Scraps broad-based criteria, eases Know-Your-Customer rules; FPIs had sold shares worth over ₹22,000 cr. in July, August
SEBI will examine various issues on 35% minimum public shareholding plan, says Chairman Ajay Tyagi. Supreet Sapkal
At a time when foreign investors have been selling Indian shares in huge quantum, the Securities and Exchange Board of India (SEBI) has simplified the compliance and operational requirements for foreign portfolio investors (FPIs), to make the regulatory framework more investor friendly.
The SEBI board, which met here on Wednesday, decided to do away with the requirement that every FPI should have at least 20 investors — known as broad-based in regulatory parlance — while simplifying the KYC (or Know-Your-Customer) document requirement for overseas investors.
“The key focus of the proposed regulations is to simplify and rationalise the existing regulatory framework for foreign portfolio investors in terms of easing the operational constraints and compliance requirements,” stated a SEBI release.
The regulator has also allowed central banks of countries that are not members of Bank for International Settlement (BIS) to register as FPIs in India since, as per SEBI, such entities are “relatively long term, low risk investors directly/indirectly managed by the government”. FPIs have cumulatively sold shares worth over ₹22,000 crore in July and August.
“This is a much-needed boost to the FPI route, which had been languishing on account of multiple issues in the past few months,” said Shruti Rajan, partner, Cyril Amarchand Mangaldas.
“Relaxing the broad-based criteria will open up the FPI route to a whole new category of entities that were unable to meet the 20-investor test. The most interesting part... lies in the references made to rationalisation of offshore derivative instruments . This has historically been a matter of debate within the industry and it will be interesting to see what changes are finally implemented,” she added.
SEBI has expressed concerns over the recent proposal of the government to increase the minimum threshold of public holding in listed companies from the current 25% to 35%.
“... there are certain aspects which need to be further examined as to what the right level to mandate is,” SEBI Chairman Ajay Tyagi told the media, post the board meeting. He highlighted the fact that a significant number of listed public sector undertakings are yet to comply with the 25% public holding norm and have been given time till August 2020 to comply and also that the primary market was not doing well currently.
“All these issues need consideration and examination, so time being we will examine all those issues,” added Mr. Tyagi. The regulator has amended the Prohibition of Insider Trading Regulations to include a clause to reward whistle-blowers up to ₹1 crore if the information leads to a disgorgement order of at least ₹1 crore.
The regulator has also brought in clauses to protect the informant from victimisation in the form of termination, suspension or demotion, among other things.
The SEBI said it had gathered details about alleged financial irregularities at CG Power and Industrial Solutions and was looking into the matter. “We have obtained some details of what is going on with them. We will look into it,” Mr. Tyagi said.
(With PTI inputs)
‘Demand clearly slowing down, investment losing traction’
With clear evidence of domestic demand slowing down further, with investment activity losing traction, Reserve Bank of India (RBI) governor Shaktikanta Das said supporting growth was the utmost priority of the central bank as inflation remained under control, the minutes of the August monetary policy review meeting showed.
“With headline inflation projected to remain within the target over the next one-year horizon, supporting domestic growth by further reducing interest rates needs to be given the utmost priority,” Mr. Das had said.
The RBI had reduced the repo rate by an unconventional 35 basis points (bps) during the monetary policy review, and by 110 bps since February this year — bringing down the repo rate to a nine-year low of 5.4%. The RBI typically revises interest rates in multiples of 25 bps. Mr. Das noted that with global demand weakening, there is a need to ‘bolster dwindling domestic demand’ and support investment activity.
“Given the current and evolving inflation and growth scenario at this juncture, it can no longer be a business-as-usual approach. The economy needs a larger push,” he said, adding that a conventional 25 bps cut would be inadequate.
“On the other hand, a 50 bps rate cut might be excessive and indicate a knee jerk reaction,” he said.
Four of the six-member monetary policy committee voted for the 35 bps rate cut while two members, Pami Dua and Chetan Ghate, voted for a 25 bps cut. “Given the evolving growth-inflation risk picture, monetary policy should be used judiciously,” Mr. Ghate said. Ms. Dua said the 100 bps cut since February was ‘sufficient’. Another external member, R.H. Dholakia, said he would have liked the policy rate cut to be 40 bps but added, “I do not mind going with majority opinion of cutting the rate by 35 bps this time, and maintaining the accommodative stance.”
Firm unveils first start-up collaboration on Edison platform
GE Healthcare, a global provider of medical imaging, monitoring and cell/gene therapy technologies, is gearing up to bring about a change in the way healthcare is being delivered in India currently.
As a precursor, the U.S. firm has announced its first start-up collaboration programme on its Edison platform, in India.
Under this, the company will work with enterprises to develop technologies that can solve some of the toughest healthcare challenges existing today.
Nalinikanth Gollagunta, managing director, Wipro GE Healthcare, said, “The focus will be on enabling preventive healthcare, precision diagnosis and treatment in a timely and affordable manner.
Under this programme, GE Healthcare would collaborate with start-ups to arrive at solutions that improve patient outcomes and experience, efficiency of clinical practice and that of the healthcare facilities, reduce waste and inefficiencies, and eliminate costly and harmful errors,” he said.
For context, the U.S. reported a wasted healthcare spend (on account of erroneous prescriptions, wrong diagnosis, wrong treatments/therapies and unwanted surgeries) of over $1 trillion, with each year adding up $500 million to the losses.
Though, such a study is yet to be done in India, the country’s wasted healthcare spend could be very huge.
Amit Phadnis, GE Officer and chief digital officer, GE Healthcare said, the healthcare industry produced massive amounts of data, and it was extremely difficult to bring this data together, convert it into meaningful insights and bring those insights to the point of care.
“We are addressing these challenges with our Edison platform and are working to accelerate the transformation of healthcare,’’ said Mr. Phadnis.
Maruti Suzuki MD & CEO says reductions in the past have stimulated demand
Maruti Suzuki MD and CEO Kenichi Ayukawa during the launch of MPV, XL6, in New Delhi on Wednesday. Kamal Narang
It would be a welcome step if the government cuts the Goods and Services Tax rate on automobiles, Maruti Suzuki MD and CEO Kenichi Ayukawa said on Wednesday, adding that in the past, tax rate cuts by the government have worked to stimulate demand.
Mr. Ayukawa added that apart from government intervention, it was very important for companies to engage with the market and the customers in order to encourage demand.
“We are also very concerned [about the level of demand],” Mr. Ayukawa said during the launch of Maruti Suzuki’s new MPV, the XL6. “Unfortunately, this fiscal year, the market has shown a more than double digit slowdown. We have to approach the customer and I expect that the new product being introduced in the market will help the market demand recover.”
“If you look at the history of the industry, the last time there was a slowdown, some tax deduction did help in encouraging the market,” Mr. Ayukawa added. “I believe if the government decides that way, it will be very helpful.”
He said there was a ‘considerable increase’ in the demand for premium MPVs, and the new XL6 is designed to cater to this demand.
The XL6, starting at ₹9.79 lakh, is powered by a BS-VI compliant petrol engine with a ‘Progressive Smart Hybrid’ technology with a lithium-ion battery.
“The Indian auto industry is undergoing a major shift,” Mr. Ayukawa added. “The industry is adapting to new regulations, new technologies and new policies. And that too with all of these coming together, at the same time. Challenges in the short-term and long-term bring pressure. What we need is a strong focus on quality in all aspects of our business.”
Company to expand petrochemical and refining capacities over five years
Fuelling growth: Of the total investments, ₹42,000 crore will come from internal resources. Gettyimages/istock
State-owned Hindustan Petroleum Corporation Limited (HPCL) is planning to invest as much as ₹74,000 crore in expanding its refining and petrochemical capacities.
HPCL CMD Mukesh Kumar Surana, said, “A capital expenditure of about ₹74,000 crore is envisaged over the next five years for various projects.”
Of the ₹74,000 crore, HPCL plans to invest ₹35,200 crore in refining, ₹21,800 in marketing, ₹5,700 crore in renewables and R&D and ₹11,500 crore across joint ventures. “The company plans to invest ₹42,000 crore from internal resources and ₹32,000 crore by way of debt. At peak debt also, our debt to equity ratio will be less than 2:1,” said Mr. Surana.
HPCL is executing the Rajasthan refinery and petrochemical project at a project cost of ₹43,129 crore.
“I am happy to share that HPCL Rajasthan Refinery Limited has achieved significant progress in setting up a nine MMTPA refinery-cum-petrochemical project in Rajasthan,” said Mr. Surana.
The company has completed technology selection for all the 13 process units. While engineering activities are in progress, site construction activities have commenced. The project has achieved financial closure.
The company is expanding the capacity of its Visakh Refinery to 15 million metric tonnes per annum (MMTPA) from 8.33 MMTPA now at cost of ₹20,928 crore.
“The project includes facilities for bottom upgradation and production of BS-VI- compliant motor fuels. The capacity of the Mumbai refinery is being enhanced from 7.5 to 9.5 MMTPA with a capability to produce BS-VI motor fuels, at a cost of ₹5,060 crore. “The completion of the projects will enhance profitability of the refineries,” Mr. Surana added.