Investor sentiment improving, catalysts needed for fresh flows

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Expectations on structural reforms however remain low and “could be a positive catalyst if GST gets passed”, it said.

Investor sentiment towards the Indian economy is improving but markets are now looking at the passage of key reform bills like the Goods and Services Tax ( GST ) to act as “new catalysts”, says a Citigroup report.

Expectations on structural reforms however remain low and “could be a positive catalyst if GST gets passed”, it said.

According to the global financial services major, both equity and fixed income (FI) investors are portraying a constructive outlook for India, but are waiting for the next ‘catalyst’ for fresh inflows.

“Positioning on India still remains heavy and relative valuations do not appear to be cheap. This is possibly leading to a lack of substantial fresh inflows as the markets await new catalysts,” Citigroup said in a research note.

The BJP-led NDA government assumed office on May 26, 2014 with a thumping majority in Lok Sabha , but some key bills, including the one on GST, have been stuck in Rajya Sabha due to opposition from some other parties, mainly Congress.

As per the report, foreign equity as well as fixed income investors believe that the Indian economy is relatively attractive than other emerging market economies as it provides better macro stability. Some investors were also enthusiastic about the prospects of a cyclical recovery.

Though investors are on a cautious mode but with better monsoon forecasts, rural consumption is likely to revive. Moreover, urban consumption is expected to get a boost post the 7th Pay Commission implementation.

Source: http://economictimes.indiatimes.com/articleshow/52398282.cms

AskMe Fin plans payment services for SMEs

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E-commerce marketplace Askme Bazaar plans to help small and medium vendors who are transacting on its site by arranging credit and insurance products for them. These services will be provided via Askme Fin, the groups’ financial services platform. In the last 2-3 months, Askme Fin has helped about 75 SMEs to raise loans from banks and SMEs, Pawan Lohia CEO, Askme Fin, told FE.

AskMe Fin has tied up financial institutions such as Mahindra Finance, Bajaj Finserv, Religare, Capital Float, ICICI Bank, Sme.com and Mandi.com to help SMEs access loans and is in talks with other banks and NBFCs who can lend to vendors.

Anand Sonbhadra, group – CFO of AskMe Fin, said his firm had facilitated disbursements of Rs 30 lakh across 150 merchants till date. The firm hopes to assist 10,000 online and offline merchants raise loans worth around Rs 1,000 crore by the end of March 2017. The average loan size varies from Rs 8-10 lakh, he added.

Askme Pay intends to add 2-3 million merchants. AskMe Pay, the payment platform of AskMe Group will be launched by June and will enable integration of other wallets on its platform. AskMe Pay will largely earn revenue via merchant discount rates and loan referral commissions from lenders, which is the range of 20-30% of the processing fee. Also services related to customer relationship management, marketing and promotional activities will fetch revenue from the merchant, Sonbhadra explained.

According to a TechSci Research Report – India Mobile Wallet Market Opportunities and Forecast, 2020, the mobile wallet market in India is projected to grow to $ 6.6 billion by 2020. A Nielsen report in February adjudged Paytm the most popular mobile wallet followed by Freecharge and MobiKwik, respectively.

Source: http://www.financialexpress.com/article/industry/companies/askme-fin-plans-payment-services-for-smes/265051/

ClearTax raises $2 million from FF Angel and Sequoia Capital

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Financial technology startup Defmacro Software , which owns and operates online tax returns filing platform ClearTax , has raised $2 million (Rs 13.3 crore) from FF Angel , the angel investing arm of Peter Thiel-led Founders Fund , and Sequoia Capital .

The five year-old company will use the proceeds from the round to launch a slew of consumer-focused tax-saving products, including mutual funds and other equity-linked saving schemes. It will also be adding to its leadership team, said Archit Gupta , chief executive of ClearTax.

“We have taken the long route, and now we are extremely excited to have some of the biggest thought leaders and investors on board as our partners,” Gupta said. “We are an instrument-agnostic platform that will allow consumers to choose their rate of return and select what to have in their tax savings basket.”

The transaction, which closed last week, marks FF Angel’s first investment in India, and comes a month after Bengaluru-based ClearTax secured $1.3 million in a seed funding round from a group of Silicon Valley investors including PayPal cofounder Max Levchin and Scott Banister, an early investor in Facebook and Uber.

SEBI to delist 4,200 firms; warns erring promoters, auditors

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Capital markets regulator Securities and Exchange Board of India (SEBI) is planning to take a number of steps to deepen it, including forcing thousands of non- or poorly-traded companies to delist and introducing more trading instruments, especially in the commodity space.

These were among some of the steps it outlined with a meeting with senior editors today.
The news would come as relief to investors, whose monies are stuck in companies where no trading takes place.
SEBI chief UK Sinha said the regulator plans to force promoters of companies whose shares do not see active trading both at the main bourses and in regional exchanges to delist.
Such promoters will have to provide an exit route to investors, failing which they will be penalised.
India has about 8,000 listed companies but active trading hardly takes place beyond the top 1,000. As many as 1,200 companies have been suspended for trading for over seven years now, and these will be the first that will be forced to delist.
Besides, there are over 3,000 companies listed on various regional stock exchanges that have become defunct, Sinha said.
The exercise for over 4,200 listed firms would be completed this year. Such exercises would be taken up going forward to clean up the market from what the SEBI chief described as “a source of nuisance”.
He also warned of strong action against the auditors who close their eyes to the lapses in the financial accounts of listed firms.
“So far, we have had a hands-off approach on auditors, but we will take action if something serious comes to our notice. Auditors cannot go scot-free if they have been certifying the books for years without pointing finger at the lapses,” Sinha said.
SEBI also plans to launch more instruments, such as options contracts, in the commodity markets, and will also introduce more commodities for trading.
Sinha also discussed steps that the regulator has taken to ease entry for foreign investors in India, saying that easier FPI registration rules have paid off.
“The number of registered FPIs increased to 8,721 from 4,580 in 2014,” he said.
He also said costs of mutual fund and insurance products in India need to come down and said the regulator had invited former UIDAI chief Nandan Nilekani to advise it on creation of tech platforms for sale and purchase of mutual funds.
“We are also looking to tweak listing rules for startups,” he said.

RBI starts meeting major players in P2P lending

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After releasing a consultation paper on peer-to-peer (P2P) lending last week, Reserve Bank of India (RBI) has started meeting some leading players in the sector. The founder of a leading P2P lending platform, who met officials of RBI’s Department of Non-Banking Regulation on Wednesday, told FE on the condition of anonymity that the central bank is gearing up to come out with final guidelines for P2P lending platforms by the end of the current calendar year.

He also said that money laundering and interest rate are two of the main areas that the RBI is focusing on while framing the final guidelines for the sector. “It seems RBI is keen on capping the rate interest that a P2P lender can charge at the same level as that for non- banking finance company micro finance institutions (NBFC MFIs),” he said.

As per current RBI regulations, the maximum rate of interest that an NBFC MFI can charge is the lower of 10% more than its cost of funds and 2.75 times of the base rate of the top five commercial banks.

“While money laundering shouldn’t have been a big concern, given that draft guidelines have mandated that all transfer of funds happen directly from the lender’s bank account to that of the borrower, the unearthing of a few ponzi schemes in the P2P sector in China seem to have made the RBI more cautious,” the P2P lending platform’s founder added.

Post May 31, which is the deadline set by RBI for suggestions and comments on the regulations, it will work on the final guidelines and seems keen on releasing them by the end of the year, he added.

According to P2P Finance Association, the global P2P market almost doubled last year and has crossed the £5 billion mark.

“Although nascent in India and not significant in value yet, the potential benefits that P2P lending promises to various stakeholders and its associated risks to the financial system are too important to be ignored. The Reserve Bank has therefore found it necessary to put out this discussion paper to elicit public opinion and views of the various stakeholders on the future course of action having regard to the current legal and regulatory framework in place to regulate the business of financial intermediation,” RBI noted in the consultation paper.

It has also proposed a minimum capital requirement of R2 crore for P2P NBFCs and is intent on restricting such entities to just companies, thereby barring proprietorships, partnerships and LLPs.

Source: http://www.financialexpress.com/article/industry/banking-finance/rbi-starts-meeting-major-players-in-p2p-lending/248758/

Sumitomo likely to acquire 44% stake in Excel Crop Care

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Japanese conglomerate Sumitomo is at an advanced stage of negotiations to acquire a substantial equity stake in Excel Crop CareBSE -0.87 % , a Mumbai-headquartered listed company. The proposed deal could pave the way for the Japanese group to own about 44% shares of the pesticides and agrochemicals company for a total consideration ofRs 1,200-1,300 crore.

Sumitomo plans to buy out stake of Excel promoters — the Shroff family — holding 24.7% equity as well as two financial investors together owning close to 19% of the shares. ET’s email to Dipesh Shroff, managing director of Excel Crop Care, and Sumitomo Chemical went unanswered.

There have been several rounds of talks between officials of Sumitomo Chemical and the Excel management, and indications are that the deal may be signed in June. Nufarm, the Australian crop protection and specialist seeds company, owns more than 14% and is likely to retain its strategic stake in Excel Crop Care.

According to a report by Avendus Capital, global players are looking at India to increase their market share, add to their product portfolio , and strengthen their supply base in specialty and agrochemicals. “The Indian agrochemicals market is expected to grow rapidly (about 12% CAGR over 2014-19) with increase in farmer awareness, improvement in rural income and increase in pressure for improving productivity,” said Preet Mohan Singh, executive director, Avendus Capital.

The Shroffs are also the promoters of Excel Industries, a specialty chemicals company, and co-promoters of Aimco Pesticides in which they control a little over 25%. Before entering into any agreement with Sumitomo, the Shroffs are expected to conclude the inter se transfer of their holding to the other promoter family of Aimco. Excel Crop Care has 1.13% equity interest in Excel Industries.

Besides Shroffs, the other two shareholders of Excel Crop Care who may sell their shares to Sumitomo are Ratnabali Capital Markets (holding 14.99%) and Ratnabali Investments (3.95%). Among the institutional shareholders of Excel Crop Care are Life Insurance Corporation (6.58%) and DSP Blackrock (1.92%).

Excel Crop Care’s consolidated net profit for the quarter ended March 31, 2016 was Rs 7.6 crore as against Rs 1.7 crore in the year ago period, on total income of Rs 188.6 crore (Rs 205.6 crore). The Excel Crop Care stock has been trading at around Rs 1,109, against 52-week high and low of Rs 1,247 and Rs 750, respectively.

M&A activities in sectors like agro and specialty chemicals is expected to pick up, said Avendus, adding that the stride towards food security will also increase the significance of agrochemicals. An estimated 85% of India’s crop loss (worth close to $20 billion) is caused by pest infestation, disease and weeds and is prevented by the use of agrochemicals.

India exports agrochemicals to countries like the us , France, the Netherlands, Belgium, Germany, Brazil, Colombia, China, Vietnam and Indonesia.

Source: http://economictimes.indiatimes.com/articleshow/52392474.cms

India moots framework for SME sector cooperation in BRICS

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India is working on a mechanism to boost cooperation amongst small and medium enterprises in the five-nation BRICS to promote joint ventures and share expertise on strengthening the sector.

New Delhi, which holds the Presidency of the BRICS this year, is drafting a framework for a joint growth strategy for micro, small and medium enterprises (MSMEs) in the region. “The framework for cooperation amongst MSMEs, which will identify the relative strengths of each country and also possible areas of joint ventures, will be discussed at the next meeting of officials in June and hopefully finalised at the BRICS ministerial meet in October,” a government official told BusinessLine . MSMEs in Brazil, for instance, are highly successful in participating in government procurements, he said, adding that they “capture almost 90 per cent of the business. Other countries could draw from Brazil’s legislative frameworks and other policy initiatives to help their small industry also get a chunk of government business.”

The BRICS grouping of five emerging economies — Brazil, Russia, India, China and South Africa — together account for a GDP of over $16 trillion, which is about half that of the seven major advanced economies. More than 40 per cent of the BRICS economies are driven by the MSME sector, according to government estimates.

The Commerce and Industry Ministry is also holding discussions with the industry to give a final shape to its proposal of putting in place a BRICS portal for addressing non-tariff measures (NTMs) that hamper trade between the BRICS.

Exporters’ body FIEO is one of the industry bodies giving inputs for the proposed portal.

“One of the biggest problems faced by exporters in the five countries is the lack of knowledge on various non-tariff measures (NTMs), such as new standards or specifications. Most of the times they get to know about the NTMs only when their goods are rejected. If this issue is addressed, it will serve as a big incentive for industry in the five nations to trade with each other,” said Ajay Sahai of FIEO.

Source: http://www.thehindubusinessline.com/todays-paper/india-moots-framework-for-sme-sector-cooperation-in-brics/article8617609.ece