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YES BANK GETS ANOTHER $150 MN FROM OPIC TO FUND SME LENDING

New Delhi, July 13 Private sector Yes Bank has received another round of USD 150 million funding from US government and Wells Fargo to fund SME lending. This is the third round of funding as part of arrangement between the Overseas Private Investment Corporation (OPIC) — US government development finance institution — and Wells Fargo, with the objective to increase lending to small and medium enterprises in India. OPIC will provide USD 75 million in financing to Yes Bank and up to USD 75 million as a syndicated financing from Wells Fargo Bank, a part of financial services provider Wells Fargo & Company. This is the third transaction between OPIC and Yes Bank and comes close on the heels of last year’s USD 265 million OPIC facility, which the bank will use to extend SME financing in India, Yes Bank said in regulatory filing. “Specifically, USD 50 million of the financing would be used to expand support to women-owned businesses, while another USD 50 million will be used for financing small and medium enterprises (SME) in low income states,” it said. SMEs contribute about 45 percent of industrial output and employ 42 million people in the country. It is estimated that 3 million women owned businesses in India employ over 8 million people. However, only about a quarter of them are able to get the finance they need to grow and create jobs, Yes Bank said. “OPIC’s facility will help Yes Bank expand its SME lending capacity, specifically enabling them to reach both women and entrepreneurs in low income states who have much to contribute to India’s economic growth,” Dev Jagadesan, OPIC Acting President and CEO said.

BLACKSTONE BIDS FOR IL&FS REALTY FUND ASSETS

Mumbai: Private equity giant Blackstone Group is bidding to acquire the early real estate investments of IL&FS in a deal worth $200 million, or Rs 1,300 crore, after the latter started a process to exit management of these assets, people directly familiar with the matter said. IL&FS Investment Managers started making real estate private equity deals from a $525-million fund beginning 2006. It subsequently raised $895 million second fund taking the real estate AUM closer to $1.5 billion. Now, IL&FS has mandated JLL to advise on the assert sale as the life of the first fund comes to a close. When contacted, IL&FS and Blackstone declined to comment on speculation. Incidentally, Blackstone’s secondary private equity unit, Strategic Partners, owns 23percent interest in the IL&FS fund, though the current offer is being fielded by the India real estate team. In private equity parlance, secondaries refer to buying and selling of existing investor commitments to new funds. The IL&FS fund had struck 17 investments across residential, commercial and retail asset classes and monetized six out of them. The deal-making would involve transfer of the management rights of the remaining assets with a current portfolio value of just under $200 million to the acquirer. In May this year, TOI reported that Blackstone was acquiring the $150 million Urban Infrastructure Opportunities Fund, founded by Jai Corp chairman Anand Jain, also a close friend of RIL chairman Mukesh Ambani. The latest moves by Blackstone, the most influential real estate investor globally, carries the potential to trigger secondaries market for real estate investments that are stuck. TOI had reported in the same edition that several other fund managers, including IL&FS, would tap the secondaries market to liquidate early realty investments. IL&FS and other asset managers saw the attractiveness of their real estate investments, made during the boom years of last decade, nosedive following the financial crisis and market crash in 2008. Sources cited earlier said Blackstone, as an asset manager, sees upside potential in developing or simply unwinding some of these troubled investments. Blackstone is on acquisition mode at a time when investor sentiment over residential projects has been lukewarm. In the past, Blackstone stepped up momentum in India’s commercial real estate, and office space in particular, when it attracted little investor attention.

MARICO CUTS PRICES OF HAIR OILS POST GST

MUMBAI: Marico has reduced prices of its hair oil brands by about 5 percent to pass on the GST benefits to consumers. This comes after a number of other FMCG companies have passed on GST benefits on toilets soaps. Last week, Emami said it was reducing the price of `Emami 7 Oils in One’ by 6-9 percent across stock keeping units (SKUs). In a statement, Vivek Karve, Chief Financial Officer, Marico, said: “Marico has taken an average price cut of about 5percent in its hair oil brands in order to pass on the GST benefits to the consumer and has initiated manufacturing with revised prices. The stocks will hit the market soon.” A few days back, Godrej Consumer Products took a price correction in the range of 6-8percent in its toilet soaps portfolio. Post GST, the tax rate on soaps, hair oils and toothpaste has come down from the earlier levels of 24-25 percent to 18 percent. On detergents, skin care, hair care and biscuits, however, the tax rate has increased to 28 percent from 24-25 percent.

FLIPKART MAY MAKE REVISED OFFER OF $950 MILLION FOR SNAPDEAL

BENGALURU/MUMBAI: Flipkart is likely to make a revised offer of around $900-950 million for buying out its rival Snapdeal, sources privy to the matter said.The deal being orchestrated by Snapdeal’s largest investor SoftBank has been in the making since the start of the year but has faced many impediments including a shareholder disagreement. Another point of contention has been the insertion of a non-compete clause for the Snapdeal co-founders Kunal Bahl and Rohit Bansal which is still to be agreed upon, sources said. “The final offer may still not touch the billion-dollar mark but is likely to be presented in another week. Flipkart has prepared a revised offer but that still has multiple complexities, ” a person aware of the development said. Flipkart is also discussing a non-compete clause for Bahl and Bansal, which will help rest rict the Snapdeal founders from starting a business in e-commerce for a certain period of time.”These details are still being worked out,” the source said on the condition of anonymity. The Snapdeal board had earlier said no to Flipkart’s initial offer which was in the range of $700-800 million. With the exclusivity period ending for Flipkart, Snapdeal has now started working on a plan to sell off its logistics business under Vulcan Express and Freecharge, its payments platform, to shore up cash and run the company . Emails sent to Flipkart and Snapdeal asking about the revised offer did not elicit a response till the time of going to press. In May, both the companies had signed a binding agreement after which Flipkart initiated due diligence. At that time, Snapdeal was being valued at about $1 billion. The exclusivity period of the same agreement ended on July 2.

RESEARCH FIRM CUTS 2017 GLOBAL IT SPEND GROWTH ESTIMATE TO 2.4PERCENT

MUMBAI: Global IT research firm Gartner further lowered its 2017 IT spending growth estimate to 2.4 percent from the earlier projection of 2.7 percent on worries about digitisation. The firm had first predicted for a 3 percent growth in worldwide IT spends, which got revised down to 2.7 percent in January this year. The downward revision in growth estimates comes amid growing anxieties over the future of the IT industry, with concerns surrounding automation and rising protectionism that is being blamed for job losses in the country. The $ 155-billion Indian IT sector depends majorly on exports and industry lobby Nasscom had last month pegged a lower growth forecast of 7-8 percent in exports in FY18. “Digital business is having a profound effect on the way business is done and how it is supported,” its vice president John-David Lovelock said in a statement. He added digital business is giving rise to new categories like the convergence of ‘software plus services plus intellectual property’. Stating that the focus now is on technology “disrupting and enabling businesses”, he said the new technologies include Internet of Things in manufacturing, blockchain in financial services and other industries, and smart machines in retail. The forecast growth is still faster than the 0.3 percent achieved in 2016 and will take the industry to $ 3.477 trillion dollars, it said, adding this includes spends on hardware, software, IT services and telecom. In 2018, the firm is forecasting for the spending growth to go up to 3.5 percent to $ 3.598 trillion. The enterprise software category is forecast to grow the strongest at 7.6 percent in 2017 to $ 351 billion, while the biggest category of communications services will grow the lowest at 0.3 percent to $ 1.378 trillion, it said. “With the increased adoption of Software as a Service-based enterprise applications, there also comes an increase in acceptance of IT operations management (ITOM) tools that are also delivered from the cloud,” Lovelock said.

GST: HOW COMPANIES ARE GAMING THE SYSTEM

MUMBAI: A non-descript textile trading company registered in Mumbai with an annual turnover of Rs 1 crore or less has suddenly become active. The company has started selling goods outside the state in different categories and could be doing business of more than Rs 50 crore by the year end. Indirect tax officials suspect this is one of the many shell companies being used to avoid GST. Taxmen are scrutinising sudden spurt of activity in old companies and formation of few companies and fear these are specifically created to game GST, said tax officials and consultants in know. “Many dormant companies have become active and are trading in various product categories they never used to deal with earlier. In many cases these companies seem to be deliberately registered in prominent business areas,” a tax official based in Mumbai told ET. Many companies, especially those with a turnover of between Rs 50 crore to Rs 200 crore, are creating shell companies specifically to take advantage of GST. These shell companies would be used to take credit in an interstate transaction and would accumulate input credit, only to be shut a year later before the tax audit comes. There are some tricks these companies use. Like in the case of an artificial jewellery maker, a trick that could be replicated by many is being implemented, explains a senior tax expert with a law firm. “The company would first sell outside the state through a shell company and claim 18percent GST with the government. The promoters plan that they would stop paying GST after a couple of transactions,” a person in the know said. Others are planning to rig the system by outrightly lying about the products. “If a Mumbai company sends goods that are at high GST rate of say 28percent to a New Delhi company but the invoice shows they are transporting food grains, which are at 5percent. The buyer in New Delhi would never show sales of the goods and never pay GST,” a tax expert said. “These shell companies, after the GST credit transfer, can go back to being dormant and may not get caught if the avoidance per company is around Rs 5 crore,” a person in the know said. Experts point out that while in many cases tax officials would come to know of the fraud, but it will take at least a year or more. By that time the companies would have shut shop and no one would be found at the registered address. “The government can eventually catch hold all those who are using shell companies to accumulate credit and make money. The only way this could be effectively done is by monitoring this real time and through various channels,” said MS Mani, partner, Deloitte Haskins & Sells. A senior tax official said some tax experts are helping businessmen create such shell companies and the department may first go after them. In a recent conference held in Mumbai, several industry experts including Kerala finance minister Isaac Thomas warned that in business to business (B2B) transactions, some people may be able to game the system.

JIO SUSPECTED DATA LEAK: 50 SIM CARDS FOUND FROM ARRESTED MAN

MUMBAI: Maharashtra police, probing the case of alleged leak of customer data from India’s newest telecom entrant – Reliance Jio, have recovered 50 SIM cards from the 35-year-old computer science dropout from Rajasthan, arrested in this connection. The cards were recovered in Rajasthan’s Churu district, from the house of Imran Chippa, a dropout of the Bachelor of Computer Science, a police official told PTI. Police had earlier recovered a computer, mobile phone and other devices from Chippa, the official said. “Most of the SIM cards recovered are of Reliance-Jio,” Balsingh Rajput, SP (Maharashtra Cyber) said. He further said, “We are interrogating Imran to ascertain the purpose for which he had obtained these cards”. Chippa was produced in a local court in Jaipur, and was sent to custody of Cyber Police on transit remand, he said. The quantum of data allegedly leaked will be known only when the computer hard disk, pen drive and other devices seized are analysed by the Forensic Science Laboratory, he said. “It will take some time to know Chippa’s modus operandi and the number of people involved in the data leak,” the official said. A resident of Sujangarh town, Chhipa had made the website Magicapk. He claimed to provide Jio user data through his website, police said. However, Jio has said that the claims of the website were “unverified” and “unsubstantiated”. After the police complaint was lodged in Mumbai, Mumbai Police reached Churu after tracking the IP address and took Chhipa into custody last night. Following the data leak, the domain of the website has been suspended. A Mumbai Police team, led by Assistant Commissioner of Police Deepak Dhole, had reached Churu district after tracking the IP address, police said. An analysis by the Maharashtra Cyber Police headed by Inspector General of Police Brijesh Singh led investigators to zero in on the location from where the suspected data breach had happened, he said. Jio had said its subscriber data “is safe and maintained with highest level of security”.

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