The slow recovery in air travel will see the airline industry continuing to burn through cash at an average rate of $5 to $6 billion per month in 2021, IATA said. 

NEW DELHI:  The International Air Transport Association (IATA) in a fresh report has estimated that the airline industry will burn through $77 billion in cash during the second half of 2020 (almost $13 billion/month or $300,000 per minute), despite the restart of operations. 

The slow recovery in air travel will see the airline industry continuing to burn through cash at an average rate of $5 to $6 billion per month in 2021, IATA said. IATA called on governments to support the industry during the coming winter season with additional relief measures, including financial aid that does not add more debt to the industry’s already-highly-indebted balance sheet. To date, governments around the world have provided $160 billion in support.

“If these support programs are not replaced or extended, the consequences for an already hobbled industry will be dire,” said Alexandre de Juniac, IATA’s Director General and CEO. IATA estimates that despite cutting costs just over 50 per cent during the second quarter, the industry went through $51 billion in cash as revenues fell almost 80 per cent.

The industry is not expected to turn cash positive until 2022. As for India’s aviation industry, the situation is no better. Except two airlines, all other payers continue to struggle hard to remain operational and have their net worth in negative territory. 

Speculation has been rampant that the legacy brand was looking for a local partner to remain present in the world’s largest two-wheeler market.

NEW DELHI: A day after it announced shutting down its India plants, American bikemaker Harley-Davidson is said to be in advanced talks with India’s largest two-wheeler company Hero MotoCorp for a strategic alliance in the market.

According to a Reuters report citing sources, Harley is in talks with Hero to enter into a distribution arrangement that will allow the Indian company to import and sell Harley bikes as its sole distributor. 
Queries sent to Hero MotorCorp regarding the tie-up remained unanswered.

Speculation has been rampant that the legacy brand was looking for a local partner to remain present in the world’s largest two-wheeler market. Harley’s main competetor, UK’s Triumph Motorcycles, has already formed a non-equity long term partnership with Bajaj Auto to introduce mid-size motorcycles for India and the global markets.

TVS Motor too has a partnership with Germany’s BMW to develop mid-engine size motorcycles. But, Harley had on Thursday, said it is closing its manufacturing facility in Bawal (Haryana) as it looks to shift its focus back to more profitable motorcycles and core markets. Experts feel a tie-up can turn into a win-win situation for Harley and Hero.

“Demand for 350-700 cc bikes remains strong in India. Harley is a very strong and aspirational brand while Hero is massive in size and reach. If they are able to bring fresh and price competitive products, it will have huge potential to succeed,” said a senior auto analyst.

PMC bank and RBI are continuing to engage with the stakeholders to explore the possibility of finding a viable and workable solution for the resolution of the bank,” it said.

NEW DELHI: The Reserve Bank of India on Tuesday appointed former Union Bank of India executive A K Dixit as the new administrator of PMC Bank, replacing J.B. Bhoria, who stepped down on September 22 due to health reasons.

A year after the RBI superseded the board of crisis-hit Punjab and Maharashtra Co-operative (PMC) Bank, the RBI-appointed administrator is yet to succeed in finding a resolution plan for the bank. Citing reasons behind sluggish turnaround, the regulator said massive losses and steep erosion in deposits pose challenges to revival.

“While the administrator of PMC bank and the RBI have been exploring various options for resolution of the bank, several factors such as huge losses incurred by the bank resulting in its entire net worth getting wiped out, steep erosion in deposits, etc. continue to pose serious challenges in finding a workable plan for revival of the bank,” the RBI said.

The cooperative bank has also been making efforts for recovery of bad loans but has been constrained by the Covid-19 pandemic and legal complexities, RBI said. “Nevertheless, in the interest of the depositors, PMC bank and RBI are continuing to engage with the stakeholders to explore the possibility of finding a viable and workable solution for the resolution of the bank,” it said.

On 24 September last year, RBI put severe curbs on PMC Bank, including on cash withdrawals, amid a probe into accounting lapses.The directive is valid till December 22 this year as of now.  Of its total loan book of Rs 8,383 crore as on March 31, 2019, about 70 per cent had been taken by real estate firm HDIL. While the efforts to recover money from HDIL are still halfway, the administrator has approached major banks with a merger request.

Rescue operation
While enhancing the withdrawal limit to Rs 1 lakh in June, the RBI had said “more than 84 per cent of the depositors of PMC will be able to withdraw their entire balance”.

KKR will invest Rs 5,550 crore in the Mukesh Ambani-led Reliance Retail Ventures

Global investment firm KKR is set to buy a 1.28 per cent equity stake in Reliance Industries Ltd.’s retail business, according to a company statement. 

“This investment values Reliance Retail at a pre-money equity value of Rs 4.21 lakh crore. This marks the second investment by KKR in a subsidiary of Reliance Industries, following a Rs 11,367 crore investment in Jio Platforms announced earlier this year,” Reliance Industries said in a statement

KKR will invest Rs 5,550 crore in the Mukesh Ambani-led Reliance Retail Ventures.

Operating India’s largest, fastest-growing, and most profitable retail business, Reliance Retail, a subsidiary of RRVL, has up to 12,000 stores nationwide.

Mukesh Ambani, Chairman and Managing Director of Reliance Industries, said: “KKR has a proven track record of being a valuable partner to industry-leading franchises and has been committed to India for many years.

We look forward to working with KKR’s global platform, industry knowledge, and operational expertise across our digital services and retail businesses.”

This marks KKR’s second investment in Reliance after it pumped in Rs 11,367 crore in Mukesh Ambani’s Jio platform for a 2.3 per cent stake earlier this year. 

Henry Kravis, co-founder, and co-CEO said “Reliance Retail’s new commerce platform is filling an important need for both consumers and small businesses as more Indian consumers move to shopping online and the company offers tools for Kiranas to be a critical part of the value chain.”

Meanwhile, on September 9, RIL had announced the divestment of 1.75 per cent stake in the retail arm to private equity firm Silver Lake Partners for Rs 7,500 crore.

Analysts had earlier predicted that Reliance Industries’ stake sale in its retail arm will enable the company to pursue other growth initiatives while maintaining zero net debt status and also help solidify its position in the market.

The government also said that state-owned BSNL and MTNL have not planned introducing 5G services yet on their networks.

NEW DELHI: The government on Wednesday informed Parliament that introduction of 5G services in the country will depend on equipment, device ecosystem and economic considerations by telecom operators.

The government also said that state-owned BSNL and MTNL have not planned introducing 5G services yet on their networks.

Minister of State for Telecommunications Sanjay Dhotre, in a written reply to a question on the 5G rollout, said, “5G services depends on 5G equipment and device ecosystem, and economic considerations by the telecom service providers.

” In response to a question on the warning over data theft and national security, Dhotre said the US has intimated about the use of 5G clean path to protect the data and networks of US diplomatic facilities.

The 5G clean path is an end-to-end communication path that does not use any equipment from untrusted vendors.

“To address security concerns of telecom network, security conditions are incorporated in the licence conditions of telecom service providers.

The National Centre for Communication Security (NCCS), Bengaluru has also been established and has been entrusted with the task of preparation of Indian telecom security assurance requirements,” Dhotre said.

Responding to a separate query with regard to 5G rollout, the minister said that 5G services have not been rolled out in the country as yet and the state-run telecom firms BSNL and MTNL have informed the government that they have not yet planned introduction of 5G services on their networks.

Globally, over 100 telecom networks have adopted 5G technology.

In India, telecom operators applied for spectrum to start 5G trials in August 2019 but the Department of Telecom (DoT) is yet to allocate radiowaves.

Dhotre said that the DoT had in March 2018 approved a multi-institute collaborative project to set up indigenous 5G test bed at a total cost of Rs 224 crore.

The collaborating institutes include IIT Madras, IIT Delhi, IIT Hyderabad, IIT Bombay, IIT Kanpur, IISc Bangalore, Society for Applied Microwave Electronics Engineering & Research (SAMEER) and Centre of Excellence in Wireless Technology (CEWiT).

The project envisages setting up of an end to-end open 5G test bed in a distributed architecture model, and it will enable Indian academia and industry to validate their products, prototypes and algorithms, Dhotre said.

It will also provide facilities for experimenting and demonstrating 5G applications, he said.

Recently, Reliance Jio also announced development of indigenous 5G technology products, Dhotre said.

Reliance Jio Infocomm and Bharti Airtel submitted fresh applications for field trials in July but they are yet to get the spectrum.

Denying reports of non-expansion in the country due to higher taxes, the company said it plans to invest Rs 2,000 crore in developing vehicle technology and electric components.

NEW DELHI:  Japanese carmaker Toyota Kirloskar on Tuesday said that they continue to remain committed to the Indian market and their operations in the country is an integral part of their global strategy. Denying reports of non-expansion in the country due to higher taxes, the company said it plans to invest Rs 2,000 crore in developing vehicle technology and electric components.

“The news that Toyota Company will stop investing in India is incorrect. vikram kirloskar has clarified that Toyota will invest more than Rs 2,000 crore in next 12 months,” Union minister Prakash Javadekar tweeted. Responding to the tweet, Vikram Kirloskar, vice-chairman of Toyota Kirloskar Motor( TKM) said, “Absolutely! We are investing Rs 2,000+ cr in electric components and technology for the domestic customer and export.

We are committed to the future of India and will continue to put all effort in society, environment, skilling and technology.” The report was not taken lightly by the Indian government as it undermines its  effort to attract investment in the country, especially from manufacturers who are looking to exit China. The Centre is planning to shell out incentives worth  $23 billion to attract manufacturers to set-up plans in India.

For the Covid-hit auto sector, the government has already promised looking at high GST rates and rolling out incentive-based scrappage policy by September end. Earlier in the day, TKM in a statement said that its first step is to ensure full  capacity utilization of what it has created and this will take time.

It added that in wake of the slowdown, further exaggerated by the Covid-19 impact, the automobile industry has requested the government for support through a viable tax structure.  TOM’s market share in the last one year has fallen from five per cent to below five per cent share in the  domestic passenger vehicle market.  The sector is dominated largely by Maruti Suzuki and Hyundai Motors.

The numbers are provisional as banks will be able to update the final data by the end of the day, the source said.

MUMBAI: Total tax collection of the Centre, including advance tax collection for the second quarter, fell 22.5 per cent to Rs 2,53,532.3 crore till September 15 of the current fiscal as compared to the year-ago period, according to an income tax department source.

The source shared some details about the provisional data. During the same period ended September 15, 2019, total tax collection stood at Rs 3,27,320.2 crore, the income tax department source from Mumbai zone told PTI over phone on Wednesday.

However, the source refused to share the advance tax numbers separately for the current quarter. The numbers are provisional as banks will be able to update the final data by the end of the day, the source said.

During the first quarter ended June, gross tax collections fell 31 per cent driven down by a massive 76 per cent plunge in advance tax mop-up, as the country was in a full lockdown due to the pandemic.

Of the total collection till September 15, when taxpayers, both individuals and companies, are supposed to pay advance tax for the quarter, personal income tax at the national level stood at Rs 1,47,004.6 crore and corporation tax at Rs 99,126.2 crore, totalling the two major components of the tax revenue at Rs 2,46,130.8 crore, the source said.

The total collection fell 22.5 per cent, led by a 13.9 per cent dip in collections from  Mumbai, which is the largest tax base, contributing to more than a third of the national collection.

The megapolis still continues to be the most affected region by the pandemic. Total collection from the nation’s financial capital fell to Rs 74,789.6 crore, down 13.9 per cent year-on-year (y-o-y), the source said but refused to share advance tax numbers for the quarter.

Of the total mop-up from Mumbai, total personal income tax till September 15, stood at Rs 34,808.8 crore and corporate tax was at Rs 32,921.2 crore.

Among the major tax collection zones, Bengaluru is the only zone where collection grew y-o-y clipping at 9.9 per cent over the past year.

The tech city contributed Rs 40,665.3 crore to the national tax kitty, up from Rs 36,986 crore a year ago, while Kochi reported the worst  collection for the year with a massive 49 per cent plunge in collections at Rs 3,214.7 crore, the source said.

The numbers are provisional as banks will be able to update the final data by the end of the day , the source added.

NEW DELHI: US private equity firm Silver Lake Partners has picked up 1.75 per cent stake in the retail arm of Reliance Industries for Rs 7,500 crore, the Indian firm said in a statement.

“Reliance Industries Limited and Reliance Retail Ventures Ltd (RRVL) announced today that Silver Lake will invest Rs 7,500 crore into RRVL, a subsidiary of Reliance Industries,” the statement said.

This investment values RRVL at a pre-money equity value of Rs 4.21 lakh crore. Silver Lake’s investment will translate into a 1.75 per cent equity stake in RRVL on a fully diluted basis.

This marks the second billion-dollar investment by Silver Lake in a Reliance Industries subsidiary after the USD 1.35 billion investment in Jio Platforms announced earlier this year.

“Reliance Retail Limited, a subsidiary of RRVL, operates India’s largest, fastest growing and most profitable retail business serving close to 640 million footfalls across its about 12,000 stores nationwide,” the statement said.

With more than USD 60 billion in combined assets under management and committed capital and a focus on the world’s great tech and tech-enabled opportunities, Silver Lake is the global leader in large-scale technology investing.

Its other investments have included Airbnb, Alibaba, Alphabet’s Verily and Waymo units, Dell Technologies, Twitter and numerous other global technology leaders.

After monetising Jio Platforms — which houses the firm’s telecom arm and digital ventures, richest Indian Mukesh Ambani is looking to rope in investors in the retail business.

Reliance may be looking to sell about 10 per cent of Reliance Retail. Late last month, Reliance acquired the retail and logistics businesses of Future Group for Rs 24,713 crore to boost its retail vertical.

Silver Lake was the first US private equity firm to invest in Jio after tech giant Facebook took a 9.99 per cent stake in the company for Rs 43,573.62 crore. Silver Lake bought 2.08 per cent in Jio in two tranches for a total of Rs 10,202.55 crore.

Rival private equity groups KKR, Vista and General Atlantic followed Silver Lake to take stakes in Jio. Other notable investors included Google and Abu Dhabi’s sovereign wealth fund Mubadala.

All investors in Jio Platforms including Silver Lake have been offered a chance to explore investing in Reliance Retail.

Ambani had at Reliance Industries’ recent annual general meeting stated that it had been approached by strategic/financial investors for a stake in Reliance Retail.

Commenting on the transaction with Silver Lake, Ambani, Chairman and Managing Director, Reliance Industries, said, “I am delighted to extend our relationship with Silver Lake to our transformational efforts of building an inclusive partnership with millions of small merchants while providing value to Indian consumers across the country in the Indian retail sector.”

“We believe technology will be key to bringing the much-needed transformation in this sector so that various constituents of the retail ecosystem can collaborate to build inclusive growth platforms. Silver Lake will be an invaluable partner in implementing our vision for Indian Retail,” he said.

Commenting on the investment, Egon Durban, Co-CEO and Managing Partner of Silver Lake, said, “we are pleased to deepen our relationship with Reliance with this investment.

Mukesh Ambani and his team at Reliance have created an outstanding world leader in retail and technology through their courageous vision, commitment to societal benefits, innovation excellence and relentless execution.”

“The success of JioMart in such a short time span, especially while India, along with the rest of the world, battles the COVID-19 pandemic, is truly unprecedented, and the most exciting growth phase has just begun. Reliance’s new commerce strategy could become the disruptor of this decade. We are thrilled to have been invited to partner with Reliance in their mission for Indian Retail,” Durban said.

The transaction is subject to regulatory and other customary approvals. Morgan Stanley acted as financial advisor to Reliance Retail and Cyril Amarchand Mangaldas and Davis Polk & Wardwell acted as legal counsel. Latham & Watkins and Shardul Amarchand Mangaldas & Co acted as legal counsel for Silver Lake.

On Tuesday agencies including Goldman Sachs, Fitch Ratings and India Ratings downgraded their growth estimates, now expecting GDP to contract in the double-digits. 

NEW DELHI:  After India’s worse-than-expected GDP performance in the first quarter—tanking by 23.9 per cent—global ratings agencies have revised their forecasts for the current fiscal year.

On Tuesday agencies including Goldman Sachs, Fitch Ratings and India Ratings downgraded their growth estimates, now expecting GDP to contract in the double-digits. 

Investment bank Goldman Sachs said it expects Indian economy to undergo a deeper recession in FY21 with a contraction of 14.8 per cent, worse than its earlier estimate of 11.8 per cent.

“We now forecast Q3 2020, and Q4 2020 at GDP growth of -13.7 per cent yoy and -9.8 per cent yoy, respectively. Our estimates imply that real GDP falls by 11.1 per cent in calendar year 2020, and by 14.8 per cent in FY21,” the investment bank said in a research note.

However, Goldman Sachs added that it expects a bounce back next year in the June quarter due to favorable base effects.

Fitch Ratings too lowered its forecast for the current fiscal 2020-21, expecting GDP to contract by 10.5 per cent against its earlier estimate of contraction of 5 per cent.

“The severe fall in activity has damaged household and corporate incomes and balance sheets, amid limited fiscal support. A looming deterioration in asset quality in the financial sector will hold back credit provision amid weak bank capital buffers. Furthermore, high inflation has added strains to household income,” Fitch said.

Other forecasters such as Nomura, India Ratings, HSBC have also lowered India’s growth projection.
India Ratings, the Indian subsidiary of Fitch, predicts a sharper fall of 11.8 per cent in India’s real GDP and says recovery will be visible only by third quarter of FY 22.

“Only in the third quarter of FY22, will India’s nominal GDP be bigger than that in Q4 FY20—a loss of nearly two years,” said Devendra Pant, chief economist at India Ratings.

He added that the loss of a tenth in the nominal GDP will result in poor revenue collections, and considerably enlarge the fiscal deficit, which the agency pegs at 8.2 percent of GDP for FY 21. 

Other major ratings agencies have also revised India’s growth forecast downward. Nomura now expects India’s GDP to contract by 9.0 per cent YoY in 2020 against it’s early prediction of 5 per cent, and by 10.8 per cent in FY21 against the earlier forecast of 6.1 per cent.

‘The brand integration not only marks the completion of the largest telecom merger in the world, but will also set the company on its future journey,’ said CEO Takkar.

VIL, which had about 280 million subscribers as of June, said that Vodafone and Idea brands will now be called ‘Vi’.

“A brand with its eyes set on the future, it is built for and around customers. The integration of two brands is a culmination of the largest telecom integration in the world,” VIL said in a statement communicating its new unified consumer brand identity and positioning through a virtual launch on Monday.

Elaborating on the new brand, Ravinder Takkar, MD and CEO, Vodafone Idea said, “Vodafone Idea came together as a merged entity two years ago. We have, since then focussed on integrating two large networks, our people and processes.”

The brand integration not only marks the completion of the largest telecom merger in the world, but will also set the company on its future journey to offer strong digital experiences to 1 billion Indians on its 4G network, he said.

“VIL is now leaner and agile, and the deployment of many principles of 5G architecture has helped us transform into a future-fit, digital network for the changing customer needs.”

“The new brand launch signifies our desire to not just deliver, but delight our customers, stakeholders, communities and our employees and signals our passion and commitment to be a Champion for Digital India,” Takkar added.

The announcement comes close on heels of Vodafone Idea board, last week, approving fund-raising plans of up to Rs 25,000 crore through a combination of equity and debt instruments, to keep the company afloat.

The upcoming fundraising will offer a lifeline to cash-strapped VIL, which has suffered massive losses, has been losing subscribers and Average Revenue Per User (ARPU), and faces outstanding Adjusted Gross revenue (AGR) dues of about Rs 50,000 crore.

In the recent past there have been reports suggesting that Verizon and Amazon may invest over USD 4 billion into the company, although Vodafone Idea itself clarified last week that while it constantly evaluates various opportunities as part of corporate strategy, there is no such proposal currently before the Board.

Earlier this month, the Supreme Court directed telecom operators to pay 10 per cent of total AGR-related dues this year, and rest of the payments in 10 instalments starting from next fiscal year.

Fund infusion is critical for cash-strapped VIL, the third largest operator in the fiercely-competitive Indian telecom market where Jio’s entry in 2016, with free calls and cheap data pushed some rivals to exit, acquire, or merge to stay afloat.

Jio Platforms — the unit that houses India’s youngest but largest telecom firm Jio and apps — recently secured Rs 1,52,056 crore from 13 investors including Facebook, Google, General Atlantic, Intel Capital and Qualcomm Ventures.

Notably, Vodafone Idea’s overall AGR dues stood at over Rs 58,000 crore, of which the company has paid Rs 7,854 crore to the Department of Telecom so far.

The statutory dues arose after the Supreme Court, in October last year, upheld the government’s position on including revenue from non-core businesses in calculating the annual AGR of telecom companies, a share of which is paid as licence and spectrum fee to the exchequer.

VIL has been under severe financial pressure, and analysts had earlier cautioned that the company’s longer-term viability was under cloud.

In December, Vodafone Idea Chairman Kumar Mangalam Birla had said VIL may have to shut if there is no relief on statutory dues.

The company had reported a staggering Rs 73,878 crore of net loss for fiscal ended March 2020 – the highest ever by any Indian firm – after it provisioned for Supreme Court mandated statutory dues.

It reported net loss to Rs 25,460 crore for the June quarter after making additional provisions to pay past statutory dues, and had, at that point, said its ability to continue as going concern hinges on the Supreme Court allowing more time to pay dues.

The apex court has rejected the demand for a 20-year time for telcos to clear a combined Rs 1.

6 lakh crore in past dues, but allowed the liability to be cleared in 10 years.

Besides payment of AGR dues, VIL’s fund-raising will be important given that 5G is on the horizon, and industry will require the firepower for making substantial investments into bidding for spectrum and network rollout.