LIC books Rs 16,000 crore profit in April-Dec from equity sales

Life Insurance Corp, the country’s biggest institutional investor locked in an impressive 68% jump in profits, about Rs 16,000-crore, from equity sales in the first nine months of the financial year.

Last financial year, the corporation had earned a profit of Rs 9,500 crore from equities in the same period. Its equity investment was subdued for the period as it has invested Rs 39,000 crore against Rs 64,000 crore in the same period last year.

“We have booked profits of Rs 16,000 crore in the year so far by selling about Rs 38,000 crore of equity,” said V K Sharma chairman LIC. “We are a contrarian player and we have deliberately taken this decision given the way markets have moved.”

He said that equity is only 12% of their investible corpus. Sharma did not talk about individual stocks that LIC has invested in. “We are not a trader but long-term investor,” he said.

LIC invested around Rs 1.98 lakh crore in debt instruments, including Rs 1.83 lakh crore in government services and state development loans.
The corporation has investible surplus but its equity investments are subdued because of the current market conditions. LIC had unsuccessfully bid for a sizable stake in BEL. “This shows that the market is deepening and more players are interested in buying public sector companies.”

“We visualised that interest rate will fall and so we gave push to pension plan,” said Sharma. It has posted a growth of 12.43% in total premium income at Rs 1,45,031 crore during the nine months ended December 2016. In the same period last year, it had done total premium of Rs 1,29,001 crore.

New business income grew 40.11% in the nine-month ended December 31, 2016, boosted by fund flow into formal system during demonetisation. “We met our yearly target of Rs 31,000 crore new business income a month before the year end,” said Sharma.

LIC operates through 40,000 collection points, where collection dipped in the first 15 days after the ban on high currency notes of Rs 500 and Rs 1,000 on November 8. However, it improved over the next few days and now 75% of the collection happens through digital payment mode. For the insurer 6.5 crore transactions are happening through digital. It is in the process of integrating its system to BHIM and UPI.

Nokia 3310 makes a comeback, to hit Indian market next quarter

The iconic Nokia 3310 is set to make a comeback in a new trendier avatar, with HMD Global bringing the handset to India in the next quarter for about Rs 3,500.

HMD Global, which has struck a 10-year brand licensing agreement with Nokia for mobile phones and tablets, will also bring in Android-powered Nokia 6, Nokia 5 and Nokia 3 to India in the second quarter of this year.

“All the products that we have announced Nokia 3310, Nokia 6, Nokia 5 and Nokia 3 will be available in the second quarter of this year in India. Average global selling price for Nokia 3310 is 49 euros,” HMD Global Oy Chief Marketing Officer Pekka Rantala told PTI in an interview here.

The revamped 3310 model features bigger screen. Its 22 hours of talk time and up to one month of standby time are expected to position the handset as a back-up for smartphone users.

Nokia 3310, known for its robustness, was the most widely used feature phone globally in 2000-05. It is estimated to have sold 126 million units globally when there were only a few countries with mobile networks.

The model was discontinued in 2005 globally. It was when India had very small mobile subscriber base of less than 85 million compared to over 1 billion at present.

Once the world’s biggest handset company, Nokia in 2014 sold its ailing handset operations to Microsoft for USD 7 billion to focus on its network equipment business.

However, last year, the brand got a new lease of life with HMD Global, a new company led by ex-Nokia executives, getting the licence.

“Now, we are celebrating the new era of Nokia brand that is the reason we are with HMD Global. Let me also be very clear that we would not license the Nokia brand to just anybody. It means too much to us. We chose carefully. We looked at the market. We looked at Google to be our brand licensing partner which could do this for a long time,” Nokia President and CEO Rajeev Suri said.

The new Nokia 3310 is a dual SIM 2.5G feature phone with 1200 mAH battery that promises around 22 hours of talk time with one-time full charge.

It has 2.4-inch display, 2 megapixel camera with LED flash, bluetooth and USB connectivity option and 16 MB internal with external storage option of up to 32 GB. To be available in 4 colours, the Nokia 3310 will allow users to play iconic games like Snake as well.

“When we went to our distributors for price survey, they mentioned higher prices. But we want to sell our phones at prices which are sustainable. When it comes to India, I believe there is a consumer profile which will see it (Nokia 3310) as a second phone,” Rantala said.

In countries like India, there is a huge population and target group that will see Nokia 3310 as their first phone or primary phone, he added.

HMD Global has also unveiled Nokia 5 and Nokia 3 smartphones for 189 euros and 139 euros, respectively, built on Google’s Android platform. The company has already been selling Nokia 6 in China.

Thanks to demonetisation, India could lose growth crown

India could lose its title as the world’s fastest expanding major economy when it reveals its growth figures for the October-December quarter on Tuesday.

The release follows a demonetisation-led cash crunch that hit India’s cash-heavy economy, but economists reckon that could be temporary.

Economists in a Reuters poll expected that India’s quarterly gross domestic product (GDP) grew at 6.4 percent annually — well below the July-September quarter’s 7.3 percent pace. If the forecast is realized, India will also fall behind China, which grew 6.8 percent on-year in the October-December quarter.

“This data will be crucial as it captures the impact of the banknote ban introduced in early-November,” according to economists at Singapore’s DBS Bank. They believe the cash shortage likely disrupted logistics, production and supply of goods and services and affected sectors including automobiles, transportation, logistics, services and construction.

The fallout from demonetisation, however, is ebbing as much of the currency affected by the policy appears to be back in circulation.

Reuters reported in January that the Reserve Bank of India (RBI) injected 9.2 trillion rupees ($135.21 billion) worth of new currency notes into the banking system to help replace the old notes that were banned in November.

According to Goldman Sachs, the RBI’s pace of re-monetization was quicker than what the investment bank had expected — they revised their timeline for the effects of the cash crunch to ebb on the economy to mid-January, from an prior forecast of early February.

Data also appeared to support the notion that consumption has begun to normalize and that the effects of demonetisation were waning, according to analysts at Morgan Stanley.

“We expect the impact on economic activity to normalize in the next one to two months,” the analysts said, adding that consumption will likely resume its recovery path from the June quarter.

The Morgan Stanley analysts pointed to improved car sales in January, a key indicator for urban discretionary spending, and the narrowing pace of decline in sales of motorcycles, seen as a proxy for rural demand, as evidence of normalization in the Indian economy.

Local media reports said market leader Maruti Suzuki   along with Hyundai, Tata Motors  , Toyota and Nissan reported robust passenger vehicle sales growth in January. According to the Times of India, Maruti Suzuki saw its domestic sales rise 25.9 percent on-year.

More broadly, India’s services PMI for January reached 48.7, which is up from a December print of 46.8. The manufacturing PMI in January was at 50.4 from 49.6 in December. PMI figures above 50 indicate an expansion in activities. Private capital spending, however, remains a concern for India as companies and banks continue to struggle with bad debts and non-performing assets.

“Private capex (capital expenditure) will remain somewhat weak given the trailing excess capacity and balance sheet issues in (public sector) banks and industrial sector,” said the Morgan Stanley analysts. They predicted private corporate capital expenditure will recover only as of 2018.

Last November, India unexpectedly announced all 500 and 1,000 rupee banknotes would be withdrawn from circulation, replaced by new 500 and 2,000 rupee denomination notes.

The move caught most people off-guard and led to a massive shortage of cash, which market commentators said would lead to significant short-term pain in cash-heavy sectors such as real estate, construction, gold, gems and jewelry

UK Sinha bids farewell: Not shy to say SEBI has been harsh

Bidding farewell after seven years as chief of the country’s market regulator, UK Sinha said on Monday that he was not shy of admitting that the Securities and Exchange Board of India had been harsh during his tenure while “cleansing the market”.

In his last press briefing before handing over the SEBI reins to Ajay Tyagi on March 1, Sinha said his team had ensured swift action on violations and said he was demitting office with the capital markets in order.

Transparency was the theme of the press conference, as Sinha spoke about strengthening the arbitration mechanism for the sake of investors.

“We believe that everyone should get uniform treatment and there should be competition too,” Sinha said, adding that Foreign Portfolio Investors had been put at ease.

While Sinha said that he would carry fond memories from his term, he admitted his one significant regret was that no Real Estate Investment Trusts (REITs) and Infrastructure Investment Trusts (InvITs) had been launched on his watch.

The regulator notified the REIT and InvIT Regulations in 2014, allowing setting up of and listing of such trusts, which are very popular in advanced markets.

However, not a single trust has been set up so far as investors wanted further measures, including tax breaks, to make these instruments more attractive.

Sinha said that he expected the first InvIT to be launched in the next two months. Sinha’s tenure has been marked by big orders against companies like Satyam Computer Services and a war against the Sahara Group over fund raising through wrongful sale of securities.

During his regime, SEBI strengthened financial markets regulations, putting in place stronger rules to curb insider trading. In addition, hallmark changes in the rules for listing and delisting companies were made, besides bids to spruce up corporate governance at listed companies.

LIC booked profit in SBI, GAIL, DRL & others, when you were lining up at ATMs

Life Insurance Corporation of India (LIC), which holds roughly 5 per cent stake worth $66 billion in the BSE200 companies, was seen booking profits in state-run GAIL BSE -0.35 %, SBI, HPCL BSE 3.21 %, IOC BSE -1.16 % and Indraprastha Gas BSE -0.14 %, among others, all through December quarter, when the government’s demonetisation drive squeezed demand and slowed down industry, halting economic growth on the tracks.

On the flip side, the insurance behemoth was seen buying select private sector names such as Dr Reddy’s Laboratories, GlaxoSmithKline Consumer BSE 2.03 % Products, Pidilite Industries BSE -1.01 % and Grasim Industries BSE -2.32 %, among others.

The quarter was marked by profound weakness in the stock market – with LIC itself offloading $3 billion worth of BSE200 stocks.

LIC’s holding in GAIL fell by Rs 943.10 crore during the quarter. However, this was covered by marked-to-market gains on the counter, as the scrip rose 17 per cent during the period.

The insurer held 9.7 per cent stake in the state-run gas company at the end of December quarter, down 170 basis points from over 11.4 per cent it had at the end of September quarter, a report by Kotak Institutional Equities showed.

LIC cut its stake in Indraprashta Gas (owned by state-run BPCL BSE 0.32 % and GAIL) o 2.8 per cent at the end of December quarter from 3.5 per cent in September quarter. This stock rose 18 per cent during December quarter.

SBI saw LIC pare its stake by 70 basis points to 9.8 per cent in the third quarter from 10.4 per cent in the second quarter. In value terms, it was worth Rs 1,312 crore. SBI shares stood flat for the quarter.

IOC (up 11.76 per cent on adjusted basis, including bonus issue), HPCL (up 4 per cent), PFC (up 1.5 per cent) were some of the stocks that witnessed selling by the state-run insurer but remained unfazed by the demonetisation drive.

That said, LIC was seen buying shares of Dr Reddy’s Labs. Its holding in the drugmaker rose by 2.90 basis points to 14.4 per cent. This stock was down 1.6 per cent in Q3 of FY17.

Dewan Housing BSE 4.22 % Finance, Pidilite Industries GlaxoSmithkline Consumer, Pidilite Industries, Britannia Industries BSE -0.24 % and Bata India BSE -1.52 %, among others, were some of the stocks where LIC increased its stake by up to 19 basis points in the challenging quarter

Universal Income only after withdrawal of present schemes

Chief Economic Advisor Arvind Subramanian today said Universal Basic Income (UBI), as proposed in the recent Economic Survey, can be put in place only after withdrawal of the existing welfare projects.

“The cost of this programme (UBI) is so huge that it cannot be an add-on to the existing programmes (welfare schemes) as the government cannot afford it and the government’s finances will go bust,” Subramanian said while addressing students of the Indian Institute of Management-Ahmedabad (IIM-A) here.

“In India, UBI scheme is about upliftment of the poor…The government spends a lot of money in social welfare schemes, but they do not reach the targeted audience,” he said.

“Advantage of UBI is a very interesting way of overcoming the problem of governmental targeted spending,” Subramanian, also an alumnus of IIM-A, said.

But he sounded a note of caution as “it is very easy to introduce new programmes in the country, but it is very difficult to withdraw the existing ones”.

“Though this idea has been appreciated as a good one to alleviate poverty and provide basic level of income to people, it should be implemented in a way that is sustainable,” the chief economic advisor suggested.

People will make a hue and cry if something given to them is withdrawn, he said.

Subramanian’s UBI proposal in the Economic Survey had led to speculation on whether the government will implement it in the country.

Citing the example of MNREGA for leakage in welfare schemes, the CEA said targeted audience does not get desired benefits as the scheme is implemented through various governmental levels.

He also countered the notion that giving money in hands (bank accounts) of the poor will mean that they are going to squander it. “If the money is given to women under UBI, there are less chances that it will be squandered,” he said.

“Now, we are trying to undo what we had done for 30-40 years (after Independence), which is a huge historical challenge,” he added.

On the issue of blackmoney, he said that it is important to stop its generation and flow after demonetisation.

Sharing data from the Survey, Subramanian talked of convergence as developing countries are growing rapidly while the growth rate of developed ones has slowed.

But against this, “surprisingly” in India, there is divergence as so-called backward states in the last 15-20 years are not progressing rapidly while forward ones have continued to grow, he said, adding that this shows that income disparity between states in India is increasing.

Bharti’s decision to buy Telenor India sends stock soaring 10%

Shares of Bharti Airtel rose over 10 percent intraday Thursday after the company announced that it is acquiring Telenor India.

The company entered into a definitive agreement with Telenor South Asia Investments to acquire Telenor (India) Communications, subject to approvals from the regulator, it told the exchanges on Thursday.

The cost of this acquisition is still under finalisation. Sources tell CNBC-TV18 that the deal’s value could be pegged roughly at Rs 6,800-7,000 crore, which includes Telenor India’s debt of Rs 1,500 crore.

As part of the deal, Airtel will buy Telenor India’s running operations in seven circles—Andhra Pradesh, Bihar, Maharashtra, Gujarat, UP (East), UP (West) and Assam. These circles, Airtel says, represents a high population concentration and a high potential for growth. The firm will also get additional 43.4 MHz spectrum in 1800-MHz band from Telenor India.

“The acquisition of additional spectrum through this transaction has further enhanced our already solid spectrum portfolio. The proposed transaction will also create substantial long term value for our shareholders given the significant synergies,” said Gopal Vittal, Managing Director and CEO (India and South Asia), Bharti Airtel, in a statement.

Meanwhile, the telecom major on Wednesday announced strategic stake purchase through its subsidiary Bharti Airtel Services in fintech startup Seynse Technologies, which runs a digital lending platform.

The stock has seen strong movements, posting a rise of over 18 percent in the past one year. At 09:20 hrs Bharti Airtel was quoting at Rs 390.55, up Rs 29.40, or 8.14 percent on the BSE. It touched a 52-week high of Rs 390.55.

Capital Float aims to disburse SME loans of Rs 5K cr in FY18

Digital lending platform Capital Float said it expects to disburse loans of Rs 5,000 crore in 2017-18 financial year.

The company “expects to disburse loans worth Rs 5,000 crore and fund 20,000 customers in FY 2017-18″, Capital Float said in a statement.

he company today claimed to have disbursed Rs 1,000 crore loans to 7,000 customers. “The company disbursed this amount in under ten months, from April 2016 to January 2017,” the statement said.

Capital Float provides services such as Pay Later and Merchant Cash Advance which accounted for 35 per cent of the loans disbursed.

“The Unsecured Business Loans and Vehicle Finance witnessed 300 per cent and 85 per cent growth respectively,” the statement said.

Capital Float Co-Founder and MD Sashank Rishyasringa said the company has seen 700 per cent growth in customer base and 500 per cent growth in disbursal value in 2016 compared to that in 2015.

The company has also partnered with Amazon, Uber, Ola, Paytm, VIA, Yatra, ICICI Merchant Services, Payworld etc to provide its financial service.

“About 50 per cent of the retail loans originated on Capital Float’s online lending marketplace, which has blue-chip banking institutions (like IDFC) co-lending on the platform. Despite achieving this dynamic acceleration, Capital Float has managed to keep its NPAs under 1 per cent,” the statement said.

Snapdeal to lay off 600 people over next few days

SoftBank-backed Snapdeal will lay off around 600 people across its e-commerce, logistics and payments operations over the next few days.

According to sources, the company started the process last week and will lay off 500-600 people across Snapdeal, Vulcan (logistics) and Freecharge (digital payments business).

The sources added that the reduction will include employees across levels and the process will be completed in the next few days.

A Snapdeal spokesperson said: “On our journey towards becoming India’s first profitable e-commerce company in two years, it is important that we continue to drive efficiency across all parts of our business, which enables us to pass on the value to our consumers and sellers.”

“We have realigned our resources and teams to further these goals and drive high-quality business growth,” the spokesperson added.

The company had last reported an employee strength of 8,000 people.

Snapdeal, which has been locked in an intense battle with rivals Amazon and Flipkart, has been struggling to raise fresh capital.

Snapdeal has already taken a number of steps to increase optimisation of operations that resulted in 35 per cent lower delivery costs and 25 per cent lower company fixed costs.

Snapdeal has also seen its net revenues increase 3.5x this fiscal.

“Building on all of these substantial gains, Snapdeal expects to be the first profitable e-commerce company in India within two years,” the spokesperson said.

It also expects Vulcan Express to turn profitable by the middle of this year.

RBI & Sebi to take a final call on FPIs’ HDFC Bank trades today

The Reserve bank of India and the Securities and Exchange Board of India (Sebi) will take a final call on the purchases in HDFC Bank BSE – 0.06% done by foreigners after 1:39 PM on Friday once the settlement of trades is done on Wednesday.

Frenzied purchases by foreign portfolio investors had led to a breach of their maximum purchase limit in HDFC Bank on Friday after the Central bank, the previous evening, lifted curbs on fresh buying by overseas investors in the private lender with their stake dropping below the prescribed limit.

Though the RBI clamped down on foreign purchases mid-way through the trading day , many trades had already been executed, prompting the Central bank to ask all custodians not to settle trades in HDFC Bank done after 1.39 PM on Friday in which foreigners were buyers.

The regulators said they would get an exact picture of FPI transactions in HDFC Bank that happened after 1:39 PM on Friday .

“We will come to know once the settlement is done on Wednesday and will resolve the issue,“ said a regulatory official. Sebi on Monday asked custodians -foreign banks -to provide details of the number of trades and shares involved in the HDFC Bank stock after RBI notification time and the number of trades involved after the stock exchange notification time on February 17.

It is learnt that the RBI notification was sent to custodians on Friday around 12.56 PM after the regulator noticed the FII limit was breached. But, the stock exchange notification came in only by 1.39 PM.

The regulators could put the onus on the brokers, who executed the trades, or FPIs to resolve the matter.

“All custodians have confirmed trades till 1.39 PM. Any trade after the cut-off time may either devolve on the broker or the regulator may give some time to the foreign portfolio investor (FPIs) to bring down their holding,“ said a person involved in the discussion with the regulators.

Stock exchanges said they were yet to receive any direction from the regulators on the matter.

“If exchanges don’t annual the trades, then brokers will have to take those trades on their books,“ said a senior stock exchange official. “Stock exchanges can annul the trades, but so far we have not received any communication from Sebi or the central bank,“ .