bond mutual fund investor to buy units of bond mutual funds which have NBFCs and therefore creating an incentive for the bond fund manager to not buy NBFC paper and the reluctance of some of the banks to lend to some of these NBFCs are the issues plaguing the market. As much as we would like to because it then stabilises the economy and starts the flow of credit, I do not think it is going to happen very quickly. I do not think it is a cyclical thing because it just stops and then starts. But right now. it has stopped and it will be a while before it starts.
Categories: Business News

H-1Bs may go only to the best & highest paid

7 hours 15 sec ago
Reforms are on the anvil in the US to ensure that H-1B visas are awarded where the beneficiaries (potential employees sponsored for the visa) are the most skilled or highest paid. This proposal in President Donald Trump’s fall agenda is consistent with the ‘Buy American, Hire American’ executive order signed by him in April last year.It means yet another challenge to companies hiring H-1B workers. According to immigration attorneys, it could be more difficult for companies to sponsor H-1Bs for bright students who have undertaken an optional practical training with them as applications with entry-level salaries (even if fully justified in this case) are likely to be rejected. Together with a more narrow definition of what constitutes a specialised occupation, the potential to hire H-1B workers could be significantly reduced.The proposal adds, “This regulation would help to streamline the process for administering the H-1B cap and increase the probability of the total number of petitions selected under the cap filed for H-1B beneficiaries who possess a master’s or higher degree from a US institution.”Emily Neumann, Houston-based immigration attorney and partner at Reddy & Neumann, points out, “There is no additional information at this time regarding how exactly USCIS (US Citizenship and Immigration Services) intends to increase the probability of selection for master’s holders.”Companies are waiting for the draft policy to be rolled out to ascertain whether applications for those who have studied in the US would be selected for H-1B, even if the salary is at an entry level. Annually, only 65,000 H-1B visas are allotted under the regular cap (also known as general quota) and an additional 20,000 visas under the master’s cap (for those having an advanced degree from US universities).Each year, since 2013-14, USCIS has had to resort to a lottery mechanism as the number of applications far exceeded the annual quotas. The number of applications had hit a peak in 2016-17 with 2.36 lakh applications. For the 2018-19 season (FY 2019), which would permit successful visa applicants to work in the US from October 1, the US agency received 1.90 lakh applications, of which 95,885 were for the master’s cap. Cases not selected in the master’s cap lottery were then placed in the general category lottery for random selection.An electronic registration programme for H-1B applications has also been proposed. An immigration counsel at an India-headquartered tech company says a pre-registration system may be introduced. Sponsoring companies will pre-register electronically for the annual lottery and then file full-fledged documentation, if the application is selected in the lottery.
Categories: Business News

RBI announces steps to increase credit flow to NBFC

7 hours 15 sec ago
The Reserve Bank on Friday announced more measures to increase liquidity flows to the non-banking financial companies. The RBI permitted banks to use government securities equal to their incremental outstanding credit to NBFCs, over and above their outstanding credit to them as on October 19, to be used to meet liquidity coverage ratio requirements.The move will help provide liquidity to housing finance companies (HFCs) and non-banking finance companies (NBFCs) which have come under pressure following series of default by IL&FS group companies."Banks will be permitted to also reckon government securities held by them up to an amount equal to their incremental outstanding credit to NBFCs and HFCs, over and above the amount of credit to NBFCs and HFCs outstanding on their books as on October 19, 2018, as Level 1 HQLA under FALLCR within the mandatory SLR requirement," RBI said in a notification.This will be in addition to the existing FALLCR of 13 per cent of total deposits and limited to 0.5 per cent of the bank's total deposits.Liquidity coverage ratio refers to highly liquid assets that financial institutions need to hold in order to meet short-term obligations.The additional window will be available up to December 31, 2018 according to the notification.Besides, it said, the single borrower exposure limit for NBFCs which do not finance infrastructure stands increased from 10 per cent to 15 per cent of capital funds up to December 31, 2018.The RBI has been taking series of steps to infuse liquidity in the system. It has also been undertaking open market operation at regular intervals to add liquidity.
Categories: Business News

PTC India to ink PPAs with 7 firms, 5 states for 1,900MW by Oct end

7 hours 15 sec ago
Power trading solutions provider PTC India will sign medium-term power purchase agreements (PPA) for 1,900 MW coal-based power capacities with seven companies and five states by month-end under a pilot scheme, an official said.After this tender, the company plans another round of 3,000 MW of medium term PPAs to give some relief to stressed power projects as PPAs are required for getting fuel supplies, a Power Ministry official told PTI."PTC India had finalised bids of 1,900 MW capacities last month at a tariff of Rs 4.24 per unit including the nominal fixed cost of one paise per unit for supply of power for the medium term of three years," the official said.The seven companies which would ink PPAs are IL&FS Energy for 550 MW, RKM Powergen for 550 MW, SKS Power for 300 MW, MB Power (Madhya Pradesh) Ltd for 175 MW, Jindal India Thermal Power for 175 MW, Jhabua Power Ltd for 100 MW and JP Nilgiri Project for 100 MW.Five states which would buy power from these plants are Telangana (550 MW), Tamil Nadu (550 MW), Haryana (400MW), Bihar (200MW) and West Bengal (200MW).IL&FS Energy will supply 550 MW to Tamil Nadu while RKM Powergen will supply 550 MW to Telangana.Jhabua Power Ltd and JP Nilgiri Project would supply 100 MW each to West Bengal. MB Power (Madhya Pradesh) Ltd will supply will supply 175 MW to Haryana while the SKS Power will supply 300 MW to Haryana as well as Bihar. Jindal India Thermal Power will supply 175 MW to Bihar.The government had launched a pilot scheme to procure 2,500 MW electricity for three years under medium-term arrangement from commissioned power plants without power purchase agreements earlier this year in April.Under the scheme there would be no escalation of tariff during the three-year period on any account. The discoms can reduce load up to 55 per cent of agreed capacity.The scheme provides that if the supply capacity goes down beyond 55 per cent then the differential power would sold in open market and any under-recovery would be charged to the discom. But if that power is sold at a premium, the profit would be divided equally between the discom and the generating firm.Under this auction, 2,500 MW capacities were put on the block but later imported coal-based capacities of 600 MW backed out. The imported coal-based generators had expressed their inability to match the Rs 4.24 per unit tariff as it was not viable for them in view of higher coal prices in the international market.The government has been targeting around 17GW coal-based thermal power generation capacity including 5 GW based on imported coal under this initiative.The official said that PTC India has planned to auction 5GW under the medium term PPAs during this fiscal and thus it would bring another tender of 3GW by March 2019.The PPAs are required for getting fuel supplies. Some power plants have coal linkages but their fuel supply agreements are not effective in the absence of PPAs. The other which do not have coal linkage can get fuel supplies under SHAKTI scheme after getting PPAs.
Categories: Business News

Petrol, diesel prices slashed further on Dussehra

7 hours 15 sec ago
In a big relief to consumers on the occasion of Dussehra, the prices of petrol and diesel across the country witnessed a dip for the second consecutive day on Friday. Presently, the per litre cost of petrol and diesel is Rs 82.38 (fall of Rs 0.24) and Rs 75.48 (decrease of Rs 0.10), respectively in the national capital. In Mumbai, the petrol price was slashed by 24 paise to Rs 87.84 per litre, while diesel saw a decrease of 11 paise and is now being retailed at Rs 79.13 per litre. A similar dip in prices was witnessed in other metropolitan cities of Kolkata and Chennai. Petrol and diesel are being sold at Rs 84.21 per litre and Rs 77.33 per litre, respectively in Kolkata. While petrol prices in Chennai settled at Rs 85.63 per litre and diesel at Rs 79.82 per litre. On Thursday, the prices of petrol and diesel were slashed for the first time in over two months. Petrol prices were reduced by 21 paise in both Delhi and Mumbai, while diesel cost was cut by 11 paise. Fuel prices have been soaring since the past few months in the country, burning a hole in the common commuter's pocket. While the Opposition has repeatedly blamed the Centre for the steep hike in the fuel price, the latter has maintained that global crude oil prices and other international factors are responsible for the increase in prices of petroleum products. In a bid to ease the crunch caused by soaring fuel prices, Finance Minister Arun Jaitley had, on October 4, announced a reduction of Rs 2.50 per litre on both petrol and diesel prices after curbing excise duty on the commodity by Rs 1.50 per litre. He had also directed all state governments to slash rates.
Categories: Business News

Consumption to be under severe pressure in H2: N Jayakumar

7 hours 15 sec ago
If you squeeze liquidity in a fast growing space like NBFC, you may create an IL&FS kind of situation, N Jayakumar, MD, 66281321 66281027 66280891 Prime Securities, tells ET Now.Edited excerpts: Have markets hit a bottom? Where are they headed in the short term?It will hold out between 9,800 and 10,000, which was tested last time. I am putting myself out for judgement as well but between 9,800 and 10,000 is a rock solid bottom. In the short run, we may even find 10,200 difficult to break but we are worried that you could find a panic bottom in the 9,800-9,900 range.But Nifty has not corrected at all! In fact, Nifty is still in the positive zone. How relevant is Nifty for investors? Statistics tells you that over 60% of stocks in the broad market are down more than 60% from all-time highs. If that is the case, the market is probably in the range of 8,000 to 8,500. The fact that four-five stocks have been serious outperformers for a variety of reasons, means virtually 80-85% of mutual fund flows are going only to the top 250 stocks. This means the outperformance in Reliance, Infosys, TCS, Levers has just kept the index up. Some of them have corrected as well, but obviously not as much as the rest. But here are others who are willing to pick up the slack in the market now. For instance, private sector banks have broadly outperformed, but ICICI, Axis have been extremely weak. ICICI for instance, has bottomed out pretty conclusively and this is not to talk individual stocks, but more from an index standpoint. Despite short-term issues, some of the cement stocks may have bottomed out as well. As a sector, pharma has definitely bottomed out. Pharma as a space will give you surprise upside returns and the space that I like a lot and more so because of recent changes in the environment are PSU banks. The neglected private sector banks ICICI, Axis, SBI, Bank of Baroda, Union Bank also will give you surprise upside returns. I call this a karmic cycle and we can talk about it in terms of what has changed. There are sectors willing to pick up the slack of outperformance which is only restricted to four or five. Those stocks may actually have corrected, Reliance had hit Rs 1350. It is now below Rs 1100 and in the short run, there may be disappointments with the results. You could have a situation where some of those which have performed well may stabilise at lower levels. I do not think they will fall much more. Interestingly, the fund flow position has changed for foreign funds. You will have much less selling. In fact, FIIs could turn buyers through a combination of 8% plus on yields both in the debt side and Rs 74-75 to a dollar clearly visible now, as being factors that could bring foreign flows in. Foreign flows will be neutral to positive going forward. Some of these sectors will take up this slack. So, index wise, I do not think 9,800 to 10,000 will really get broken in a hurry. Of course, there are sectors which are very positive and the sector we should actually focus on. The NBFC sector has been the front-runner in terms of the market upsurge over the last several years. The NBFC space came up as a result of a considered strategy that PSUs could not take up growth in terms of durable space, consumer durables and the growth through the housing finance books, etc. That entire slack got taken up by PSU banks lending to NBFCs, private sector banks lending to NBFCs and NBFCs doing what these banks could not do. Now with the IL&FS scare and the asset-liability mismatch, which RBI quite unexpectedly talks about vis-à-vis the NBFC space, what it meant is that the 7:1, 8:1 leverages will over the next two years come down to 3.5-4:1. All NBFCs today are only doing the following. So, it is all going to change. On November 15, Rs 110,000 crore worth CPs are coming up for maturity. Already 80,000 crore have disappeared through the short-term funds. Of the Rs 1,10,000 crore, 30-40% goes to the really top quality HDFC, L&T kind but the rest could be a challenge. What is happening is these NBFCs are selling their portfolios because they have all hit single party limits. As they sell their portfolios, the banks are getting money from the same big corporate treasuries like Reliance, Vedanta, ITC, Maruti, etc, which are now pulling money out of these mutual funds and putting them in bank deposits. Those bank deposits act as the long-term source for banks to reposition themselves by buying these assets. So from an NBFC perspective, the assets and the liability come off. The overall leverage is going to be reduced. They are not going to get more access to direct lending and so their growth is a big issue. The NBFC re-rating or derating has built this in completely. So the NBFC space is coming off and PSU banks are taking the portfolios. Portfolios of almost Rs 2 lakh crore will get sold off in the next six months. So banks will end up buying all the good assets of NBFCs. NBFCs may end up with portfolios which could be “a little less liquid.” But what will the NBFCs do in the interim? They will go in for more equity issuances. Maybe the equity market is only 1-1.5% book. So, be it. They will go in for long-term bonds and that is when the repositioning happened but that takes two-three years. The NBFCs would be in a consolidation and long-term fund generation mode for the next two-three years. Growth is not their principle objective. From a bank perspective, the question that could be asked is do SBI, BOB and others have adequate capital to absorb all this? The big shift in the portfolios are happening and the private sector banks are well capitalised and may actually be able to take this up. That’s why I am so bullish on ICICI and Axis as they could actually be the beneficiaries of the portfolio which these guys have created over a five-seven year period. So the wheel of lending is going to change? What banks lost, NBFCs gained and now NBFCs would lose and banks gain? That is absolutely correct and one more thing is happening. The NBFC business model itself is being questioned and the liquidity that the NBFCs supply to people like the stock market, LAS, etc, could also be a bit under the cloud. There was a recent scare in the market that NBFCs have given loan against property to builders and these builders may start going belly up. Is the book of a large NBFC like peeling an onion? You keep on peeling layer after layer or is it not that bad? I do not think it is that bad. The reality is that the realty space is in trouble. You can see unsold inventory across the board. The reality also is that a lot of these NBFCs had outstandings to the realty companies against specified assets. But if those companies went into NCLT, these assets get pooled and then your outstanding becomes a bit of a question mark .So far, there was no question of realty companies going belly up. When liquidity got crunched in the US in 2008, banks got refinanced. What did banks do? They took the money but did not transmit it, they essentially put it back in government securities and tables but stayed on liquidity. A similar psychosis is developing right now. Banks are getting the liquidity but really are not lending to anybody other than the top few names which means that credit a as a whole in the economy is going to get crunched, consumption is going to come under severe pressure in the second half of this year. Both discretionary and non-discretionary consumption? Absolutely. Autos… Durables because banks have not shown the adeptness to add to the portfolios and marketing them. They are just buying portfolios. Once that is done, they are not trying to build up a much larger portfolio. The incremental credit to the economy is going to be under big threat and that will affect GDP in the run-up to the election. The government needs to understand that liquidity is the mother’s milk of sentiment. If you do not have liquidity, there is no sentiment. Going into the elections, whatever the government might do, the NBFC space I cannot be wished away. All these measures that RBI talks about, incremental single party limit, etc, needs to have been announced on day one, not on day 15 or day 20. Fifteen days is too long in the financial services space. You need to go out there. When the Lehman crisis happened, the government decisions got taken on a Friday night, Saturday morning before markets opened on Monday. They are not held in abeyance and the sentiment allowed to drift over a two-week period. This is the problem. In the long run, I do not know the adjustments happen but in the short run, you do not want another IL&FS situation. An IL&FS is not representative of the NBFC space. It was actually an infrastructure holding company. It has got nothing to do with being an NBFC. The problem is if you squeeze liquidity in a fast growing space like NBFC, you may create an IL&FS kind of situation. The whole move has to be immediate and surgical. It is too big to fall. It is not like 10 ladies have come together to start a chit fund! Structurall, NBFC space needs to be protected. And not just protected. It is actually a systemic issue. I do not think we can overemphasise this point. Liquidity is the main thing that was driving it up. They were growing at 20-30-35%. Where was that coming from? They had 8:1, 9:1 leverage and they were trying to build long-term funds over a period of time. Through one ALM statement, you cannot throw the cat amongst the pigeons here and which is essentially what has been done. Two quarters ago, you were quite gung ho on aviation and your view was the bad news in aviation is the time to buy. But bad had got worse. Is this only because of crude? It got worse because of two reasons – one is crude and two is that pricing to passengers has not kept pace… Why is that? It is just an obsession the top two-three companies have with load factors. Load factors need to drop to sensible levels of 75-80-82% and make passengers pay for what is fair. It is an experience, flying is an experience. It has become a preferred mode of travel for most people. Rather than using train or bus, people are saying that flying is convenient, there is a value for the time and they are willing to pay for it. We have gone through this. Rs 2500 ticket to fly Bombay–Delhi with crude at $80 and dollar rupee at 74, does not make sense. These companies are not being spearheaded by people who do not understand this. They are making cash losses on a daily basis and are continuing to do it. This is going to lead to consolidation. There is definitely going to be issues. There could be entry of new players. The good news from a silver-lining perspective is that while the consolidation is happening, pricing power can return but more importantly, crude may have peaked out at 86-87. We could be on the way down. China’s growth is slowing. World growth is slowing. Other than the US which is on steroids in a manner of speaking, there is pressure on every other economy. India will slow down next quarter. Crude will come off if it is fundamentally linked but a lot of crude price movement have always maintained has not been fundamental but it has been a play on the markets. Other issues like Saudi Arabia, geopolitical, going public of Saudi Aramco, etc. But in the short run, the tailwinds that were there for crude price movements, has actually become headwinds in the short term. Suddenly, HPCL, BPCL and OMCs are available in and around their replacement cost. These are businesses which cannot be replicated and these are businesses which have a genuine and a natural moat around them. Would you buy this decline in OMCs because if crude is bearish, maybe there is a trade there? I do not think so. There may be a tactical trade if you are lucky because one is not able to take a call on whether the government will keep interfering especially as the election year approaches. It is not impossible for the government to take decisions which affects three companies but benefit the economy as a whole, like the recent decision. I do not want to get into whether is it is desirable and whether it will be repeated. The event risk around the oil companies makes it clear that they cannot be permanent portfolio additions. They can be tactical plays. They fall off 30-40% on movements like this and you could take a play and make 20-30% possible. Unfortunately, I am not that smart to figure out what is the bottom and what is not. But there are fundamental issues of government policy level interventions that could make for business dynamics that could get disrupted. I would recommend those. In a year from October 2019, a lot would have changed. Do you think right now this market is giving you more like a Flipkart and Amazon sale that you can grab before markets get their rhythm back? There are always two sales in a year in stocks in India. That has been going on for several years. Sometimes, the bull market gets extended, the sales happen once in two years or twice in three years but the reality is that today, liquidity, the financing of midcap stocks, etc, have been completely decimated. The market is telling you what values can go down to when there is no liquidity in the system.
Categories: Business News

The $41-billion gap that separates Mukesh Ambani from Anil

10 hours 1 min ago
by Bhuma ShrivastavaOver the past year, the fortunes of the two brothers at the helm of India’s wealthiest dynasty have grown apart -- to more than $40 billion apart.Elder sibling Mukesh Ambani, 61, toppled China’s Jack Ma as Asia’s richest man, after driving a telecommunications revolution in India that propelled his petrochemicals conglomerate Reliance Industries Ltd. into the $100 billion club. His personal fortune has swelled to $43.1 billion, according to the Bloomberg Billionaires Index, $5.2 billion ahead of Ma and just ahead of Microsoft Corp.’s former chief, Steve Ballmer.Meanwhile Anil Ambani, two years his junior, has had a difficult year, with some of his businesses suffering legal and liquidity challenges that roiled stocks, cutting his personal fortune by almost half to $1.5 billion, according to the index.Neither the brothers nor their groups responded to questions for this story regarding their wealth or business operations.The tale of the two brothers’ diverging fortunes began 16 years ago, when their rags-to-riches father Dhirubhai Ambani, whose life inspired a Bollywood film, died of a stroke without leaving a will. The industrialist, who started out as a gas-station attendant in Yemen, had built a vast business empire, financing massive factories by selling so many shares to small investors that stockholder meetings had to be held in a football stadium.A feud between his two sons following their father’s death dogged the group until their mother, Kokilaben, stepped in during 2005 and brokered a truce. Mukesh got control of the flagship oil refining and petrochemicals, while Anil got the newer businesses such as power generation and financial services. He also took over the telecoms unit, which under Mukesh had expanded aggressively by bundling phones with mobile connections at throwaway prices.At the time, the wireless division seemed to give Anil some of the more promising opportunities. Crude oil prices had climbed to a then-record price of more than $60 a barrel in 2005, sparking concern that refiners’ margins may get eroded. India’s burgeoning mobile-phone market was hailed as the future. 66280916 A non-compete clause between the brothers kept Mukesh out of that arena until the agreement was scrapped in 2010. Mukesh quickly returned, pumping in more than 2.5 trillion rupees ($34 billion) over the next seven years to build a speedier 4G wireless network for his Reliance Jio Infocomm Ltd.“It was a very, very big bet,” said James Crabtree, a professor at the Lee Kuan Yew School of Public Policy in Singapore and author of the book “ The Billionaire Raj,” which examined wealth inequality in India. Jio also gave Mukesh the chance to forge his own legacy beyond the shadow of the businesses he had inherited, he said. “Jio in that sense was an all-in bet.”It took a long time to pay off. Reliance’s shares lagged S&P BSE Sensex index for most of the past decade as investors watched Mukesh pour money into his telecom network with little sign of a return at first. 66280917 When it came in 2016, the impact was dramatic. By July this year, less than two years after starting the service, Jio had signed up 227 million users and was making a profit. Rivals were bleeding as Mukesh’s upstart embarked on a devastating price war, offering monthly plans for as little as $2.“Reliance’s strategy to diversify beyond the energy sector was the biggest game changer,” said Sanjiv Bhasin, executive vice president at India Infoline Ltd. “Mukesh Ambani had the 10-year vision to foresee that data will be the next gold and he invested heavily.”What financed that investment was Dhirubhai’s old oil and petrochemicals business, which, expanded by Mukesh, still accounts for 90 percent of Reliance’s profit. Cash flow from the business, together with a blue-chip rating gave Reliance Industries access to a large pool of cheap capital. “Mukesh Ambani has very adroitly used this competitive advantage,” said Saurabh Mukherjea, founder of Marcellus Investment Managers.Meanwhile, Anil has been selling assets to quell investor concerns around the indebtedness of some of his companies that contributed to declines in his shares.Like his brother, Anil invested billions to expand his portfolio, but the younger brother didn’t have a cash cow like the oil refinery to finance growth. Instead, like other businesses in India and elsewhere, many of his companies increased debt.Read here about how debt-fuelled growth is a playbook common to many conglomerates world over, with painful aftereffectsThe borrowing spree by local companies caused India’s banks to amass one of the world’s worst bad-loan ratios and when the central bank started cracking down on the resulting $210 billion mountain of stressed debt, highly leveraged companies came under pressure.“The only options any indebted company has is to sell assets, seek refinancing or get new investors,” said Crabtree in Singapore.Of Anil’s businesses, shares of Reliance Naval & Engineering Ltd. saw the worst decline this year, losing 75 percent. Bought in 2015 as part of his bet on defense as the next engine of growth, the warship and submarine maker has proven hard to turn around.Its loan accounts have been “ irregular or substandard” since 2014, the company said in March. The defense contractor is in arbitration with ex-owners over the latter’s alleged breach of some warranties. Auditors in April cautioned against the firm’s ability to survive and two creditors have an ongoing lawsuit to send Reliance Naval into insolvency. In a stock exchange filing in April that sought to allay the auditor’s concerns, the company said it is engaged with its lenders and is confident on reaching a solution “to resolve the financial position of the company and to continue as a going concern.”Other group units have also faced difficulties.Another of Anil’s defense firms has come under scrutiny over the 2016 negotiations between France and India for $8.7 billion of French warplanes. In an Aug. 20 statement, Anil and his company denied allegations from opposition lawmakers that the deal unfairly benefited his company, saying the lawmakers had been “misinformed, misdirected and misled by malicious vested interests and corporate rivals.”Anil’s Reliance Infrastructure Ltd., which built Mumbai’s first metro line, missed a bond payment in August as it waited for proceeds from the sale of power transmission assets to fellow billionaire Gautam Adani’s unit to cover the amount. It plans to be debt-free by next year, Anil said at a briefing in August.Electricity generator Reliance Power Ltd., also part of Anil’s group, has failed to stem a decade of overall decline in its shares since its record IPO in 2008, just as the global financial crisis hit.The group’s profitable financial services firm Reliance Capital Ltd. has also seen its shares decline this year, despite staying away from bad news.But the biggest challenge for Anil’s empire came from his brother’s business.Reliance Communications Ltd., once the flagship of Anil’s portfolio, was battered by the price war Jio started. Last month, Rcom sold its 178,000 kilometer fiber-optic network for 30 billion rupees as part of a disposal that will see it divest of almost all of its wireless assets and exit from the mobile phone business.The buyer was Mukesh’s Jio.RCom “was the crown jewel given away to Anil Ambani after the family businesses split,” said Bhasin. “Then the debt and interest burden spiraled.”In May, a creditor persuaded a court to begin insolvency proceedings for RCom before agreeing to an out-of-court settlement.How India’s Richest Man Shook Up Its Phone IndustryBloomberg News is currently defending litigation brought by Anil Ambani and Reliance Communications in connection with previous Bloomberg reporting.The sale of RCom assets to Jio brings the saga of the two brothers full circle and sets the stage for the next chapter in the story of one of India’s great business dynasties.Anil is gradually unwinding RCom’s debts and refocusing the firm toward real estate. This month he told investors that a property development in Navi Mumbai, a planned city across the bay from India’s financial capital, will create 250 billion rupees in value for investors.“It may be a late coming but at least he is not running away,” said Bhasin, who remains bullish on the group’s infrastructure, finance and power businesses.Mukesh is gearing up for an even bigger gamble. In July he announced plans for an e-commerce foray that would marry the group’s telecom and retail business to take on global rivals Amazon.com Inc. and Walmart Inc.While the news helped boost shares of Mukesh’s Reliance Industries since the announcement, some investors are sounding a note of caution about another ambitious expansion. Reliance Industries’ total debt has risen in the past five years and non-core investments have shown muted returns on capital.“There’s a reason investors put a discount on holding companies with diverse businesses,” said Crabtree, explaining that telecom diversification worked but “taking it much further may be one too many rolls of the dice.”In the past few weeks, Mukesh has faced his own challenges.A verdict by India’s top court last month barred non-government use of a national biometric database that telecom operators including Jio had been using to sign up customers. The prospect of a multi-fold rise in verification costs for the telecom company, together with a slump in the rupee and rising oil prices contributed to a 11 percent drop in Reliance Industries’ stock this month.Still, the media spotlight has been on Mukesh and his wife Nita, head of the Reliance Foundation, for a very different reason. Both their eldest son and daughter got engaged this year, putting the Mumbai and Bollywood elite on high alert for two epic Indian weddings. Judging by Akash’s lavish engagement party this June in the family’s $1 billion Mumbai home with 27 stories and 600-staff, they won’t be disappointed.The saga continues.
Categories: Business News

Why the developing world started gaining on the West

10 hours 1 min ago
by Noah SmithDuring the past three decades, there has been a momentous change in the global economy. One of the most troubling and puzzling features -- the failure of poor countries to catch up to developed countries -- has seemingly been overturned.Basic growth theory says that developing countries should grow faster than rich ones. One reason is that capital has diminishing returns -- as you build more offices, more houses, more cars and machine tools and computers -- the economic benefit of building yet more of those things goes down, even as the cost of maintaining them goes up. Second, poor countries can grow fast by copying technology and business practices from rich countries, which is almost always cheaper and easier than inventing new technologies and business practices from scratch.But, as so often happens in economics, reality has often failed to behave as theory predicts. Economist Lant Pritchett has documented that between 1870 and 1990, inequality between countries soared, with Europe, Japan, the U.S. and a few other countries pulling away from the pack. Of course, much of that divergence was probably due to the impact of colonialism -- it’s hard for a country to get rich when it’s under the thumb of another country. But even after decolonization, poor countries struggled to catch up for several decades. Economists Robert Barro and Xavier Sala-i-Martin found that between 1960 and 1985, poor countries continued to lose ground relative to rich ones.66281035 So was growth theory simply wrong? Maybe. All growth theories contain a fudge factor representing a nation’s fundamental capacity for productivity -- the education of its populace, the quality of its political institutions, war, damaging government interventions and so on. Controlling for measures of these things, Barro and Sala-i-Martin found that developing nations had tended to catch up -- the problem was that too many poor countries fell into civil war or embraced communism or failed to educate their burgeoning populations, degrading the institutions needed to sustain growth. Economists settled on the uncomfortable idea that most poor countries didn’t have what it takes, politically, to grow.Then something amazing happened. Shortly after Barro and Salai-Martin's 1992 landmark paper, the story of global growth seemed to change. Many poor countries languished in the 1990s due to low resource prices (poor countries are often natural resource exporters). China, which had been slowly making up lost ground since the end of Mao Zedong’s rule in the 1970s, saw its growth accelerate in the 1990s. India and Indonesia also started to catch up, thanks in part to their own economic reforms.These countries were so large -- together accounting for almost 40 percent of the world's population -- that their growth began to drive down global inequality:66281041 Meanwhile, the divergence documented by Barro and Sala-i-Martin was reversing. Beginning in the 1990s, developing countries started to grow faster than developed ones. Outside of Africa -- where a series of bloody wars sent a number of countries into chaos in the 1990s -- the pattern was even stronger.In the 2000s, commodities prices rebounded, and natural-resource exporting countries began to share in the new wave of global growth. Meanwhile, China accelerated yet again, following its entry into the World Trade Organization in 2001 and a burst of productivity growth. The gap between sprinting developing and slow-growth developed countries became even greater.Then came the Great Recession. Rich countries and poor countries alike were hit hard by the global financial crisis, but -- unlike in previous downturns -- the poor countries didn’t suffer more. Catch-up continued. Global inequality kept falling.Now, a decade after the crisis, economists are starting to reevaluate their long-held beliefs about global convergence. Dev Patel, Justin Sandefur and Arvind Subramanian of the Center for Global Development recently looked at multiple datasets on per- capita incomes around the world, and found that no matter which measure is used, the relationship between starting income and subsequent growth has been negative since around 1990.In other words, the idea that rich countries grow more slowly has gone from fiction to fact. No longer do textbook economic theories need to be fudged -- reality has caught up. It appears that the war, bad policies, and dysfunctional institutions that afflicted developing nations in the mid- 20th century were a temporary phenomenon.And the implications for the world are enormous. With economic clout comes geopolitical heft -- the influence of the old colonial powers will steadily diminish, while their ex-colonies assume more global leadership. Some countries will even make the leap from developing to developed status, as South Korea has already done. Trade between emerging markets will continue to increase, bypassing the rich economies entirely.But most of all, the world will simply be a more equal place. Gone are the days when a few countries could lord it over others, secure in the illusion that their society had a secret sauce that others could never emulate.
Categories: Business News

Large or midcap, avoid cos with big debts:Chakri Lokapriya

10 hours 1 min ago
Earnings visibility and strong balance sheets are key in both largecaps and midcaps, Chakri Lokapriya, CIO & MD, TCG AMC, 66258539 66256110 66255492 tell ET Now.Edited excerpts: The government really seems to be doing its bit, easing some more liquidity coverage ratio norms. Do you think that will resolve the liquidity crunch in the system? What the government is doing is important and it continues to need to do so over the next several months. If you draw a parallel with another market, in US in 2008, Lehman happened and there was liquidity crunch. Thereafter, for years, the government provided liquidity. Today the issue is not so bad but for several months, RBI has to provide liquidity and then things will settle themselves.But you are not going to go out and buy any NBFCs in this decline, would you? We should stay back from buying NBFCs currently though the current quarter earnings will all look good. The whole problem started sometime last month. Against this backdrop, you are going to have a higher cost of funding which will translate into lower net interest margins and lower loan growth which will translate into lower multiples for these stocks. All of these stocks have traded at very high multiples in the past. Even now, after the correction, the multiples are still not cheap enough to buy at the current juncture. A quick take on the Reliance numbers. While the GRMs have fallen short of expectations, what continues to beat Street estimates is Jio’s performance and the retail division’s performance. While GRM saw some amount of pressure. overall the numbers were good. Petchem remains to be very strong and it is not becoming a more consumer facing company with broadband as a backbone. Now, they are getting into Hathway and other companies. The outlook for Reliance continues to remain very strong from here.What would you not buy in this decline? The way to approach this market is to stay away from all companies whether it is midcap or largecap which have high level of debt because their cost of financing has gone up, leading to fall in net profit margins. Therefore the multiples one can trade at will come down as a result. So against the backdrop, earnings visibility is key and strong balance sheets are key whether it is largecap or midcap.
Categories: Business News

Prescribe asset-liability ratio norms for NBFCs: Jaspal Bindra

10 hours 1 min ago
Jaspal Bindra, former Asia Pacific CEO of Standard Chartered and now the executive chairman of Centrum Group, said the 66261316 66258539 66257217 regulator should prescribe asset-liability ratio guidelines for NBFC lenders to avoid recurrence of the current debt-market turmoil. NBFCs should reduce their reliance on commercial papers and short-term instruments. Over the next two quarters, capital raising would be expensive and the increased cost will be passed on to the borrower, resulting in slow to flat growth, Bindra tells Saikat Das. Edited excerpts:Are NBFCs headed into a tougher operating environment?NBFCs that are well managed, focused and have robust risk management process will continue to do well. They play a pivotal role in the economic growth. Besides microfinance institutions, they finance assets such as two-wheelers, tractors, commercial vehicles. The demand for which will continue to grow.However, over the next two quarters, capital raising will become expensive and the increased cost will be passed on to the borrower, resulting in slow-to-flat growth for NBFCs.Do you hold only IL&FS responsible for the latest NBFC crisis?No. IL&FS did limited third-party lending. However, its default brought forth a larger problem of asset-liability mismatch. This is prevalent across many NBFCs and housing finance companies as they use short-term capital to finance long- term assets. It is difficult to draw out an appropriate asset-liability mix as borrowings vary from sources of funding, nature of products, tenure of loans. In an event of a default like IL&FS, lenders to NBFCs get cautious, reduce their exposure and, hence, there is a slowdown.What needs to be done to regain investor confidence in NBFCs?There should be some guidelines set by the regulators on appropriate asset-liability ratio (ALM). Moreover, NBFCs need a line of liquidity. Unlike commercial banks that can approach the central bank for liquidity under various schemes or pledge their government bonds, NBFCs need a window to either re-finance their assets or have short-term accommodation against their illiquid assets.What should be the ideal sources of funding for NBFCs to match their assets?NBFCs need to reduce their reliance on commercial papers as they are short-tenor and significantly expensive. A route currently prevalent in priority sector lending is securitisation or taking leverage on receivables. This, if implemented, could help in acquiring capital at a reasonable price. Alternatively, capital markets and banks are always a dependable source.Where do you see the Centrum Group in the current circumstances?We currently have minimal shortterm borrowings. Our outstandings payable by March 31, 2019 are below ₹50 crore. Less than half of our lending book is bank financed. Our recent acquisition of L&T Finance’s supply chain finance business is fully financed and accounted for. We have diversified our revenue streams to build in a balanced mix of fee-based income and interest income from our lending businesses.This way, the business has sufficient interdependence to succeed across economic cycles.Since you took over, what are your business additions to the Centrum Group?Centrum predominately followed a fee-based model with operations in investment banking, wealth management, stock broking and money exchange. After my joining, we have diversified into the lending businesses of housing finance, SME finance and microfinance. We also received a direct insurance broking licence and offer services from life, general, and health insurers.We launched our maiden PE fund and will soon launch a new structured credit fund under the AIF route. We have also started a real estate management and advisory platform. We recently divested our money exchange business.Will a falling rupee have a debilitating effect on India’s economy?Economic growth is a combination of multiple factors such as GDP, inflation, CAD, political factors, oil prices, and interest rates. Falling rupee is a contributor, but not the only determinant. India is a net importer; hence it could have some short-term impact on economic growth. However, export sectors such as pharma and IT will do well.Also, with the upcoming festive season, sectors such as FMCG, consumer durables look positive due to strong domestic demand. A favourable monsoon too has reduced growth concerns.Is India slipping into a recession in dollar terms?It is too premature to forecast a recession for India; particularly due to the upcoming state and general elections, one can predict high consumption spending. A lot will also depend on the government’s reaction to the current market situation.Given the on-going trade war, will the world face a recession?Global economic growth will definitely slow down. However, it may be marginally positive for India, assuming there are no sanctions imposed on us. Chinese products will become more expensive and people may look for cheaper alternatives that are available in India. Also, Chinese companies could consider manufacturing and exporting from India.
Categories: Business News

No place for Naresh Goyal in Tata Group's plan to buy Jet

13 hours 3 min ago
The Tata Group wants complete control over Jet Airways along with the exit of existing promoters, the Goyal family, and has rejected an initial proposal for part-ownership and joint control of the airline.People close to the talks said the Tata Group has made it clear to Jet representatives that it is interested in an outright purchase either of the entire company or its assets such as aircraft and other aviation-related infrastructure.It will not, however, be interested in a deal where the Goyals, who currently own 51 per cent of Jet, retain significant control. The Times of India had reported on Thursday that the Tata Group and Jet Airways were in initial talks for a stake sale.Jet representatives offered the Tatas 26 per cent and some board-level positions, including vice-chairmanship. This proposal has been rejected. “The Tatas are interested in buying out the entire airline and significantly scaling up the existing business,” said a top official close to the development. 66279585 A Jet Airways spokesperson said the information is totally speculative while the Tata Sons spokeswoman said, “We do not comment on market speculation.” “We are looking at a single scalable entity and our plan will be the way we did the steel acquisition… we are not interested in small, incremental alliances and looking at a deal beyond asset sales,” said another person working with the Tata Group.Tata Sons chairman N Chandrasekaran and Jet Airways chairman Naresh Goyal have met once. The talks could still go on if a proposal more amenable to the Tatas is put on the table.Texas-based private equity giant TPG Capital had also rejected a similar offer for part-ownership by Jet Airways. Goyal and wife Anita own 51 per cent in the airline while UAE’s Etihad Airways has 24 per cent stake.The airline had two rounds of negotiations with TPG Capital, but the talks got stuck due to differences over controlling rights and Goyal’s demand for a role post acquisition. A spokesperson for TPG declined to comment.Cash-strapped Jet, which has delayed salaries to pilots and key executives, has been in talks with both strategic and financial investors to sell assets and a major chunk of its business to stay afloat. It had informed stock exchanges of its plan to sell the frequent flyer business, JetPrivilege.The Tata Group, which founded Air India decades ago, has two aviation joint ventures. One is Vistara, a full-service carrier with Singapore Airlines, and the other is a low-cost carrier with Malaysian budget airline AirAsia.If talks with Jet succeed, the group will revamp its existing aviation ventures and align everything with Jet, said another person mentioned above.“Ideally, we should have one airline,” a senior official had said in an earlier interaction with ET.
Categories: Business News

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