Category: Business

The government taking a 35.8% holding in Vodafone Idea has surprised many. At a time when it looked poised to dilute its stakes in many public sector companies, the move failed to excite the Street too, as the cash-strapped company’s shares dipped 21% yesterday.

Experts also pointed out that ailing government-owned telecom giants MTNL and BSNL are also crying for attention. They are yet to roll out 4G services.

But the move may well give Vodafone Idea a lease of life. The third-largest telecom carrier’s fundraising plans are significantly delayed and Vodafone Group has made it clear it will not make any fresh equity infusion into its Indian unit.

Against this backdrop, the government of India is set to become the single largest shareholder in struggling Vodafone Idea after the telco opted to convert interest worth Rs 16,000 crore on deferred spectrum liabilities and Adjusted Gross Revenue dues into equity.

It had previously accepted a four year moratorium on spectrum and AGR dues offered by the government’s Telecom Reforms Package announced last September.

While Airtel had chosen to pay the interest arising out of such deferment, Vodafone Idea is taking advantage of the relief package to convert them into equity. This will result in a massive dilution to existing shareholders.

The government will hold some 35.8% stake in India’s third biggest carrier. The Vodafone Group will own around 28.5% and Aditya Birla Group about 17.8%.

While this may provide comfort to financial creditors, at the same time it places an undue expectation on the government for any future fund infusions as it has consciously chosen to be part of the company’s turnaround.

As of September end, Vodafone Idea had a gross debt of Rs 1.94 trillion, 90% of which it owes to the government. The company’s decision crucially prevents a duopoly in the telecom market, which was ostensibly the intent of the telecom reforms package.

While this move has helped the company extinguish some dues, the government holding has evidently unsettled investors.

Prime Minister Narendra Modi had declared last February that “government has no business to be in business”.

Vodafone Idea should not be allowed to remain a quasi-public sector company for long. While the government may become the largest shareholder, it may not get involved in running the company.

In an earlier interaction with Business Standard, Vodafone Idea’s CEO Ravinder Takkar had said that it would be incorrect to state that the company will turn into a public sector undertaking. He said the government has no interest in acquiring and running telecom companies.

The government will also have an option to convert the due amount pertaining to the deferred payment into equity at the end of the four-year moratorium period.

In the absence of any significant external fundraising by the company, such a scenario would mean the government becoming a controlling shareholder.

Nevertheless, it should soon come up with an exit strategy for its stake. Its support provides short-term relief and stability but over the long term it needs to be ensured that Vodafone Idea does not go the Air India way.

With inputs from Business Standard

(Except for the headline, this story has not been edited by Kashmir Today staff and is published from a syndicated feed.)

Sheikh Samiullah, CEO and the co-founder of FastBeetle told Business Today In in an exclusive interaction that the fresh funding will be utilised in expanding the operations to several rural districts of the union territory including South Kashmir as well as Jammu regions.

Logistics tech platform headquartered in Srinagar, FastBeetle, has become the first Kashmiri startup to raise $100,000 in a pre-Series A funding round led by a clutch of angel investors including Sandeep Patel from Nepra, entrepreneurship evangelist Saurabh Mittal, Vikram Sanghvi, Rohit Qamra, and a few non-resident Kashmiris. Existing investors Kartikeya Desai and Anuj Sharma also participated in the current round.

Sheikh Samiullah, CEO and the co-founder of FastBeetle told BusinessToday.In in an exclusive interaction that the fresh funding will be utilised in expanding the operations to several rural districts of the union territory including South Kashmir as well as Jammu regions. He added that the startup is also aiming to use the funding in marketing, promotion, and overhauling of IT infrastructure as well as hiring employees.

“We are very bullish on hiring local talent from the valley and will use this funding opportunity to create employment opportunities in J&K,” FastBeetle co-founder said.
Both Samiullah and Abid Rashid Lone co-founded FastBeetle in 2019 aiming to disrupt the conventional delivery sector of the valley and making inroads into the e-commerce industry, which was still at the nascent stage. However, months-long communication breakdown due to internet unavailability hammered the startup sector, blocking channels to fund-access.

“We even approached the government run Entrepreneurship Development Institute and were promised Rs 10 lakh as initial financial support for the upstart, which we couldn’t get,” Samiullah said.

The company provides inbound and outbound full-stack logistics services across 19,000 pin codes in J&K and works with over 800+ micro-entrepreneurs and SMEs, of which 60 per cent are run by women, helping drive entrepreneurship in the region and providing critical services in areas not serviced by larger companies.

It recently announced strategic tie-ups with Amazon and Flipkart to enable last mile logistics in several pin codes in Kashmir and to use the funding to strengthen the team and expand business operations to all districts including Jammu, as well as in the adjacent union territory of Ladakh.

The company has grown steadily after its selection last year at a special incubation program held in Srinagar by ALSiSAR Impact, a double bottom line impact incubator and transaction advisory firm, that has a special focus on frontier markets and the Himalayan region. “FastBeetle is a great example of the type of social enterprise that is much needed to spread the benefits of growth to underserved regions. ALSiSAR Impact is proud to have supported the founders from an early stage,” said Anuj Sharma, Founder and CEO of ALSiSAR Impact.

Despite the growth in VC and impact investing in India over the last few years, non-metro regions and frontier markets especially in Himalayan region seldom receive early-stage investment and support. This is one of the first such investments in the region that is full of potential for both social and economic impact. It also signals to other capable entrepreneurs in the valley that it is possible to raise funds to build a scalable enterprise, the company said in a statement.

The Story Was First Published On Bussiness Today.

PTI

Petrol and diesel prices on Thursday neared record levels across the country after rates were hiked by 25 paise and 30 paise a litre respectively.

The price of petrol was hiked to Rs 101.64 a litre in Delhi and to Rs 107.71 per litre in Mumbai, according to a price notification of state-owned fuel retailers.

Diesel rates increased to Rs 89.87 a litre in Delhi and Rs 97.52 in Mumbai.

Prices differ from state to state depending on the incidence of local taxes.

This is the second price increase in petrol since the ending of a three-week-long hiatus in rate revision and the fifth in the case of diesel.

The hike took the retail price of petrol to a near-record high. Petrol had hit a record high of Rs 101.84 a litre in Delhi in July and Rs 107.83 in Mumbai. For diesel, the increase led to rates equalling the all-time high of Rs 89.87 a litre touched in Delhi in the same month.

International oil prices are at three year high with global benchmark Brent trading at USD 78.64 per barrel.

This spurt in global rates led state-owned Indian Oil Corp (IOC), Bharat Petroleum Corp Ltd (BPCL) and Hindustan Petroleum Corp Ltd (HPCL) resuming daily price revisions on September 24, ending the pause in rates that came into effect from September 5.

In five price increases since September 24, diesel rates have gone up by 1.25 paise per litre, negating all of the price reductions that happened between July 18 and September 5.

Petrol price has increased by 50 paise per litre in two instalments this week.

Before this, diesel price was last increased on July 15. The last increase in petrol rate was on July 17.

International crude oil prices have reached a nearly three-year high as global output disruptions have forced energy companies to draw more crude oil out of their stockpiles.

When international oil rates fell in July and August, retail prices of petrol and diesel in the Delhi market were reduced by Rs 0.65 and Rs 1.25 per litre.

Prior to that, the petrol price was increased by Rs 11.44 a litre between May 4 and July 17. Diesel rate had gone up by Rs 9.14 during this period.

The price hike during this period pushed petrol prices above the Rs 100-a-litre mark in more than half of the country, while diesel crossed that level in at least three states.

India is dependent on imports to meet nearly 85 per cent of its oil needs and so benchmarks local fuel rates to international oil prices. (PTI)

(Except for the headline, this story has not been edited by Kashmir Today staff and is published from a syndicated feed.)

PTI

In order to survive Financial Crisis, State-owned telecom firm BSNL has approached the government for Rs 40,000 crore financial help, half of which it needs in the form of sovereign guarantee to clear short-term debt.

BSNL Chairman and Managing Director PK Purwar told PTI that the company does not need any additional debt and its business has become self-sustainable to support the operations.

“We do not need any additional debt. We have asked for Rs 20,000 crore sovereign guarantee to pay back our short-term debt and issue long term bonds. We will need Rs 20,000 crore if we have to set up 1 lakh node B (mobile sites) for mobile network rollout,” Purwar said.

The BSNL CMD confirmed that he has approached the government for the support, which is beyond the Rs 69,000 crore relief package that was announced in 2019.

At present, BSNL has a debt burden of Rs 30,000 crore which is one of the lowest in the telecom sector.

Purwar also heads MTNL, which is proposed to be merged with BSNL. The government has already issued a permit to BSNL to operate mobile business in Delhi and Mumbai which was earlier managed by MTNL.

The Appointments Committee of the Cabinet on Wednesday extended the additional charge of Purwar as chairman and managing director of loss-making telecom firm MTNL for a period of one year till October 2022.

The government had offered a combined revival package of about Rs 69,000 crore to BSNL and MTNL in October 2019 that has helped both telecom PSUs in narrowing their losses.

According to official data, losses of BSNL have narrowed to Rs 7,441 crore in 2020-21 from Rs 15,500 crore in 2019-20.

MTNL reported a total loss of Rs 2,554 crore for the last fiscal compared to Rs 3,811 crore in 2019-20. (PTI)

(Except for the headline, this story has not been edited by Kashmir Today staff and is published from a syndicated feed.)

Reuters

Ford Motor Company said on September 9 that it will end manufacturing operations in India, shuttering its two plants in Sanand and Chennai, a decision forced by huge accumulated losses and lack of growth in a difficult market.

Ford will wind down the manufacturing of vehicle for exports in Sanand, Gujarat by the fourth quarter of 2021 and vehicle and engine manufacturing in Chennai by the second quarter of 2022, the American company said in a statement.

This is the second major exit of local manufacturing operations in India by a global automotive brand. US giant General Motors, which entered India just a few years before Ford, stopped selling cars in India in 2017.

Ford Motor Co (F.N) will stop making cars in India and take a hit of about $2 billion because it does not see a path to profitability in the country, becoming the latest automaker to leave the major growth market dominated by Asian rivals.

The U.S. carmaker entered India 25 years ago but still has less than 2% of the passenger vehicle market having struggled for years to win over Indian consumers and turn a profit.

Ford said in a statement on Thursday that it had accumulated operating losses of more than $2 billion in 10 years in India and demand for its new vehicles had been weak.

“Despite (our) efforts, we have not been able to find a sustainable path forward to long-term profitability,” Ford India head Anurag Mehrotra said in the statement.

Ford’s decision to cut its losses in India after leaving Brazil earlier this year underscores the pressures on global automakers to invest more in electric and automated vehicles, as well as connected vehicle technology.

Global automakers once fought to maintain a presence in every major market, and were willing to lose money to do so.

Now, companies such as Ford, General Motors (GM.N), Renault SA (RENA.PA) and Stellantis NV (STLA.MI) are walking away from money-losing ventures and redirecting capital to electrification and investment in technology they need to survive.

Ford’s decision also comes as a setback for Indian Prime Minister Narendra Modi’s “Make in India” campaign. It follows other U.S. vehicle makers such as General Motors (GM.N) and Harley Davidson (HOG.N) that have left India in recent years.

Mehrotra said Ford’s decision was also reinforced by “persistent industry over capacity and lack of expected growth in India’s car market”.

India was expected to become the world’s third-largest car market by 2020 after China and the United States with sales of some 5 million vehicles a year. Instead, sales have languished at about 3 million, still trailing Europe and Japan too.

India’s car market is dominated by low-cost, mainly small cars made by Japan’s Suzuki Motor Corp (7269.T). Its Maruti Suzuki brand accounts for seven of the top 10 sellers with South Korea’s Hyundai Motor (005380.KS) making the other three.

WINDING DOWN

Ford has been escalating investment in electric vehicles (EVs) and advanced software. In May, it said it would boost spending on EVs by a third to $30 billion by 2030.

With so much on Ford Chief Executive Jim Farley’s plate since he took charge last year and limited financial resources, India was a lower priority, a source previously told Reuters.

As part of the plan, Ford India will wind down operations at its factory in Sanand in the western state of Gujarat by the fourth quarter of 2021 and vehicle and engine manufacturing in its southern Indian plant in Chennai by 2022.

Ford has the capacity to produce about 440,000 cars in India a year across both plants but is only using about 25% of that, according to data intelligence company Global Data.

The U.S. automaker will continue to sell some of its cars in India through imports and it will also provide support to dealers to service existing customers, it said. About 4,000 employees are expected to be affected by its decision.

The decision to stop production came after Ford and India’s Mahindra & Mahindra (MAHM.NS)failed to finalise a joint venture partnership that would have allowed Ford to continue making cars at a lower cost than now but cease its independent operations.

Ford said it had considered several other options for India including partnerships, platform sharing, contract manufacturing and the possibility of selling its manufacturing plants, a plan that is still under review.

Ford will continue to operate its engine factory in Sanand which exports engines for its Ranger pick-up trucks globally. It will also continue to rely on India-based suppliers for parts for its global products.

India’s Federation of Automobile Dealers Associations said in a statement that it was shocked by Ford’s move, saying the U.S company’s decision only to compensate dealers who offer vehicle services to customers as well was “not enough”.

There are 400 Ford outlets in India where dealers over time have invested 20 billion rupees ($272 million), the association said in a statement, adding that the automaker had been appointing new dealers until as recently as five months ago.

“Such dealers will be at the biggest financial loss in their entire life,” it said.

($1 = 73.5740 Indian rupees)

With inputs from Reuters

(Except for the headline, this story has not been edited by Kashmir Today staff and is published from a syndicated feed.)