1. Reliance Retail to buy Metro’s cash and carry business for Rs 2850 crore
Tags: Economy/Finance
Reliance Retail Ventures, a subsidiary of Mukesh Ambani’s Reliance Industries Limited (RIL) said on 22 December 2022 that it had agreed to buy German retailer Metro Indian unit for Rs 2850 crore (USD 344 million).
However the deal is subject to approval by the various regulatory body in India.
The deal includes 31 wholesale distribution centers, land banks and other assets owned by METRO Cash & Carry in India.
METRO AG, which operates in 34 countries, entered the Indian market in 2003.
Cash and carry business model is a type of wholesale trading where the customer pays in full for the goods it purchases and no credit is extended by the seller to the purchaser. The purchasers are small businesses, kirana stores etc.
METRO also operated in the wholesale B2B(Business to Business) market which includes retailers and kirana stores, hotels, restaurants and caterers (HoReCa), corporates, Small and Medium enterprises, companies and institutions as its customers.
The B2B segment is considered to be a low-margin business and multinationals such as French Carrefour have exited from the country in 2014.
Reliance Retail is the subsidiary company of RIL which operates the retail business of Reliance and is the largest retail company in India.
Reliance Industries Limited (RIL)
Reliance Industries Limited was founded by Dhirubhai Ambani in 1973
It is the largest private sector company in India
Headquarters: Mumbai
Chairman: Mukesh Ambani.
2. Aloke Singh appointed head of Air India's low cost airline business
Tags: National Economy/Finance Person in news
Tata Group has appointed Aloke Singh as the chief of its low cost airline business from 1 January 2023. The Low Cost Carrier business will comprise AirAsia India and Air India Express.
Currently the Tata group operates four air lines. They are Air India, Air India Express, AirAsia India and Vistara. Vistara is a joint venture of Tata with Singapore Airlines.
On 29 November 2022, Tata group announced the merger of Vistara with Air India under a deal wherein Singapore Airlines will also acquire a 25.1 per cent stake in Air India. The deal, which will make Air India the country's largest international carrier and second-largest domestic airline, is expected to be completed by March 2024, subject to regulatory approvals.
The Tata group intends to merge budget carrier AirAsia India with Air India Express and the merger is likely to be completed by the end of 2023.
After Merger the company will be called Air India Express.
AirAsia India was launched in 2014 while Air India Express started operations back in 2005.
Low cost airlines or budget airlines or no-frill airlines do not provide traditional services like food, drinks or other premium services and their fares are also usually low. Some of the major low cost airlines operating in India are Go Air, Indigo, Air India Express, and Spice Jet.
Air India Managing Director and Chief Executive Officer: Campbell Wilson
3. iDEX sets record with signing its 150th contract
Tags: Economy/Finance National News
Innovation for Defense Excellence (IDEX), a flagship initiative of the Department of Defense Production, has set a milestone with the signing of its 150th contract on December 21, 2022 in New Delhi.
Important facts
The contract was signed by Joint Secretary (Defence Industries Production) & Additional CEO/DIO Anurag Bajpai with CEO, Altair Infrasec Pvt Ltd Anil Anand in the presence of Defence Secretary Giridhar Aramane.
iDEX achieved this milestone within five months of signing its 100th contract on July 26, 2022.
The contract relates to an Indian Navy project of the Defence India Start-up Challenge (DISC 7) SPRINT edition.
The challenge was titled ‘Expendable Mobile Anti-Submarine Warfare (ASW) Training Target (EMATT) capable of simulating the sound and movement of a submarine’ and the winner was Altair Infrasec Pvt Ltd, Pune.
It envisaged the development of a training target capable of being deployed on platforms from P8I aircraft, MH60R helicopters, ships with speeds of up to 10 knots and other remotely operated aircraft, requiring EMATT to be launched.
About iDEX framework
It was launched by the Prime Minister in 2018 with the objective to provide a platform of co-creation and co-development in the defence sector, engage start-ups and develop defence and aerospace set up in the country.
It is being implemented by the Defence Innovation Organisation (DIO), established under the Department of Defence Production.
Till date, iDEX has received over 6,500 applications from individual innovators, MSMEs and start-ups under DISC, PRIME and OC.
It has also been able to create thousands of jobs and attract India's talent back to the country.
It has also been awarded the prestigious Prime Minister Award for Public Policy in Innovation Category for the year 2021.
4. Government set a target of 205 lakh tonnes Nutri Cereals production for the year 2022-23
Tags: National Economy/Finance
The Government of India has set a target of production of 205 lakh tonnes of Nutri Cereals in the country by 2022-23. This information was given by the Union Minister of State for Consumer Affairs, Food and Public Distribution, Ms. Sadhvi Niranjan Jyoti in a written reply to a question in Lok Sabha on 21 December 2022.
Nutri-cereals refers to a group of crops comprising sorghum (Jowar), pearl millet (Bajra), finger millet (Ragi/Mandua), and small millets like little millet (Kutki), kodo millet (Kodo), barnyard millet (Sawa/Jhangora), foxtail millet (Kangni/Kakun), and proso millet (Cheena). They are highly nutritious and government is trying to promote the usage and productions of millets as Nuti Cereals.
Effort to increase the production of Nutri- Cereals in India
India declared 2018 as the National Year for Millets to promote millets for nutrition security.
The Government of India has launched NFSM-Nutri Cereals, a sub scheme under the National Food Security Mission. It is being implemented from the year 2018-19 in 212 districts of 14 states.
Rajasthan is the largest producer of nutri-cereals in India followed by Maharashtra and Karnataka.
According to the Food and Agriculture Organisation (FAO), India is the largest producer of millet in the world followed by Niger and China.
The United Nations has declared 2023 as the International Year of the Millets.
5. SEBI extends suspension on futures trade in key Agricultural commodities by a year
Tags: Economy/Finance
The Capital and Commodity Market regulator Securities and Exchange Board of India (SEBI) has extended the suspension of trading in derivative contracts of Agricultural commodities until December 20, 2023. Last year SEBI had banned the futures trading in key farm commodities till 20 December 2022.
In a notification issued by SEBI on 21 December 2022, SEBI said the suspension of trading in futures contracts would continue for a year on soybean and its derivatives, crude palm oil, wheat, paddy rice, chickpea, green gram and mustard.
The government fears that the speculation in the future trading in these agricultural commodities will lead to rise in the prices of the agricultural commodities which will further increase food inflation in India.
Future Trading
- A futures contract is an agreement between two parties to buy or sell an asset at a future date at a price agreed upon by both.
- Futures trading with the means of futures contracts can be done with any asset traded in a financial market. These could be stocks, currency, bonds, commodities or market index.
Commodity Exchange
- Commodities exchanges are those exchanges where commodities derivatives contracts are traded. They are different from normal stock markets where shares or bonds of a company are traded.
- Commodities are mostly used as inputs in the production of other goods or services. Grains, Gold, Crude Oil, Copper, and Natural Gas are some examples of commodities.
- Generally, the commodities traded in commodity derivatives market are classified into two broad categories viz. Agricultural Commodities (as chana, cotton, guar seed, maize, soybean, sugar, etc) and Non-Agricultural Commodities (gold, silver, oil, aluminium, copper etc).
Commodity Exchanges in India
There are two national level commodities exchange in India
- Multi Commodity Exchange. Headquarters , Mumbai
- National Commodity & Derivatives Exchange Ltd. (NCDEX) Headquarters, Mumbai.
SEBI Chairperson: Madhabi Puri Buch
6. India attracts $13 billion FDI in non-conventional energy sector
Tags: Economy/Finance
The Foreign Direct Investment (FDI) in the Non-Conventional source of energy in India in the last 22 years was USD 13.034 billion. This information was given by the Union Minister for New and Renewable Energy (MNRE) R K Singh in the Rajya Sabha on 20 December 2022. The total FDI in India in 2021-22 was $83.6 billion. Government has allowed 100% FDI through automatic routes in the solar sector.
Sharing the country-wise details of FDI/ equity inflow during the period April, 2000 to September, 2022, he said Mauritius was the major source of FDI in the sector and it was followed by the United Kingdom, Singapore, Netherland and the United Arab Emirates (UAE).
Non-conventional Source of Energy
Non -Conventional sources of Energy is also called as renewable source of energy as they can be continuously replenished through natural sources. For example solar energy, wind energy, Tidal energy, biofuel, hydropower etc.
What is Foreign Direct Investment (FDI?)
Foreign Exchange Management act 1999(FEMA) which deals with Foreign exchange has defined Foreign Direct Investment.
Foreign Direct Investment is an investment through capital instruments by a person resident outside India (a) in an unlisted Indian company; or (b) in 10 percent or more of the paid-up equity capital of a listed Indian company.
- Unlisted Company means that the Capital instrument of the company is not listed on any stock exchange and it cannot be bought and sold in the market.
- Listed Company means that the Capital instrument of the company is listed on any stock exchange and it can be bought and sold in the market.
- Capital Instrument means an instrument issued by a company to raise capital (money) from the market for business/investment purposes. It includes both Shares (equity) or debenture or bonds.
Routes through which FDI gets in India
There are two routes under which FDI is allowed in India. One is the automatic route and the other is the approval route. Government puts certain sectors in the Automatic list and Approval route.
Automatic route
The foreign investor needs no prior approval from the government of India or Reserve bank of India. For example Thermal power plants, electronic systems etc.
Approval route
The foreign investor needs permission from the government of India before they can invest in these sectors. For eg public sector banks, print media etc.
Sectors where FDI is prohibited in India
- Atomic Energy Generation
- Any Gambling or Betting businesses
- Lotteries (online, private, government, etc)
- Investment in Chit Funds
- Nidhi Company
- Agricultural or Plantation Activities (although there are many exceptions like horticulture, fisheries, tea plantations, Pisciculture, animal husbandry, etc)
- Housing and Real Estate (except townships, commercial projects, etc)
- Trading in Transferable Development Rights(TDR’s)
- Cigars, Cigarettes, or any related tobacco industry
7. Nitin Gadkari launches India's first-ever surety bond from Bajaj Allianz
Tags: Economy/Finance
Union Minister for Road, Transport and Highways Nitin Gadkari launched India’s first ever surety bond insurance product from the Bajaj Allianz General Insurance on 19 December 2022. It is expected to reduce the need for bank guarantee for the infrastructure developers.
What is Surety Bond Insurance?
The Surety Bond Insurance is a risk transfer tool for the principal (authority which has awarded the contract) and shields the principal from the losses that may arise in case the contractor fails to perform their contractual obligation.
In case the contractor doesn't fulfil the contractual terms, the principal can raise a claim on the surety bond and recover the losses they have incurred.
Unlike a bank guarantee, the Surety Bond Insurance does not require large collateral from the contractor thus freeing up significant funds for the contractor, which they can utilise for the growth of the business.
The insurance product will also help in reducing the contractors' debts to a large extent thus addressing their financial worries. The product will facilitate the growth of upcoming infrastructure projects in the country.
Bajaj Allianz General Insurance
Bajaj Allianz General Insurance Company Limited is a joint venture between Bajaj Finserv Limited and Allianz SE (Germany).
It commenced its operation in India in 2001.
Headquarters: Pune, Maharashtra
Managing Director and Chief Executive Officer: Tapan Singhel
Tagline: Caringly Yours
8. RBI imposes Rs 2.66 crore penalty on Bank of Bahrain & Kuwait BSC for violation of cyber security norms
Tags: Economy/Finance
The Banking sector regulator Reserve Bank of India (RBI) imposed a penalty of Rs 2.66 crore on Bank of Bahrain & Kuwait BSC, India operations for non-compliance with directions on “Cyber Security Framework” in Banks on 19 December 2022. In a statement, the Reserve Bank of India (RBI) said the bank failed to implement systems to detect unusual and unauthorized, internal or external activities in its database.
The fines were imposed on the bank by RBI under the Banking Regulation Act 1949.
Bank of Bahrain & Kuwait BSC
Bank of Bahrain and Kuwait (BBK) was incorporated in Bahrain in March 1971.
It is a foreign bank which started its India operation in 1986 as a scheduled commercial bank.
It has four branches in India in Mumbai, New Delhi, and Hyderabad and at Aluva (Kerala).
Country head and Chief Executive Officer: Mallikarjun Kota
9. Loans worth Rs 10, 09,511 crore written off in last five financial years: Finance Minister Nirmala Sitharaman
Tags: Economy/Finance
According to the Union Minister for Finance Nirmala Sithraman, Scheduled commercial banks have written off loans amounting to Rs 10, 09,511 crore in the last five financial years and the process of recovery of dues from the borrowers continues. Speaking in the Lok Sabha on 19 December 2022 she said that the borrowers of written-off loans continue to be liable for repayment and the process of recovery of dues from the borrower in written-off loan accounts continues.
She said that public sector banks could recover only Rs 1,03045 crore from written off loans from the last five financial years, while the aggregate recovery in the last five years amounts to Rs. 4,80,111 crore.
What is Loan Write Off?
A loan is written off by a bank where it feels that there is no chance of recovery of loans. They make 100% provisioning for the loan amount and remove the loan from their balance sheets.
According to the Reserve Bank of India , if a loan which has remained Non-Performing Assets (NPA) for the last 4 years and banks has made 100% provisioning for it ,then the bank can remove the loans from its balance sheets via write off.
Bank wise loan off write off
In the last five financial years, State Bank of India (SBI) wrote off Rs 2 lakh crore. Punjab National Bank wrote off Rs 67,214 crore loans, followed by IDBI Bank which wrote off Rs 45650 crores of loans. Among private sector banks, ICICI Bank wrote off Rs 50,514 crores of loans while HDFC Bank wrote off Rs 34782 crore loans.
10. Union Finance Minister lays foundation for new office complex Vaigai at Custom House in Chennai
Tags: Economy/Finance State News
Union Finance Minister Nirmala Sitaraman on 18th December laid the foundation for a nine-story new office complex Vaigai to be built at a cost of Rs 92 Crore at the Custom House in Chennai.
Important facts
She also inaugurated ‘Nandavanam’, the central revenue quarters of the Central Board of Direct Taxes and Central Board of Indirect Taxes and Customs (CBDT & CBIC) at Anna Nagar in Chennai.
The union minister also inaugurated a micro forest named ‘Paimpozhil’ inside the Nandavanam campus.
The new office complex ‘Vaigai’ will have two basements for harbouring government agencies.
It will be built at a cost of Rs 91.64 crore over an expanse of around 1.70 lakh sq.ft.
Sitaraman also informed that a creche will be opened for the benefit of the women employees and the building will be energy efficient.
