Weekly Economic Review.....

1. Top Headlines
Reebok India accuses former top execs of $157M fraud.
Rupee hits 56 versus dollar, Reserve Bank cautious.
S Raghunandan joins Jyothy Labs as CEO & director.
ValueFirst acquires Way2sms.com, 160by2.com
PE-backed Azure Power may get $70M from US Exim Bank
F&B chain Steammo raises funding from IncuCapital
Comp-U-Learn to acquire US-based ECG Technology
Weekly Economic Review
It was a bad week for the rupee. India’s currency took a beating for the
first three days of the week only to make a modest recovery on
Thursday and Friday. All in all, the rupee was down about 1.7% for the
week at 55.37 to the US dollar. This was the eight straight week of
decline for the rupee.
Moving on, the troubles in the world economy are taking their toll on
India. The services sector is expected to benefit from a weak rupee. But
global uncertainty has cut into demand. Provisional data from the
Reserve Bank shows services exports increased just 4% in the last fiscal
to about $137 billion. Meanwhile, the import of services fell 3.8% to
$81.1 billion. The new figures are the worst in a decade with the
exception of the 2009-10 periods. IT industry lobby group Nasscom
says onsite and offshore exports grew a total of more than 16% during
the fiscal to about $70 billion.
And in other news, the UPA government has finally bitten the bullet and
delivered the pain. On Wednesday, state-run oil companies announced a
dramatic hike in petrol prices. Excluding sales tax or Vat, petrol prices
across India are up by Rs6.28 per litre. Government-owned fuel
marketing companies took losses of nearly 5,000 crores last fiscal
because they sold their products at below-market prices.
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2. And in other news, private companies could soon find it much harder to
acquire land for their projects. On Thursday, a parliamentary panel
recommended strict rules that would not allow the government to
acquire land on behalf others. The panel said all for-profit ventures
should have to buy land in the open market. It added that agricultural
land should not be acquired. And also said there should be no
exceptions for infrastructure, mining, or SEZ projects. The
parliamentary committee’s proposed rules are much stronger than
those in the 2011 land acquisition bill, which exempted land
acquisitions under various existing legislation like those for highways
and SEZs.
And switching to telecom, BhartiAirtel could soon get a head start in the
upcoming battle for wireless data services in India. On Thursday the
company announced it would acquire a 49% stake in Qualcomm India’s
broadband venture. Under the deal, Airtel will buy a 26% stake
currently owned by two Indian firms. The remaining 23% will come
from fresh equity. All in all, the deal will be worth about $165 million.
And Airtel is slated to take on the existing debt of $1-1.2 billion only
after 2014. BhartiAirtel’s acquisition will allow it to offer broadband
services in major telecom circles like Delhi and Karnataka.
Inside The Story
Reebok India accuses former top execs of $157M fraud.
Reebok India, owned by Germany's Adidas, lodged a police complaint
against two former top executives accusing them of fraud that had led
the company to lose 8.7 billion rupees. The alleged fraud would be the
most high-profile corporate scandal in India since 2009 when Satyam
Computer's former chairman and founder Ramalinga Raju revealed that
the company had overstated profits and falsified assets for
years.Reebok India is accusing former India Managing Director
Subhinder Singh Prem and former Chief Operating Officer Vishnu
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3. Bhagat of financial wrongdoing, said police officials in Gurgaon, where
the complaint was filed.
Rupee hits 56 versus dollar, Reserve Bank cautious.
The rupee dropped to a record low against the dollar on Wednesday,
sparking mild intervention from a RBI seen by traders as reluctant to be
more aggressive against such a strong down trend.The rupee touched
the symbolically significant level of 56 to the dollar as concerns about
the euro zone prompt global risk aversion and expose India's domestic
vulnerabilities, most prominently a widening current account deficit
and sluggish policy reforms.The rupee has now fallen more than 5 per
cent this year against the dollar to make it the worst-performing Asian
Currency monitored daily by Reuters. It has dropped more than 13 per
cent from its 2012 high reached in February.
S Raghunandan joins Jyothy Labs as CEO & director
Indian consumer products maker Jyothy Laboratories Ltd has appointed
S Raghunandan as the chief executive and director.Raghunandan joins
JLL from Reckitt Benckiser (India) Ltd and has nearly 20 years of
experience in sales, marketing and strategic & tactical planning. He
resigned from the general manager’s post within five months of joining
the company due to personal and health reasons. He had also held
senior positions with companies like Paras Pharmaceuticals (managing
director), Dabur India (executive vice-president, sales), Dabur
International (CEO) and Hindustan Unilever (regional sales
manager).Raghunandan obtained his degree in Chemical Engineering
from Birla Institute of Technology and Science (Pilani) and was an
alumnus of IIM-Kolkata.
ValueFirst acquires Way2sms.com, 160by2.com
Digital media company Value First is pushing its inorganic growth
strategy as it acquires Hyderabad-based consumer Internet firm
Way2online, which owns and operates Way2sms.com and 160by2.com.
It is an all-cash deal, reported to be around Rs 200 crore.“The
transaction is one of the largest acquisitions in the Internet industry in
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4. India that makes ValueFirst the largest digital media company in the
country in terms of revenues, as well as number of users. With this
acquisition, ValueFirst will cross 50 million profiled registered users,
add 40,000 fresh registrations daily and get to Rs 250 crore of revenue
this financial year,” a statement issued by ValueFirst said. The
acquisition is being funded through internal accruals and by ValueFirst’s
investors – New Enterprise Associates and Headland Capital. The deal
would give ValueFirst access to multiple platforms like Internet, voice,
SMS and e-mail. The company is also targeting revenue of over Rs 250
crore in FY13 and is to go for an IPO in the next 24 months.
PE-backed Azure Power may get $70M from US Exim Bank
Export-Import Bank of the US may provide long-term finance of Rs
395.9 crore ($70.35 million) to solar power producer Azure Power India
Pvt Ltd for its solar power plant at Nagaur in Rajasthan.The plant is an
expansion of the firm’s existing 5 MW Nagaur photo-voltaic facility, and
will ensure a total output of 40 MW, making it the largest solar power
plant to be developed at a single location under the National Solar
Mission. The current project started in January this year.“With this
project, we are committed to working towards meeting the grid parity
objective of the National Solar Mission in India,” said Inderpreet
Wadhwa, CEO of Azure Power.
F&B chain Steammo raises funding from IncuCapital
Early-stage venture capital firm IncuCapital has invested in the F&B
chain Steammo, a new brand of Pune-based J&R Hospitality
Management Pvt Ltd.The VC firm has invested Rs 40 lakh in the first
tranche and IncuCapital’s Prashant Maharaj will be joining the board of
Steammo as part of the deal.J&R Hospitality is a speciality food
company, which offers steamed quick-service food through its branded
kiosks. Founded by Ravisha Sirohi and Jabish Gohlyan in 2011, the
company plans to open around 20 outlets in the next 6-8 months. It has
also gone through product trials for the last couple of months and will
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5. Use the money raised to scale up its kiosks. These kiosks will operate in
the food courts across different cities.
Comp-U-Learn to acquire US-based ECG Technology
Hyderabad-based software development company Comp-U-Learn Tech
India Ltd will acquire ECG Technology LLC, a Delaware-based firm
engaged in engineering, technical and design consulting, according to a
BSE disclosure. The company may also acquire 100 per cent stake in
ECG and is looking to raise $100 million through various routes (FCCB,
QIP, GDR, ADR, Etc.) for scaling up its businesses. In February this year,
Comp-U-Learn acquired Divya Knowledge Process Management Ltd, an
educational services company having a tie-up with Bharathidasan
University (Tiruchirapalli, Tamil Nadu), for $0.8 million. The company
had made five more acquisitions since 2009.
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