Tag: USD

India Inc’s foreign investments jumps 2-fold to $3 bn in March

18/04/2017 15:32

Foreign direct investment (FDI) by Indian companies in their overseas ventures jumped over two- fold to USD 2.99 billion last month.

Indian firms had made investments of USD 1.42 billion in their overseas joint-ventures/subsidiaries in March 2016.

Investments in March this year were much higher than the preceding month, February, at USD 867.53 million, the Reserve Bank data showed today.

Their investment came in the form of equities USD 1.99 billion, loans of USD 742.60 million and issuance of guarantee worth USD 251.40 million.

Among major investors include Bharti Airtel with Ltd USD 765.20 million and Tata International Ltd, USD 179.22 million.

ONGC Videsh Ltd invested USD 75.49 million and WNS Global Services USD 53.78 million.

PE/VC investments down 6.3% in Jan across 43 deals: EY

21/02/2017 12:52

PE/VC investments in India touched USD 1.2 billion (Rs 8,037 crore approx) in January across 43 transactions, down 6.3 per cent in value terms over the year ago period, an EY report says.

In terms of volume too there was a 6.5 per cent decline as compared to January 2016, mainly due to a decline in number of growth/expansion funding deals and high value deals, with more than half the deals being less than USD 10 million each.

However, a single large deal — Canada Pension Plan Investment Board’s (CPPIB) acquisition of 48 per cent stake in GlobalLogic for USD 720 million from Apax, accounted for 60 per cent of the deal value in January 2017.

“January 2017 investment numbers were influenced greatly by the large deal involving GlobalLogic, which was also one of the largest exits in recent times, reassuring the LPs (limited partners) about the India story,” Mayank Rastogi, Partner and Leader for PE at EY, said.

Rastogi further said that the deal volumes were sustained on the back of steady early stage/VC activity which does not seem to have had any impact from demonetisation.

“The Union Budget presented on February 1 was also largely positive for the industry and especially so for the start-up companies,” Rastogi said adding there are however, a couple of provisions like the introduction of thin cap rules which may have an adverse impact on investments in the infrastructure and real estate sectors.

Except for technology, all other prominent sectors recorded a decline in both value and volume as compared to January 2016, as well as the month prior to that.

Real estate and financial services record lower deal numbers after being top contributors last year. Real estate recorded USD 22 million through one deal, while financial services recorded USD 23 million by way of four deals respectively.

Among other sectors, food and agriculture performed well with USD 78 million across 7 deals — the highest monthly performance in over two years — while education was another sector to record good number of deals totalling six for the month, the EY report said.

Indian banks may raise USD 30 bn via bonds by Mar 2019: Report

23/12/2016 10:51

Indian banks need around USD 90 billion additional capital by March 2019 and one-third of this amount is expected to be raised through bonds, says a report.

Indian banks are likely to become more active in the Additional Tier 1 (AT1) market in 2017, after issuing around USD 2.8 billion so far in 2016, rating agency Fitch said in a report.

It further said banks need around USD 90 billion in extra capital by March 2019 to support credit growth and meet steadily increasing regulatory requirements.

“Around one-third of this new capital is likely to be raised through AT1 issuance,” Fitch said.

Under the Basel-III norms, AT-1 bonds come with loss absorbency features, meaning that in case of stress, banks can write off such investments or convert them into common equity if approved by the RBI.

AT-1 bonds qualify as core or equity capital.

“We believe the Indian domestic market is unlikely to show the same sort of depth, and we have doubts that it will be able to absorb all of India’s AT1 paper,” the Fitch report said.

Indian banks would continue to favour domestic issuance in the short term — given the cost advantage — but some of the better-rated banks are likely to be encouraged to follow the example set by State Bank of India in 2016 and turn to the international market next year, it said.

India to invest $20 bn in gas fields in next 5-7 yrs: Pradhan

30/11/2016 15:05

India will see an investment of about USD 20 billion in gas field development in the next 5-7 years and is looking to boost usage of the green fuel and double consumption, Oil Minister Dharmendra Pradhan said as per the PTI report.

The investment will be primarily in developing natural gas discoveries by state-owned ONGC and Reliance Industries-BP joint venture off the east coast, the minister said at CII’s ‘Global Energy Dialogue’ event.

“We are now expediting production of gas from domestic sources to the extent of 20 trillion cubic feet from already discovered sources through policy, fiscal and regulatory mechanism. These fields and the current auctions of Discovered Small Fields are going to add to the domestic supplies in the next 3-4 years,” he said.

ONGC is lining up USD 5.07 billion to produce over 16 million standard cubic metres per day of natural gas from a set of discoveries in its Krishna Godavari basin KG-DWN-98/2 block.

RIL-BP has several discoveries in the adjacent KG-DWN- 98/3 or KG-D6 block and NEC-25 off the Odisha coast.

“About USD 20 billion will be invested in next 5-7 years primarily in deepwater fields to augment gas production,” he said.

Natural gas makes up for 6 per cent of the primary energy basket in India as against a global average of more than 24 per cent.

“We are determined to increase the gas offtake significantly as it would serve several objectives. By switching to this cleaner fuel and diversifying our energy mix, we can augment our fight towards climate justice,” he said.

“Second, we can substitute liquid fuels with natural gas in several applications; this will help us in our objective of reducing our import dependency for crude oil by 10 per cent from the current levels by 2022.”

For this, availability of natural gas is being increased by boosting domestic gas output, importing LNG and through trans-national gas pipelines.

Also, gas infrastructure, including pipeline, city gas network and LNG import infrastructure is being improved.

“We are realigning the infrastructure planning, given the role LNG is going to play in our supply mix. The northern and western regions in India consume around 80 per cent of the overall volume of gas utilised in the country. We are working to change it and make eastern and southern India as new growth centre,” he said.

An additional 34 million tonnes per annum of LNG import terminal capacity are being added while pipeline network will be doubled to about 30,000 km in the next five years.

Also, India is pursuing trans-national pipeline projects like Turkmenistan-Afghanistan-Pakistan-India (TAPI) pipeline. Also a 1,300-km undersea gas pipeline to bring natural gas from Iran to India is being studied, he said.

RIL raises $573 mn loan for 6 large ethane carriers

RIL raises $573 mn loan for 6 large ethane carriers

26/10/2016 11:46

Reliance Industries today said it has raised a term loan of USD 573 million to part finance construction of a six very large ships for transportation of ethane from the US.

The firm has ordered six very large ethane carriers (VLECs), the largest ethane vessels ever built in the world.

“The facilities (loan) with door to door tenor of 12 year comprise of a Korea Trade Insurance Corp (K-sure) insured tranche of USD 286.5 million and a commercial tranche of USD 286.5 million,” RIL said in a statement.

“The facilities shall be secured by collateral of respective VLECs.”

VLECs would transport ethane from US to Dahej in Gujarat. The gas will be used for feeding RIL’s crackers at Dahej, Hazira and Nagothane “to ensure consistent supply of ethane at competitive prices.”

The VLECs are financed in a debt-to-equity ratio of 80:20.

“Despite global slowdown in the shipping industry, both tranches of the facilities (loan) were oversubscribed by two times and saw participation from seven banks in K-sure covered tranche and six banks in the commercial tranche. This reflects the strong credit standing of RIL in the international financial markets,” it said.

Banks lending to RIL include The Hongkong and Shanghai Banking Corp Ltd, Standard Chartered Bank, Banc of America Leasing & Capital LLC, Australia and New Zealand Banking Group Ltd, Citibank, DBS Bank Ltd, BNP Paribas, Societe Generale, Sumitomo Mitsui Banking Corp, The Bank of Tokyo-Mitsubishi UFJ Ltd, Credit Agricole Corporate and Investment Bank and JP Morgan Chase Bank NA.

Services receipts flat at USD 58.6 bn in Apr-Jun: RBI

25/10/2016 12:37

India’s receipts from invisible services remained almost flat at USD 58.6 billion in the April-June quarter of current fiscal, while payments towards those activities rose by 13.8 per cent to USD 35.05 billion, RBI data showed.

The term ‘invisibles’ means payments and receipts resulting from international trade in ‘invisible’ services rather than ‘visible’ goods. It comprises services sector, primary income and secondary income.

The RBI data on India’s invisibles is in accordance IMF’s Balance of Payments and International Investment Position Manual format for April-June of 2016-17.

The invisibles’ receipts from services in the first quarter of the current fiscal 2016-17 stood at USD 39.53 billion, up 3.3 per cent from a year ago.

The receipts from primary income, increased by 13.5 per cent to USD 3.77 billion. However, the secondary income receipts were down by 11.4 per cent at USD 15.30 billion.

In the invisibles payments category, services payments from India were up by 15.8 per cent to USD 23.76 billion for the quarter ended June, 2016-17.

Invisibles payments from primary income sources also grew by 8.6 per cent at USD 9.97 billion.

And that from secondary income, the invisibles payments increased by 19.4 per cent to USD 1.32 billion, RBI added.

Rs 550 bn OMOs to keep liquidity balanced during 2HFY17: Ind-Ra

24/10/2016 14:11

India Ratings and Research (Ind-Ra), according to base case scenario, expects another Rs 550 billion of durable liquidity needs to be infused through open market operation (OMO) purchases in 2HFY17, over and above Rs 1.05 trn in 1HFY17.

Ind-Ra’s base case scenario is built on RBI’s stated objective of neutral liquidity, which ensures minimal shortages as well as minimal surpluses. Hence, any preference towards considerable excess in liquidity will be adjusted through durable liquidity creation or OMO purchases. Similarly, surge in Fx flows may not necessitate permanent sterilization in the near-term.

Higher than expected Rs 550 bn amount of OMO purchase in 2HFY17 would be contingent upon subdued net forex flows, or lower than estimated 17.4 bn BoP surplus, sharp rise in currency in circulation (CIC) against tepid growth in nominal variables and RBI continuing to maintain high surplus liquidity in the interbank market against the stated strategy for neutral liquidity, said Ind-Ra.

Ind-Ra, after financing of the current account deficit (CAD), expects the capital inflows to add nearly USD 17.4 billion (INR1.18trn) to the forex reserve in FY17. These accretions take into account the FCNR (B) redemptions. According to the latest BoP data available, USD7bn had been added to the forex reserves till August 2016.

Growth rate in CIC for the current year is likely to be restricted by multiple factors; such as drive against declaration of unaccounted wealth which could bring back large amount of cash into the system. An increase of 13 per cent yoy RM as against similar growth in FY16 (13% yoy as on 18th March 2016) could reduce large (another INR1trn) requirement for OMO.

Ind-Ra’s prognosis suggests that the urge for maintaining high surplus in the systemic liquidity will reduce after FCNR (B) redemption is over by November. Further, there may be legitimate reasons to retain the appetite for OMO purchase in the next fiscal ahead of limited room for the incremental rating action. This will support policy makers to maintain an accommodative strategy in sync with the RBI’s accommodative stance. Otherwise absence of rate action or OMO purchase may exert undue pressure on yields during FY18, limiting the efficacy of RBI’s accommodative monetary policy transmission.

RBI sets rupee reference rate at 67.0200 against US dollar

20/09/2016 13:53

Reserve Bank today fixed the reference rate of the rupee at 67.0200 against the US dollar and 74.8814 for the euro.

The rates were at 66.8737 and 74.6845 respectively, yesterday.

According to an RBI statement, the exchange rates for the pound and the yen against the rupee were quoted at 87.3740 and 65.86 per 100 yens respectively, based on reference rates for the dollar and cross-currency quotes at noon.

The SDR-rupee figure will be based on this rate, the statement added.

Indian e-commerce market could reach $28 bn by FY2020: Report

09/09/2016 16:28

Indian e-tailing market could reach USD 28 billion by 2019-20, registering a compounded annual growth rate of 45 per cent over the next four years, says a report.

According to domestic brokerage firm Kotak Institutional equities, this growth will largely be driven by an increase in number of buyers and annual average online spend. Other factors like steady increase in household incomes and shift in consumption towards discretionary spends could also boost India’s retail demand.

“We estimate that the Indian e-tail market size could reach $28 billion by FY2020, led by an increase in number of buyers to 110 million (assuming one person per urban household to shop online), and stable annual spends of around $260 per consumer,” Kotak Institutional Equitiessaid in a research note.

According to the report, though the growth of e-tail market in India is often compared to that of China, given the broad similarities in population and mobile internet penetration, in the near-term in India may not mirror China completely due to various economic and other differences between the two countries.

The report noted that the e-commerce sector is expected to see steady growth and is likely to register a 45 per cent annual growth over financial year 2017-2020. While China witnessed a CAGR of 116 per cent during 2009-15.

India’s present internet user base of around 330 million was similar to that of China in 2009, when B2C e-commerce took off. However, the online buyer base in India has remained relatively stagnant over the past 2-3 years, and online buyer penetration at 16 per cent is already lower than that of China in 2009. Though mobiles have led internet penetration in both countries, it is essential to differentiate between the quality of users based on: the quality of handsets and data speeds.

Of the total 330 million internet users in India, only around 142 million have a broadband connection. This is in sharp contrast to China, which has around 86 per cent of its internet users on broadband (defined as 3G/4G networks), the report said, adding that the scenario in India may certainly change as data prices reduce and new broadband services are launched.

As per technology research firm Gartner, Indian smartphone shipments will remain skewed in favour of feature phones, implying that India may well be 5-6 years behind of China in smartphone quality which will eventually determine easier access to online shopping.

Another factor that may impact the Indian e-tail story is the low female participation in the labour force, the report added.

FDI inflows into India stood at $5.34 bn in April-May

FDI inflows into India stood at $5.34 bn in April-May

22/07/2016 16:59

India received USD 5.34 billion foreign direct investment in the first two months of the current financial year, Parliament was informed today.

During April-May the country attracted USD 4.76 billion FDI under automatic route, while USD 582 million came through the approval route, Minister of State for Finance Arjun Meghwal said in a written reply to the Lok Sabha.

He said the government has made changes in the FDI policy in several sectors “to ensure that India remains increasingly attractive and investor friendly investment destination”.

The government has relaxed FDI Policy in sectors like defence, pharmaceuticals, aviation, food retailing and broadcast.

During the two months, defence received no FDI, while pharmaceuticals attracted USD 452.86 million foreign inflows.

The other sectors include air transport (USD 5.65 million), information and broadcasting (USD 39.2 million) and retail trading (USD 7.94 million).

Replying to a separate question, Meghwal said in the first quarter, April-June, of 2016-17 Foreign Portfolio Investors pumped in Rs 10,4561 crore.

“To attract global investor, a number of reforms were taken in the FDI policy and FPI policy,” he added.