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Top 10 business news today: From Raghuram Rajan warns startups and Reliance Jio Infocomm 4G rollout to EPF interest rate cut to 8.7 pct, Ramdev’s Patanjali, more

Tue April 26 2016, 1:51 pm
  • 1. Raghuram Rajan warns startups against deep discount model: With concerns being raised about cash-burn in burgeoning ecommerce sector, RBI Raghuram Rajan today made it clear that getting revenues through deep discounting is not a viable business model for startups. "If the only reason you are getting revenues, not profit, is because you are selling based on 50 per cent discount, it can't be viable in the long run," he said. He was quick to acknowledge that many businesses are in different stages of their life-cycle with some trying to establish the viability. "All these businesses are trying to establish viability, some are still being financed in a big way," he said, adding that it is natural for some of them not to work which will lead to shutting down the business. The remarks come amid dwindling valuations of some successful Indian startups, which are being partly attributed to the high stress on discounting in the business model. (Reuters)

  • 2. 'Deferring Reliance Jio Infocomm 4G rollout to hit RIL, says Moody's: Significant delay in commercial launch of 4G telecom services of Reliance Industries will impact expected improvement in the company's credit metrics, Moody's Investors Services said today. "The commercial launch of Reliance's telecom service (Reliance Jio Infocomm) has been delayed from our expectation of early 2016. Significant delays in commercial rollout will defer ebidta generation, which in turn will impact the expected improvement in credit metrics," Moody's said in a note on RIL's FY16 earnings. While RIL remains committed to commercially launch telecom service in 2016, Moody's said it did not "expect the telecom business to generate positive cash flows for the next three years, as it will continue to require further investment over the same time frame." RIL on Friday had declared FY16 earnings, but did not indicate when Jio will launch 4G telecom and high-speed broadband services. (PTI)

  • 3. In a first, govt slashes EPF interest rate to 8.7 pct: The Finance Ministry and the Labour Ministry appeared to be locked in a fight over the rate of interest on EPF deposits for 2015-16 with the former pegging the rate at 8.7 per cent, 10 basis points lower than decided by the EPFO – this was probably the first time govt has cut rate set by EPFO. The Labour Ministry is now planning to seek a review of the Finance Ministry's decision after trade unions attacked the lowering of the rate. Labour Minister Bandaru Dattatreya told the Lok Sabha, "The (EPFO's apex decision-making body) CBT, at its meeting held in February 2016, had proposed an interim rate of interest at 8.8 per cent to be credited to the accounts of EPF subscribers for 2015-16. The Finance Ministry has, however, ratified an interest rate of 8.7 per cent." It is probably for the first time that Finance Ministry has overruled the decision of retirement fund body EPFO's apex decision making Central Board of Trustees (CBT) headed by the Labour Minister. Trade unions are of the unanimous view that this decision of the Finance Ministry is an encroachment on the autonomy of the Employees' Provident Fund Organisation (EPFO). (Reuters)

  • 4. Reduce prices to attract more buyers, Raghuram Rajan tells realtors: Having cut the interest rates, RBI Governor Raghuram Rajan today put the onus on real estate developers, asking them to reduce prices to encourage more people to buy properties. Rajan's remarks also come against the backdrop of low demand for housing projects leaving developers with unsold inventories. "I am hopeful that as interest rates come down, there will be more credit and buying. And I am also hopeful that prices adjust in a way that encourage people to buy," Rajan said. The Reserve Bank of India (RBI) has lowered rates by 1.5 per cent cumulatively since January last year and earlier this month the policy rate was cut by 0.25 per cent to 6.5 per cent -- its lowest level in more than five years. More than half of the rate cuts have been passed on by the banks to consumers. (Reuters)

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    Parag Milk Foods initial public offerings hit capital markets on May 4 to raise Rs 760 crore.

  • 6. Salt producers defer strike after govt's assurance: Salt producers from Gujarat, who had threatened to stop production and supply from tomorrow seeking complete rollback of VAT imposed on industrial salt, today postponed their plan after getting assurance from the state government. A delegation of salt producers, who are opposing 5 per cent VAT imposed on industrial salt introduced by the government from the current financial year, today met Labour and Employment Minister Vijay Rupani with their grievances. The delegation of around 15 salt manufacturers from different salt-producing regions in the state met Rupani at his office in Gandhinagar, who were then asked to meet Finance Minister Saurabh Patel in this regard. (Reuters)

  • 7. FDI up 44 pct since June 2014, says govt: Foreign direct investment (FDI) in the country grew by 44 per cent to USD 63.16 billion during June 2014 to February 2016 period, Parliament was informed today. "Due to the continuous reforms and initiatives being undertaken by the government, the FDI equity inflow has recorded a growth of 44 per cent in its 21 months tenure (June 2014 to February 2016)," Commerce and Industry Minister Nirmala Sitharaman said in a written reply to the Lok Sabha. She said that FDI has increased from USD 43.87 billion to USD 63.16 billion during June 2014 to February 2016 as compared to the preceding period of 21 months (September 2012 to May 2014).

  • 8. 16 lakh gave up LPG subsidy in Maharashtra, claims state govt: Maharashtra has emerged as the leading state in the country in giving up LPG subsidy with over 16 lakh people surrendering it, the state government today claimed. "The total LPG subsidy surrendered in Maharashtra is the highest at 16,42,814 in response to Prime Minister Narendra Modi's campaign of 'Give It Up'. The state had been aggressively pursuing the centre's campaign in over a dozen cities and towns in Maharashtra," a statement by the Maharashtra government said. It noted that the "Give It Up" campaign launched last year estimated that one crore consumers did not require LPG subsidy. There are 14.54 crore active LPG consumers in the country. "The five states that topped in surrendering LPG subsidy are Maharashtra, Uttar Pradesh, Delhi, Karnataka and Tamil Nadu, almost accounting for 50 per cent of contributors," the statement said. (Reuters)

  • The Modi government is planning to infuse more funds into Air India to bring back its heydays. (Reuters)

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    With high profile personalities going hammer and tongs on the issue, Raghuram Rajan himself expressed interest in a second term, despite calls from sections of the ruling BJP against any extension for him, albeit indirectly saying, ‘there is always more to do’. He added that “There is a lot of fulfillment from making things actually happen for improving the environment… I have enjoyed every moment of the job”. (Reuters)

  1. P
    pradeep nandam
    Apr 27, 2016 at 4:49 am
    Khudos to the web designer of this page. Worst ber ever keeping the site viewers away from the site.How can a reader read 10~15 lines of info in 5 sec? the designers should really check & test the site once the news got published.
    Reply

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