Foreign airlines can control Indian carriers via group firms
While foreign airlines can’t directly own more than 49 per cent in Indian airlines, despite Monday’s liberalised Foreign Direct Investment (FDI) policy, their group companies or investors can fully own airlines in India with government approval. So while the likes of AirAsia and Singapore Airlines will continue to have a cap of 49 per cent on their stakes in Indian arms, AirAsia India and Vistara, foreign funds and non-airline companies will be allowed to fully own a domestic, Indian airline. The government is looking to dilute the rule which makes it mandatory for an Indian carrier to be controlled and owned by an Indian or an Indian entity. This will increase competition for Indian airlines, as deep-pocketed airlines from the Gulf will be able to set up shops in India through their group companies. This will allow the likes of Etihad, Singapore Airlines and AirAsia to gain management control of Jet Airways, Vistara and AirAsia India through their group companies. Qatar Airways had earlier tried to use the Qatar Investment Authority, a sovereign wealth fund, to buy into Indian budget carrier IndiGo. Donald Trump Jersey
Companies like Voltas, HPCL and others focus on consumer business to overcome slowdown
There are several instances of companies, including Voltas, HPCL, Aegis Logistics, Crompton Greaves and Shilpi Cable Technologies that have steadily increased their consumer businesses. Banks are turning more towards consumer lending to counter slowdown in corporate earnings growth. So, what is prompting companies in traditional B2B space to go for a B2C model? With economy under stress and earnings under pressure, companies are prompted to chase high-margin business opportunities, which are usually in the retail consumption business. Thanks to the information asymmetry, retail consumers typically do not have the same bargaining power as corporates in business deals. Increased exposure to consumer retail business also helps enhancing valuations on the Street. Little wonder, companies from consumption-driven sectors such as FMCG, pharmaceuticals, automobiles typically trade at higher valuations. Crompton Greaves managed to unlock value for its investors after listing its demerged consumer electrical products division. So, does it mean that B2B business models would fall out of favour? Unlikely. When the macro economic situation improves, companies refocus on increasing revenue base through (lower margin) B2B business. Besides, growing a B2C business is fraught with challenges of retaining individual customers and continuous investment in brands. Tamba Hali Authentic Jersey
Travel startups beat ecommerce marketplaces in funding race this year
Startups in travel business have received more funding than ecommerce marketplaces so far this year, according to data sourced from research firm Tracxn. Travel startups have received $366,450,000 while ecommerce marketplace startups have received $357,831,100 in funding since the beginning of 2016, as per the data. A bulk of the funds for travel startups came through two deals, with Ibibo Group raising $250 million in February in a Series-C round while OYO Rooms raised $100 million in a Series-D round in April. Although travel startups are only marginally ahead, this is the first time since 2011 that the segment has featured among the top three funded sectors. Online marketplaces stopped short of being the highest funded segment only in 2010, as per data from Tracxn. Though much of the funding for travel startups this year came through just two deals, the sector has seen increasing interest from investors since last year, according to Tracxn’s data. Travel startups raised among the highest funding in the third quarter of 2015, with ConfirmTkt, HolidayIQ, JetSetGo, TripFactory, Wetravelsolo, WudStay, Zo Rooms, 14Square, NightStay, OYO Rooms and Zo Rooms raising $164,100,186 between July and September. However, during that quarter, e-commerce marketplaces were way ahead with $1,506,624,000 raised by firms including Flipkart, Snapdeal, Paytm, Stylecracker, Gadgets360 and Glowship. In the first quarter this year, travel startups saw a funding of $253,250,000 raised by ConfirmTkt, SavvyMob, Ibibo Group, Roadhouse Hostels and Roomoncall while in the ongoing second quarter GoHero, OYO Rooms, RailYatri, Easy Roads, Stayzilla have raised $113,200,000. Olivier Vernon Jersey
E-commerce sites unfavorable for local traders in Ranchi
Seeking a level playing field to do business in the state, an 11 member team of Dhanbad Chamber of Commerce went on a day-long hunger strike at bank more on Wednesday against e-commerce portals. Traders said online shopping portals like Amazon and Flipkart have eaten into their profits, bringing down their counter sale by 25%. Dhanbad chamber president, Rajesh Gupta, told TOI the strike will hopefully turn the spotlight on the plight of small businesses in the state. “The e-commerce portals offer big discounts and also run at a loss at times to put small-time enterprises out of business,” said Gupta. Gupta said small businesses are unable to compete with e-commerce players as they do not have “big capital”. “Items are sold at a fraction of the cost on online shopping sites, or at the factory rate. Middle-class families have access to smartphones, giving them the power to make purchases easily. If action is not taken against these online retailers, we might have to shut shop,” he added. Gupta said products worth Rs 10 crore enters Jharkhand on a monthly basis, without the state government earning any revenue of it. Jharkhand Chamber of Commerce president Pawan Sharma said the state government should define borders perfectly and impose tax on goods that enter the state. He also said that state chamber is in negotiation with union finance ministry to guard the interest of small businessmen across the country. Jason Myers Authentic Jersey
OIL-led consortium inks deal for 24% stake in Vankor oil field
Deal is valued at $2 billion and is expected to close by September 2016. A consortium led by Oil India has signed an agreement to acquire 23.9% stake in Russia’s second biggest oil field of Vankor from Rosneft. The deal is valued at $2 billion. The stake acquired by OIL-led consortium is in addition to the 15% interest picked up by ONGC Videsh Ltd in the Vankor oilfield for $1.268 billion. “Indian consortium, led by OIL, along with Indian Oil Corp and Bharat PetroResources Ltd, a subsidiary of Bharat Petroleum Corp Ltd (BPCL), signed definitive agreement to acquire up to 23.9% shares from RosneftOil Co in JSC Vankorneft, a company organised under the law of Russian Federation which is the owner of Vankor and North Vankor field licenses,” OIL said in a statement. The deal is expected to close by September 2016. The 23.9% stake would be split in the ratio 33.5-33.5-33 between IOC, OIL and BRPL (IOC and OIL picking up 8% stake each while the remaining 7.8% stake would go to BRPL). Rosneft holds 85% shares in Vankor while ONGC Videsh Ltd (through its subsidiary) holds 15% at present. Vankor field, located in East Siberia, is Russia’s second largest field by production and accounts for around 4% of Russian production and currently producing about 422,000 barrels of oil per day. “It is the largest of the fields, discovered and commissioned in Russia during the last 25 years and is located in the North of Eastern Siberia in Turukhansk district of the Krasnoyarsk Territory, 142 km away from Igarka town,” the statement said. The recoverable resources of the Vankor field as of January 1 stood at 361 million tonnes of oil and condensate and 138 billion cubic meters of gas. “With the closure of the Vankor deal, IOC’s equity oil portfolio will go up by 1.6 million tons per annum,” it said. Further, Rosneft has agreed to sell another 11% stake in Vankor to OVL. Details of this deal are yet to be finalised. The acquisitions have significant strategic importance to India, both in terms of augmenting energy security as well as enhancing its stature in the global political and economic arenas, the statement added. Justin Simmons Authentic Jersey
IOC to join NTPC, CIL for fertilizer projects
Indian Oil Corp. is set to join a consortium of Coal India Ltd and NTPC Ltd for setting up three fertilizer factories with a total investment of Rs.200 billion. The investment is expected to help improve the financial health of ailing state-owned Fertilizer Corp. of India Ltd (FCIL), which will provide land for the factories at Sindri in Jharkhand and Gorakhpur in Uttar Pradesh, and that of ailing state-run firm Hindustan Fertilizer Corp. Ltd which will provide land at Barauni in Bihar. The existing production facilities at these places are archaic. Coal secretary Anil Swarup said that the petroleum ministry has informed the coal ministry of its support for IOC joining the project. The board of directors at IOC will consider the proposal by the end of July. An email sent to IOC on Wednesday morning remained unanswered at the time of publishing. NTPC had on 17 May said that it has formed an equal joint venture with CIL to set up two urea factories on the premises of FCIL, with provision for a third partner to join in. “Now there is a clear roadmap for the project. All the three proposed factories will be operational by December 2020. The joint venture will have a debt equity ratio of 1:3,” said Swarup. The partners together will bring a little more thanRs.60 billion of equity. Each of the natural gas-based factories will require an investment of roughly Rs.65 billion. The project also entails state-owned Gail India Ltd supplying natural gas for the factories by connecting them with its Jagdishpur-Haldia pipeline. Natural gas is a more efficient and cost-effective feedstock for urea production, compared to naphtha, which is used in older fertilizer plants. India produces a little over 21 million tons of urea and imports about 8 million tons. Since adverse currency movements and price of the feedstock in global markets influences the import price, the government has been trying to achieve self sufficiency in this plant nutrient. Subsidy is given to companies for selling urea at below their actual cost of import or production, based on their audited sales figures. The government wants to leverage profit-making public sector enterprises in the energy sector to turn around the ailing ones in the fertilizer sector. Reviving the three units is expected to create about 1,200 direct and 4,500 indirect jobs, minister of state for chemicals and fertilizers Hansraj Gangaram Ahir informed Parliament on 4 March. He said a total of 10 defunct fertilizer units will be revived. Zemgus Girgensons Authentic Jersey
World’s biggest natural gas producer Gazprom eyes bigger share in India
Russia’s Gazprom PJSC, the world’s biggest natural gas producer, is stepping up supplies to India. Last week, Alexey Miller, chairman of the Gazprom management committee, and Dharmendra Pradhan, India’s petroleum minister, discussed the modalities for increasing Gazprom’s gas sales in St Petersburg. Pradhan was accompanied by top executives from Petronet LNG, Indian Oil Corporation (IOC) and other public sector firms. “During the visit to St Petersburg, (we) discussed various routes to bring Russian gas to India and cooperation in third countries. Also, (I) met Alexei Miller, CEO Gazprom, world’s largest gas company. Gazprom is keen to work various gas projects with India,” said petroleum minister Dharmendra Pradhan. Pradhan also met top executive from Novatek, the second largest gas producing company of Russia, which also express interest to participate in Indian gas sector. Gazprom, which supplies nearly 30% of Europe’s demand, interest to expand business here comes at a time when its domestic rival Rosneft has offered equity stakes in two Siberian hydrocarbon assets – Vankor and Taas-Yuryakh to Indian firms including ONGC Videsh, Indian Oil Corporation (IOC), Oil India (OIL) and Bharat PetroResources (BPRL). “The perception of India has changed. Earlier, if any foreign firm wants to do business with India and particularly public sector companies, it used to take atleast two years for the first response. Now, diplomatic push is helping India get energy deals overseas,” a senior petroleum ministry official told FE. In the past two years, India and Russia have agreed to collaborate for $5.5 billion worth oil and gas projects. New Delhi’s interest in increasing economic co-operation with Kremlin is seen as an extension of several rounds of talks between Prime Minister Narendra Modi and Russian President Vladimir Putin. Talking about the affordability of natural gas ferried from Russian fields, the petroleum ministry official said that there are options to swap the LNG with other supplies mid-way. “This would make the LNG affordable for Indian market. These technicalities would be discussed between the companies,” the official explained. In the full year of 2015-16, the LNG imports by India witnessed a surge of 14.96% at 21,309.28 mmscm against 18,535.73 mmscm in FY15. “While Gazprom has been boosting gas exports to its most lucrative market, Europe and Turkey, its dollar-denominated revenue from the region may drop this year to lowest since 2004 as most of contracts linked to oil with a time lag of as much as nine months,” Bloomberg said on April 28. This could led Gazprom to expand its footprint in India, where economy is poised to grow at 8%. Between 2009 and 2016, Gazprom Group delivered 26 liquefied natural gas (LNG) cargoes to India totaling 1.7 million tonnes. In 2012, Gazprom Marketing & Trading Singapore, which is part of Gazprom Group, and GAIL signed a long-term agreement for LNG. The 20-year agreement provides for LNG supplies in the amount of 2.5 million tons per year on a free-on-board basis, with potential for renewal. Imports of LNG have steadily risen over the years, albeit at varying rates of growth from about 7 bcm in FY06 to about 21 bcm now. Overall gas consumption, has increased, especially FY14 onwards, to compensate for the decline in domestic production. Paul Kariya Jersey