IPOs worth Rs 5,000 crore lined up this month

Mumbai: At least four companies are ready to sell their shares to the public for the first time in June, aiming to raise a total of at least Rs 5,000 crore, four people familiar with the moves said.
The firms are telecom equipment maker Tejas Networks Ltd, depository services firm Central Depository Services Ltd, pharma company Eris Lifesciences Ltd and small finance bank Au Small Finance Bank Ltd.
Bengaluru-based Tejas Networks, which is backed by private equity investors such as Goldman Sachs, Intel Capital, Frontline Strategy and Mayfield, is looking to launch its approximately Rs800 crore initial public offering (IPO) in the third week of June, one of the persons cited above said.
“Road shows were completed last month, a final assessment of the institutional demand has been done and the IPO is set for launch, which is targeted for the week of 12 June,” he said.
The IPO will raise Rs450 crore in primary capital for capital expenditure and working capital requirements. Several shareholders—including Cascade Capital Management Mauritius, Intel Capital, Frontline and the company’s chief executive officer Sanjay Nayak—will also sell some of the shares they hold through an offer for sale.
Au Small Finance Bank Ltd, one of the 10 entities who were granted a small finance bank licence in 2015 by the Reserve Bank of India, is planning to launch its almost Rs2,000 crore IPO, said another person cited above, also requesting anonymity.
“The plan is to launch the IPO towards the end of the month. The company is currently on investor roadshows, which are expected to be concluded soon,” he said.
Among small finance banks, it will be the third to be listed. Equitas Small Finance Bank got listed in April 2016 and in the next month, Ujjivan Small Finance Bank got listed too.
Au’s IPO is a pure offer for sale. Existing investors partially selling their shares include International Finance Corporation (part of the World Bank Group), Warburg Pincus, ChrysCapital and Kedaara Capital.
“As you are aware, Au Small Finance Bank Ltd had filed a draft red herring prospectus with capital markets regulator Securities and Exchange Board of India (SEBI) for its IPO on 1st February 2017. The company received the SEBI comments in March 2017. The timing of opening the IPO will be decided in due course by company and selling shareholders in consultation with BRLMs (book running lead managers),” said a spokesperson for the company in an email.
Last week, Mint reported that Ahmedabad-based pharmaceuticals company Eris Lifesciences Pvt. Ltd plans to launch a Rs2,000 crore IPO in June.
The fourth company is depository services firm CDSL, which plans to raise Rs400 crore.
According to the draft red herring prospectus filed by the company, the IPO will be a pure offer for sale by existing shareholders BSE Ltd, State Bank of India, Bank of Baroda and The Calcutta Stock Exchange. BSE, SBI, Bank of Baroda and The Calcutta Stock Exchange together hold 65.65% stake in CDSL, with BSE alone holding 50%.
Emails sent to Tejas Networks and CDSL on Thursday evening were not answered.
So far this year, eight companies have raised Rs6,335.83 crore through IPOs, while last year 26 companies raised Rs26,493.84 crore through this route.

Railways to promote use of clean fuel, cut emission by 33% by 2030

New Delhi: The Indian Railways is taking increased efforts through sustained energy efficient measures and maximum use of clean fuel to cut down emission level by 33 per cent by 2030. The Railways will use 5 per cent bio diesel as well as CNG/LNG for traction and take the use of renewable energy to 10 per cent by 2030. In order to boost the use of renewable energy sources, the Railways have set a target to achieve 1,000 megawatt (MW) of solar power, of which 20 MW has been commissioned; and 170 MW of wind power, of which 36 MW has been commissioned. Further, the Railways will recycle water and focus on rain water harvesting and revival of water bodies. The Railways have set a target of planting 50 million trees over the next five years, of which 12 million trees have already been planted. The Railways have also initiated fitting of bio-toilets in all of their 55,000 coaches by 2019.

IT firms eye US$ 1-billion opportunity

Bengaluru: The delay in finalisation of the GST is affecting the development of applications
Indian IT firms could see business opportunity of over $1 billion in building and implementing solutions to help their clients become compliant with the GST regime.
Companies such as Infosys, Wipro, HCL Technologies, Tech Mahindra and others, which implement the enterprise software of SAP, Oracle, will now have to align the technology backbone based on GST norms.
The opportunity for these companies includes customised packages and software services implemented on the customer’s business.
Dealers or businesses would need to upload the details of their transactions and multiple returns to the government portal called GSTN and they would have to adopt technology for taxation or an ERP system in order to be GST compliant, said Harpreet Singh, partner, indirect tax, KPMG.
This directly and indirectly should create opportunities for IT services firms and other companies that are building application-based solutions to make tax compliance easy for businesses once the GST is implemented.
“In order to undertake GST compliance, the GSTN has tied up with third parties called GST suvidha providers who will be allowed to use the application programme interface for themselves and make them available for other parties. There are other players called application service providers who can use these APIs to build innovative applications for taxpayers. All IT services companies are now gearing up to either become a GSP or ASP as they see potential in this,” Singh added. He said anyone aspiring to build and provide application services for the GST could become an ASP.
Tax compliance and related technology service firm ClearTax estimates the opportunity for implementation of GST-related software to be worth nearly ~1,000 crore. “For system integrators or service providers, the opportunity with the GST is worth more than ~1,000 crore. In the software-led services segment for the GST, we foresee an opportunity worth more than ~3,000 crore ($500 million),” said Archit Gupta, founder and chief executive officer, ClearTax.
Nearly 8 million businesses are estimated to be registered for the GST and the majority of them are likely to use application-based services.
“There is a huge market. Even if 60 per cent of dealers decide to go through the ASP route, we are talking about roughly 5 million customers,” said Singh.
Another IT industry analyst said some IT services providers were planning to create packages for GST consulting services and offer dedicated services through BPOs.
“Apart from the incremental revenue through software implementation, some IT services firms are talking about creating packages for GST on the consulting business front,” said Pareekh Jain, senior vice-president, HfS Research.
The delay in finalisation of the GST is, however, affecting the development of applications. Some companies were struggling to launch their ASP solutions owing to frequent changes in the GST law and release of multiple versions, said Singh.

Indian SMEs more bullish on growth prospects: Survey

New Delhi: In spite of doubts over uncertain business rules following the goods and services tax (GST) rollout in July 1, small and medium enterprises (SMEs) are more bullish on growth prospects as compared to their global counterparts, according to a survey conducted by financial services giant American Express.
According to the American Express Global SME Pulse 2017, 71 per cent of the survyed SMEs in India expressed 'optimism in the economy'. Among other Asian countries included in the survey were China and Japan, where the percentage of firms having faith in the domestic economy stood at 54 per cent and 62 per cent.
Conducted on companies across 15 nations, the survey looked at more than 300 medium-sized companies, out of which 76 per cent said they expected revenue growth of at least 4 per cent in 2017.
Firms remained positive about profitabiltiy with 45 per cent of the surveyed SMEs forecasting a profit of 8 percent by 2020. Globally, only 27 per cent of firms pegged the profit forecast at 8 per.
According to government estimates, the sector accounts for 45 per cent of the country's industrial output, while 40 per cent of the total exports come from SMEs in India. At presnet, it employs 60 million people and is responsible for creating 1.3 million jobs per year.
While SMEs in India are optimistic about the economy and their own business, they cite domestic policies, uncertain laws and regulations as major concerns over the next year.
To streamline their future business financing options, Indian SMEs ranked flexible lending and repayment options (at 37%) as the most important factor affecting business. High interest rates of 49 per cent was another pain point while applying for business finance.
Lack of easy access to credit has, however, continued to dog such firms. "SMEs are consistently having diffculty in accessing short-term loans," sdaid Saru Kaushal, Vice President and General Manager of the Global Corporate Payments division at American Express India.
The survey has also revealed that 38 per cent of firms feel that expansion in new domestic market segments will be a top priority for their businesses over the next three years. They are also pushing for sales growth with over 35 per cent of the surveyed firms looking to grow their current market share.
Indian SMEs are still trying to assess the GST regime and its impact on their general conduct of business as crucial aspects of the new tax structure remains unclear. Also, the sector was disproportionately hit due to the government's demonetisation exercise since November last year, a senior official at industry body Fisme said.
Although the government has unveiled GST rates for a significant number of items, a majority of companies in the sector remain anxious over the new accounting and taxation norms that need to be finalised soon.
These include the government's decision to reduce the tax exemption limit for small-scale industry units from Rs 1.5 crore to Rs 20 lakh and the phasing out of CENVAT credit from September onwards. The industry, which has raised several objections to these changes, is cuurently holding talks on the issue.

India welcome to play a role in reconstruction of Syria: Bashar al-Assad

New Delhi: Mr Bashar al-Assad, the President of Syria, has welcomed India to play a role in the economic reconstruction of Syria. He expressed that both the countries are victims of terror and should support each other in the fight against it. He has welcomed Indian companies to take part in the expansion projects that will be undertaken in most cities of Syria after liberation from ISIS and al-Nusra and other terrorist organisations. Further, he said that India and Syria could learn from each other and strive to build a genuine coalition in order to fight against terrorism. He also said that India's stand on the Syrian war is based on international law and United Nations Charter; and not influenced by the countries that try to force New Delhi to end ties with Syria. India will be one of the few countries that Mr Assad will visit once the war ends.

In a first, Reserve Bank of India to have CFO soon

Mumbai: The Reserve Bank of India (RBI) will soon have a chief financial officer (CFO) to oversee financial reporting and accounts, besides shaping policies.
Spelling out job responsibilities for the CFO, who will be of the rank of executive director, the RBI said he or she would be responsible for “accurate and timely presentation and reporting of financial information”.
The head of finance should essentially be a qualified chartered accountant with at least 15 years of experience of overseeing financial operations of banks or financial firms, the central bank said in a notification seeking applications for the position.
Till now, the central bank does not have a dedicated official handling the finance function, and the tasks are being carried out internally.
The CFO’s responsibilities will also include establishing accounting policies and procedures, and ensuring compliance with financial regulations and standards.
The CFO would communicate both the expected and actual financial performance of the bank. His work will also involve overseeing the Budget process, collecting inputs and comparing actual performance vis-à-vis the Budget Estimates.
Raghuram Rajan, during his tenure as RBI governor, had toyed with the idea of having a chief operating officer of the rank of deputy governor. Rajan wanted Nachiket Mor, presently director on the central board of the RBI, to be in that position, said two senior bankers.
The RBI expects the CFO to flag risks to the finances and develop strategies to counter and mitigate the same. He would have oversight of three departments, including department of government and bank accounts, corporate strategy and budget department, department of corporate services.
About the compensation package for the CFO, the RBI said that for regular appointment (on permanent basis), the selected person will draw a starting basic pay of Rs 1,20,500 a month and will also be eligible for dearness allowance, house allowance, special allowance and local compensatory allowance.
The gross monthly emoluments for the post will be about Rs 2,40,660. The person will get the perquisites as available to the post of executive director and will be eligible for superannuation benefits. For the person coming on contract, appointment would be on cost-to-company (CTC) basis.
The cost per month works out as Rs 2 lakh a month with housing. Without RBI’s housing, the CTC will about Rs 4 lakh a month. Those on contract would not be eligible for allowance and perks.

L&T Q4 profit rises 29.5% to Rs 3,025 crore

M

umbai: Larsen and Toubro Ltd (L&T), India’s largest engineering and construction company, on Monday reported a 28% jump in March quarter consolidated net profit on higher revenue and lower taxes, beating Street expectations.
The company missed its own 2016-17 target for order inflows and revenue, as a Rs20,000-crore defence order did not come through. L&T, however, said it expects order inflows to grow 12-14% and revenue by 12% in 2017-18, as the deferred orders materialize.
The private sector capex cycle is unlikely to recover this fiscal, group executive chairman A.M. Naik said. “With the current push on recovering of debt, about 90% of private sector today is worried about returning money and not borrowing and promoting new projects, at least in the infrastructure sector,” Naik said.
Consolidated net profit in the quarter rose to Rs3,025 crore from Rs2,335 crore a year earlier. Total income from operations rose 12% to Rs36,828 crore. Nineteen analysts polled by Bloomberg had expected L&T to report a consolidated net profit of Rs2,650.50 crore; 20 analysts had expected net sales of Rs36,582.20 crore.
In January, L&T said it expects 2016-17 orders and revenue to grow 10% each, revising its earlier forecast of 15% growth in order inflow and 12-15% for revenue. However, revenue for the year grew only 8% to Rs1.1 trillion, while order inflows rose just 5% to Rs1.43 trillion.
“Increasingly, for a big company such as L&T, it is a challenge to be dependent entirely on government orders to deliver about 15% order inflow growth. They are being conservative with the new forecast of about 12% growth,” said an analyst at a securities house, asking not to be named.
L&T said it won orders worth Rs47,289 crore in the March quarter, up 9.6% from a year earlier. International orders, at Rs.9,044 crore, made up 19% of the total order inflow.
The consolidated order book stood at Rs2.61 trillion as of 31 March, an increase of 5% from a year earlier.
Revenue from the infrastructure business, its largest unit, rose 8.2% to Rs20,300.96 crore in the quarter. Revenue in the power business fell about 2.8% to Rs1,838.55 crore.
In its outlook for the year, L&T said it expects an economic recovery to steadily improve, backed by structural reforms.The government’s thrust on infrastructure will be a strong driver of economic growth, L&T said.
On Monday, L&T also said it has appointed J.D. Patil to its board as whole-time director and senior executive vice president (defence business) with effect from 1 July. Patil joined L&T in 1978 and was involved in expanding the company’s nascent technology and product development group and the foray in defence sector.
In April, L&T appointed current deputy managing director and president S.N. Subrahmanyan as managing director and chief executive officer, heralding the first change of guard in L&T’s top management in 18 years.
Subrahmanyan, 55, will take on the top job at the complex and diverse conglomerate effective 1 July. Naik, 74, who currently is group executive chairman will be non-executive chairman for three years from 1 October for transition of leadership and to provide guidance and mentorship to the management.
L&T’s shares closed at Rs1,788 on BSE on Monday, little changed from previous closing. Results were announced after market hours.

VLCC acquires nutraceutical maker Wellscience

New Delhi: VLCC Health Care Ltd, a beauty and wellness firm, has forayed into the fast growing nutraceuticals industry with the acquisition of the direct selling business of Wellscience, a Gurugram-based nutraceutical products maker. The acquired company, which will be rebranded as VLCC Wellscience, offers a comprehensive range of high quality nutraceutical supplements and personal care products, catering to customer requirements across age groups, and has a direct selling network of over 35,000 associates. Mr Lajinder Bawa, CEO of VLCC Wellscience, has stated that the brand values of Wellscience and VLCC will likely provide the company with the necessary thrust required for its next level of growth.

India is the biggest growth driver for Essilor, says CEO Hubert Sagnieres

India is the biggest growth driver for Essilor, says CEO Hubert Sagnieres
Livemint: May 30, 2017
New Delhi: Earlier this year, French lens-maker Essilor International SA and Italian frame designer Luxottica Group SpA announced a merger to create a global eyewear giant with a market share of 13-14%. In India, the combined entity will have 15-20% market share in the Rs22,674 crore (as of 2016) eyewear market.
“But the market should actually be three times bigger,” says Hubert Sagnières, chairman and chief executive officer at Essilor International and executive vice-chairman and deputy CEO of Essilor Luxottica, referring to the number of people with bad vision in India and across the globe.
Essilor sells lenses under brands such as Varilux, Crizal, Definity, Xperio and Foster Grant, while frame designer Luxottica operates brands like Oakley and Ray Ban. The companies are expecting to complete the transaction latest by January 2018. Sagnières, who was in Delhi last week, talks about the idea behind the merger, expectations from the Indian market, and how e-commerce has been a game changer for eyewear. Edited excerpts from an interview:
How will the merger change things?
The main reason why Luxottica and Essilor are in business is to improve the vision of the people. Essilor has been in business for 180 years now; Luxottica is a little younger with 50-55 years. We have developed our activities for improving vision with lenses and Luxottica has done the same with frames. The combination of the two companies is to make sure that we develop the eyewear market which is currently facing two key challenges—awareness and accessibility. There is a lack of awareness when it comes to bad vision. Secondly, there are not enough stores or access points where people can go and have their eyes checked or purchase eye-glasses, contact lens and sunglasses.
Secondly, most of the Luxottica brands which are sold in India are produced mainly in the US. With the merged entity, we can produce Luxottica locally at our facility in Gurgaon. So, the big change will also be on the availability of all the brands that Luxottica has. There will be luxury fashion and affordable fashion with the combined entity.
How do you plan to resolve the issues of accessibility and awareness?
To eradicate poor vision from India, we don’t need to develop any new product. We just need to make sure that people pay attention to their vision. People assume that a good vision is forever but the dust, light and sun can anytime attack your iris and retina. It may not make you blind but you may have eye diseases like glaucoma or retina issues.
In India, we take the young people in rural areas and train them to be basic opticians over a period of one year. We give them a small grant so that they can go back to their own villages and start micro-enterprises. This is one way of solving accessibility issue. We started this about five years back and today we have trained close to 3,000 people. We will add 10,000 more by the end of 2020.
How has overall eyewear market evolved in India?
It’s growing very fast. The uncorrected vision was not being paid any attention earlier. Over the last 15-20 years, there has been a lot of awareness. The cost of poor vision in India is estimated (by World Health Organization) to be over Rs2 trillion annually, that is $37 billion. If you just put glasses on people’s faces, you increase the GDP (gross domestic product) of India by Rs2 trillion every year.
India stands second when it comes to number of people with bad vision. India has 1.3 billion people, out of which 550-600 million people have bad vision. China is number one. At the same time, this ranking is linked to population.
Which are your best markets?
Absolutely none. There is no market where we have eradicated poor vision. In US, 40 out of 300 million people and in France, four out of 60 million people don’t have access to eye-care. We have not solved the problem of poor vision but we are making progress everywhere. Essilor is doing business in every country of the world except North Korea.
Which countries are driving growth for you?
India is the biggest driver. We are growing much faster in India than in China and we are basically the same size in both the countries. India is among top 10 markets for us. It currently contributes less than 5% to our global revenue.
Also, some countries in Africa are good drivers, where we have low market share. Certain countries are more organized. Like in Latin America, Colombia is very well organized for eye care. Government has invested a lot in eye care development schools there.
How big a role does e-commerce play in eyewear accessibility globally and in India?
Globally, huge. It contributes around 5% to our global revenue, while it was nothing three years ago. It has solved the problem of accessibility to a great extent. The biggest markets where online eyewear is doing well, are China and the US.
In India, it is not where it should be, but it is growing. It is still perceived as a way to get deals and cheap stuff. India is still very small because it just started a year ago. We have recently started a site called www.coolwinks.com.
What is the revenue of the company post merger?
Globally, we have revenue of €7 billion. Combined with Luxottica, it will be €14 billion in a market which is close to €100 billion. The more important fact here is that the industry is underpenetrated because the market is three times bigger. That’s the size of uncorrected, bad vision across the world.

CPPIB scales up India investments, pumps in Rs 9,120 crore in fiscal 2017

New Delhi: Toronto-based Canada Pension Plan Investment Board (CPPIB), which opened its India office in 2015, has quickly scaled up its investments since then, figures from its annual report show.
The pension fund had investments of around Rs13,440 crore in the country by March 2016, and pumped in Rs9,120 crore more in the next year to take its total India exposure to Rs22,560 crore by 31 March 2017.
Canada’s largest pension fund has been investing in India since 2010 and made its first active investment in the country through a C$100 million commitment to Multiples Private Equity Fund in that year. (1 CAD=Rs48)
Most recently, CPPIB joined hands with Everstone Group’s industrial and logistics real estate development platform, IndoSpace, to form a joint venture named IndoSpace Core to acquire and develop modern logistics facilities in India. The Canadian pension fund will initially commit around $500 million and own a significant stake in the joint venture.
It has also formed a strategic investment platform with The Phoenix Mills Ltd (PML) to develop, own and operate retail-led mixed-use developments across India. The pension fund will initially own 30% in the platform, known as Island Star Mall Developers Pvt. Ltd, a PML subsidiary, which owns Phoenix MarketCity Bangalore, for about C$149 million. CPPIB’s total commitment to the platform is around C$330 million, which will increase CPPIB’s stake in the platform up to 49%.
In an interview published in Mint on 9 January, Mark Machin, who worked as CPPIB’s first president for Asia and was named president and chief executive of the pension fund a year ago, said India had the best profile as an investment destination in the world.
“There are three things that are discussed from time to time: the stability and the effectiveness of the government to effect change, the second thing is the oil price spike which is a real challenge for India and third thing is high interest rates. But right now, we are in a good place and that is why a lot of money is looking at India,” he said, adding that the pension fund’s emerging markets allocation is expected to grow from 15% to around 20% by 2030. It is looking to ramp up its exposure to emerging markets, in particular India and China.
Among its other bets, CPPIB bought an additional 1.5% stake in Kotak Mahindra Bank Ltd along with peer Caisse de depot et placement du Quebec (CDPQ) for $352 million in March this year. To date, CPPIB has invested a total of C$1.2 billion in the bank, representing a 6.3% stake.
The same month, CPPIB also bought 3.3% in telecom tower company Bharti Infratel Ltd for $300 million, as part of the purchase of a 10.3% stake alongside funds advised by PE firm KKR & Co. LP, from Bharti Airtel Ltd.
In January, CPPIB agreed to buy around 48% US-based digital product development services firm GlobalLogic Inc., from private equity fund Apax Partners LLP.
Meanwhile, the CPP Fund, which houses investments for CPPIB, saw an increase of about 13.5% in its net assets to C$316.7 billion as of 31 March, 2017 from C$278.9 billion at the end of fiscal 2016, according to a separate statement.
The C$37.8 billion increase in assets for the year consisted of C$33.5 billion in net income after all CPPIB-related costs and C$4.3 billion in net Canada Pension Plan (CPP) contributions. The portfolio delivered a gross investment return of 12.2% for fiscal 2017, or 11.8% net of all costs.
“This was a strong year for the CPP Fund as we achieved one of the largest yearly increases in assets since the inception of CPPIB,” said Machin in a media release.
“As always, we continue to focus on longer-term performance. Year-by-year results will swing, but it is noteworthy that our 11.8% five-year return mirrors our annual return. We believe this is a strong indicator of our ability to generate steady, sustainable returns for generations of beneficiaries to come,” he added.
To generate the C$33.5 billion of net income from operations after all costs, CPPIB incurred total costs of C$2,834 million for fiscal 2017, compared to C$2,643 million in total costs for the previous year.
CPPIB’s total costs for fiscal 2017 consisted of C$923 million of operating expenses; C$987 million in management fees and C$477 million in performance fees paid to external managers; and C$447 million of transaction costs.
This fiscal year reflected a decline in the operating expense ratio for the second year in a row, as well as a slowdown in the growth of CPPIB’s operating expenses, the company said. In fiscal 2017, CPPIB completed 182 global transactions through four investment departments. Nineteen of those investments were more than C$500 million.
“The composition of our highly diversified long-term portfolio continues to position us well, allowing us to take advantage of the strong performance of global stock markets this year, amid significant global geopolitical developments,” said Machin, adding that the diverse investment programs of the group generated strong earnings, while fixed income investments remained relatively flat.
In the 10-year period up to and including fiscal 2017, CPPIB has now contributed C$146.1 billion in cumulative net income to the Fund after all CPPIB costs. Since CPPIB’s inception in 1999, it has contributed C$194.1 billion.
On the other side, for the five-year period, the net nominal return was 11.8%, contributing C$129.6 billion in cumulative net income to the Fund after all CPPIB costs. While Canadian assets represented 16.5% of the portfolio, and totalled C$52.2 billion, assets outside of Canada represented 83.5% of the portfolio, and totalled C$264.7 billion.