You are here: Home » Current Affairs » News » National
Business Standard

Top 10 biz headlines: FDI reforms, Synergy Group eyes 49% Jet stake & more

From the govt easing FDI norms for single-brand retail, digital media, and manufacturing to Synergy Group planning to pick up 49% stake in Jet Airways, here are the top business headlines for Thursday

BS Web Team  |  New Delhi 

fdi
Representative image

1) eased for single brand retail, digital media, manufacturing

The Union Cabinet on Wednesday relaxed the rules for single-brand retail, more than seven years after the foreign investment cap was removed for the segment to attract marquee foreign brands such as Gucci, Louis Vuitton, and others into the country. The latest government move is in line with the recent Budget announcements on FDI changes.

While 30 per cent local sourcing remains a mandatory condition for single-brand retail, the government has now agreed to a long-standing industry demand to make things easier for foreign retailers. With the change, foreign retailers’ India buy for exports will be factored in to meet the 30 per cent domestic sourcing norm. Companies in the single-brand space can also start online retailing without opening brick-and-mortar stores first, something that was not allowed earlier. While 100 per cent FDI is allowed in single-brand retail, whenever the foreign investment exceeds 51 per cent, the mandatory local sourcing norm kicks in. (Read more here)

2) Apple, gain after local-sourcing norms eased for single-brand retail

The government’s decision on Wednesday to ease local-sourcing norms for single-brand retail is likely to benefit players such as IKEA, Uniqlo and H&M, said sector experts and companies.

Apple, which has not been able to open fully-owned stores because of the 30 per cent sourcing norms, was not available for comment. Analysts said the Cupertino-based company may now launch its e-store in the country. (Read more here)

3) Toyota, enter into capital alliance amid a shake-up in auto industry

Strengthening their existing collaboration to develop futuristic technologies, Japanese automobile majors Motor Corp and Motor Corp on Wednesday announced a “capital alliance” for equity investment into each other. While will acquire 4.94 per cent shares of Suzuki, worth $908 million, the latter will make a $454-million investment in the biggest automaker of Japan.

The latest investment comes months after the two companies announced a cross-badging deal under which they would manufacture vehicles for each other in the Indian market. Premium products from the Maruti stable such as the Baleno, Ciaz and Vitara Brezza will be sold under the brand with small changes. In return, Maruti will get technical know-how, which will help the company develop hybrid and electric cars. With the government giving impetus to cleaner fuel, the industry expects Maruti will have a significant advantage where it can develop such vehicles using Toyota’s research and development prowess. (Read more here)

4) After EOI submission, Synergy Group eyes 49% stake in Jet Airways

South America’s Synergy Group Corp is planning to pick up 49 per cent stake in It will discuss co-investment options with its lenders and infrastructure companies, the group’s advisor told Business Standard. Synergy Group Corp, which owns majority stake in Avianca Airlines, South America’s second-largest airline, submitted an expression of interest last week to revive the grounded airline.

It’s Bolivian born founder German Efromovich will visit India next month to discuss investment options with Jet’s lenders and Indian infrastructure companies. Government norms mandate that substantial ownership and effective control of an airline must rest with Indian citizens. (Read more here)

5) Nothing much in stimulus to make consumers happy, say carmakers

Despite the measures announced by the finance minister to boost the automobile sector, carmakers have said the sector would only see some revival in sentiments, that too, at the industry level and not at the consumer level.

A spokesperson at two-wheeler market leader, Hero MotoCorp, said the measures would improve liquidity, increase ease of lending and the transmission of rate reduction, but there is an urgent need to reduce GST on two-wheelers to 18 per cent from 28 per cent. “Two-wheelers are neither luxury nor ‘sin’ goods. Reducing GST to 18 per cent will help boost demand immediately, leading to an even more positive impact. We hope this will be addressed in the next round of measures,” the spokesperson said. (Read more here)

6) DGCA asks to deliver modified A320, A321 Neo engines in advance

The Directorate General of Civil Aviation (DGCA) has issued a warning, stating that the Airbus A320neo aircraft — powered by Pratt & Whitney (P&W) engines — will not be allowed to fly unless they come with modified components.

Among the major components that the DGCA has asked the engine maker to change are the main gear box and low pressure turbine blades. “No engines from the maintenance unit or any new induction of Airbus A320 and A321neo will be accepted, unless fitted with the new modified gear box and third stage low-pressure turbine blades. There will be a restriction on acceptance of lease engines, too, without the modifications,” the DGCA said in a statement. (Read more here)

7) Indian IT majors face employment issues with local hiring in US

As Indian information technology (IT) majors aggressively hire local talent in the US, by far their largest geography in terms of revenue contribution, they are feared to face increasing incidences of employment-related legal issues in the country.

Industry insiders say that most of the local American employees, unlike their Indian counterparts, are not open to relocating to other cities within the country, even though this is one of the clauses in their employment contract. This gives rise to retrenchment in some cases and lands the employers in legal issues. Recently, Indian IT services major (TCS) successfully closed one such lawsuit filed by a former employee in the US. (Read more here)

8) Brookfield in talks with to buy its Real Estate Fund 1 assets

Canada-based Brookfield Asset Management is in talks with Sun­­life Asset Management Company to buy the investments of Real Estate Fund 1, which is into liquidation, say sources. The fund’s bankers have approached Brookfield to take over the seven investments of the fund. Brookfield is evaluating it, said the sources. One said the bankers had approached other investors, too.

The fund did 13 investments. It has fully exited four and did a partial exit in one. Mails sent to Aditya Birla Capital did not elicit a response. (Read more here)

9) NCLT lets sell 7 wind power firms to Japan's Orix for Rs 4,800 cr

The Company Law Tribunal Wednesday cleared the sale of IL&FS's seven wind energy assets to Japan's Orix Corporation for Rs 4,800 crore, which will partially help reduce its debt burden of over Rs 99,000 crore.

The tribunal comprising of VP Singh and Rajesh Sharma allowed the government-appointed board's plea to approve sale of 51 percent stake in seven wind energy arms to Orix.

Orix Corporation is already an equity partner in the group and owns 49 percent stake in each of these seven operating wind power plants. (Read more here)

10) Moody's sends deeper into 'junk'

Moody's Investors Service on Wednesday downgraded YES Bank's creditworthiness deeper to 'junk' status because of concerns over lower-than-expected capital raising recently and the bank's ability to raise more funds in the future, the Economic Times reported on Thursday.

"The downgrade of YES Bank's ratings takes into account lower-than-expected amount of capital raised by the bank, and the risk that the substantial decline in the bank's share price will challenge its ability to raise sufficient capital to maintain the rating at its previous level," Moody's said in a statement, according to the financial daily.

First Published: Thu, August 29 2019. 07:42 IST
RECOMMENDED FOR YOU