Month: September 2021

Focused on organic growth, fortunate to count India as important part of GE, says CEO Larry Culp

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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General Electric (GE) has been in India since the turn of the 20th century, with a presence in power generation, financial services, healthcare and aviation. Currently, it has 15 manufacturing factories in the country across aviation, power, renewable energy and healthcare equipment.

GE’s partnership with Wipro, that was started by Azim Premji and Jack Welch, has lasted 31 years. More recently, the company has been running a health-tech startup accelerator in India, through which it has mentored 17 health-tech startups and has helped them to scale up.

Larry Culp, who took over as chairman and CEO in 2018, has been leading a transformation at the company with a focus on sustainable aviation, precision healthcare, and clean energy.

To talk in detail about the outlook for GE going forward in all its business segments, and also about it sees the global recovery playing out, CNBC-TV18 caught up with Larry Culp.

Culp said, “I do think that we feel good about the overall recovery as we look across the GE portfolio today. Obviously, most eyes are on the recovery in aviation. We see global departures down as of this morning 26 percent versus the same time in 2019 but that said, we have seen a gradual return, particularly here in the US and parts of Europe as well. That is good for the industry and good for our service business. Certainly, the broader transpacific, transatlantic routes are slowly coming back. We are optimistic given the pace and the momentum that we see building.”

Healthcare has been a standout for them through the course of this pandemic, said Culp. “We were hit early on, as hospitals paused to care for those impacted by COVID-19. But we’ve certainly seen a modernisation effort both in the private and public sectors ever since,” he added.

“In renewables, we have seen significant interest in our on and offshore wind businesses, let alone in our grid infrastructure business,” he said, adding that in the power segment, the gas business has been steady as people recognise that gas has an important role to play in supporting renewables through the energy transition.

Also Read: First Solar CEO lauds India’s efforts on climate change; here’s what he said

However, GE is grappling with supply chain issues, given the spike in demand. But those are short-term operating challenges, said Culp, sounding hopeful about the medium to long term.

When asked what the broad call was for the healthcare business, he said looking ahead, GE is talking about a business with a $17 billion revenue base. It has been profitably growing in the last several quarters. If we look at what we do in India and around the world, we are at the centre of the precision health revolution. That is fundamentally geared towards driving improved outcomes by tailoring diagnostics, and related therapeutics to individuals to the fullest extent possible.

Also Read: Diagnostic cos’ valuations much ahead of growth expectations: Prabhudas Lilladher

That is not only good for patients but also for providers, particularly with respect to their economics, he said, adding that most providers in India or elsewhere, be it public or private, see a productivity challenge in the years ahead. A lot of what we do, not only in core hardware products but increasingly in software and AI, is going to help drive those results, he said.

Talking about investments, he said, GE would like to start out with organic investments, and then earn the right to invest inorganically. “There is no question that we are looking to localise our footprint and accelerate our R&D, across a range of modalities and technologies, including AI.”

“India plays a key role for us in healthcare. Our long-standing relationship with Wipro and what we have done with them really touch 300 million lives today. We have 19,000 employees in the country, 6,000 of those are involved in R&D efforts,” he said.

Also Read: Reliance aims to generate 100 GW renewable energy, bring green hydrogen cost under $1/ kg by 2030: Mukesh Ambani

When asked where India currently stood in terms of being a growth market, and what the aspiration was for India over the next five years, he said, GE is fortunate to count India as an important part of its business today. “It is a multibillion-dollar footprint for us,” he said.

“When we think about GE and our purpose of building a world that works, whether in terms of precision healthcare or the energy transition, those are all global challenges that are also part and parcel of what we are doing in India today. We are bullish on India in that regard,” Culp said.

For the full discussion, watch the video

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Sebi extends deadline for investment advisers to conduct annual compliance audit

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Markets regulator Sebi on Thursday extended the deadline for investment advisers to conduct the annual compliance audit for the financial year ended March 31. The timeline for compliance with the requirements has been extended by three months, Sebi said in a circular.

For the financial year ending March 31, 2021, the investment advisers (IA) are now required to conduct the annual compliance audit by December 31, 2021, and submit the adverse findings of the audit, if any, by January 31, 2022. Further, the date for obtaining a certificate from an auditor has been extended till December 31, 2021.

Also Read: Sebi introduces swing pricing mechanism for debt mutual fund schemes

Sebi prescribed a timeline of six months from the end of each financial year for IAs to conduct an annual audit in respect of compliance with Investment Advisers norms. Also, there is a timeline of one month from the date of the audit report for submitting adverse findings of such audit, if any. In addition, Sebi specifies a timeline of 6 months from the end of the financial year for the IAs to obtain an annual certificate from an auditor confirming compliance with the client level segregation requirements.

These timelines have been extended because of the pandemic. Sebi is in receipt of representations from IAs requesting for an extension of the above-mentioned timelines prescribed for the annual compliance audit and an annual certificate confirming client level segregation due to pandemic, Sebi said.

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Looking at India-Aus trade partnership with fresh eyes, says Australia minister

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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India and Australia have committed to formalising a Free Trade Agreement (FTA) between the two countries by the end of 2022, Australia’s minister for trade and investment, Dan Tehan told reporters on Thursday in New Delhi.

Tehan met his Indian counterpart, commerce and industry minister Piyush Goyal, along with a delegation led by the Australian High Commissioner to look at India and Australia’s economic partnership “with fresh eyes”, he said, adding that the current volume of trade between the two countries does not reflect the true extent of the economic partnership between the two countries.

The minister said dedicated teams will be set up by both sides to meet the commitment the two countries have made, with an attempt to finalise an interim agreement by Christmas this year. The countries will also put in their offers for an early harvest deal as soon as October.

Goyal said that there is a commitment from both sides to finalise the FTA in a time-bound manner, adding that pre-RCEP trade negotiations with Australia, which started in 2011 and had to be put on hold as both countries negotiated the agreement, saw a delayed resumption due to COVID-19.

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Domestic natural gas price hiked by 62% to $2.90 for October 2021 to March 2022 period

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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The government on Thursday announced a 62 percent hike in the price of natural gas, which is used to produce electricity and is turned into CNG to use as fuel in automobiles and cooking gas for household kitchens.

This is the first hike since April 2019 when the price was at $1.79 per Metric Million British Thermal Unit (mmBtu). The revision, which is in line with the expectation of a 60 to 70 percent hike, comes on the back of the surge in global gas prices.

The hike comes as a positive for gas producers like Oil and Natural Gas Corporation (ONGC) and Oil India Limited (OIL), however, it may prove to be negative for gas distribution companies like IGL and MGL and also power companies that use gas as an input as the revision could mean higher input costs.

Edelweiss had earlier said the move would be positive for ONGC. A hike of $1 per mmbtu will boost the profit before tax (PBT) by 14.50 percent on an annualised basis, it said, adding that it also means IGL and MGL will need to take 10 to 11 percent of price hikes, a lot of which they have already taken.

The oil ministry’s Petroleum Planning and Analysis Cell (PPAC) said the rates paid for gas produced from fields given to state-owned ONGC and OIL will be $2.90 per million British thermal unit for the six-month period beginning April 1. Simultaneously, the price for gas produced from difficult fields such as deepsea, which is based on a different formula, was hiked to $6.13 per mmBtu from the current USD 3.62 per mmBtu.

Also Read: For every $1/mmbtu gas price increase, profit for upstream cos will go up by 13-14%: Centrum Broking

According to industry sources cited by news agency PTI, the increase in gas price is likely to result in a 10-11 percent rise in CNG and piped cooking gas rates in cities such as Delhi and Mumbai.

It will also lead to a rise in the cost of generating electricity but consumers may not feel any major pinch as the share of power produced from gas is very low. Similarly, the cost of producing fertiliser will also go up but as the government subsidises the crop nutrient, an increase in rates is unlikely.

While the government sets the price of gas produced by ONGC from fields given to it on a nomination basis, it bi-annually announces a cap or maximum price that operators who won exploration acreage under licensing rounds can get. The operators are supposed to do a market price discovery by seeking bids from users but that rate is subject to the price ceiling announced by the government, sources told PTI.

–With agency inputs

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

WhatsApp adds Rupee symbol in chat composer to ease sending payments

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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WhatsApp on Thursday said it has added the Rupee symbol in its chat composer to make it easier for users in India to send payments via the messaging platform. Also, the camera in the composer will now let users scan any QR code to make payments at more than 20 million stores in the country.

Speaking at the Global FinTech Festival (GFF) 2021, WhatsApp India Director Payments Manesh Mahatme said the company believes that true inclusion is when customers don’t have to navigate their way through their phone to make a payment. “An arrival point is when payments just ‘fits’ into a customer’s intrinsic behaviour. Hundreds of millions of customers send WhatsApp messages every day…We want to make sending money as easy and simplified as sending a message,” he added. The Rupee symbol rollout has begun and would soon be available to users all over India in the coming weeks.

In 2018, WhatsApp had started testing its UPI-based payments service in India. The testing was limited to about a million users as it waited for regulatory approvals to come in. In November last year, WhatsApp had announced that it is rolling out its payments services in India after receiving the nod from the National Payments Corporation of India (NPCI). NPCI had allowed WhatsApp to start its payments service in the country in a “graded” manner, starting with a maximum registered user base of 20 million in UPI.

Asked about the 20 million cap, Mahatme said, “We are scaling up in a phased manner right now and we are partnering with NPCI to work through this scale”. “Our focus right now is to currently drive awareness of our payments to feature on WhatsApp and to build new use cases to transact. We will focus on these inputs, as we go forward,” he added.

In India, WhatsApp, which counts India as its biggest market with over 400 million users, competes with players like Paytm, Google Pay, Walmart-owned PhonePe, and Amazon Pay. Unified Payments Interface (UPI) transactions have emerged as one of the most popular ways to make mobile payments and have seen significant growth, especially over the past many months as people embraced contactless digital transactions amid the COVID-19 pandemic.

Last year, there were about 22 billion transactions on the UPI platform. This year, it might be around 40-45 billion transactions, NPCI Managing Director and Chief Executive Officer Dilip Asbe had recently said. WhatsApp’s Mahatme said the company’s vision is to empower every Indian with access to payments and financial services, thereby accelerating economic empowerment and financial inclusion.

“For cultivating and onboarding the next 500 million to the digital payments ecosystem, users need to be driven by simplicity, trust, and inclusivity, he added. Mahatme noted that the Facebook-owned company will very soon – in addition to its current efforts – deploy some more marketing efforts.

“We have more than 15 million small businesses, which use WhatsApp for Business to connect with their customers. Now any small business owner, who has downloaded the WhatsApp for Business app and uses it, can just type in their virtual handle or get UPI address in chat to accept payment from WhatsApp users,” he said.

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

STARTUP DIGEST: Oyo to file IPO papers this week, 10Club acquires Skudgear, WhatsApp adds rupee symbol to chats

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Oyo Hotels to file papers for $1-bn IPO this week

 Hospitality startup Oyo will file a DRHP for its IPO this week, sources told CNBC-TV18. This comes amid Oyo’s legal hurdle with rival Zostel.

The proposed Oyo IPO will comprise a fresh issue of shares and an offer for sale from existing shareholders. Oyo has appointed Kotak Mahindra Capital, JP Morgan and Citigroup to manage the issue. Oyo Hotels and Homes is planning to raise $1 billion through an IPO.

The startup had recently raised about $5 million in a strategic investment from Microsoft. The company — backed by Soft Bank, AirBnB, and Grab — also increased its authorised share capital to Rs 901 crore early from Rs 1.17 crore.

Truecaller sets IPO price range

Mobile phone directory and caller identification service Truecaller has said the price range for its planned listing of Class B shares would be between 44-56 Swedish crowns.

Based on the pricing range, the company would have a market valuation between $1.9-2.4 billion after completion of the listing on Nasdaq Stockholm.

The company will start trading on October 8 under the trading symbol ‘TRUE.’

Truecaller counts Sequoia, Atomico, OpenOcean and Kleiner Perkins among its investors, and more than 10 percent of the company is owned by its employees.

10Club forays into sports category with acquisition of Skudgear: Report

Thrasio-style venture 10club has marked its entry into the sports business with the acquisition of fitness equipment maker Skudgear.

10club will now look to make Skudgear a $100-million brand, in line with the aim of the founders, as per reports. For 10club, Skudgear is its second acquisition. Prior to this, 10Club had announced the acquisition of baby products selling brand My Newborn.

WhatsApp introduces new features to make payments simpler

WhatsApp has introduced the rupee symbol ‘ ₹’ in its chat composer to help Indian users make seamless payments through the messaging service.

WhatsApp unveiled the symbol at the Global FinTech Festival (GFF) 2021, and added that it has also added a quick response (QR) scanning support to its camera icon in the message composer page.

“We believe true inclusion is when customers don’t have to navigate their way through their phone to make a payment. An arrival point is when payments just ‘fits’ into a customer’s intrinsic behaviour. Hundreds of millions of customers send WhatsApp messages every day; spend many minutes on WhatsApp; take and send pictures. We want to make sending money as easy and simplified as sending a message,” said Manesh Mahatme, Director, Payments, WhatsApp India.

With the latest updates, WhatsApp looks to make payments more inclusive and intuitive as users can now send money using two of the most iconic and recognisable symbols all within the WhatsApp chat composer, the company said in a statement.

Both the features are expected to be rolled out in the next few weeks.

Payback India launches pay feature to integrate UPI, powered by BharatPe

Payback India, a BharatPe company has announced the launch of a pay feature on its mobile app. It’s an industry-first that integrates QR-based UPI payments and loyalty in a single app, the company said in a statement.

Members of Payback will earn 50 bonus points on the first UPI transaction via Payback Pay and five Payback points thereafter, on every transaction. Additionally, customers will earn 2X points on transactions done at BharatPe QRs. The points will be credited in the customer’s account on a real-time basis.

Furthermore, Payback will next add the feature of redemption of points at BharatPe’s QRs at more than 75 lakh merchant outlets and launch the feature on the ioS app, the firm said.

“Last year Payback drove GMV of $ 8 billion for partner merchants. I would stick my neck out and say the proposition is superior to CRED, MagicPin, FAVE or any other loyalty programme in India today. Payback Pay will put customers in the habit of scanning and paying on UPI QRs. Eventually, all redemption and earning of Payback points will happen automatically at BharatPe QRs. Payback points will be a currency as it will be universally accepted,” said Ashneer Grover, Co-Founder and Managing Director of recently-turned unicorn BharatPe.

Elon Musk’s SpaceX loops in Sanjay Bhargava to lead Starlink’s efforts in India

PayPal veteran Sanjay Bhargava has announced that he is all set to serve tech billionaire Elon Musk’s SpaceX as Starlink Country Director India starting October 1. On September 29, Bhargava mentioned in a LinkedIn post that he is excited about the new role.

“Super excited to join SpaceX effective Oct 1, 2021, as Starlink Country Director India. Had worked with Elon Musk on the PayPal founding team,” Bhargava wrote.

“Have been in India since 2004 and Starlink and I share a common passion for supporting a transformed India starting with rural India,” he added. Recently, Musk had tweeted that his aerospace company SpaceX could soon launch satellite-based Internet service Starlink in India.

Musk replied to a Twitter post that the company is figuring out how the regulatory approval process in the country would work for Starlink.

Starlink shipped 1,00,000 terminals to customers recently. The project aims to provide global broadband connectivity via a constellation of satellites.

JetSynthesys becomes Warner Music’s India partner

US-headquartered multinational entertainment and record label conglomerate Warner Music Group (WMG) and digital entertainment and technology company JetSynthesys have come together to announce an exclusive strategic partnership.

With this association, JetSynthesys becomes WMG’s official India partner for all things related to music label licensing and acquisition, artist management, event management, original content creation across music, short videos and films, along with mobile gaming and e-sports.

India is one of the strongest emerging markets globally when it comes to entertainment, across formats and verticals. Valued at around Rs 15 billion in 2020, the Indian music industry itself is estimated to reach Rs 23 billion by the end of 2023 according to recent industry reports. JetSynthesys has shown remarkable growth in the last few years, especially in gaming and e-sports and digital products and platforms.

Additionally, JetSynthesys, which has a global foray in gaming, digital entertainment, and interest-based social community platforms, will invest Rs 200 crore into the Indian entertainment sector over the next three years to ramp up its foothold in the space further.

Nine non-profits begin incubation journey with NSRCEL, Capgemini

NSRCEL has selected nine ventures in the final phase of the social programme with Capgemini. The programme supports not-for-profit tech-enabled ventures solving social problems and impacting areas of education, employability and environment.

“NSRCEL has been empowering the early-stage ventures with initial handholding to support them in achieving their entrepreneurial goals. The increased attention towards companies focusing on the social sector is extremely crucial to underline the existing problems.” said Anand Sri Ganesh, COO, NSRCEL.

The incubation phase will focus on entrepreneurs getting access to workshops on building their value proposition, impact measurement, leadership capacity building, legal and compliance support, strategic road map for scaling, among others, along with a grant. Capgemini’s Applied Innovation Academy was engaged during the pre-incubation and will continue to do so in the incubation phase for proficiency building activities.

T-Hub signs MoU with Redberri Earth Foundation

T-Hub an innovation ecosystem has signed an MoU with Redberri Earth Foundation, a US-based non-profit organisation under its T-Bridge initiative.

The partnership will aim to understand market opportunities for Indian startups in the US market. T-Hub and Redberri will provide Indian and Chicago startups with business opportunities, market understanding and access to clients in Chicago and India, respectively, the company said in a statement.

The two entities will collaborate in the areas of startup innovation and entrepreneurship. This partnership will help the startups and support T-Hub in creating a strong foothold in Chicago’s startup and innovation ecosystem, the firm added.

T-Hub, in partnership with Redberri, aims to establish structured market access programmes and soft-landing programmes, which will help nurture the startup ecosystem in the US and India.

 GLOBAL TECHNOLOGY & STARTUP NEWS

 Facebook could face hefty fine in Russia over banned content: Report

 Russia may seek to fine social media giant Facebook up to 10 percent of its annual turnover in the country for a repeated failure to delete content that Moscow deems illegal, the Vedomosti daily reported on September 30.

Moscow has increased pressure on foreign tech companies over the last year as part of a long-running push to assert greater sovereignty over its segment of the internet, including efforts to make companies store Russians’ personal data on its territory.

 On September 29, Russia threatened to block YouTube after the video-hosting giant removed Russian state-backed broadcaster RT’s German-language channels from its site.

 State communications regulator Roskomnadzor said Facebook’s repeated violations could see it fined 5 percent or 10 percent of its annual Russian turnover, Vedomosti reported.

 Vedomosti cited experts who estimated Facebook’s annual Russian turnover at around 12 billion roubles ($165 million). Roskomnadzor has opened 19 different administrative cases against Facebook this year for failing to delete banned content, Vedomosti said, with 43 million roubles owed in fines and more pending.

Facebook to highlight Instagram’s ‘positive impact’ on kids in US Senate hearing

Facebook under criticism over internal data showing its Instagram app damaged the mental health of teenagers, plans to highlight during a US Senate hearing on September 30 what it argues were more positive impacts, according to the company’s prepared testimony seen by Reuters.

Antigone Davis, global head of safety at Facebook, will detail the company’s previously announced efforts to better protect children and teens online, including defaulting users under the age of 16 to private accounts when they join Instagram, as per the testimony.

“Our research showed that many teens who are struggling say that Instagram helps them deal with many of the hard issues that are so common to being a teen,” Davis’s written testimony says.

Facebook has been under fire for the past week after the Wall Street Journal reported internal documents showed that the social media company was aware that Instagram harmed the mental health of young users.

Ahead of the hearing, Republican Senator Marsha Blackburn said in a statement that “Facebook knows that its services are actively harming their young users.”

Democratic Senator Richard Blumenthal called the hearing “Protecting Kids Online” following The Wall Street Journal’s reporting.

In a separate hearing, a Facebook whistleblower will testify about the company and how it handles children’s safety online at a Senate hearing featuring Blumenthal and Blackburn. The senators did not disclose any information about the whistleblower.

Google adds visual search features in shopping, video push

Google users can soon combine images and text in search queries, a feature unveiled on September 29, that could help the Alphabet unit expand its role in e-commerce and dominance in online video, according to Reuters.

The new feature will arrive within months through its Google Lens search tool, the company said in its livestreamed Search On conference. Google said in May that advances in artificial intelligence software would make this possible.

Users will be able to run reverse-image searches when surfing on the Google iOS app or the Chrome desktop browser. Selecting an image will pull up similar online visuals, which could help shoppers find where to buy items seen in photos and ultimately lead them to Google Shopping, its rival to Amazon’s marketplace.

Making more items searchable is another priority. Google said it was licensing a free Address Maker app to governments and organisations to map routes and assign addresses to businesses and homes not yet listed on Google Maps. The app could reduce the time it takes governments and organisations to assign addresses for a town from years to weeks, Google said.

Amazon settles with employees allegedly fired for criticising working conditions

Amazon and the US National Labor Relations Board (NLRB) said on September 29 the company had reached a settlement with two former employees who alleged they were fired last year for criticising the working conditions at the e-commerce giant’s warehouses.

Amazon had terminated the employment of Emily Cunningham and Maren Costa, who had accused the company of enforcing policies in a discriminatory fashion and instituting rules that “chill and restrain” the staff from exercising rights, according to Reuters.

The NLRB found in April that Amazon illegally fired them after they advocated for better working conditions during the pandemic.

“Amazon will be required to pay us our lost wages and post a notice to all of its tech and warehouse workers nationwide that Amazon can’t fire workers for organising and exercising their rights,” Cunningham and Costa said in a joint statement on September 29.

The US agency said the company had reached a non-board settlement, a private agreement between parties in which terms were not disclosed, with the former employees.

The NLRB regional director, however, is required to review and approve the settlement agreement before allowing the charges to be withdrawn.

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Amendments to delisting rules: Experts decode benefits of the changes

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

Listen to the Article (6 Minutes)

India is perceived to be a tough market for delisting and that has not only averted the MNCs from listing here but have made many buyouts very cumbersome. The recent amendments made by the market regulator SEBI which allows open offer and delisting together at differential pricing will make merger and acquisitions (M&A) easier.

Sebi has been bringing about changes for ease of delisting keeping investor protection intact.

To discuss this, CNBC-TV18 spoke with experts Cyril Shroff, Managing Partner, Cyril Amarchand Mangaldas, Sunil Sanghai, Founder & CEO, NovaDhruva Capital and Vibhor Talreja, MD, Everstone Capital Advisors on this subject.

Talking about the open offer and delisting at differential pricing giving a likely boost to the buyout situations, Sanghai said every mature market entry and exit has to be seamless. On the entry front clearly, we have done a lot of work including in the recent IPOs if one were to see the new edge companies etc., we have really facilitated the smooth entry of these companies. However, on the exit front, we still need to do some work and delisting is an important factor.

According to him, what used to happen so far is that if there was a mandatory open offer, then one has to just do the mandatory open offer and wait for delisting subsequently. When there was a change which came in 2015, it allowed that instead of mandatory open offer, one could go down the delisting way, make a delisting offer and if that offer is successful then you delist your company. However, if it is not successful, then you come back and pick up the same track, which is the open offer track and complete the mandatory open offer which is a regulatory requirement, said Sanghai.

“The latest change tries to harmonise the two rather than doing sequentially one after another which is to do delisting and if you fail, that go back to the open offer,” said Sanghia, adding that it was a very welcome change.

According to Shroff, this is not only about ease of exit and entry being similar.” I think there is a deeper philosophical point here, which is that for a maturing capital market, and from a point of view of moving towards better governance, you need a very efficient market for a change of corporate control, he said.
“Corporate control is an asset by itself and there is a market for it. And we’ve had many inefficiencies in it, and this was one of the big ones, namely the ability to sort of delisting without problems. So solving a problem both at a technical level, as well as at a philosophical level, though some more work needs to be done,” he added.

“I see two big, you know, big changes in this, which are two most important psychological thresholds that Sebi has crossed over here. First and foremost is they have effectively put aside or abandoned the concept of reverse book building, at least for the first attempt and that is a massive chain because we have been trying for it for decades and this is a breakthrough. So that is one big change. The second is really the fact that you can do it simultaneously.

Sebi in its press release itself admits, and they use the word directionally contradictory transactions in a sequence and that is a big admission that the current process that they had of if you cross 75, you don’t achieve delisting, you have to come down and you have to do these back to back transactions. The fact that they are now going to be rational and convenient, in terms of the way forward where you get a 12 month period to make successive attempts at delisting. That’s a big change as well,” Shroff explained.

Therefore, these two things together are almost like a generational change in thinking from the Sebi side, and these are not cosmetic changes. I personally think that this is going to make a big difference to the market for corporate control, both for strategic acquirers, as well as private equity acquires – this is going to be a big boost for control transactions, Shroff said.

Talking about buyout situations, Talreja said, on the one side, we are living in a market that has seen unprecedented IPOs but we often forget that there are  potentially few companies that would like to delist and delisting used to be reasonably rigid and practically not possible. And the changes that we see today are one additional step towards that. We should not look at them as one adhoc step, because Sebi has been easing the delisting process over time step by step, continuously, there were changes in June, which made the process much easier before that there were changes last year, which allowed a counteroffer and so on and so forth.

So, one that option now has become easier and two, about M&A, all of us have been part of more than a few M&A transactions, where foreign strategic keen interest on acquiring control of an Indian entity waned significantly because the company was listed and delisting for all practical purposes was not possible. That interest that waning of interest is bound to change now, with these prudent and balanced guidelines from a forward market-looking regulator like Sebi. I have zero doubt that these guidelines would provide a much-required spur to particularly inbound M&As of listed companies, said Talreja.

Throwing further light on delisting process, Sanghai said there are various pockets of capital. There is a pocket of capital which is okay with the listed situation and exposure to the larger market. There is another pocket of capital that wants an unlisted block and in that situation ou have to provide a smooth exit to a listed company.

Also Read: Big Deal: Shareholder activism on the rise; here’s what it means according to experts

Therefore, delisting and to manage a squeeze-out is an important part. If you go back in history, up until 2003, we didn’t have so much of a problem of delisting. It’s in 2003, we introduced reverse book building and the concept of reverse book building was to protect the minority shareholder so that you don’t delist at an artificially low price and the investor has a choice to tender at a price at which they want to exit – that created a problem because it had a lot of other consequences.

However, the regulators are mindful of that. The change started happening in 2015, then it further happened in 2018 by giving a counteroffer. Now there is a further change in that and I still see a final step to be done which is the final removal of reverse book building. That is the one which is going to help your acquisitions and the takeovers in a very smooth way, specified Sanghai.

For the entire discussion, watch the video

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Indianomics: Experts decode DHFL resolution process

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Piramal Group on Wednesday announced the completion of the Dewan Housing Finance Corporation (DHFL) takeover and has discharged the consideration to the creditors.

The Piramal-DHFL deal was done with many firsts. Under the Insolvency and Bankruptcy Code (IBC), it was the first finance company to be resolved. Also, the second-largest deal to be done under the IBC at Rs 38,000 crore.

For the first time, the effective resolution professional was the administrator appointed by the Reserve Bank of India (RBI). In many ways, the resolution of DHFL is a feather in the cap of the RBI as well as the administrator, bankers and the professionals involved.

Also Read: DHFL creditors, depositors recover Rs 38,000 crore under IBC: Ajay Piramal

In an interview with CNBC-TV18‘s Latha Venkatesh, R Subramaniakumar, DHFL administrator said, “The problem with DHFL was well-identified much before I walked in and the moment I walked in, I was able to draw the clear picture of what exactly is happening in the company within 15-20 days. Thereafter, the biggest challenge was to make people look at one direction of resolution and thanks to the team and with series of townhalls we were able to bring all of them onboard.”

“However, the pandemic lockdown came as a shocker and the challenge was that people could not move out but we had to run the company. So we facilitated technology enablement and made almost 85 percent of the staff members start operating from home. Later, we were able to speak with the investors, we were able to speak amongst ourselves as well as to the company people,” Subramaniakumar said.

Abizer Diwanji of EY India said, “The biggest challenge we had was that our lending was a bit constrained. We had a lot of issues in terms of trying to reach out to people within the pandemic. Also, the fact that we had litigation where the FD holders had said that you cannot lend further and there was litigation around it. The biggest issue was value preservation. The way value preservation happened is actually converting the asset into cash and retaining the franchise.”

Also Read: Piramal Group completes DHFL acquisition for Rs 38,000 crore

“The collections platform that we build and the enterprise value that got maintained by converting loans into cash was the biggest way in running the process. The other thing was to pursue investors who we thought were actually bidders. We received a record number of EoIs and the only reason the EoI did not convert to bids was the pandemic and the uncertainty around it. However, going to investors and running a proper investment banking process, making presentations to prospective investors and involving them to say what is the enterprise value that DHFL can deliver to them was big learning,” Diwanji said.

Jairam Sridharan, CEO at Piramal Retail Finance said, “Asset quality is what determines the value of the underlying franchise. So the key thing that you need to get comfortable with is that the asset quality is good. In this particular case, one side of the portfolio, the wholesale side of the portfolio was very problematic. But what really helped was the report that was done to find out all the underlying fraud and that report gave us a very good sense. The administrator and his team did a very good job of separating out the fraud from the non-fraud and reclassifying assets between wholesale and retail and potentially fraudulent assets. That made it very clear to understand what is a truly good asset and what is not, and that made things a lot easier. Then of course as a buyer, you have to do your due diligence.”

Rajkiran Rai G, managing director and chief executive officer of Union Bank of India said, “RBI appointed administrator is a good model to be copied. With this experience, we should definitely look at it as an option.”

Watch video for more.

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KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow