Tagged #India


New India Budget Aims to Boost Growth


IndusView, Saturday 28 February 2015 (London): Asia’s third-largest economy unveiled its annual budget today saying it is aimed at a high-growth trajectory. The budget is focusing on improving infrastructure, cutting the fiscal deficit and boosting investment so that growth would accelerate to 8%-8.5% in India’s next financial year starting in April.

“The budget gives an opportunity to the increasingly young, middle-class and aspirational India to realize its full potential,” said Bundeep Singh Rangar, Chairman of London-based consulting firm IndusView. “The time was ripe for long-awaited reforms to kickstart the economy.”

Presenting the budget in parliament Mr. Jaitley said the country was growing at a strong rate, inflation was down and foreign exchange reserves were high. Falling global oil prices have given the government the room to spend on creating infrastructure without increasing inflation or messing with fiscal deficit targets.

He further announced a panoply of economic and tax reforms and promised $11.36 billions of dollars of investment towards infrastructure. Five ultra-mega power projects of 4,000 MW capacity each are planned. The government will introduce tax-free infrastructure bonds for road, rail and irrigation projects. The focus will be on additional road and ports projects.

To the delight of business, Mr. Jaitley said a nationwide general sales tax (GST) system – “a state-of-the-art indirect tax system” – would be put in place by April 1 next year, replacing a jumble of local fees and taxes that prevent India from being a single market for goods and services.

“This is not a ‘big-bang’ budget, but a good budget more focused on smaller issues, and ironing out a lot of irritants to investors in the process,” said Rangar. “Neither the financial markets, nor most analysts, detected the dramatic reforms that Mr. Modi’s supporters have been urging.”

Manmohan Singh, who served as India’s prime minister for 10 years under the Congress Party, faulted the budget as too cautious, arguing that the new government had missed a chance to cut spending or increase tax revenues.

Corporate taxes, meanwhile, will drop from 30% to 25%, which could increase Indian firms’ compliance.

This is a positive budget for the Private Equity (PE) industry as it addresses some of the key pain points of the industry. The removal of distinction between FPI and FDI is welcome as it is not really possible to differentiate between the two and has caused delayed response from investors. Foreign Investment is now allowed in alternative investment funds, which will stimulate the environment of foreign investment and private equity interest in India.

There are 200 plus active fund managers operate in India while 100 are domestic fund managers. The PE industry claims over 12% employment growth in PE/Venture Capital (VC) backed companies against 3% employment growth in non PE-backed companies.

Modi didn’t take further steps today to wind up fertilizer, cooking gas and liquid petroleum gas subsidies. Jaitley repeated pledges to provide homes, toilets and electricity for India’s 1.2 billion people by 2022, which would be the 75th anniversary of the country’s founding.

India’s economy is projected to expand as much as 8.5% in the next fiscal year, according to the latest Finance Ministry estimates, the fastest pace among the world’s biggest emerging markets. The ministry cautioned, however, that the forecast is based on a revised method for calculating gross domestic product and India’s economy is still recovering.


M&A Deals Jumps to 1,177 in 2014


India saw a merger and acquisition boom in 2014. The total number of M&A deals of Indian companies in 2014 rose to 1,177 the highest ever in a decade and the momentum is set to pick up this year as well, said a report by London-based advisory company IndusView on Friday. M&A deals contributed close to $38 billion from 573 deals and PE deals contributed $12 billion from 604 deals, according to report by advisory firm Grant Thornton. E-commerce within IT space was the major contributor for PE investments with about $4 billion being raised from over 100 deals.

“Last year’s deal value at $50 billion has been a fantastic year for deal making with a very strong foreign investor interest in India,” said Bundeep Singh Rangar, chairman IndusView. “It is expected that 2015 deal-making will grow higher”.

Domestic M&A deals are riding on the consolidation wave with Sun Pharma acquiring Ranbaxy, Kotak merging with ING Vysya and others, it said.


India’s First Female Bank CEO Aims High


Chanda Kochhar, the first woman to run a bank in India, is no stranger to tough situations.

She became chief executive officer and managing director of Mumbai-based ICICI Bank Ltd., India’s largest private-sector lender, as the global financial crisis raged in 2009. Soon she was battling a run on retail deposits, fuelled by unfounded reports the bank had significant exposure to troubled U.S. banks.

With the quiet confidence that is her trademark, Ms. Kochhar ordered branches across India to stay open as long as customers wanted their money, made sure ATMs were constantly restocked and coached edgy branch managers late into the night.

The key, she explained, was doing everything possible to make customers and employees feel comfortable in the face of a crisis, and communicate clearly.

With similar resolve, she has pushed ICICI, a bank hitched to India’s burgeoning middle class, into risky new markets – from the smallest of Indian villages to Canada’s rugged oil sands. Under Ms. Kochhar’s leadership, ICICI has followed India’s far-flung diaspora of immigrants and businesses into 18 other countries, while nearly doubling the bank’s return on equity.

And with clever use of technology, such as full-service branches in mobile vans and transactions via Facebook, she has brought millions of India’s “unbanked” into the modern economy.

ICICI, which stands for Industrial Credit and Investment Corp. of India, is now the country’s largest private bank, as well as its leading, private life and general insurer. It has more than 3,750 branches and 11,300 ATMs in India. Ms. Kochhar’s goal is to grow ICICI into a top 20 global bank.

The bank was a “gender neutral” institution long before it gained favour in the banking industry, in India and elsewhere. It has evolved into an organization that doesn’t give any special privileges to women, but also doesn’t distinguish between the sexes, Ms. Kochhar said. She’s now one of at least three female bank CEOs in India who rose through the ranks at ICICI, along with Axis Bank’s Shikha Sharma and JPMorgan India’s Kalpana Morparia.

In contrast, none of Canada’s Big Six banks has ever had a female CEO; nor have most of the top banks in the United States. With worldwide assets of $124.5-billion (U.S.), it is significantly smaller than National Bank of Canada, the smallest of Canada’s Big Six banks (assets: $199-billion Canadian) and Toronto-Dominion Bank, the largest (assets: $922-billion).

Ms. Kochhar regularly ranks on Forbes magazine’s annual list of most powerful women (No. 42 in 2014) and is widely recognized as India’s leading female CEO. She has earned every leading business prize in India as well as the Padma Bhushan, one of the country’s top civilian honours.

Expanding ICICI’s presence in Canada is a natural, given the extensive familial ties and growing economic relationship between the two countries, she said. She pointed out that roughly 30,000 Indian immigrants come to Canada every year, along with tens of thousands of students.