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Market Movers: Metals, pharma stocks sink; 136 scrips blip sell

January 18, 2021 - 7:53pm
MUMBAI: The domestic benchmark equity indices got off to a weak start for the week as they saw deep losses in the session on hefty profit booking and weak cues from global equity markets.The losses were widespread as smallcap and midcap stocks saw deeper cuts than their largecap peers amid signs of some cooling off in buying from foreign institutional investors.The breadth of the market was extremely weak as nearly four stocks fell for every that rose on the National Stock Exchange. All sectoral indices on the NSE also ended in the red.Nifty50 ended 152.4 points, or 1.1 per cent, lower at 14,281.30 while the 30-stock Sensex closed at 48,564.27, down 0.96 per cent, or 470.4 points.Here are the major movers from today’s session:UPL soars on strong Q3 earnings hopesShares of UPL ended 7.4 per cent higher and as the top gainer on the Nifty50 index on expectations of strong December quarter earnings performance. Market participants said the stock’s cheap valuations was also attracting interest from some high net-worth individuals.RIL bucks the trend on Goldman Sachs’ viewThe index heavyweight bucked the weak trend in the broader market and rose 2.4 per cent after brokerage firm Goldman Sachs issued a bullish note on the stock. Goldman Sachs believes that risk-reward is in the favour of investors as it sees 23 per cent upside in RIL going ahead.Metals, pharma stocks sinkThe heaviest correction today was seen in metal and pharma counters in the market. Nifty Metal plummeted 4.1 per cent to become the top sectoral loser. Nifty Pharma came in second as it tumbled nearly 3 per cent.HDFC Bank rises on strong Q3 numbersLike RIL, HDFC Bank stock also bucked the sell-off as the lender’s strong earnings for the December quarter helped the scrip rise 1.1 per cent.Sell signals galoreAs many as 136 stocks on the NSE gave a “sell” signal based on MACD readings. The list includes BHEL, ONGC, Tata Motors, RBL Bank, and HCL Technologies.What’s ahead for market?Nifty50’s Options chain did not make for a pleasant reading for the bulls as all out-of-money strike price Call options saw heavy selling suggesting that a sharp rebound may be unlikely in the coming days.“We have broken the crucial support of 14,350 and should ideally be headed further south to levels closer to 14,150 and then 14,000. Markets have become volatile and strict stops must be placed on all trades. 14,500 has become a resistance zone and any rally up can be utilized to short the Nifty for lower targets,” said Manish Hathiramani, proprietary index trader and technical analyst at Deen Dayal Investments.
Categories: Business News

Delhi and Tokyo ink new pact for employment

January 18, 2021 - 4:53pm
NEW DELHI: As part of efforts to promote soft power Japan’s Ambassador to India Suzuki Satoshi and Foreign Secretary Harsh Vardhan Shringla on Monday signed the “Memorandum of Cooperation between the Government of Japan and the Government of Republic of India on a Basic Framework for Partnership for Proper Operation of the System Pertaining to ‘Specified Skilled Worker’”. “Specified Skilled Worker (SSW)” is a new status of residence created in Japan in April, 2019. Japan established this system to accept foreign nationals who have a certain level of expertise and skill. With a declining population and ageing society, there are abundant job opportunities in Japan in certain sectors, officials stated. Suzuki said, “With the MOC we are going to sign today, new opportunities will be open for Indian nationals to get employment in Japan.” Those Indian nationals who possess certain professional and language skills are eligible to work under the system of SSW. There are 14 specified industry fields: (1) Nursing care(Caregiving), (2) Building cleaning management, (3) Machine parts & tooling industries, (4) Industrial machinery industry, (5) Electric, electronics and information industries, (6) Construction industry, (7) Shipbuilding and ship machinery industry, (8) Automobile repair and maintenance, (9) Aviation industry, (10) Accommodation industry, (11) Agriculture, (12) Fishery & aquaculture, (13) Manufacture of food and beverages, and (14) Foodservice industry.The MOC sets a framework between the Governments of Japan and India, allowing information sharing and problem-solving in order to protect Indian nationals coming to Japan as SSW and facilitate a smooth implementation of the SSW system. With the status of SSW, foreign nationals can stay and work in Japan up to five years. As the system of SSW is in place to welcome foreign nationals who can begin work immediately with a certain level of expertise and skill as well as language proficiency*, only those who pass relevant exams are entitled. Accordingly, the two Governments will hold consultations in the near future to prepare for the implementation of the SSW system with India. As language proficiency is required, it is hoped that the new opportunities presented by the system of SSW will also spur interests in Japanese language studies, according to a Japanese official. In this regard, SSW presents not only a new job opportunity to talented Indian people, but also prospects for wider and tighter people-to-people exchanges, bringing the already excellent bilateral relations to another level. Suzuki said, the system of SSW” is a “great addition to our people-to-people exchanges and thereby will further enrich the already excellent bilateral relationship between Japan and India.”There is another scheme called “Technical Intern Training Program (TITP)”. TITP is up and running with India from October 2017. The difference with SSW is that TITP’s main objective is training and skill development. Already a number of Indian nationals are participating in TITP and acquiring skills in Japan. Those who completed a certain level of TITP can also transition to the status as SSW, without taking exams on expertise or Japanese language.
Categories: Business News

Oppo India in process to file 80 patents, focus on 5G

January 18, 2021 - 4:53pm
New Delhi: Smart devices maker Oppo India is in the process of filing 80 patents and will enhance focus on the development of 5G device ecosystem in 2021, a senior company official said on Monday. OPPO India vice-president and research and development head Tasleem Arif said that setting up of a 5G lab in the country has reduced the company's dependency on headquarters and other centres of the smart devices firm. "At India research and development centre, we not only want to be the first mover on 5G but we are also contributing a lot in IPR. We have filed over 200 IPs (intellectual properties). In that 60 per cent, approximately 120, has already been filed and 40 per cent, around 80, is under process. All this has happened majorly in the last one-and-a-half years," Arif said on the sidelines of launching Reno5 Pro 5G and Enco X wireless earphones. The Reno5 Pro 5G and Enco X wireless earphones will start selling in India from January 22 across mainline retailers of the company and e-commerce platform Flipkart for Rs 35,990 and Rs 9,990 respectively. "For 2021, our key focus will be IoT and 5G because we believe that once 5G gets introduced then interaction within the devices will also increase. IoT will also play a key role. In that direction we are launching Enco X," Arif said. He said that India R&D contributed to 5G, seamless experience in download, and in co-developing artificial intelligence-based highlight video feature with the company's headquarter in China. "Reno Pro5 provides the industry's first AI highlight video. This is the first time AI highlight video will be introduced in a smartphone. Since we have our own set-up whatever research is required on 5G we will do ourselves. Once the 5G will come, there will be challenges around battery, video experience. We do all stability, video experience and new product testing by ourselves in India," Arif said. In OPPO Reno5 Pro 5G, the company has provided a 4350 mAh battery and flash charge facility which it claims can charge the device up to 100 per cent in 30 minutes and provide up to four hours of video playback with 5 minutes of charge. Arif said that a huge amount of investment for India R&D centre is in pipeline and it will be made as the business grows. According to IDC, OPPO stands at the third position with a record 40.2 per cent year-over-year growth, as of October 2020. According to Oppo, the Reno series has recorded over 50 per cent growth in the July-September 2020 over the previous quarter.
Categories: Business News

ET Wealth | Changing jobs? Use this checklist

January 18, 2021 - 4:53pm
It’s natural to rejoice on snagging a big, fat salary hike when you change your job. However, not many people conduct a comprehensive check or calculate all the financial changes that the move entails. The salary hike by itself is not sufficient to take a decision on whether you should shift. Consider the salary structure offered, the cost change it will incur, the work-life balance it will entail, among others. Broadly, you need to focus on two areas: evaluating the financial package your new employer is offering, and the tasks to be completed with your previous employer.Cost of changeThe first thing to check is the overall cost of moving to a new job. Your salary hike may be substantial, but the job could entail new lifestyle expenses, negating the cash gains. So if you move from a tier 2 city to a metro, you may end up spending much more on rent, household expenses, commuting to work, among other things. “A small thing like a change in work environment may dictate a change of clothes, resulting in a spending surge,” says Neeti Sharma, Senior Vice-President, TeamLease Services. “The indirect financial implications can be substantial,” she adds.Similarly, things like tax-deductible allowances, perks like travel and mobile expenses, size of insurance offered will determine whether the added expenses eat into your hike or not. If they do, reconsider shifting to the new job.Salary structureThe salary structure offered by your new employer can make a difference in your take-home pay, depending on the fixed and variable portions of your salary, tax-deductible allowances, retiral benefits, etc. “On paper, your CTC (cost to company) could be high, but the take-home salary could be compromised. While you should ensure this doesn’t happen, ultimately it depends on the financial requirements of each person,” says Sharma. So while one person may be fine with an annual allowance as a lump sum, another may need it as a monthly payment due to the high debt he may be servicing.Also check the tax benefits in terms of tax-deductible allowances offered. If the taxable component of your salary is higher than in the previous job, it could result in a higher tax outgo. “Besides, make sure your basic salary is high because if this is high, all other components will be high. Your PF, insurance and income slabs are all based on the basic salary, not on CTC,” says Sharma. Tax liabilityWhile you should not forget to collect Form 16 from your previous employer, more importantly, inform the new organisation about your previous income and TDS. If you don’t, there will be a duplication of deductions and you will end up with a tax shortfall. If this happens, you will pay additional tax after the due date along with the penal interest for late payment. Also remember that if you move to a higher tax bracket, you will end up paying a higher tax and will need to invest accordingly in tax-saving instruments.Calculate tax liability correctlyIf you switch jobs in the middle of a financial year, and fail to inform the new employer about your previous income and TDS, he is likely to calculate the TDS based on the income for the remaining months of the fi nancial year. So you may end up with a lower TDS submitted than the tax that is actually due. Consider Mr A earning Rs 75,000 per month switches to a new job at a hike of 30% in August. Here’s how to calculate his tax liability correctly. 80298054Health insuranceA crucial point to check is the health insurance being offered by the new employer. If it does not offer sufficient coverage or does not cover your spouse or parents, and you or your family members fall sick, you will end up paying from your own pocket, neutralising the salary hike. “Check if it is adequate and your parents are covered. If not, buy an independent policy for them at least a month before joining. Buy it within the active period of your existing company policy so that you have the time to decide whether to continue with the same insurer or port to a better one,” says Dinesh Rohira, Founder & CEO, 5nance.com.Work policiesIt may not seem important at the time, but fringe benefits, perks, leave policy, number of work days and work expenses can make a substantial difference in your lifestyle expenses and work-life balance. So check whether your mobile and transport bills are covered by the company. If they were covered earlier but your new employer does not offer these, a large portion of your hike could go into paying for these. Similarly, a rise in the number of work days from five to six days a week could raise your work-related expenses like travel, eating out, etc. Also check the number of paid leaves, leave encashment policy, and whether you can share your leaves with your colleagues. “Leave encashment is a huge financial cost for companies and most MNCs insist on their employees taking leaves,” says Sharma. Other things to check are whether the company gives the variable component of the salary or cuts most of it, and whether it pays the salary on time as your entire financial cycle revolves around it.EPF corpusMake sure you transfer your EPF corpus because if you forget or delay the shift through two or three job changes, the transfer can become complicated. Another dilemma is whether you should transfer the entire PF amount or encash it. “While it is advisable to stay invested and earn the high rate of interest in the currenct volatile times, you can withdraw if you need the money and have the discipline to reinstate the savings later,” says Rohira.Cost of changeDo not pick a new job based only on hike. Calculate the net hike by checking how far the new expenses will eat into the additional salary. Suppose you earned Rs 75,000 a month earlier and got a 25% hike, giving you an extra Rs 18,750. But you also shifted to a new city and incurred higher expenses. It may not make sense to take up the new job then. 80298076Claim your dues, benefitsMost employees leave it to the employer to make the final settlement without checking on all the dues they need to claim. Besides retiral benefits like gratuity, remember to encash your leaves, if eligible. If you have taken a loan from the company, take a no-dues certificate, along with reference letters or clearance letters that you might need later.New accountWhen you join a new organisation, you may be required to open a new salary account. The low operational activity in the old account may need you to decide whether you want to retain or close it. If you decide to close it, remember to end the ECS mandate and shift your EMIs to the new account.Rejig financesA big hike can have a sizeable impact on your finances, and as such, you may need to rejig these. “It may affect your lifestyle, spending pattern, saving as well as investment,” says Rohira. If the hike is above 10%, take a relook at your finances.Emergency corpus“Have an emergency corpus of 2-3 months while moving,” says Rohira. This is because your previous employer may take time to make the final settlement and the new employer will pay only after a month. So plan liquid savings to tide through this period.
Categories: Business News

4 things govt must focus on: Sonal Varma, Nomura

January 18, 2021 - 4:53pm
We need to understand that so far what India has seen is a normalisation to pre pandemic levels. We are not back to the growth rates that were there pre pandemic in terms of trends, says Sonal Varma, MD & Chief Economist (India and Asia ex-Japan), Nomura. The next big event is going to be the Budget. From purely a market as well as economy standpoint what are the three priorities that you think that the government is going to be focusing on?From an economic standpoint, number one there are still sectors which have not completely normalised. So, we need to understand that so far what India has seen is more of a normalisation to pre pandemic levels. We are not back to the growth rates that were there pre pandemic in terms of trends. There are still some sectors and segments that need policy support whether it is allocation towards rural employment guarantees or specific support for the MSMEs or the services sector. Second, this is a year where the rollout of vaccines implies there need to be a larger allocation for health and this is extremely important even from an economic recovery perspective because as vaccines become more widely distributed, the confidence effects will play up. Consumers have increased their precautionary savings because of the uncertainty and that uncertainties have come down as these vaccine rollouts happen. So this is going to be quite important. Third, from a more medium term perspective, the durable spending on infrastructure with the allocations is something that the government has highlighted as part of the national infrastructure pipeline. How much allocations are made there will be important as well. Let me also add a fourth. From the fixed income investors’ standpoint there will be a question as to how soon can the government get back to the medium-term fiscal consolidation path because the fiscal deficit has more than doubled this year and the timeline over which India gradually goes back into the fiscal consolidation path will be in focus as well.
Categories: Business News

World on the brink of a moral failure: WHO chief

January 18, 2021 - 4:53pm
GENEVA: The head of the World Health Organization said on Monday that the world was on the brink of a "catastrophic moral failure" on distributing vaccines, urging countries and manufacturers to share COVID-19 doses more fairly around the world. "Not only does this me-first approach leave the world's poorest and most vulnerable at risk, it is also self-defeating," WHO Director-General Tedros Adhanom Ghebreyesus said at the opening of the body's annual Executive Board meeting. "Ultimately these actions will only prolong the pandemic."
Categories: Business News

HMSI launches sports edition of Grazia

January 18, 2021 - 4:53pm
New Delhi: Honda Motorcycle and Scooter India Pvt Ltd (HMSI) on Monday launched sports edition of its scooter model Grazia priced at Rs 82,564 (ex-showroom Gurugram). The Grazia Sports Edition is powered by a BSVI-compliant 125cc engine with features such as idling stop system and side stand indicator with engine cut-off. The scooter comes with an overall re-crafted look with sporty colour and graphics along with racing stripes and red-black coloured rear suspension, HMSI said in a statement. HMSI Managing Director, President and CEO Atsushi Ogata said Honda re-invented the scooter market in the past 20 years and the launch of the new sports edition of Grazia adds more excitement to the premium scooter segment. Stating that Honda Grazia is tailor-made for those riders with youthful and fun persona, HMSI Director (Sales and Marketing) Yadvinder Singh Guleria said, "As the educational institutes start opening their campus, Grazia Sports Edition will be the new choice for many looking for their personal mobility on two wheels." The new Grazia Sports Edition will be available at Honda two-wheeler dealerships across India, HMSI said.
Categories: Business News

WhatsApp's new policy is 'voluntary': Delhi HC

January 18, 2021 - 4:53pm
New Delhi: The Delhi High Court on Monday said accepting WhatsApp's new new privacy policy is a "voluntary" thing and one can choose not to join that platform if in disareement with its terms and conditions."It is a private app. Don't join it. It is a voluntary thing, don't accept it. Use some other app," Justice Sanjeev Sachdeva said to the petitioner, a lawyer, who had challenged WhatsApp's new privacy policy. The changes were to come into effect in February but have now been deferred till May.The court also said that if the terms and conditions of most mobile apps are read, "you would be surprised as to what all you are consenting to". "Even Google maps captures all your data and stores it," the court said.The court further said it could not understand what data would be leaked, according to the petitioner, and since the issue requires consideration, it will be listed on 25 January due to paucity of time on Monday.The central government also agreed with the court that the issue needs to be analysed.WhatsApp and Facebook, represented by senior advocates Kapil Sibal and Mukul Rohatgi, told the court that the plea was not maintainable and many of the issues raised in it were without any foundation.They further told the court that private chat messages between family and friends would remain encrypted and cannot be stored by WhatsApp and this position would not change under the new policy. The change in policy would only affect the business chats on WhatsApp, they said.The petition, by a lawyer, has contended that the updated privacy policy violates users right to privacy under the Constitution. The plea has claimed that WhatsApp's new privacy policy allows full access into a user's online activity without there being any supervision by the government. Under the new policy, users can either accept it or exit the app, but they cannot opt out.The lawyer appearing for the petitioner claimed that the option to not agree with the new policy was given to users in European nations, but not in India.
Categories: Business News

Saurabh Mukherjea on listed market unicorns

January 18, 2021 - 4:53pm
The coming of age of smaller Indian manufacturers which are building dominant global franchises would be a very interesting theme in the coming years and a defining theme of this economic recovery, says Saurabh Mukherjea, Founder, Marcellus Investment Managers. From CLSA to Citi, Kotak to BofA, all are saying 2021 will be a great year for the economy but not a great year for investors because markets have moved up in anticipation of earnings recovery and valuations are trading 40-50% above historical averages. Do you see merit in this argument?I do not think anybody should be worrying about one-year outlook in any stock market. If I could predict stock price movements for six months or one year, then I would have providential powers which obviously none of us have. What is entirely feasible is that there could be breathers in the market as the stock market tries to reassess if the economy is recovering at the pace that people had expected. I have a very strong view that the market will do well over three years but can’t predict what will happen over one year. Anybody who is trying to second guess the market at a time when the economy is just about troughing out, is playing a very dangerous game. All we can do is look at fundamentals, look at the results of healthy companies, macroeconomic indicators, company-specific news and global indicators like commodity prices, oil prices, interest rates and capital flows. It appears we are in the early stages of an economic recovery. It makes sense to be constructive about the market and about high quality companies. Beyond that it will be guess work. What has changed in the last three to four months in the portfolios or the money you manage? The emphasis continues to be on clean, well-run companies. That has always been our focus in Marcellus. There are three areas where we have a little bit more focus in terms of our day-to-day research, in terms of our calling up distributors and doing more channel checks. The first one is the whole auto ecosystem. It looks like the entire auto ecosystem -- including OEMs and auto ancillaries -- is humming. Both at the OEM level and at the auto ancillary level, we will get the next layer of capex announcements as the auto companies will spend another six months with full order books and then they will try to think about the next layer of capex enhancements. Big announcements will likely come through this summer if the auto cycle holds up. The reports that we are getting from lenders indicate loan disbursals for both cars and two- wheelers are very healthy. We are doing more work on the auto ecosystem to see what else we can buy there. The second segment is high quality financials. Premier firms like HDFC Bank, Kotak Bank are long-standing favourites. As we see signs of a longer economic recovery, we are going down the market cap spectrum looking at second rung financials and we have made some significant investments there such as AU Finance Bank over the last three-four months. We are hoping to do more investments in smaller market cap financials because we believe well-run financials, well- run lenders, well-run life insurers will have a great 2-4 years ahead. The third segment will be listed unicorns. We are looking for companies which have around $800-million market cap mark. These are high quality small companies which could go on to build not just dominant franchises in India but have global potential as well. A very clear trend is coming through that well-run smallcap Indian companies are able to build globally dominant franchises. We have earlier spoken about holdings in GMM Pfaudler, Alkyl Amines. There are two other companies which are building globally dominant franchises. One is Garware Technical Fibres in Pune, which is a world class franchise in the fishing net market. The other is Ultramarine & Pigments based out of Chennai, a manufacturer of inorganic pigments and surfactants. Ultramarine & Pigments is the largest in Asia. The coming of age of smaller Indian companies which are not that well known, building dominant global franchises even though their market cap is only $1-2 billion. This would be a very interesting theme in the coming years and a defining theme of this economic recovery. I would call this a listed market unicorn story. Can you expand the last theme? You like smallcap manufacturing companies. Is it because of PLI? Is it because of low interest rates or is it because of their whole business approach and technology?Why is it that we are finally seeing smaller Indian companies come through with return on capital well north of 20% -- 22%, 23%, 24%, 25%? These are cash generating smaller Indian companies, which do not need bank financing, bank debt, bond market debt and who have significant intellectual property which is proprietary to them and who are consistently driving 20% EPS growth year after year. Why is this happening now? Why did it not happen in the 2006-2007 boom? Why did it not happen in 2014, 2015, 2016? I reckon there are three things which have played out in favour of well run Indian manufacturers regardless of market cap. First, GST has given well-run Indian manufacturers, regardless of industry, a genuinely PAN India market to play in. If you go outside Mumbai and go to Bhiwandi, just the blossoming of the logistics industry and the outsourcing by smaller manufacturers of their warehousing and trucking is a straightforward example of how GST is allowing even small companies which are efficiently run to improve their efficiency and ROC by outsourcing activities which they had to do in house. So, GST is helping well-run manufacturers regardless of market cap improve their cash flows and efficiency levels. Second, the slide of the rupee towards the 75-76 mark. It has strengthened a little bit on the back of these very strong inflows but the slide of the rupee from mid 60s to mid 70s, has given an efficiency kicker to Indian companies which export. It is evident in IT services but even manufacturing companies like Garware Technical Fibres are the exporters and they are truly benefiting from a more competitive rupee. The third aspect is for the last two-three years, we have affordable money, affordable capital and for smaller companies whose suppliers need to be able to access capital and affordable rates. It seems to benefit from a more affordable cost of capital regime coming through but it is very clear that for the first time in 12 years, we are seeing a host of well-run $1-2 billion manufacturers with really classy franchises where cash flows are very strong. Franchises are underpinned not just on low cost but around intellectual property, patents, proprietary processes and order books. The biggest challenge to them is how do they grow over the next one or two years without letting things get out of control. So, it is a very promising time for efficient well-run Indian manufacturers. Quite literally, both the domestic economy and the world seems to be their oyster.
Categories: Business News

Tomar hails farm reforms, says laws revolutionary

January 18, 2021 - 4:53pm
New Delhi: A day before the scheduled meeting with protesting farmer unions, agriculture minister Narendra Singh Tomar, on Monday, hailed the farm reforms saying that these reforms will go a long way in elevating the living standard of farmers.“The three laws enacted by the government will free farmers from all unnecessary legal bindings and help them get maximum value for their produce. Farmers will be attracted toward planting high value crops. Whenever any reform is introduced, impediments are bound to come in the way,” Tomar said while addressing a national conference on farm reforms.He said that the farm laws have been introduced after long deliberations with experts and stakeholders. “These reforms were long overdue. But previous government could not muster courage to introduce these laws. Our government under the leadership of Prime Minister Narendra Modi brought revolution in agriculture sector,” he said.Dispelling rumours that system minimum support price (MSP) will be withdrawn, Tomar said that the government has strengthened the MSP system since 2014 when BJP came into power.“MSP system will exist in future also. In fact we have included pulses and oilseeds under MSP purchase. We have increased the MSP on 23 crops by implementing the recommendations of Swaminathan Commission,” he said.Tomar said that there is still imbalance in agriculture sector even as the country has achieved surplus production in food grains. “The condition of small and marginal farmers is different than large farmers. We have done a lot of work for linking small farmers with government schemes, subsidies, MSP, technology and market so that their earnings improve,” he said.The government has increased the agriculture budget by 5 times from Rs 27,000 crore in 2013-14 to Rs 1.34 lakh crore in the current fiscal. “We have allocated Rs 1 lakh crore for farm infrastructure development which will help attracting investment in rural sector. The direct fund transfer under PM KISAN scheme will make farmers self dependent and additional disbursement of Rs 1.57 lakh crore through KIsan Credit Cards has helped them meet input cost,” Tomar said.
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Taking all efforts to extradite Mallya: Centre

January 18, 2021 - 4:53pm
New Delhi: The Centre on Monday told the Supreme Court that it is taking all efforts to extradite fugitive businessman Vijay Mallya, accused in bank loan default case of over Rs 9,000 crore involving his defunct Kingfisher Airlines from United Kingdom, but the process is being delayed to some legal issues involved in the matter.A bench of Justices U U Lalit and Ashok Bhushan posted the matter for further hearing on March 15, after Solicitor General Tushar Mehta sought some time to file report on the status of extradition of Mallya.At the outset, Mehta shared a letter of the Ministry of External Affairs’ official Devesh Uttam written to him on the status of extradition of Mallya from the United Kingdom.The solicitor general stated that Ministry of External Affairs (MEA) has raised the issue of extradition with the UK government and the Centre is taking all serious efforts to extradite Mallya.He said that government is trying its best but status remains the same and from political executive level to administrative level the matter is being looked into repeatedly.The bench took the letter on record.Mallya, an accused in bank loan default case of over Rs 9,000 crore involving his defunct Kingfisher Airlines, is in the UK since March 2016. He is on bail on an extradition warrant executed three years ago by Scotland Yard on April 18, 2017.The letter submitted by the law officer stated that, “the Ministry of External Affairs has been informed by the UK government that there is a further legal issue that needs resolving before Mallya can be extradited”.It said, “Under United Kingdom law, extradition cannot take place until it is resolved. As it is judicial in nature, the issue is confidential and you will understand that Her Majesty’s government cannot provide any more details. We also cannot estimate how long this issue will take to resolve. Her Majesty’s government fully understands the importance of this case to the government of India. I can reassure that Her Majesty’s government is seeking to deal with the issue as quickly as possible”.The letter further stated, “The government of India has been making consistent efforts for early extradition of Vijay Mallya. In November 2020, Foreign secretary Harshvardhan Shringla raised this issue with Priti Patel, UK Home Secretary who informed that UK’s legal complexities were preventing the quick extradition of Vijay Mallya”.It further said, “In December 2020, the external affairs minister Dr. S Jaishankar raised the issue with the UK foreign secretary Dominic Raab and most recently in January 2021, the Home Secretary of India raised it with the UK Permanent Under Secretary of Home. UK’s response remains the same”.On November 2, last year, the top court had asked the Centre to file status report in six weeks on the confidential legal proceedings pending in the UK on extradition of Mallya to India.The Centre had on October 5 told the apex court that Mallya cannot be extradited to India until a separate “secret” legal process in the UK, which is “judicial and confidential in nature is resolved”.The top court had also refused to accept the plea of advocate E C Agarwala, appearing for Mallya in the apex court, seeking discharge from the case.The Centre had in October, last year said it is not aware of the secret on-going proceedings against Mallya in the UK as the government of India is not party to the process.On August 31, last year the top court had directed Mallya to appear before it on October 5, 2020, while dismissing his plea seeking review of the 2017 verdict which held him guilty of contempt for transferring USD 40 million to his children in violations of court orders.When the top court had asked Mehta about the time-frame for conclusion of proceeding pending in the UK, he had said they have no information about it from the London High Commission.The Ministry of Home Affairs, in its affidavit filed earlier in the contempt case in which Mallya has been held guilty, said that the pending legal issue in the UK is “outside and apart from the extradition process” and is “confidential and cannot be disclosed”.The top court had in October, 2020 asked Mallya''s lawyer to apprise the apex court by November 2, last year what kind of "secret" proceedings are going on to extradite him.The Centre had given details of the extradition proceedings against Mallya starting from February 9, 2017 till dismissal of his appeal against extradition in UK on May 14, last year and said that the fugitive businessman has thus exhausted all avenues of appeal in the United Kingdom.The Centre had said that following the refusal of leave to appeal, Mallya’s surrender to India should, in principle, have been completed within 28 days but “the UK home office intimated that there is a further legal issue which needs to be resolved before Vijay Mallya’s extradition may take place”.
Categories: Business News

Tata Motors ties up with private lenders for commercial vehicles financing

January 18, 2021 - 4:53pm
NEW DELHI: Homegrown auto major Tata Motors on Monday said it has entered into partnerships with leading private banks, including HDFC Bank, ICICI Bank and Yes Bank, to fund its commercial vehicles.The tie-ups aim to enhance value offerings for customers of both new as well as pre-owned vehicles throughout the customer lifecycle, Tata Motors said in a statement.The offerings arising out of these tie-ups will include ancillary financial provisions such as fuel financing, working capital financing, aggregate financing and service cost financing. It will enable customers to avail attractive financial schemes from all the partner financiers with minimal formalities, it added.The other private banks include Equitas Small Finance Bank, AU Small Finance Bank, Union Bank of India and Punjab National Bank. NBFCs such as Cholamandalam Investment and Finance Co Ltd, HDB Financial Services, and Sundaram Finance are also part of the tie-ups."Our partnership will certainly add value and leverage our common strengths to meet the ever-evolving needs of our customers."We are confident of an increased reach in customer categories, product segments and geographies and hope that this will help us serve our customers in an efficient and delightful manner in the future as well," said Tata Motors Vice-President (Sales and Marketing, and Commercial Vehicles Business Unit) Rajesh Kaul.Tata Motors said its BS-VI offerings have garnered "an overwhelming response in the market, with the fleet owners appreciating the lowered total cost of ownership of the vehicles".It added that in the wake of such enthusiasm, these financial offerings promise customers easy access to financial schemes from leading banks in the country for the purchase and financing of the vehicles and services.Some of these financing solutions will target large corporate and individual customers with large fleets in the medium and heavy commercial vehicle (M&HCV) space, with attractive offerings in terms of cost and high quality of service, the company said.It added that some others will cater to small commercial vehicle (SCV) customers in semi-urban and rural locations, with special offerings dedicated to the customers of pick-up, the Tata Yodha.
Categories: Business News

Hero Motors acquires strategic stake in Hewland Engineering for undisclosed amount

January 18, 2021 - 4:53pm
NEW DELHI: Auto components maker Hero Motors Company on Monday said it has acquired a strategic stake in UK-based transmission design technology firm, Hewland Engineering for an undisclosed sum. The acquisition will enable the company to create a competitive single source entity to design and manufacture high-quality transmission products, particularly in the emerging EV segment, to OEMs (original equipment manufacturers) across North America, Europe and India, Hero Motors Company (HMC) said in a statement. Besides, it will give HMC access to Hewland's established motorsport customer base in the UK, while enabling the latter to further strengthen its product and service portfolio - particularly in the area of transmissions for electrified passenger cars - and aggressively pursue opportunities among global OEMs and Tier One suppliers, it added. Commenting on the acquisition, HMC Chairman and Managing Director Pankaj M Munjal said: "This investment represents a significant strategic inflection point for us in the transmission product segment. By combining Hewland's comprehensive design and analysis capabilities with our ability to support high-volume manufacturing we are strongly positioned to offer full-stream transmission solutions to global OEMs and Tier One suppliers." Munjal further said: "We are continuing to invest in the UK, as it is a significant hub for our EV- and cycle-focused activities in particular, as well as for Hewland's established motorsport customer base." Hewland Engineering Chairman William Hewland said over the last 10 years Hewland has built significant strengths in transmission design and manufacture, full structural and gear-train analysis and efficiency modelling capabilities for internal combustion-engine cars and, increasingly, for electrified vehicles. "This new collaboration with Hero Motors provides a capital infusion that will help us execute our strategic growth initiatives, as well as enhance our capabilities and presence within the EV market," he added. Hewland further said, "In close collaboration with Hero Motors we will be a highly competitive single source for full programme delivery - from transmission design through to high-volume manufacture - for customers across North America, Europe and India."
Categories: Business News

Why IOC is stock pick of the week

January 18, 2021 - 1:51pm
Indian Oil Corporation (IOC), the largest domestic oil marketing company (OMC) with more than 29,000 retail outlets, has reported bumper profits in the second quarter of 2020-21 and is expected to repeat the same in the third quarter. Opening up of the economy and resumption of economic activities after a long haul are helping OMCs like IOC. India’s oil demand was up 4% m-o-m in December, which was a fourth consecutive m-o-m growth. Though the oil demand for the Oct-Dec period is still down y-o-y, favourable operating factors are helping the OMCs to report better bottom-line numbers. IOC is expected to report y-o-y Ebitda (earnings before interest, tax, depreciation and amortisation) and net profit growth of 15% and 55% respectively during this period.Bumper Ebitda and net profit in the third quarter is expected due to strong marketing margins that will be able to offset muted refining margins and lower marketing volumes. Since oil price continued its upward move in the third quarter as well, there will be significant inventory gains as well (though inventory gains will be lower than the second quarter). However, if the oil price surge continues, it will be difficult for OMCs to pass on the entire costs and this in turn, may adversely affect its marketing margins in the coming quarters. Rationalising and fully utilising its vast network of outlets by offering value-added services should help IOC to extract higher profit from the marketing division.Though the refining segment will continue to lag, things have started improving there also. The refining margins, which were languishing at multi-year lows, have started showing signs of improvements. The benchmark Singapore refining profit margin for gasoline climbed to $6.29 on 14 January. After Covid induced lull, IOC’s refineries are also back to 100% capacity utilisation levels and this should help in improving its refining margins.IOC has been able to bring down its debt in the recent past and this has helped IOC to bring down its interest costs. However, the chance of further debt reduction is minimal as IOC has several expansion plans and this will necessitate increased capital expenditures in the short term. In addition to the regular expansion in its refineries, IOC also has plans to enter the ‘next generation’ energy needs. It plans to venture into hydrogen blended CNG and has started pilot testing in 50 DTC buses in the third quarter. In addition to increasing fuel efficiency by 4-5%, blending of hydrogen into CNG can also reduce carbon monoxide and hydrocarbon emissions from heavy vehicles. 80300121 Selection methodologyWe pick up the stock that has shown the maximum increase in “consensus analyst rating” during the last 1 month. Consensus rating is arrived at by averaging all analyst recommendations after attributing weights to each of them (ie 5 for strong buy, 4 for buy, 3 for hold, 2 for sell and 1 for strong sell) and any improvement in consensus analyst rating indicates that the analysts are getting more bullish on the stock. To make sure that we pick only companies with decent analyst coverage, this search will be restricted to stocks with at least 10 analysts covering it.
Categories: Business News

This MF has to prove itself under new mandate

January 18, 2021 - 1:51pm
ET Wealth collaborates with Value Research to analyse top mutual funds. We examine the key fundamentals of the fund, its portfolio and performance to help you make an informed investment decision.How the fund has performed 80300267Where the fund invests 80300257Basic factsDate of launch: 9 JULY 1998Category: EquityType: Large & MidcapAUM (As on 31 DEC 2020): Rs 2,787.5 crBenchmark: Nifty Large Midcap 250 Total Return IndexWhat it costsNAV (As on 12 JAN 2021)Growth option: Rs 392.65Dividend: Rs 17.95Minimum investment: Rs 5,000Minimum SIP Amount: Rs 100Expense ratio(AS ON 30 NOV 2020) (%): 2.12Exit load: 1% for redemption within 30 daysFund managers: Sankaran Naren and Prakash Gaurav GoelTENURE: 8 Years, 10 Months and 3 Years, 2 MonthsTop 5 sectors in portfolio (%) 80300228Top 5 stocks in portfolio (%) 80300222Recent portfolio changesNew Entrants: Aditya Birla Fashion & Retail, Hero Motocorp, Indian Oil Corp, IRCTC, LIC Housing Finance, Sudarshan Chemical Inds., Tata Motors DVR, United Breweries (Dec).Complete Exits: NLC India, Tata Steel (Nov). Alkem Labs, Chalet Hotel, Cipla, Container Corp Of India, ICICI Lombard, JM Financial, Muthoot Finance, SBI Life, V-Mart Retail (Dec)Additions: Aarti Inds, Alkem Labs, Camlin Fine Sciences, ITC, JK Cement Ltd, Zydus Wellness (Nov. ACC, M&M Financial Services, Max Fin Services (Dec)How risky is it? 80300209Should you buy?This fund has transformed from its earlier avatar of ICICI Pru Top 100, a large-cap oriented fund. The shift has resulted in bigger presence in mid-caps compared to its earlier large-cap tilt. The portfolio has also grown from less than 40 stocks to more than 60 now. However, it still retains large positions in its top bets. The fund’s track record prior to the shift was solid. However, the change in mandate has put the fund on a different wicket. While presence of a skilled, veteran fund manager provides comfort, the fund needs to prove capabilities under new mandate.
Categories: Business News

UP: Autopsy rules out vaccine link in death

January 18, 2021 - 1:51pm
LUCKNOW: The death of the 46-year-old ward boy Mahipal, posted at UP's Moradabad district hospital, who died on Sunday evening - about 24 hours after getting the Covid-19 vaccine shot - was not linked to any kind of vaccine-related adverse event, said health officials in Lucknow on Monday.Citing the postmortem report of the person conducted by a panel of three doctors, additional chief secretary information, Navneet Sehgal, said that cardiac arrest was the cause of death.The ward boy was given the Covishield vaccine during the inaugural round on January 16. He was rushed to the hospital on Sunday evening on complaints of 'breathlessness, discomfort and chest pain'. However, he was declared dead on arrival.While Mahipal's family claimed that he was feeling uneasy after the vaccination, the health officials did not relate it to the side effects. Taking a note of the matter, the district administration ordered a postmortem.The panel included Dr Shasi Bhushan, medical officer, CHC Moodhapandey, Dr Nirmal Ojha radiologist, district hospital Moradabad and Dr RP Mishra, radiologist, district women hospital Moradabad. Upon examination, the team found pus pockets in both the lungs besides noting that the cardiac muscles visibly degenerated.In their report submitted to the state health department, the panel concluded a heart attack as the cause of death and cardiopulmonary disease as the underlying cause of the heart attack. They also noted that Mahipal’s death was not linked to vaccine side effects.The panel has preserved the lung viscera for further testing along with samples of his lung, heart and also blood.
Categories: Business News

Swami Aiyar on Budget, growth & protectionism

January 18, 2021 - 1:51pm
Attacking Covid, spending on infrastructure and recapitalisation of banks on a massive scale are the three big priorities for government in the Budget, says Swaminathan Aiyar, Consulting Editor, ET Now. What would be your advice to the government on the Budget?I would say keep the direct taxes stable, please do not change them. Please go easy on protectionism. There will be a huge demand from sectors getting production linked incentives to get say another 20% import protection. If the government accepts that, we will be going in the wrong direction, especially in some of the new sectors like textiles. I do not think one is going to attract massive investment and so giving massive protection is going in the wrong direction. Don’t make India a highly protectionist economy because the first lesson of economics is ultimately duties on imports become tax on exports. We have had the advantage of the natural global tailwind of low interest rates and abundant liquidity which really wants to come into India. How can we take advantage of it? There is no point in saying funds are available if there is no demand for funds. The production linked incentive (PLI) scheme is aimed at attracting funds for investment. If it happens, it will be a good sign. Over and above that, the government needs to get cracking with its privatisation programme. If you can start privatising one PSU every month in the coming year, that would be another way of absorbing the foreign flows. But beyond that, as far as greenfield investment is concerned, these things take time. It does not happen overnight. It cannot happen in one financial year. We have to focus on what is already going on. Maybe, we can attract foreign companies a little more on the asset reconstruction front. Maybe have a massive sale of bad debts at attractive prices. That could be one way of quickly absorbing funds and getting somebody else to work. Over and above that, if the government feels like borrowing massively in order to take advantage of low interest rates for the infrastructure sector, well and good if the public sector undertakings -- ongoing projects like brownfield expansions and delayed repairs. maintenance -- can absorb money quickly. If the government wants to go on a borrowing programme, the low interest rates and the fact that the money is coming in, are already helping depressed interests in India. The effect is already there. There is no need for the Indian government to borrow from abroad when our foreign exchange reserves are so high. I do not think the game is borrowing from abroad. But wherever the flows are, harness them for your existing programmes as quickly and smoothly as possible with as little red tape as possible. Every time before budget, the super rich get scared. This time, there is a reason to be scared; the government needs a Covid cess. It may not generate a lot of revenue but a Covid cess could dampen the sentiments further.A Covid cess would be a mistake. I would say our income tax rates are already very high compared with our neighbours in ASEAN countries. The corporate tax has been brought down to 15%. The companies do not want additional tax breaks. I am afraid our income tax rates are already very high compared with our neighbours. So the idea of putting a cess on top of income tax would be a bad mistake. Just go ahead and borrow. Let the fiscal deficit be a little higher for two reasons because there are going to be two big one-time expenses this year; bank recapitalisation if you follow my formula and the Covid rollout which will also be very expensive at around Rs 100,000 crore. So just have additional deficit financing for one year. These two will automatically disappear next year. They have a sunset clause. I would say instead of trying to raise more money, be a little easier on fiscal deficit for the current financial year because it is going to come down automatically the next year. Many believe that there is very little elbow room to cut income tax rates. What do you think is going to be the government’s priority when it comes to spending?The budget is a political document. Nirmala Sitharaman will have a two-hour, three-hour speech saying I am giving one thing for every single lobby in the country from A to Z, from east to west, from north to south. That is politics. Certainly something will be provided for farmers, that is politics. But the government can step up large scale spending. It has already been spending on infrastructure. There are many projects which are ready or programmes where the government can quickly spend on repairs and maintenance. The government cannot spend money quickly on new projects. Tending and other procedures take time. So I think the priority would be the Covid rollout. Everybody has to be vaccinated. There has to be a huge communications campaign. They have to tell people that 70% people either have been vaccinated or already have immunity. So, please go out and spend money as normal. Go to shopping malls, go to theatres, go on pilgrimages, go on holidays. There has to be a huge campaign to revive confidence. So attacking Covid, infrastructure and recapitalisation of banks on a massive scale are the three big priorities. What could the Budget have for capital markets?When things are going well, why do anything? You do not need to reduce the flow, you do not need to do any tax raise or anything to increase the flow. It would be a bad idea if you somehow try to tax the inflows. That is a tailwind for us. So the government should just say that this is a good situation and we want it to continue. We should not have a government that is constantly trying to tinker with every tax and every sector. Just say this is one area where things are going okay. I am not going to do anything further for the current year. Whatever is happening let it continue. How would you look at the kind of growth that we are seeing now? Does it seem as dire as was originally anticipated?I would say that I have been very impressed by the speed of the recovery in the last quarter. When I look at the PMI figures, manufacturing data, overall, we have proved our resilience. The economy is not in such a bad shape as I had originally expected. GDP in the current year may be no more than minus 6-7% against minus 10% or even 14% that some people were predicting. In the coming year, if the world as a whole recovers from Covid -- which is not guaranteed because there is a second Covid upsurge in the West and in Japan -- and I hope that will soon be taken care of. Vaccinations are beginning, let us hope within three to six months that gets solved. If the world economy rebounds and given our resilience, I will not be surprised if India has record GDP growth of 10-12% in the coming year. That itself will give a big boost to revenues, it will bring down the fiscal deficit, it will make things easier for every branch of finance if we have this very fast rate of industrial growth. If things go okay, we can look forward to very fast GDP growth in the year ahead. But what happens after that? Then we will still need these basic reforms to make us competitive. We are uncompetitive in land acquisition and the cost of land and the cost of money. Labour reforms are not deep or wide enough. We still have a problem that electricity rates and freight rates are too high because we are using these high rates to subsidise passengers in the case of railways and farmers in the case of agriculture. We need to get rid of some of these distortions and become more competitive for the year beyond. I hope the Budget has some kind of ideas of a long-term nature, planning what should happen over the next five years. Those reforms need to be announced now and a start should be made in a phased manner. The optimist in me is saying agri is back, interest rates are low, services comes back next year and thanks to the Covid vaccine, the sentiment will definitely be better than in the last six months. Are we in for a big surprise on the economy and on the earnings?As I said, if we are going to have 10-12% GDP growth -- here I am being as optimistic or more optimistic than you -- then against that we are going to have massive provisions for NPAs. As I said the twin balance sheet problem is going to be twice as bad this time as it was in the last great recession of 2008-09. So on the one hand GDP is going to make a big rebound, which is positive but the government must make sure that the financial sector which has really been scarred very deeply by this crisis is also able to participate in that boom and that is the only caveat. I am an optimist but if earnings go up but if you tell the truth about the balance sheets, huge bad debts coming up. To that extent, the financial sector may not be looking pretty at all in the year to come.
Categories: Business News

'Amitabh's voice removed from Covid caller tune'

January 18, 2021 - 1:51pm
The Delhi High Court was on Monday told that megastar Amitabh Bachchan's voice has been removed from the caller tune on precautions against coronavirus and therefore, nothing remains in the PIL which sought its removal.The submission was made before a bench of Chief Justice D N Patel and Justice Jyoti Singh by the petitioner who said that with the removal of the actor's voice from the caller tune his plea has become infructuous.Taking note of the submission, the court disposed of the petition as not pressed.The petitioner had sought removal of the voice of the megastar from the caller tune on the ground that the actor himself, along with some family members, had been infected by the virus.
Categories: Business News

Investors should remain invested: CEO, Invesco MF

January 18, 2021 - 1:51pm
My advice to investors will be to remain invested. Markets will have their ups and downs, and as investors, we should focus only on our financial goals, says Saurabh Nanavati, CEO, Invesco Mutual Fund. Here is his take on equity funds in the coming years and more. What is your assessment of current market scenario and economic recovery?The global crisis of 2020 was not economic in origin but started as a health crisis. Economic growth in the coming year will be dependent on a variety of factors—infection rates, fiscal policy, monetary policy, public health policy, including the severity of lockdowns, progress in therapies and a vaccine, and consumer and business confidence. Our base case scenario suggests a continuing favourable set-up for equities as growth comes back, global earnings cycle recovers, costs are cut to improve efficiency and risky assets are supported by ample money supply from Central Banks.India enters 2021 with some advantages. Besides a rapidly improving covid scenario, economic activity is fast returning to normal providing a fillip to corporate earnings growth. We expect a good part of it to sustain in the coming quarters as well. Moreover, overall macro indicators seem benign and corporates and consumers will continue to enjoy the benefit of the more than 200 bps reduction in interest rates over the past two years. India should be a key beneficiary of a weaker dollar, preference for emerging markets over developed markets; the government’s resolve to hard pedal reforms, thereby attracting more equity flows.While the strong move of the market over the past 6-7 months may make investors cautious, we don’t think the overall market balance can be described as particularly adverse. Some valuations appear stretched for the short-term but deep corrections are unlikely, given the huge liquidity waiting to invest. We always advice investors to participate in the markets and leave the job to professional fund managers to manage the portfolio prudently by getting off the expensive stocks and shifting to more reasonable stocks on an ongoing basis.What is the best way for investors to approach a runaway market like this?My advice to investors will be to remain invested . Markets will have their ups and downs, and as investors, we should focus only on our financial goals. If these goals are achieved earlier than anticipated, then you could book profits or rebalance to suit your asset allocation according to risk profile. Seek assistance of your adviser about any rebalancing. Trying to time a correction is a futile exercise and the loss of not participating has always been more than the gain in timing the correction.Your equity funds have performed well. How are you positioning for the next few years?We run a variety of strategies in the equity space, each defined by underlying mandates. We prefer to run with reasonably compact high-conviction portfolios with high active components across funds. Our stock selection is guided by our unique stock categorisation process that allows for risk-adjusted returns and is good at avoiding accidents. Each of the strategies is well-defined with respect to their growth/value balance and market cap exposures. Our funds are not configured for the highest absolute returns but more for consistent returns year-on-year.Is Invesco India Multimap retaining presence in its category given its stance?Invesco India Multicap Fund has always been run in the spirit that it should provide a balanced exposure to large, mid and small-caps in nearly equal proportion over a market cycle. The fund has maintained a discipline of not having more than a 50% exposure to large caps while simultaneously keeping a minimum 50% exposure to mid and small-caps at all times. This structure will likely lead to more consistent performance outcomes over market cycles compared to the one which envisages to move allocations from large to mid/small and vice-versa at various points in time. The recent change in regulations regarding multi-cap funds has vindicated our stance and has allowed us to continue in this category without having to undertake any rebalancing of our portfolio.While redemptions from equity funds have been high, SIP flows continue to see strong traction. How are you reading investor behaviour?The stock market crashed in March 2020. If you look at the industry numbers, March witnessed higher inflows. Unlike other previous market crashes, investors did use the opportunity to make investments in equity and take advantage of the lower prices. Since then equity markets have made a remarkable comeback. It is understandable to expect some profit booking, rebalancing and realigning of portfolios. With the industry doing so much of education around SIPs, I believe retail investors will continue investing in equity through SIPs as these are aligned to long-term financial goals.Are measures taken by Sebi to plug gaps in debt fund risk practices enough to reinforce investor confidence?Our regulator has been very proactive and some of the measures taken are steps in the right direction and will keep risks in check. These measures will go a long way in reinforcing investor confidence and retail participation across categories.Are fund houses prepared to meet the new diktat prescribing strict standards for executing trades? What operational challenges do you anticipate?Yes, fund houses are prepared for the same. Any new rule will always face teething issues, but the relevant teams start working on it immediately and make it happen. The industry has proved its resilience, with no better example than the covid crisis and operating from home for 10 months and yet all subscriptions and redemptions have been met seamlessly.
Categories: Business News

Ola Electric switches on $300 M fundraise plans

January 18, 2021 - 1:51pm
A year and a half after it got SoftBank to invest $250 million, or about Rs 1,725 crore, at a billion-dollar valuation, Ola Electric is planning to raise $300 million from existing and new investors, multiple people aware of the development said.This part of a larger strategy by the electric vehicle arm of leading homegrown ride-hailing company Ola Cabs to become a full-range electric vehicle maker by adding motorcycles, three-wheelers and other modes of last-mile transport to its product portfolio, they said.Having set up the world’s largest scooter factory of 2 million units in Hosur at a Rs 2400 crore investment, Tamil Nadu, Ola Electric will be rolling out range of electric scooters within a couple months to challenge mainstream petrol-powered scooters and disrupt the nascent yet adrenaline-packed personal electric two-wheeler segment in India.“Funds will be used for brand building, distribution,” an official said on condition of anonymity. “But unlike peers like Ather that relies on open source, Ola believes its secret sauce will be its own battery management systems, software. It’s looking at making India a global manufacturing hub.” The business is capital intensive, the person said.In 2019, Ola had spun off its EV business into a separate entity. It also had acquired a Dutch start-up Etergo BV.The company is 45% owned by Bhavish Aggarwal, co-founder of Ola; 10% by Ola's holding company ANI Technologies another 10% employees stock option pool while another 35% is held by existing investors -- Ratan Tata, Munjal family, Hyundai, Matrix Partners, Tiger Global and SoftBank. Its existing investors include Softbank, Tiger Global, Matrix Partners, Ratan Tata, Munjal family, and Hyundai among others. Likely to be priced within 5-10% of petrol powered scooters, Ola is hoping to trigger a shift in consumer preference. Electric two-wheeler sales had slipped 5% in 2020. The company claims what is currently available in the market is twice the price of mainstream scooters, which is against the economics of affordability and Ola aims to bring in its range of scooters very close to petrol engine scooters.Varun Dubey, executive director at Ola Electric, said the market is an “inflection point”, the acceptance is higher, technology has evolved, and the company is trying to bridge the “affordability gap”. The industry is poised for disruption, and it will come from outside, he told ET. Dubey refused to talk about any fund-raising plans. The company also declined to give a price point or the riding range. “We remain fully capitalised for our electric vehicle ambitions, including the setup of our global manufacturing facility in India,” Dubey said. “Once finished, this will be the world’s largest scooter factory with an initial capacity of 2 million units a year. We look forward to bringing this mega-factory online rapidly and putting our first electric scooter in the hands of customers in the coming months.”He emphasised that Ola’s e-scooters will do away with the need for frequent charging and will have a uniquely removable battery to carry it anywhere. “The nature of the scooter is changing. The engine is not the core of the product,” Dubey said. “Technology will be the soul of this category and it will be far more tech-driven product. With all the exposure to the world of technology around us, we believe the market is already ready for the switch.” Keeping its manufacturing foray in mind, Ola has hired a large number of auto industry veterans from General Motors, Ford and Korean original equipment manufacturers, preferably with EV experience, to lead this initiative. Former Hyundai India head BVR Subbu is the chairman of the venture. Kia Motors’ sales head in India has also joined forces recently. Global investors like Blackrock or Saudi sovereign fund PIF have backed large global EV plays such as Arrival and California-based Lucid Motors. Ola Electric’s fund raise is coming at a time when Ashok Leyland’s UK arm Switch is the market to raise funds for its electric buses, as ET reported on December 15.CHANGING PARADIGMWhile electric cars have broken into the mainstream, two-wheelers have lagged behind, Ola Electric believes sustainable mobility can’t be complete without a large two-wheeler penetration. The company aims to “fundamentally reimagine” how a scooter “is made, sold and experienced”, including service using technology as its core.“Ola Electric is very much a new age automotive company or a tech-centred automotive company,” Dubey said. “We are aspiring to be the world’s largest two-wheeler maker."The company plans to ride on scale by targeting India as well as global markets like Europe, Australia, New Zealand and Latin America to arrive at the right value proposition for the buyers. “It is going to be India’s most advanced manufacturing set up with autonomous robots, with our own AI-powered systems,” Dubey said. “We are building the right scale to enable these innovations and ecosystems.” The initial 2 million capacity, as per his estimates, could be achieved within 2-3 years though industry players argue it would be an audacious target, given the fact that only 25,735 electric two-wheelers were sold in India – the world's largest two wheeler market – in 2020. It is just 1.25% of the total capacity set up by the Bengaluru-based unicorn.The company is likely to integrate itself on the infrastructure front as well, high on local content with the entire supplier ecosystem, including battery.
Categories: Business News

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