India best equity story in EMs, says Chris Wood

New Delhi: “India is the most preferred equity story in the emerging markets universe on a 10year view,” says Christopher Wood, managing director and equity strategist at CLSA in his weekly note, GREED & fear.
“A belief that has been strengthened by evidence that the Modi government is showing a renewed focus to address the asset quality problem in the banking sector,” he explains. That move has triggered an investment rejig in his portfolio, with the addition of State Bank of India with a three per cent weight; a further one percentage point will be added to the existing investment in HDFC. As a result, the investment in Naver in the Asia ex-Japan long-only portfolio will be removed.
The positive stance on India is despite the market’s rich valuations, up nearly 19 per cent since the December 2016 low.
“GREED & fear remains constructive even if the Indian stock market is certainly expensive on a forward earnings basis. The continuing rise in the stock market year-to-date, and the resulting re-rating, has been triggered primarily by ongoing strong inflows into domestic equity mutual funds,” says Wood.
In the first three months of calendar year 2017, mutual funds have invested ~11,469 crore in the Indian equity market. The flow continued in April, with MFs putting ~9,917 crore, compared to ~4,196 crore in March. In the seven months between October 2016 and April 2017, they have invested ~53,469 crore in equities, compared to ~16,527 crore in the previous corresponding period, the data shows. New bank regulations Last week, the government had notified an ordinance to amend the Banking Regulation Act. This brings a new framework to deal with the ~6 lakh crore worth of non-performing assets (NPA) in the banking system.
The regulator has also been empowered to decide on dealing with toxic assets and instructing banks to act accordingly. The Reserve Bank of India (RBI) will also set up multiple oversight committees to direct banks and joint-lending forums to deal with stressed assets.
“The other aim of this amendment is to remove a concern shared by all bankers, that if they agree to a haircut (write-off) on a specific loan, they will be at risk of future investigation by the judiciary or an investigative agency. It is the reluctance of banks to take haircuts which has been the key cause of India’s long festering banking problem,” says Wood.
The lack of progress in addressing this legacy problem, he feels, is the main reason why India is still seeing no evidence of a renewed private sector-driven investment cycle. Once the NPA issue is resolved, the way will be clear for public sector banks to raise capital. A process which should also lead, with the encouragement of both RBI and the government, to the consolidation of these banks, Wood feels. GST Implementation of the goods and services tax (GST) laws, according to Wood, is a landmark achievement that will help end inter-state barriers to trade and increase tax revenues.
“The rest of the Indian story under the extraordinary Modi remains as vibrant as ever. While it is true that the Aadhaar programme was launched under the previous government, the real roll-out and practical application of the programme has been massively leveraged since Modi assumed power. The benefits of direct electronic payments are hard to exaggerate in terms of reduced leakages and the like,” he says.

Narendra Modi to inaugurate India's longest bridge in Assam near China border

Dibrugarh: Prime Minister of India, Mr Narendra Modi, will inaugurate the longest river bridge in India, called 'Dhola-Sadiya' bridge, that is built over the Brahmaputra river in Assam near the China border, with a length of 9.15 km, on May 26, 2017. The bridge can hold the weight of a 60-tonne battle tank and will enable easy movement of military troops due to its proximity to the China border, thereby strengthening India's defence needs along the Shino-Indian border. The bridge will also provide quick access to the people of Assam and Arunachal Pradesh, as it will reduce the travel time between the two states by about four hours. In the absence of a civilian airport in Arunachal Pradesh, this bridge will enable people from this state to go to the closest rail head in Tinsukia as well as the airport in Dibrugarh. The bridge is 540 km from Dispur, the capital of Assam, 300 km from Itanagar, the capital of Arunachal Pradesh and less than 100 km aerial distance from the China border.

India and UK to cooperate in urban transport sector

New Delhi: India & UK today agreed to sign a memorandum of understanding (MOU) on bilateral cooperation in urban transport policy planning, technology transfer and institutional organization of transport.
The decision to enter into a bilateral cooperation arrangement between the Transport For London (TFL) and the Indian Ministry of Road Transport and Highways on a wide range of transport mobility solutions and associated activities in urban environments was taken during the three-day official visit of the Minister of Road Transport & Highways and Shipping Shri Nitin Gadkari to Britain.
During his visit to the headquarters of Transport For London (TFL) , Shri Gadkari was given a presentation on strategy and policy reforms, customer experience and data analysis in respect of London buses and other integrated modes of public transport in Greater London area.
Under the proposed MOU, the TFL will share with the Ministry of Road Transport and Highways its expertise on the mobility and efficiency of transport system and methodologies to facilitate the planning and delivery of mobility solutions including ticketing , passenger information, major project financing, infrastructure maintenance strategies and behavioural change and public transport promotion.
Shri Gadkari later said the signing of the MOU will be done through diplomatic channels shortly. Possibilities of further cooperation on electric buses, bus innovation and capacity augmentation and water transport were also explored during his interaction with the TFL authorities.
The TFL provides world class services that keep the British capital better equipped with public transport. The TFL virtually coordinates all the London transport, including London metro, the bus network, Dockland Light Rail, water transport and cable car.

India Shows the Way to the World in Fight Against Climate Change

New Delhi: Union Minister of State (IC) for Power, Coal, New & Renewable Energy and Mines, Shri Piyush Goyal presided over the launch of World’s largest efficient lighting programme, UJALA – UK (UK Joins Affordable LEDs for All) by Energy Efficiency Services Ltd. (EESL) in London, United Kingdom today. Talking about the philosophy of the Prime Minister of India, Shri Narendra Modi about preventing wastage of all resources especially electricity, Shri Goyal said that, “a sustainable lifestyle is important for the future of the planet and if the planet has to be saved for the future generations, it is I, you and we all who have to collectively make a difference and act today itself. We are running out of time.”
Informing the august gathering about the scale at which the EESL LED programme is expanding, the Minister said that, “the EESL LED programme in India has grown 140 times in less than 2 years and I don't think we will find any parallel to that anywhere in the world. EESL would achieve the turnover target of $1.5 million by 2019, concomitant with the Government of India’s target under the UDAY scheme and 100% rural household electrification”. Shri Goyal further stated that even in the Developed countries like the US and Europe, there is a great potential for incorporating energy efficiency measures like the EESL LED programme, especially looking at the climate change scenario in the present context. India's share in the Global LED market has increased from a mere 0.1% a few years back to around 16% today, it was informed.
Talking about the potential energy savings by implementing the LED programme in India, Shri Goyal said that lighting alone consists of 15% of the total energy needs of the population across the country, especially the lower middle class families, which is about 180 billion units of energy. As India moves towards becoming a 100% LED Nation, the potential savings would be around 112 billion units, in other terms reducing carbon dioxide emissions by nearly 79 million tonnes every year. Consequently, India’s peak load will reduce by about 20 GW and our consumers will save around $6.5 billion worth in electricity bills annually, the Minister added.
Describing the strategy for scaling up the LED penetration in UK, Shri Goyal said that India was able to significantly reduce the purchase price of the LED by increasing efficiency and not giving subsidies to the consumers. The scheme has sustained itself on the savings achieved by increasing energy efficiency in the whole lifecycle of the LED bulbs. “Government of India has fine tuned the process, brought down the costs of manufacturing and sold nearly 230 million LED bulbs whereas the private sector, in the same period, sold about 330 million LED bulbs, effectively replacing about 560 million incandescent bulbs in the last 2 years. The consumers are the direct beneficiaries by saving on electricity bills and reducing the carbon footprint on the environment for the future generations, he added.
The Minister requested the Government of UK to get EESL in touch with all the stakeholders like local distribution companies, e-commerce companies, hotels, industry, large businesses, supermarket chains etc. and replicate India's model in the UK so as to achieve a similar kind of scale up that the programme has witnessed in India as a zero investment model. He stressed that a massive deployment of this LED programme throughout the world will go a long way in fighting climate change and make the world a better place to live in for the future generations. The Minister urged all the dignitaries present to become ambassadors of this Energy Efficiency programme for a better tomorrow. “I hope that we all will come together in a mission mode to adopt Energy Efficiency as a way of life in the future”, Shri Goyal added.
The Minister also suggested to the Government of the UK a target of replacing at least 100 million incandescent bulbs with LEDs by March 2019 and reduce the individual household consumption of energy by at least half. Further, it was informed that as a beginning to UJALA-UK operations, EESL has started the retrofitting of the facade and other lights of the High Commission of India in UK and the India House which would lead to considerable energy savings. EESL’s engagement with the UK will cover a broad spectrum including marketing of the world class energy efficiency products, services, investments and raising capital, scouting for new energy efficiency technologies and partnering with British companies to establish presence in third world country markets.
During the event, MoUs were signed between Indian High Commission and EESL and between the British Electrotechnical and Allied Manufacturers Association (BEAMA) and the Indian Electrical and Electronic Manufacturers Association (IEEMA) to strengthen bilateral industry cooperation and exchanges between India and the UK.
Dignitaries present during the event were Shri Y.K. Sinha, the High Commissioner of India to the UK, Shri Dinesh Patnaik, Deputy High Commissioner of India in UK, Pankaj Patel, President, FICCI along with other dignitaries from Governments of India and UK, FICCI and other stakeholders from the industry.

UK car exports to India grow 11-fold in 7 years, Jaguar Land Rover top list

New Delhi: According to UK's Society of Motor Manufacturers and Traders (SMMT), car exports from UK to India have grown 11 times in the past seven years to 3,372 cars in 2016, led by Jaguar and Land Rover models owned by Jaguar Land Rover, a subsidiary of Tata Motors. Discovery Sport, Range Rover Evoque, Jaguar XF, Jaguar XE and Jaguar F-Pace are the top five best-selling models in India. On the other hand, car registrations of Indian models in UK rose 12.6 per cent to 31,535 in 2016. The Indian automotive aftermarket bought car parts from UK worth GBP 14 million (US$ 17.48 million) in 2016 and is expected to grow 15 per cent per year over the next five years.

India's longest highway tunnel to be inaugurated on April 2

Mumbai: India's longest highway tunnel at Chenani Nashri, between Udhampur and Ramban in Jammu & Kashmir is all set to be inaugurated by prime minister Narendra Modi on April 2.
The 10.89 km tunnel that has absorbed a sum of Rs 2519 crore in its construction, forms part of the proposed widening of National Highway 44 (old NH-1A) from Jammu to Srinagar will be inaugurated at 3 pm.
The tunnel is the longest highway tunnel in India boasting of features like Integrated Traffic Control System (ITCS), Video Surveillance System and FM Rebroadcast System, among others and will reduce travel time by approximately two hours, apart from promising fuel savings to the tune of 27 lakh per day.
"The tunnel has multiple economic gains as connectivity in the remote area can help transform the life of this neglected region in the hills. The credit goes to previous planners for having mooted this tunnel," S P Singh, senior fellow at the Indian Foundation of Transport Research and Training (IFTRT) told ET.
However, Singh added that the delay in the time for construction and the subsequent cost escalation could have been avoided.
The project has been dubbed as a "state of the art engineering marvel in the most difficult terrain pf Himalayas".

Lok Sabha clears Finance Bill 2017, mini reforms package

New Delhi: The Lok Sabha on Wednesday signed off on Finance Bill 2017, ratifying the government’s tax proposals announced in the budget and also a small but significant package of reform initiatives directed at improving the ease of doing business and boosting anti-corruption initiatives undertaken by the National Democratic Alliance (NDA).
Accordingly, the government has made Aadhaar mandatory for filing of income-tax returns and for obtaining and retaining the permanent account number (PAN) from 1 July and capped legal cash transactions at Rs2 lakh, ensuring a paper trail for all high-value transactions.
To improve the ease of doing business and ensuring faster disposal of cases by various tribunals, the government will also reduce the number of tribunals and bring parity in pay and service conditions of the officials. The merger of eight tribunals with existing ones and pay parity for judges will ensure that these quasi-judicial bodies are adequately staffed, ensuring faster disposal of cases.
On Tuesday, when the amendments were introduced in Parliament, the opposition objected, saying the government was trying to legislate non-budgetary policies through the finance bill. Finance minister Arun Jaitley denied this and the introduction of the amendments was allowed by the speaker.
The finance bill is a money bill and needs only to be cleared by the Lok Sabha, where the Bharatiya Janata Party-led NDA has a clear majority.
Under the new amendments, the Competition Appellate Tribunal will be merged with the National Company Law Appellate Tribunal (NCLAT).
Lalit Kumar, corporate partner at law firm J. Sagar Associates, said, “Having one forum always helps. It’s definitely a positive move done to avoid multiplicity of tribunals. Tribunals like the NCLAT are already important with a judge and a technical member at the helm dealing with commercial matters.”
The amendments and measures announced earlier in the budget, including one to clean up political funding, mean the government has managed to push through significant reforms in this year’s budget. The changes will come into effect once the finance bill receives the President’s nod.
Replying to the debate in Parliament, Jaitley defended the government’s decision to make Aadhaar mandatory for filing of tax returns and for obtaining and holding on to the PAN, calling it an “anti-evasion” measure.
Explaining the rationale, Jaitley said that linking PAN with Aadhaar would help in weeding out multiple PANs held by one individual. “One person has made five PAN cards. These are then used for tax evasion. That is why we have made Aadhaar mandatory. This reduces the possibility of this kind of tax fraud and evasion,” he said.
Jaitley also defended the government’s decision to modify provisions related to search operations by the income-tax department in the finance bill, stating that no arbitrary powers have been given to the tax department.
Explaining the changes in Section 132A of the income-tax Act, Jaitley said it was important to protect the sources of information of the taxmen.
As per proposed changes to the section, taxmen will not have to disclose the reason for which the search was conducted to any person, authority or appellate tribunal.
“The current situation was such that if anyone challenged the search, then the sources of information had to be disclosed by the tax official. The sources of information started drying up. For instance, an employee will not disclose tax evasion by the head of the company for fear of disclosure. The change has been that now only the court can look into the source of the information but not anyone else,” Jaitley said.
“Before any search, if a tax officer gets information about undisclosed income with a particular taxpayer, the reasons for such a move have to be written in the search order. There is no change in this. This still has to be recorded,” he said.
The finance minister also reiterated that agricultural income is not taxed and would not be taxed in the future.
Earlier in the debate, the government was criticized for its decision to make Aadhaar mandatory for tax purposes.
“Supreme Court still hasn’t decided (on making Aadhaar mandatory). You are giving subsidy through Aadhaar. That is fine. But in this case, the tax is being paid to the government. Why should Aadhaar be made mandatory?” questioned Bhartruhari Mahtab, a Biju Janata Dal MP from Odisha.
Shreeja Sen contributed to this story.

Dream of 'Har Ghar Jal' will be realized by 2030: Tomar

Centre allocates Rs 25,000 Crore to tackle problems of Arsenic and Fluoride in drinking water in four years.
New Delhi: Government today launched National Water Quality Sub Mission on Arsenic and Fluoride to provide safe drinking water to about 28,000 affected habitations in the country by March 2021 with an outlay of Rs 25,000 crore. Inaugurating the mission here in collaboration with the States, the Union Minister for Rural Development, Drinking Water and Sanitation and Panchayati Raj Shri Narendra Singh Tomar said that while West Bengal is badly affected by the problem of arsenic, Rajasthan suffers from presence of fluoride in drinking water with serious health hazards. He said, there are about 17 lakh 14 thousand rural habitations in India, of which about 77 percent have been provided with safe drinking water of more than 40 liters per person per day and about 4 percent of the habitations are suffering from problems of water quality. The Minister assured the participating delegates that there will be no discrimination of funds against any state to address the twin challenges of drinking water and sanitation. Ministers of Drinking Water and Sanitation from 12 States participated in the National Workshop on Water for All and Swachh Bharat.
Shri Tomar said that Government is committed to providing tap water on a sustained basis in every household by 2030 as per the United Nations Sustainable Development Goals for which Rs 23,000 crore of central fund will be required annually till the target is achieved. The Minister said that the dream of ‘Har Ghar Jal’ cannot be realized without the involvement of the citizens. He said that there are about 2,000 Blocks in the country with an acute shortage of surface and ground water sources and called for conservation of water on war footing through convergence of schemes like MGNREGA.
Dwelling on the issue of Swachhta, Shri Tomar said that sanitation coverage has increased from 42 percent to 62 percent since the launch of the Swachh Bharat Mission, SBM in October 2014. He said, apart from Sikkim, Himachal Pradesh and Kerala which are ODF (Open Defecation Free) States, 4 to 5 more States can become ODF in next six months. So far, 119 districts and 1.75 lakh villages have become ODF and the Centre has announced to incentivize the states for their timely progress. The Minister informed that since the launch of the SBM, more than 3.6 Crore toilets have been constructed in the rural areas and 16.41 lakh toilets were constructed under MGNREGA. He said, when we are seeking to transform India into a 21st century economic giant: open defecation and garbage cannot be part of this vision.
Shri Tomar along with the Minister of State for Drinking Water and Sanitation Shri Ramesh Jigajinagi launched Water APP on the occasion. The Minister also gave away prizes to various state governments for exemplary work done in the areas of sanitation and drinking water.

Cabinet approves of proposal to establish a Fund of Fund for Start-ups (FFS)

New Delhi: The Union Cabinet chaired by the Prime Minister Shri Narendra Modi has approved the following proposals with regard to the Fund of Funds of Start-ups (FFS) which was established in June, last year with a corpus of Rs. 1,000 crores.
i.Alternate Investment Funds (AIFs) supported by FFS shall invest at least twice the amount of contribution received from FFS in Start-ups qualifying as per the Gazette Notification G.S.R.180 (E) dt. 17/02/2016. Further, if the amount committed for a Start-up in whole has not been released before a Start-up ceases to be so, the balance funding can continue thereafter.
ii.It was also decided that operating expenses for carrying out due diligence, legal and technical appraisal, convening meeting of Venture Capital Investment Committee, etc. would be met out of the FFS to the extent of 0.50% of the commitments made to AIFs and outstanding. This will be debited to the fund at the beginning of each half year; i.e. April 1 and October 1.
Background
The Union Cabinet in its meeting held on 22/06/2016 had approved the proposal to establish a Fund of Funds for Start-ups (FFS) with a total corpus of Rs.10000 crore, with contribution spread over the 14th & 15th Finance Commission cycles based on progress of implementation and availability of funds. It was decided that the FFS shall contribute to the corpus of Alternative Investment Funds (AIFs) for investing in equity and equity linked instruments of various start-ups at early stage, seed stage and growth stages.
The FFS is being managed and operated by Small Industries Development Bank of India (SIDBI). FFS contributes to SEBI registered Alternative Investment Funds (AIFs) that may go up to a maximum of 35% of the corpus of the AIF concerned.
The Cabinet on 22.06.2016 had decided that the corpus of Fund of Funds along with counterpart funds raised by the AIFs in which FFS takes equity would be invested entirely in Start-ups. It has been pointed out to the Department during its interactions with various stakeholders that investors in the AIFs would prefer that the portfolio of AIFs is adequately diversified to manage the investment risks appropriately and if the entire pool of funds of the AIF is invested in Start-ups, it poses unacceptable risks to the investors of such AIFs.
The other issues raised by stakeholders were that the process of funding of Start-ups by AIFs is long drawn which starts from pitching by a Start-up, commitment by the AIF and then release of funds in tranches. Thus it is possible that before release of the final instalment the turnover of the Start-up crosses Rs. 25 crores but it still needs funds to meet its growth requirements. Besides, Start-ups need access to funds through various stages of their life cycle, viz. early stage, seed stage and growth stage.
It was also pointed out to the Department by SIDBI that the present provisions don’t provide for SIDBI to get compensated for activities done post sanction to AIFs.
These decisions have been taken to in the backdrop of the above concerns.

MakeMyTrip raises US$ 330 million from Ctrip.com, Naspers, others

Bengaluru: Online travel company MakeMyTrip Ltd has raised $330 million in fresh funds from existing investors Ctrip.com International Ltd and Naspers Ltd and a clutch of undisclosed investors in a move that will help it counter rivals in the ticketing segment.
MakeMyTrip said in a statement on Wednesday that it had entered into a definitive share purchase agreement with unnamed investors for ordinary shares worth $165 million (it plans to issue 4.58 million shares at $36 apiece).
The company added that it plans to issue 916,000 ordinary shares to Ctrip at $36 per share, and 3.66 million Class B convertible ordinary shares at the same price to MIH Internet SEA Pte, a subsidiary of Naspers.
The shares issued to Naspers will be convertible into ordinary shares of the company on a one-to-one basis, MakeMyTrip said.
The fresh capital infusion comes after MakeMyTrip, one of India’s first consumer Internet companies, which is also listed on NASDAQ, bought rival Ibibo Group’s travel business in India in an all-stock deal in October 2016 for about $720 million.
The move created the country’s largest online travel firm which, according to a note by Morgan Stanley, is worth $1.8 billion.
The money will come in handy for MakeMyTrip which is seeing increasing competition in its ticketing business from rivals including Yatra and Cleartrip, as well hospitality start-ups including the SoftBank-backed OYO Rooms (Oravel Stays Pvt. Ltd).
Over the years, MakeMyTrip has also started focusing on tours and hotel bookings that have higher profit margins than ticketing.
According to industry executives and experts, air ticket bookings offer a gross margin of 5-7% as against 10-20% hotel bookings offer.
According to an investor presentation by MakeMyTrip in April, the firm’s air ticketing transactions grew 28% in 2015-16 and tours and hotel bookings by 126% the same year. Net revenue in the air ticketing business grew 14% year-on-year; that in the tours and hotels business rose 45%.
A senior executive at MakeMyTrip said the company would invest in its hotels business and in redBus, the bus ticketing platform it acquired from Ibibo.
“As we penetrate deeper into tier II/III cities, budget hotels and homestays will be important,” said Rajesh Magow, co-founder and chief executive officer, India, at MakeMytrip, adding that this segment would drive growth. For MakeMyTrip, the premium hotel segment “is also important” because it helps the cause of consumer loyalty, Magow added.
MakeMyTrip’s revenues are currently split almost equally between ticketing and tours and hotel bookings, he said.
MakeMyTrip also plans to use the funds to expand overseas, especially in South-East and West Asia, and strengthen its business-to-business vertical to cater to small and medium enterprises, before rolling out the product for larger corporate entities.
“We are building a product which is a user-friendly tool to enable travel booking. This will be ready in 3-4 weeks. We will begin with SMEs as there are no massive structures and procurement processes (in them),” said Magow.
According to industry experts, the fresh capital will give the company ammunition to expand its lead over competitors.
“This capital is meant to grow the combined entity in an accelerated pace. The focus on hotels is understandable as this is an unsolved problem,” said Rutvik Doshi, director at Inventus (India) Advisors. “A large number of hotels do not have proper administrative or accounting processes and not even marketing capabilities. Getting the long tail of hotels online, especially the ones in smaller cities and towns, will require immense capital and effort.”