Lakshmi Vilas Bank-Indiabulls Housing Finance Merger Approved by Board, CCI Approves L&T's Bid to Take Over Mindtree, US Reaches H-1B Visa Cap for 2020 et al.

Lakshmi Vilas Bank-Indiabulls Housing Finance merger approved by Board. CCI approves L&T's bid to take over Mindtree. US reaches H-1B visa cap for 2020. Boeing to cut 737 Max aircraft production by nearly 20%. Vodafone Idea, Airtel may post first mobile revenue growth in 3 years. However, Airtel may post first loss in almost 16 years. Zomato reports three-fold jump in revenue in FY19.

 

Moving on to the top Business stories of the day. 

 

DEALS 


Lakshmi Vilas Bank-Indiabulls Housing Finance merger approved by Board. CCI approves L&T's bid to take over Mindtree. 
 
Approved: The Board of Lakshmi Vilas Bank (LVB) on Friday approved its merger with Indiabulls Housing Finance (IBH) in a share swap deal.
 

Two to Tango: The merger will enable LVB to obtain a larger geographical presence and help Indiabulls get access to low-cost stable funds and an entry into banking.  
 

Titbit: Indiabulls had earlier applied for a banking licence in 2013, which was declined.
 

Tell Us More: The merged entity will have a net worth INR19,472cr and a loan book INRl,23,393cr for the nine months of FY19. Its employee strength will stand at over 14,300.
 

The share swap ratio of 0.14:1, or 14 shares of IBH for every 100 shares of LVB, has been agreed upon.
 

The news comes at a rather crucial time when housing finance companies are facing liquidity issues and slowdown in loan disbursements following the IL&FS scam.
 

More details on the deal here.
 

Go-Ahead: The Competition Commission of India (CCI) on Friday approved L&T's takeover bid for Mindtree.
 

Caveat: The deal now needs approvals of anti-trust authorities of Germany and the US as Mindtree has clients in those countries.
 

Backstory: On 18 March, L&T announced its plan to launch an open offer to buy an additional 31% in Mindtree after agreeing to purchase Cafe Coffee Day founder V.G. Siddhartha's 20.32% stake in the firm for INR3,269cr. L&T also plans to buy 15% stake in Mindtree from the open market.

The three-part deal will see L&T buy up to 66.32% in Mindtree for around INR10,700 crore at INR980 per share.

 

EXPATS 

US reaches H-1B visa cap for 2020. Indian IT firms bear the brunt of new visa rules.

Buy American and Hire American: The US Citizenship and Immigration Services (USCIS) said it has already reached Congressionally-mandated 65,000 H-1B visa cap for the fiscal year beginning October 2019. 
 

The news comes barely 5 days after it started receiving the applications.
 

Best From the Rest: The H-1B visa is a non-immigrant visa that allows US companies to employ foreign workers in speciality occupations that require theoretical or technical expertise.
 

This is the first season of H-1B applications after the USCIS enforced new rules for the US work visa applications.

 
Understand the new selection criterion for perhaps the most sought-after work visa here
 

Swipe Left: As per a report, restrictions on the H1-B visas have compelled Indian tech companies to hire more locally, leading to an escalation in employee costs. 
 

Cognizant saw over 32% visa denials followed by Infosys and TCS with 26% and 18% respectively in FY18. The new regulation has significantly impacted the cost structures for the Indian IT majors.

 

TAXES 

ITR forms to require individuals and businesses to disclose more details. CBDT tightens ITR norms for investors in unlisted firms.

Devil is in the Details: In an attempt to increase transparency and narrow the scope for tax evasion, as per the new forms notified by the income tax department, individuals and businesses now have to disclose more details of professional and residential status, as well as their income, while filing income tax returns (ITRs). 
 

The scope of reporting foreign assets and bank accounts has also been scaled up.
 

What Else?: Similarly, in order to clamp down on shell companies and check routing of black money, the Central Board of Direct Taxes has barred individuals who hold directorships in firms or had investments in unlisted company shares in the last fiscal year from using the simpler forms—ITR-1 or ITR-4. They have to now use either ITR-2 or ITR-3 forms, disclosing the details of holdings of unlisted equity shares. This covers those who have received employee stock options (ESOPs) in unlisted companies, including those listed outside India.

 
More on the new notifications here.

 

737 

Boeing to cut 737 Max aircraft production by nearly 20%. Pilots on board battled the plane's automated flight control systems for almost the entire duration of the six-minute flight, as per a preliminary report on the recent crash. 
 

Cutting It Down: Aerospace giant, Boeing reported that it will trim monthly production of its 737 MAX by 10 aircraft to 42 by mid-April.
 

The news comes as the aircraft came under severe scrutiny following two crashes in the span of about five months involving Lion Air and Ethiopian Airlines which lead to the death of over 346 people.
 

FYI: Boeing has a backlog of about 4,600 orders for the Max planes.
 

The aircraft manufacturer will also establish a committee that will review the policies and processes Boeing uses to design and develop its airplanes. 

The pilots on board Ethiopian Airlines Flight 302 battled the plane's automated flight control systems for almost the entire duration of the six-minute flight, according to a preliminary report on the recent Ethiopian Airlines crash involving the Boeing 737 MAX. 
 

A detailed timeline of the flight suggests that the pilots' struggle to control the plane began moments after the plane took off from Addis Ababa Bole International Airport, en route to Nairobi.

 
Accept My Apologies: Boeing CEO Dennis Muilenburg extended his apologies for the lives lost in the 737 Max crashes.
 

"These tragedies continue to weigh heavily on our hearts and minds, and we extend our sympathies to the loved ones of the passengers and crew on board Lion Air Flight 610 and Ethiopian Airlines Flight 302," he said.

 

TOPLINE 
 
Vodafone Idea, Airtel may post first mobile revenue growth in 3 years. However, Airtel may post first loss in almost 16 years. Zomato reports three-fold jump in revenue in FY19.
 

Good News: As per this ET report, mobile service revenue of Vodafone Idea and Bharti Airtel in India likely grew for the first time in 11 quarters in the three months ended March. 
 

The growth is likely driven by the minimum recharge plans launched by the two telcos in October last year, which might have prompted more users to opt for higher-priced voice and data packs.
 

Not All is Rosy: Bank of America-Merrill Lynch expects Airtel to report a net consolidated loss in the range of INR599cr-INR1,300cr in Q4 FY19 - its first in almost 16 years on back of low pricing, higher costs and shrinkage in non-mobile businesses.
 

Mixed Tape: Online food delivery platform Zomato reported a three-fold jump in revenue to $206m for FY19 vs $68m in FY18, even as it incurred losses to the tune of $294m. 

 
As per its annual report, significant portion of the losses was due to Zomato’s food delivery business, coupled with increased promotional marketing spends and costs associated with its aggressive first-to-market strategy.

 

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