QBiz: Voda-Idea May Be Worth 23% More; RBI Lens on 4 PSU Banks

A roundup of important business news.

1. Vodafone-Idea May be Worth 23% More Than The Agreed Price

The valuation of the merged Vodafone India-Idea Celullar entity is likely to be Rs 160 a share, 23 percent higher than the Rs 130 a unit price that the UK telco has agreed to sell its shares at to the Aditya Birla Group, after accounting for all the operational synergies, said a Vodafone official.

“Vodafone has been very conservative with the Rs 130 figure, but in the true sense, if one adds the $10 billion operational synergies to the Rs 72.5 a unit that has been taken to peg the enterprise value of the companies for the deal, the value of the merged entity comes to around Rs 160 a share,” says one of several company executives that Economic Times spoke to.

Vodafone has agreed to sell 9.5 percent additional stake at Rs 130 a share to Aditya Birla Group in the merged entity in three years after the closure of the deal in 2018, as both companies try and equalise their shareholding over time.

(Source: Economic Times)

2) Bharti Airtel to Buy Tikona’s 4G Business for Rs 1,600 Cr

Telecom major Bharti Airtel said it will acquire 4G business of Tikona Networks, including broadband spectrum and 350 sites across 5 circles, for about Rs 1,600 crore.

“Bharti Airtel shall acquire the 4G business of Tikona” for “approximately Rs 1,600 crore for the transaction”, the company said in a regulatory filing.

Tikona currently has 20 MHz spectrum in the 2,300 MHz band in Gujarat, UP (East), UP (West), Rajasthan and Himachal Pradesh circles.

With this acquisition, Airtel will be second company, after Reliance Jio, in the country to have pan-India presence in 2300 Mhz band – which has second largest ecosystem of 4G devices.

(Source: Business Standard)

3. RBI Puts 4 Banks Under Watch on Asset Quality Concerns

The Reserve Bank has put four public sector lenders, including IDBI Bank and Indian Overseas Bank, under watch and advised them to stay off risky assets so that their financial health is not stressed further.

While UCO Bank also figures in the list, the name of the fourth lender could not be immediately ascertained. Sources said these lenders were on the RBI’s radar as their financial health may not improve after the central bank’s asset quality review (AQR) comes to an end on 31 March.

These banks have been advised by both the finance ministry and the RBI to improve their financials, look for avenues for capital infusion and create a self-sustaining model by selling assets, they added.

(Source: Livemint)

4. Amazon, Big Basket, Grofers Seek to Invest $695 Mn in Food E-Tailing

Three companies – Amazon Corporate Holdings Pvt Ltd, Supermarket Groceries Supplies Pvt Ltd (Big Basket), and Grofers India Pvt Ltd – have submitted proposals seeking permission to invest $695 million over a period of time for e-tailing food products, the Food Processing Ministry has said.

Of these, US-based online giant Amazon proposes to invest about $500 million, Food Processing Minister Harsimrat Kaur Badal said on Thursday.

Addressing a press conference, Badal said Grofers and Big Basket have also submitted foreign direct investment proposals for retail trading of food products, while Metro Cash and Carry has shown interest in food retailing.

The government last year allowed 100 percent FDI for marketing, including through e-commerce, of food products manufactured and produced in India.

(Source: The Hindu BusinessLine)

5. Govt Removes 1% Tax On Cash Payments Above Rs 2 Lakh

The government has done away with the 1 percent tax on cash payments of over Rs 2 lakh for purchase of any goods or service after it banned cash dealings above that limit from 1 April this year.

Finance Minister Arun Jaitley, in the Union Budget for 2016-17, had provided for the seller to collect tax at the rate of 1 percent from the purchaser on sale in cash of any goods or offering any services exceeding Rs 2 lakh.

Tax collection at source (TCS) limit for cash purchase of bullion was kept at Rs 2 lakh, but for jewellery, it was fixed at Rs 5 lakh. However, in the Budget for financial year 2017-18, presented last month, he brought in a new provision banning cash transaction above Rs 3 lakh. This cap was lowered to Rs 2 lakh through an amendment.

(Source: BloombergQuint)

6. Sebi Makes Annual Accounts Public; Income Surplus up 75% in FY16

Markets regulator Sebi on Thursday made public its first annual accounts statement, along with the observations made by Comptroller & Auditor General (CAG), showing 75 per cent jump in income surplus to Rs 356.19 crore last fiscal. The surplus rose from Rs 203.50 crore in the financial year ended 31 March 2015 to Rs 356.19 crore in 2015-16. The total income jumped to Rs 601.67 crore last fiscal from Rs 513.17 crore in 2014-15.

CAG, which examined Sebi’s records, said the income is overstated by Rs 1.66 crore being excess booking of income on accrual basis in 2015-16, representing fees realisable by Sebi from FPIs, which actually pertains to registration and renewal fees for the periods commencing in/after April 2016.

(Source: Financial Express)

7. Yes Bank Launches Share Sale To Raise Up To $750 Million

Private sector lender Yes Bank has launched a qualified institutional placement (QIP) of equity shares to raise up to $750 million (about Rs 4,900 crore), according to a person with direct knowledge of the matter.

Of the total amount, the bank has the option to raise $100 million through a greenshoe option, the person added. A greenshoe option allows the company to sell more shares than had been planned if the demand for the issue is higher than expected.

The floor price for the QIP has been set at Rs 1,498.95 per share, Yes Bank said in a stock exchange filing. In accordance with Securities and Exchange Board of India regulations, the lender will offer a discount of not more than 5 percent to the floor price. The bank has picked Bank of America Corp. and CLSA Ltd. to arrange the share sale, Bloomberg reported earlier on Thursday.

(Source: BloombergQuint)

8. Tata Capital Launches Mobile App to Offer Personal Loans

Financial services company Tata Capital on Thursday launched a mobile app to extend its personal loans offering to young and mobile savvy audience. The app 'myLoan' is a social profile based personal loan mobile application.

It will make a real-time assessment of the borrower's loan application through an algorithm, using a mix of digital, social and financial data.

“Digital data allows for a more holistic picture of a customer than financial metrics. With the launch of the app, we aim to sustain our digital presence through new and unique application that uses financial and alternate information during the borrower's credit analysis,” Tata Capital's chief operating officer (retail business and housing finance) Govind Sankaranarayanan said.

(Source: Times of India)

9. SpiceJet is Second Most Valued Airline

SpiceJet, the airline which was on the verge of closure till it was sold back to its original promoters in 2015, on Thursday surged past Jet Airways, its much larger peer, in terms of market capitalisation.

At Thursday's close, SpiceJet had a market cap of Rs 5,599 crore, compared to Jet Airways's Rs 5,464 crore, BSE data showed. Interglobe Aviation, the owner of IndiGo which has a market cap of about Rs 35,300 crore, remains the most valued airline company in the country.

(Source: Times of India)