Indian medical tourism industry to touch $8 billion by 2020: Grant Thornton

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According to a CII – Grant Thornton white paper, cost is a major driver for nearly 80 per cent of medical tourists across the globe.

As healthcare turns costlier in developed countries, India’s medical tourism market is expected to more than double in size from USD 3 billion at present to around USD 8 billion by 2020, a report says.

According to a CII – Grant Thornton white paper, cost is a major driver for nearly 80 per cent of medical tourists across the globe. The cost-consciousness factor and availability of accredited facilities have led to emergence of several global medical tourism corridors – Singapore, Thailand, India, Malaysia, Taiwan, Mexico and Costa Rica.

“Amongst these corridors of health, India has the second largest number of accredited facilities (after Thailand). The Indian Medical Tourism market is expected to grow from its current size of USD 3 billion to USD 7-8 billion by 2020,” Grant Thornton India’s National Managing Partner Vishesh C Chandiok said.

Bangladesh and Afghanistan dominate the Indian Medical Value Travel (MVT) with 34 per cent share.

Africa, GCC and CIS regions (whose current share is just 30 per cent) present the maximum possible opportunity for the Indian healthcare sector. Medical tourists from these sectors currently favour the South East Asian medical corridors.

Chennai, Mumbai, AP and NCR are the most favoured medical tourism destinations for the floating medical population who avail treatments in India.

“While the number of MVTs itself is poised to grow at over 20 per cent CAGR, Kerala needs to focus on its visibility as a healthcare destination amongst other states,” said the report.

Kerala attracts only 5 per cent of such medical tourists currently and has the potential to increase its share to a 10-12 per cent with a focused marketing strategy.

As per the study, the key factor to drive medical value tourism in Kerala will be availability of national as well as globally accredited facilities across the entire state, an area where Kerala lags behind in comparison to Tamil Nadu, Maharashtra, NCR and Andhra Pradesh.

“… Kerala is already one of the most preferred tourist destinations in the country. For medical value tourism, however, there is a clear need to build and upgrade infrastructure,” Grant Thornton India Partner Vrinda Mathur said.

The white paper suggests tapping a larger share of the health wallet of the African, Asian, Middle East patients as well as welcoming tourists from other regions and countries, as also a marketing campaign with active support of the government and private sector.

Source: http://health.economictimes.indiatimes.com/news/industry/indian-medical-tourism-industry-to-touch-8-billion-by-2020-grant-thornton/49618595

Mallya default singes top auditing companies

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Some of world’s top auditing firms, including Price Waterhouse, Grant Thornton, Deloitte LLP and Walker Chandiok & Co, are under scrutiny with a slew of regulators seeking answers on their valuation, auditing and due diligence of UB Group companies over the last few years.

Deloitte LLP conducted the financial and tax due diligence for Diageo of United Spirits Ltd (USL) which led to the $2.1 billion acquisition of the company, but could not detect the problems in annual accounts. These accounts, in turn, were prepared by PW, which was the auditor for USL between 2010 and 2011, and later by Walker & Chandiok & Co.

The accounts were disputed by Diageo in April 2015 after it found a Rs 2,100 crore hole and sought Vijay Mallya’s ouster from the USL board. Questions have also been raised by lenders on what basis Grant Thornton valued the Kingfisher brand at Rs 4,100 crore. This is now being probed by the Serious Fraud Investigation office (SFIO).

When contacted, a Grant Thornton spokesperson said the firm fully stood by its brand valuation report on Kingfisher. “We believe it was appropriate in the context of when it was done and the purpose for which it was done,” the spokesperson said.

PW declined comment but an external spokesperson said the firm had not received any communication from either the Securities and Exchange Board of India or the Enforcement Directorate. “Deloitte does not comment on client confidential matters,” its spokesperson said.

Diageo had invested in USL after the British company was given express representations that all of the receivables from Mallya entities were recoverable in full. The fund diversion worth Rs 2,100 crore from USL was later raised when KPMG, the new auditor appointed by Diageo, discovered discrepancies when it was finalising USL’s 2014 accounts. All the three years’ accounts will now have to be re-stated, according to listing norms.

In the same year, the new USL management called in PW UK for a forensic audit of the previous three years (which included auditing by its own India unit) and passed on the reports to the regulators including the Sebi, the ministry of corporate affairs and the Institute of Chartered Accountants of India.

The ICAI, sources said, had asked both PW and Walker Chandiok to explain the discrepancy. An ED official said it was surprising that none of the auditors or valuers for Diageo raised flags over the accounts manipulation or the Rs 4,000 crore diversion by USL to the British Virgin Islands in 2007.

While the auditors of USL are in the dock for cooking accounts, another marquee auditing firm — Grant Thornton is under investigation by the SFIO for its Rs 4,100 crore brand valuation of Kingfisher Airlines. It was based on this brand valuation in 2011 that Mallya raised Rs 9,100 crore from government-owned banks by offering the brand as collateral. The lenders are now holding a dud Kingfisher brand, which is finding no takers.

Sources in the ICAI said it was a redux of the Satyam scam, when some of the world’s top auditors overvalued assets before the Maytas and Satyam merger, which led to the unravelling of the scam. In the Satyam case, the ICAI had debarred two auditors from Price Waterhouse who were found guilty of professional misconduct. S Gopalakrishnan and T Srinivas were struck off the ICAI’s rolls and fined Rs 5 lakh each. A Central Bureau of Investigation court later convicted them of fraud.

Source: http://www.business-standard.com/article/current-affairs/mallya-default-singes-top-auditing-companies-116031900495_1.html

The Companies (Amendment) Bill, 2016 introduced in Loksabha

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On 16th March 2016 Lok Sabha has passed the Companies (Amendment) Bill 2016 to further amend the Companies Act, 2013

The Act introduced significant changes related to disclosures to stakeholders, accountability of directors, auditors and key managerial personnel, investor protection and corporate governance. However, Government received number of representations from industry Chambers, Professional Institutes, legal experts and Ministries/Departments regarding difficulties faced in compliance of certain provisions. Amendments of the Act were carried out through the Companies (Amendment) Act, 2015 to address the immediate difficulties arising out of the initial experience of the working of the Act, and to facilitate “ease of doing business”.

The changes introduced are broadly aimed at addressing difficulties in implementation owing to stringency of compliance requirements; facilitating ease of doing business in order to promote growth with employment; harmonization with accounting standards, the regulations of Securities and Exchange Board of India Act, 1992 and the Reserve Bank of India Act, 1934; rectifying omissions and inconsistencies in the Act, and carrying out amendments in the provisions relating to qualifications and selection of members of the National Company Law Tribunal and the National Company Law Appellate Tribunal in accordance with the directions of the Supreme Court.

The Companies (Amendment) Bill, 2016, inter alia, proposes the following, namely:—

  • Simplification of the private placements: Simplification of the private placement process by doing away with separate offer letter, by making filing of details or records of applicants to be part of return of allotment only, and reducing number of filings to Registrar;

Earlier, there was significant difficulty was created by the Companies Act, with the unduly restrictive set of provisions pertaining to private placements. This over-ambitious scheme of regulation was a direct result of some incidents in the past. One such provision requires every private placement to be routed through a separate bank account opened for this purpose, and a bar on utilization of the money until allotment. More often than not, the amount received in private placement is large, and companies cannot afford to keep the amount idle.

Now, this private placements process has been simplified with the Companies (Amendment) Bill, 2016.

(b) Allow unrestricted object clause in the Memorandum of Association dispensing with detailed listing of objects, self-declarations to replace affidavits from subscribers to memorandum and first directors;

(c) Provisions relating to forward dealing and insider trading to be omitted from the Act;

(d) Requirement of approval of the Central Government for Managerial remuneration done away with:

Requirement of approval of the Central Government for Managerial remuneration above prescribed limits is replaced by approval through special resolution by shareholders;

Central Government control on managerial remuneration is eliminated. Section 197, which places limits on managerial remuneration, will now require special resolution only, if the limits placed under the law are exceeded.

(e) Loans to entities in which directors are interested:

A company may give loans to entities in which directors are interested after passing special resolution and adhering to disclosure requirement;

 (f) Provisions easing business by overseas entities

In support of the “Make in India” policy, it is quite appropriate that the Companies (Amendment) Bill, 2016 must have enabled foreign owned businesses to form companies in India. Accordingly, there are several provisions to facilitate foreign-owned businesses:

– EGM of a wholly-owned subsidiary of a foreign company may be called anywhere in India.

– The requirement for a resident director provided in section 149 is sought to be amended to provide that in case of newly incorporated companies the condition may be satisfied subsequent to incorporation, rather than before incorporation.

– Remove restrictions on layers of subsidiaries and investment companies

(g) Allow for exempting class of foreign companies from registering and compliance regime under the Act;

(h) Align prescription for companies to have Audit Committee and Nomination and Remuneration Committee with that of Independent Directors;

(i) Test of materiality to be introduced for pecuniary interest for testing independence of Independent Directors;

(j) Disclosures in the prospectus required under the Companies Act and the Securities and Exchange Board of India Act, 1992 and the regulations made thereunder to be aligned by omitting prescriptions in the Companies Act and allowing these prescriptions to be made by the Securities and Exchange Board of India in consultation with the Central Government;

(k) Provide for maintenance of register of significant beneficial owners by a company, and filing of returns in this regard to the Registrar;

(l) Removal of requirement for annual ratification of appointment or continuance of auditor;

(m) Amend provisions relating to Corporate Social Responsibility to bring greater clarity.

http://www.prsindia.org/uploads/media/Companies,%202016/Companies%20bill,%202016.pdf

SEBI board clears wilful defaulter rules; clarifies on definition of control

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SEBI says wilful defaulters would also be not allowed to take control of any other listed company.

India’s market regulator Securities and Exchange Board of India (SEBI), on Saturday, tightened the rules for so-called wilful defaulters preventing them from raising funds through public issues. The rules, however, are applicable prospectively which suggests that those who have already been termed wilful defaulters may not come within the ambit of these strictures.

Following a board meeting in Delhi, on Saturday, SEBI said that entities declared as wilful defaulters will not be allowed to raise money through sale of shares, debt securities and non-convertible preference redeemable shares to the public.

“No issuer shall make a public issue of equity securities/debt securities/non-convertible redeemable preference shares, if the issuer company or its promoter or its director is in the list of the wilful defaulters,” said a press release issued by SEBI.

Such entities will not be allowed to take control of another listed entity, SEBI said. These firms will also not be allowed to set up market entities like mutual funds. The rules are applicable prospectively, said the regulator.

At a press conference in New Delhi, UK Sinha, chairman of SEBI said that all rules made by the regulator are prospective in nature.

In January 2015, SEBI issued a draft paper proposing that wilful defaulters would not be allowed to sell shares, debt securities and non-convertible preference redeemable shares to the public. The paper had suggested that wilful defaulters be barred from taking control of another listed entity, but that they be allowed to participate in counter offers to deal with hostile takeover bids. Each of these restrictions would be applicable if the issuer, its promoter, group company or director of the issuer of such securities were in the list of wilful defaulters published by RBI, the stock market regulator had said.

The final regulations announced on Saturday are along the same lines.

Policy makers have toughened their stance against wilful defaulters as they try and improve the asset quality of the banking sector. While defaulters who are hit by external factors such as weakness in economic conditions may deserve some help from the system, policy makers feel that wilful defaulters must not be spared.

RBI has been asking banks to get tough on wilful defaulters and has a tough set of rules in place which say that anyone tagged a wilful defaulter cannot raise fresh funds from the banking system. The banking regulator, however, has been of the view that such defaulters also need to have their access to capital markets restricted. This has now happened with SEBI tightening its rules as well.

While RBI has not disclosed the quantum of loans that fall under the wilful default category, data has emerged from some large public sector banks.

Loans worth Rs.11,700 crore given by State Bank of India have been locked up as non-performing assets as nearly 1,160 defaulters have wilfully decided not to repay, PTI reported on 24 February.

Another state-owned lender, Punjab National Bank (PNB), declared 904 borrowers who owed it a combined Rs.10,869.71 crore as of December-end as wilful defaulters. PNB added 140 companies to the list of wilful defaulters in the December quarter alone.

The most prominent case in this regard is the attempt by banks and investigative agencies to recover dues from UB Group chairman Vijay Mallya, who has been declared a wilful defaulter by lenders like State Bank of India. The country’s largest lender had moved the Bangalore debt recovery tribunal (DRT) seeking an arrest warrant against Mallya. On Friday, the Enforcement Directorate (ED) issued summons to Mallya, asking him to be personally present before it on 18 March. The summons is part of ED’s probe into a money laundering case against the former liquor baron.

Definition of control

Separately, the market regulator clarified what the term ‘control’ means in the context of mergers and acquisitions (M&As) by pegging the shareholding threshold of an acquirer at 25%.

“Considering the international practices and the current regulatory environment in India, the definition of control may be amended such that control is defined as (a) the right or entitlement to exercise at least 25% of voting rights of a company irrespective of whether such holding gives de facto control and/or (b) the right to appoint majority of the non-independent directors of a company,” said SEBI in its press release.

The move is aimed at removing ambiguities that companies currently confront during takeovers. Currently, the definition of ‘control’ under the Substantial Acquisition of Shares and Takeovers (SAST) Regulations, 2011—popularly known as the Takeover Code—doesn’t specify a threshold for shareholding.

The current takeover code states that an acquirer is in ‘control’ only if the board of the company that’s being acquired gives the former the right to appoint a majority of the directors, and have the final say on management and policy decisions.

The control of management or policy decisions is through shareholding or management rights or shareholders’ agreement or voting agreements.

SEBI has also cleared a framework for protective rights with an exhaustive list of rights that do not lead to acquisition of control.

“An illustrative list of protective rights which would not amount to acquisition of control may be issued. Grant of such protective rights to an investor may be subject to obtaining the public shareholders’ approval (majority of minority),” SEBI said.

Somasekhar Sundaresan, partner, J Sagar Associates, said “The company that is declared to be a willful defaulter ought to be left out of the severity of SEBI’s measures, and instead those in control of the company alone should have been targeted. A defaulter, whether willful or not, requires restructuring, and imposing prohibitions on the business entity could in fact hurt lenders for whose benefit the policy on willful defaulters has been developed. Expanding the scope to directors would also mean that turning around a company that is accused of being a willful defaulter would become impossible since no one would join the board even after throwing out the old promoters. Detailed provisions on when a borrowing entity ceases to be a willful defaulter would be needed—it cannot be after the board is replaced since, so long as it is a willful defaulter, no one would be able to join the board.”

“The move to allow shareholders to confer the power to exercise veto rights to selected investors without getting into whether they mean “control” is a positive measure. Open offers are for the benefit of public shareholders and they must have the power to waive an open offer. This is a very mature measure of reform. Market players would keenly await what SEBI puts out as a list of veto rights aimed at investor protection will not constitute control,” added Sundaresan.

Source: http://www.livemint.com/Money/LSmk1XiZ26pZnyGj5m4ufP/Sebi-bars-wilful-defaulters-from-markets-posts-at-listed-fi.html

Canadian fund commits Rs 1012 crore for renewable energy in India

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CDPQ, which deals primarily in public and para-public pension and insurance plans, also announced the establishment of its Indian office in New Delhi.

Canada’s institutional fund manager Caisse de depot et placement du Quebec (CDPQ) on Wednesday said it has committed an investment of $150 million (Rs 1012.05 crore) in the Indian renewable energy sector. CDPQ, which currently manages $248 billion (Rs 16.73 lakh crore) in net assets, invests globally in major financial markets, private equity, infrastructure and real estate.

“CDPQ plans to commit $150 million to renewable energy investments in India,” the company said in a statement.

Over the next 3-4 years, CDPQ will use its commitment to target hydro, solar, wind and geothermal power assets with investments likely to take the form of select partnerships with leading Indian renewable energy companies, it added.

“We believe that India stands out as an exceptional country to invest in, given the scope and quality of investment opportunities, the potential for strategic partnerships with leading Indian entrepreneurs and the current government’s intention to pursue essential economic reforms,” CDPQ President and CEO Michael Sabia said.

CDPQ, which deals primarily in public and para-public pension and insurance plans, also announced the establishment of its Indian office in New Delhi. It appointed Anita Marangoly George managing director of its South Asia operations.

George, who joins the company from the World Bank where she was working on the global practice on energy, had helped finance the first commercial solar project in the country, the statement said. She will be taking up the new assignment from April 1 this year, it added.

 

Source: http://www.dnaindia.com/money/report-canada-s-fund-manager-commits-rs-1012-crore-investment-in-indian-renewable-energy-2187291

Paragon Partners launches $200M India-focused mid-market PE fund

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Indian private equity investor Siddharth Parekh and entrepreneur Sumeet Nindrajog are launching a $200 million India focused fund. The duo announced today that they have raised $50 million in commitments, marking the first close of their $200 million private equity fund, Paragon Partners Growth Fund I (PPGF-I). Established in August 2015, PPGF is an Alternative Investment Fund(AIF)-Category II Private Equity fund looking to invest in high growth mid-market private companies in India.

 

The fund will focus on five core sectors, including consumer discretionary, financial services, infrastructure services (capex light), industrials and healthcare services. The fund claims to have an advanced pipeline of investment opportunities across these sectors and plan to invest in 10-15 mid-market companies in India, with an average deal size of $10-20 million.

 

In line with this, Paragon Partners plans to pursue an active investment approach, contributing to the advancement of its portfolio companies in three core areas: business development, organizational development, and operational efficiency.

 

Paragon Partners’ Advisory Board will also work hand-in-hand with its investment and operations professionals to drive value in its portfolio companies. The board includes Deepak Parekh (Chairman, HDFC Ltd.), Harsh Mariwala (Chairman, Marico Ltd. & Founder Member), Sunil Mehta, (Chairman, SPM Capital Advisors Pvt Ltd) and Jeff Serota (ex Sr. Partner at Ares Private Equity) amongst others. Siddharth, Co-Founder, Paragon Partners, commenting on the first close, said,

 

We believe the next decade in India will see a strong resurgence of growth in key sectors such as manufacturing, financial services and infrastructure.

 

With its first close, PPGF-I has invested $10 million as growth capital in Capacite Infraprojects Limited, a Mumbai based firm which is engaged in the construction of buildings (including super high rise structures) and factories, for large real estate developers, corporates and institutions  across the Mumbai, NCR and Bengaluru regions.

 

Established in August 2012, Capacite is promoted by Rahul Katyal, Rohit Katyal, and Subir Malhotra. It will look to grow and expand to more locations on a selective basis moving forward. Commenting on the investment, Rohit, Director at Capacite said,

 

Within a span of three years, Capacite has achieved significant scale with an expected top line of ~Rs 1,000 cr for the current financial year, backed by a gross order book of  Rs 5,400 cr. We are delighted to partner with Paragon Partners, as Capacite embarks on its next wave of growth.

 

PPGF-I claims to have seen interest from onshore and offshore institutions, family offices and HNI’s. Domestic investors include India Infoline, Edelweiss Group and Infina Finance Private Limited (an associate of Kotak Mahindra Bank Limited).  The fund also claims to have received a significant commitment from the Fairfax group based in Canada. With additional discussions in progress, the fund expects to close on further commitments in coming months.

 

The Indian startup ecosystem has seen an uprising in the past few years and there is now both internal and external interest in investing in early and mid-stage companies. In September 2015, Kalaari Capital had raised a $290 million India focused fund. In December 2015, Blume Ventures had raised $30 million for its Fund II to invest in 35-45 startups. In February 2016, early stage investor, Kae Capital too raised $30 million for its second fund, with an aim to allocate 10% of the fund to cater to non-tech start-ups.

 

Reports also suggest that Sequoia Capital had closed a $920 million India focussed fund in February 2016, though Sequoia is yet to confirm the same. Other marquee investors like SAIF Partners, Accel Partners, and Lightspeed India, have racked up fresh funds in the recent past.

Source:

PE inflows from foreign funds in real estate up 33%

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Total private equity investments from foreign funds in Indian real estate increased 33%, from $1,676 million (around R11,306 crore) in 2014 to $2,220 million (around R14,974 crore) in 2015, according to latest findings of global real estate consultancy Cushman & Wakefield.

 

Owing to high property prices and high investment potential, Mumbai was accounted for about 35% of the total foreign investments in 2015, followed by Delhi NCR accounting for about 25% of the investments.

Sanjay Dutt, managing director, Cushman & Wakefield India said, “The three large cities; Mumbai, Bengaluru and Delhi-NCR continue to attract the highest investments in India and account for about 75% of these investments.

However, with government initiatives to de-stress these cities, relaxed FDI norms and focus to improve infrastructure across the country, other cities in India are likely to witness rise in PE investments going forward.”

The structured debt deals accounted for almost half (49% in value terms) of the total PE investments in 2015.

The structured deals strategy, though moderated due to increased competition, offers returns in the range of 15% – 17% to its investors.

Source: http://www.financialexpress.com/article/industry/companies/pe-inflows-from-foreign-funds-in-real-estate-up-33/221723/