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

India’s e-commerce sector to see $120 billion revenue by 2020: Assocham-Forrester report

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The country’s e-commerce sector is expected to see revenues of USD 120 billion by 2020 from USD 30 billion at the end of last fiscal, a report said.

The increase would be mainly on the back of young demographic profile, rising Internet penetration and relatively better economic performance, the Assocham-Forrester study said.

India’s e-commerce sector saw revenues of USD 30 billion at the end of the financial year 2015-16. It is expected to reach USD 120 billion by 2020, it said.

“While in terms of base, India may be lower than China and other giants like Japan, the Indian rate of growth is way ahead of others. Against India’s annual expansion of 51 per cent, China’s e-commerce is growing at 18 per cent, Japan 11 per cent and South Korea 10 per cent,” the study noted.

The report further said that India has an Internet user base of 400 million in 2016 whereas Brazil has 210 million Internet users and Russia 130 million, among the BRICS nations.

About 75 per cent of the country’s online users are in the age group of 15-34 years since India is one of the youngest demographies globally and one out of every 5 (online user) visits the Indian Railways site, the report said.

In India, about 60-65 per cent of the total e-commerce sales are being generated through smart phones. Branded apparel, accessories, jewellery, gifts, footwear are among the major hits on the e-commerce platforms, it added.

Source:http://economictimes.indiatimes.com/articleshow/52172120.cms?utm_source=contentofinterest&utm_medium=text&utm_campaign=cppst

 

Financial inequality highest in India, China: International Monetary Fund

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According to IMF, China and India have grown rapidly and reduced poverty sharply, however, this impressive economic performance has been accompanied by increasing levels of inequality.

Financial inequality is highest in India and China among Asia Pacific countries despite the two being among the fastest growing economies, IMF has said.

According to the International Monetary Fund, China and India have grown rapidly and reduced poverty sharply, however, this impressive economic performance has been accompanied by increasing levels of inequality.

“In the past, rapid growth in Asia came with equitable distribution of the gains. But more recently, while the fast-growing Asian economies have lifted millions out of poverty they have been unable to replicate the ‘growth with equity’ miracle,” the Fund said.

As per the report, China managed to increase middle class in urban areas, as did Thailand, while India and Indonesia struggled to lift sizeable portions of their populations toward higher income levels.

“In India, differences between rural and urban areas have increased, and have been accompanied by rising intra-urban inequality,” it said.

Many factors have been identified as key drivers of the inequality between rural and urban areas in China and India.

In China, rapid industrialisation in particular regions and the concentration of foreign direct investment in coastal areas have led to substantial inequalities between coastal and interior regions. Other factors also include low educational attainment and low returns to education in rural areas.

On India, the report said inter provincial inequality is lower in India than in China, and rising inequality in India has been found to be primarily an urban phenomenon.

Moreover, the rural-urban income gap has increased, and higher rural inflation has been found to be a key driver of this. Educational attainment has also been identified as an important factor explaining rising inequality in India over the past two decades, the Fund said.

The two countries have introduced a number of policies to tackle the rising inequality.

China introduced the Minimum Livelihood Guarantee Scheme (Dibao) for social protection in the 1990s. Moreover, various social programs are aiming to expand social safety nets and provide support for the development of rural areas and western regions.

In India, the government introduced the Mahatma Gandhi National Rural Employment Guarantee Act to support rural livelihoods by providing at least 100 days of employment. Programs to improve education include the National Education Scheme and Midday Meal Scheme.

The Fund lauded the JAM (Jan Dhan-Aadhaar-Mobile) initiative and said that “the JAM trinity initiative helped India in making substantial advances in financial inclusion. More recently, programs aiming for universal bank account coverage were launched”.

Source:
http://economictimes.indiatimes.com/articleshow/52106291.cms?utm_source=contentofinterest&utm_medium=text&utm_campaign=cppst

 

IMF Sees Rising Debt Challenge as Asia Stays Global Outperformer

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The International Monetary Fund said rising debt levels in major Asian economies have become a significant risk, even as the region remains on track to post solid economic growth.

Asia-Pacific economies as a group will decelerate only slightly, to 5.3 percent this year and next, from 5.4 percent in 2015, the Washington-based fund said in an annual regional report published Tuesday. The IMF last month trimmed its global forecasts, and said the world was more exposed to negative shocks thanks to a prolonged weaker pace of expansion.

In Asia, domestic demand, particularly consumption, should be a key driver, but worsening global conditions and high leverage in the region may curb growth, the fund said.

“Downside risks continue to dominate the economic landscape,” the IMF said. “In particular, the turning of the credit and financial cycles amid high debt poses a significant risk to growth in Asia, especially because debt levels have increased markedly over the past decade across most of the major economies in the region, including China and Japan.”

Downward Spiral

The IMF’s singling out of debt as a growing worry is in line with recent statements. The institution warned in a report last month against what it called a self-reinforcing “spiral” of weakening growth and rising debt that could require a coordinated response by the world’s major economies.

In Asia, the IMF said Tuesday, debt levels are high, while credit growth and corporate issuance have remained strong as companies try to take advantage of still-favorable global liquidity conditions.

The ratio of corporate debt to gross domestic product has risen faster in Asia than anywhere else in the world since 2009, the IMF added, and the measure is particularly elevated in China and South Korea. Household debt is a growing worry in Hong Kong, Malaysia, Singapore and Thailand, the IMF said.

“Although part of the credit growth reflects financial deepening, some growth has been above that implied by fundamentals,” the IMF said. Financial deepening refers to the spreading availability and use of banking.

Reform Refrain

As in previous reports, the IMF called on policy makers to push ahead with structural reforms to raise productivity, including measures to boost consumption in China. The fund also flagged the risk of an over-reliance on monetary or credit policies to hold up demand, particularly if job losses in manufacturing exceed the gains in services.

On Japan, the only developed economy where it anticipates economic contraction next year, the IMF recommended moves to reduce the difference between life-time and non-regular labor contracts to allow for higher wage increases. It also suggested deregulation and a drive to increase female labor market participation.

The IMF said that recent economic policies in Japan — so-called “Abenomics” — have been “supportive,” but added that “durable gains in growth” are yet to be seen.

The fund also warned against an excess reliance on monetary stimulus. The remark comes less than a week after a surprising Bank of Japan decision to hold off on stepping up its monetary expansion jolted markets and led to a surge of the yen against the U.S. dollar.

Source: http://www.bloomberg.com/news/articles/2016-05-03/imf-sees-rising-debt-challenge-as-asia-stays-global-outperformer

China commends India’s GDP growth; says keen to invest more

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China has complimented India for “doing a good job” in maintaining an impressive growth rate despite a global slowdown and is keen on working together to push for reforms in the international financial system to offset the inherent weaknesses.

Stating that his country was keen to ramp up investments in India, Chinese Foreign Minister Wang Yi said the two major emerging economies can contribute significantly in helping the world economy by keeping up their growth momentum.

“First of all, we both need to grow our own national economies. On this front, we want to commend India for doing a good job in promoting economic growth,” said Wang.

Wang, who was here to attend Foreign Ministers’ meeting of RIC (Russia, India, China) grouping, further said reform of global financial system is key to protect the interest of developing countries and for recovery of the world economy.

“We need to join hands in playing a positive role in improving the global economic and financial governance because that will help protect the interests of the developing countries. It will also help the world economy to embark on a path of strong recovery,” Wang said.

He said China was “optimistic” about the prospect of deeper relationship between the two countries.

“Of course, we will be happy to invest more in India. There is no doubt about it,” he added.

After witnessing nearly three decades of close to double-digit growth, China has seen a decline in its growth rate, making room for India to replace it as the fastest-growing major economy of the world.

However, Chinese economy remains much bigger than that of India in terms of the overall size.

China clocked 6.9% growth in 2015 when India is estimated to have grown by 7.3%. The IMF has projected Indian economy to grow at 7.5% in 2016 and 2017.

The Chinese Foreign Minister also said his government was “looking forward” to President Pranab Mukherjee’s upcoming visit to China.

E-commerce sees major money inflow

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It is not only Uber, the American taxi-hailing app, that is going all guns blazing in India with massive investment plans. Its biggest competitor, Bengaluru-based Ola, as well as e-commerce entities Flipkart and Amazon, are all planning to pump in big money to stay ahead, even in a scenario when investors are not as ready as earlier in opening their purse-strings.

Uber India has readied itself for another $500 million (Rs 3,300 crore) investment in the next three months, reports suggest. The app service had only nine months earlier committed $1 billion (Rs 6,600 crore) in India. Uber could not be reached for a comment.

For foreign giants such as Amazon, Uber and Alibaba, this country is a big market they all want to capture. Experts believe this is a trend which will continue, as a global economic slowdown will push a chunk of new investments towards India.

“We can clearly see a slowdown in overseas markets, while India is still managing annual growth of seven to eight per cent. So, companies such as Uber, Amazon and Alibaba want to bet big on India. While Amazon was not able to make a dent in China and Alibaba in Europe, they do not want to lose out on India. We will see this trend through the year,” says Amarjeet Singh, partner – tax, KPMG in India.

Ola, rival of Uber in the same segment, is on track to invest a chunk of its $1.3 billion (Rs 8,650 crore) capital raised so far. The firm recently announced it would invest Rs 200 crore in the Delhi-National Capital Region area over the next six months, “towards innovative green fuel technology, leasing of CNG cars and strengthening the system to catalyse greater CNG adoption in the region”, Rahul Maroli, its vice-president for strategic supply initiatives had said.

According to sources, Ola will further make strategic investments in all metro cities, as well as in Tier-II and Tier-III towns. “The company plans to add at least another 550,000 vehicles by the end of this year,” said one. Ola has at least 350,000 cabs and 80,000 auto rickshaws on its platform across 102 cities in the country.

American e-commerce major Amazon had said in October 2014 it was investing $2 billion (Rs 13,200 crore) in India. Later, its executives said the group had an open chequebook for the market. In February, it bought Noida-based payments services provider Emvantage, its first acquisition. This is aimed to help Amazon accelerate the development of payment solutions for customers.

As for Alibaba, the Chinese e-commerce giant, it already has a foothold in Indian e-commerce through its investments. The group is majority stakeholder in One97Communications, owner of mobile payments giant Paytm. Also, online marketplace major Snapdeal raised $500 million (Rs 3,300 crore) from a group of entities last year which included Alibaba.

The Chinese company now plans to directly enter India.

“We plan to enter the e-commerce business in India in 2016,” recently said J Michael Evans, group president. “We have been exploring very carefully the opportunity in this country, which we think is very exciting against the backdrop of (the) Digital India (programme of the government).”

Indian e-commerce giant Flipkart had, in March, infused Rs 338 crore into its online fashion store, Myntra, documents filed with the registrar of companies stated. Flipkart has so far raised $3 billion (nearly Rs 20,000 crore).

Source: http://www.business-standard.com/article/companies/e-commerce-sees-major-money-inflow-116032800986_1.html