New Delhi | The Competition Commission said it has cleared US retail giant Walmart’s proposed acquisition of Flipkart, a deal estimated to be worth USD 16 billion.
The approval comes less than three months after the announcement of the mega-deal, which is also being opposed by various trade organisations.
In May, Walmart announced the acquisition of a 77 percent stake of Flipkart in its biggest takeover till date.
“@CCI_India approves proposed acquisition of Flipkart Private Limited by Wal-Mart International Holdings, Inc,” the regulator said in a tweet.
Mergers and acquisitions beyond a certain threshold require the approval of the Competition Commission of India (CCI).
Welcoming the regulator’s decision, Walmart said it remains committed to contributing to the Indian economy by supporting smallholder farmers, manufacturers, and its Kirana customers.
“Flipkart is a prominent player in India with a strong, entrepreneurial leadership team that is a good cultural fit with Walmart.
“We believe that the combination of Walmart’s global expertise and Flipkart will position us for long-term success and enable us to contribute to the economic growth,” it said.
In a statement, Flipkart Holding welcomed the CCI’s decision. “… by combining Walmart’s global expertise with our leadership position and Indian ethos, we believe we are positioned for long-term success and contribution to the Indian economy and society,” it added.
Traders’ body CAIT, which has been opposed to the deal, described the CCI approval as “most unfortunate” and said it would approach the court against the decision.
In June, more than 100 trader organisations opposed the deal stating it will cause “irreversible damage” to small traders and endanger jobs for thousands.
As per the notice submitted to the CCI, the acquisition of a majority stake in Flipkart will be done through Wal-Mart International Holdings.
The proposed transaction would be effected pursuant to the share purchase agreement and the share issuance and acquisition agreement entered into on May 9 by and among Walmart’s subsidiary and Flipkart, the notice said.
In June, Walmart said that it expects to close the deal this year.
“In May 2018, the company announced it will pay approximately USD 16 billion in exchange for approximately 77 percent of the outstanding shares of Flipkart Group (Flipkart). The investment includes USD 2 billion of new equity funding.
“…closing is expected later this calendar year, and is subject to regulatory approval,” the American retail major had said in a filing to the US Securities and Exchange Commission (SEC).
The US India Strategic Partnership Forum (USISPF) said the deal is good for India as a whole.
The deal will strengthen the agriculture supply chain and create new skilled jobs, supporting the ‘Make in India’ initiative, USISPF President and CEO Mukesh Aghi said in a statement.
Walmart is a USISPF member.
PM targets Rs 12k cr saving in oil import bill from ethanol use
New Delhi | Prime Minister Narendra Modi today set a target to triple ethanol production in four years to help save Rs 12,000 crore in oil import bill by mixing the sugarcane extract in petrol as well as boost farm income.
Speaking at a function here to mark World Biofuel Day, he said about Rs 10,000 crore is being invested in setting up 12 bio-refineries in the country that will produce fuel from crop stubble and residue as well as urban waste.
“Biofuels can help reduce import dependency on crude oil. They can contribute to a cleaner environment, generate additional income for farmers and create rural jobs,” he said.
Modi said fuel generated from sugarcane and crop residue not only gives additional income to farmers but also helps the environment by the safe disposal of farm stubble.
The world’s third largest oil consumer is dependent on imports to meet 81 per cent of its needs and substituting some of the fuel with biofuels will help cut import dependence.
India started blending ethanol, produced as a by-product during the process of making sugar from sugarcane, in petrol during the first NDA regime in 2002. But the programme slowed almost to a grinding halt in the 10-year rule of Congress-led UPA.
Modi said the programme to mix ethanol in petrol was revived when the BJP-led NDA came to power again in 2014.
“As a result of the efforts of the Centre, ethanol blending in petrol increased from 38 crore litres in the ethanol supply year 2013-14, to an estimated 141 crore litres in the ethanol supply year 2017-18,” he said, adding this saved close to Rs 4,000 crore in oil import bill.
The target, he said, is to raise ethanol production for doping in petrol to 450 crore litres in four years that will save Rs 12,000 crore in import bill.
India spent nearly USD 88 billion (about Rs 5.9 lakh crore) on the import of crude oil in 2017-18.
“Our target is to raise blending of ethanol in petrol to 10 per cent by 2022 and to 20 per cent by 2030,” he said.
Currently, petrol contains 3.8 per cent of ethanol.
The bio-refineries being set up will generate about 1.5 lakh jobs in the entire value chain, he said.
Also, the government approved the National Policy on Biofuels in June this year which seeks to produce fuel that can be doped in petrol and diesel from agriculture and municipal waste as well as crop residue, he said.
Fuel is targeted to be produced from crop stubble, which otherwise is burnt every year causing pollution and erosion in soil’s nutrient value. It can also be produced from damaged crops, he said, adding efforts are on to also generate fuel from urban waste as well as bovine excreta.
He said bio-CNG generated from cow dung can be used as a fuel in transport vehicles to cut petrol and diesel consumption. “Biofuels have synergies with various government initiatives, including enhancing farmers’ incomes, and Swachh Bharat,” he said.
Listing measures of the government on using environment-friendly fuel, he said recycled plastic is being used in road construction while electricity generated from solar panels is being extensively promoted.
Besides, LED bulbs are replacing conventional lighting in railways and ports, he said.
As many as 5 crore cooking gas LPG connections have been given to poor women households in the last two-and-half years to give them smokeless kitchens, helping improve their health and environment, he said.
Modi said his government has raised minimum support price or MSP for 14 Kharif (summer season) crops, fulfilling the promise of giving a rate that is 50 per cent more than the cost of production.
Responding to critics that the increase was not commensurate with the promise, he said renowned agriculture scientist M S Swaminathan has in a recent article praised the government’s steps to boost farm income.
Also, the Fair and Remunerative Price (FRP) for sugarcane for 2018-19 crop year has been hiked by Rs 20 to Rs 275 per quintal and it now gives 80 per cent profit over the cost, he said.
“This enhanced rate will benefit crores of farmers,” he said.
The Prime Minister said schemes such as Jan Dhan, Van Dhan and Gobar Dhan are helping to transform the lives of the poor, the tribal population and the farmers.
He said the transformative potential of biofuels can be realised only through the participation of students, teachers, scientists, entrepreneurs and the people.
He urged everyone present to help take the benefits of biofuel to the rural areas.
The Prime Minister also released a booklet on ‘National Policy on Biofuels 2018’. He also launched the ‘Proactive and Responsive Facilitation, by Interactive and Virtuous Environmental Single-window Hub’ (PARIVESH), a web portal for speedy environment clearance of projects.
10% ethanol mix with petrol by 2022 and 20% by 2030 is what the government is aiming to achieve; all agricultural waste and discard can be used for ethanol production, reducing farm wastage: PM Narendra Modi on World Bio Fuel Day pic.twitter.com/uj4jj4EJsm
— ANI (@ANI) August 10, 2018
Trouble brews for airline major Jet Airways
The woes of the airline industry continue to haunt investors on D-Street, with one of the sector’s top airlines in the news again for all the wrong reasons.
Jet Airways Founder Chairman Naresh Goyal yesterday said he felt “guilty and embarrassed” as a lot of shareholders have lost their money, amid the airline’s shares plummeting on financial troubles.
Shares of the full-service carrier touched a 52 week low of Rs 258 on today morning’s market pre-opening trade, down roughly 14% intraday as the company deferred announcing its June quarter numbers on Thursday.
Addressing shareholders at the company’s annual general meeting here, Goyal said competition, as well as fuel prices, are on the rise.
“Lots of shareholders have lost money, I feel guilty and embarrassed,” he said.
From its 52-week high price of Rs 883.65 scaled on January 5th, 2018, shares of the company have tumbled 70% in pre-opening trade, recovering slightly during days’ trade hovering around the Rs 280 mark.
Goyal said key external factors that slowed down the airline’s momentum were weakening of the Indian rupee, around 16 percent increase in Brent crude rates with a consequent rise in fuel costs and the industry’s inability to pass on increased costs to the consumers.
In addition, there was a considerable increase in maintenance, landing and navigation costs (collectively known as airport charges) during the year, he said.
According to him, operationally the airline took every step possible to maintain a sharp focus on costs and worked to reduce net debt.
“We are committed to strengthening our relationship with Etihad, We will continue to grow (together),” he said.
Meanwhile, in a regulatory filing, Jet Airways today said its board deferred considering the results for the quarter ended June 30, resulting in a sharp decline in share price in today’s trade.
The audit committee did not recommend the financial results to the board for its approval, pending closure of certain matters.
Amid rising concerns over the airline’s financial health and proposed salary reductions for employees, the Jet Airways chairman said a new committee would be set up to improve public perception and negative publicity about it.
“Now there is a feeling that Naresh Goyal family is running the airline. All these perceptions which have been created in the marketplace are going to be corrected. A new executive committee would be formed, and chaired by the airline’s directors Naseem Zaidi & Ashok Chawla,” Goyal said.
Besides, the airline is looking at cooperation with Air India in terms of engineering and flight operations. Several meetings have also been held with Air India Chairman and Managing Director Pradeep Singh Kharola, he said adding, they agree that there are common problems whether it is cost or fares.
Last week, reports emerged the airline was planning pay cuts for pilots, engineers and employees. On this issue, CEO Vinay Dube said, “We are looking at multiple elements of restructuring and payroll is one of them. We are in deep dialogue with our staff and they are extremely supportive of our restructuring plans’. In that, we will make the best decision in the interest of the company and the employees”.
IKEA opens first India store
Hyderabad | Swedish home furnishings major IKEA today opened its first store in India, kicking off its retail journey five years after it received approval to invest in the country’s single-brand retail sector.
The company, which has employed 950 people directly and another 1,500 indirectly at its store here, plans to hire 15,000 in the coming years as it expands operations in India.
IKEA Group CEO Jesper Brodin said the opening of the first store in India marks a milestone in the company’s journey here which began over three decades ago through sourcing of products.
“We have a long-term commitment to India, which is an important market for us,” he added.
The store here is the first of 25 such outlets planned to be set up in India by 2025. In 2013, IKEA received a nod from the government to invest Rs 10,500 crore in single-brand retail.
IKEA had originally planned to open its first store in India by 2017, but it was delayed. The opening of its first store here was scheduled for July 19 this year but the company again pushed it back by almost 20 days to August 9, citing quality commitments.
Out of the total outlay of Rs 10,500 crore, the company has so far invested Rs 4,500 crore in its different projects in India.
It has invested Rs 1,000 crore on the Hyderabad store alone, which would have a range of around 7,500 products. The store is spread over 13 acres of land and has a built-up area of 4 lakh sq ft.
The company said it would increase its investments in India as it looks to accelerate expansion in the country faster than it usually does elsewhere.
“As we see big opportunities in India, we believe that we will increase this investment as we continue expansion in India in future,” it said.
Besides retail, IKEA said it will also enter e-commerce segment in India by next year, besides exploring small format stores as part of its India expansion plans.
“We want to be accessible… we will try our best to speed up our expansion to move quicker than normally we do in IKEA,” Brodin stated.
After Hyderabad, Ikea’s second store would be in Mumbai next year, followed by Bengaluru and Delhi-NCR.
He said the company has also identified four more cities in India where it plans to set up its stores but did not disclose details.
Commenting on the company’s recruitment plans, IKEA India HR Manager Anna-Carin Mansson said the company’s aim is to make retail an attractive career choice for young people in the country.
“Our aim is to recruit 15,000 people…in the coming years,” she added.
IKEA said it has adopted a “non-negotiable” approach to hire 50 percent women at all levels in India, even “including forklift drivers and assembling co-workers”.
It said it will offer delivery and assembly service to its customers who are not familiar with the DIY (do it yourself) concept.