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Mindtree Management Open For Negotiations with L&T, Ola to Invest in Self-Driving Car Service, PM Theresa May Announces Departure, But Conditions Apply et al.

Professor of Financial Economics and Part-time Value Investor, Transfin.
Mar 28, 2019 1:34 PM 4 min read
Editorial

Mindree management open for negotiations with L&T. Ola to invest in self-driving car service. PM Theresa May announces that she would step down if Britain formally left the EU. Paytm raising c. $2bn from existing backers.

 

Moving on to the top Business stories of the day. 

 

GOVERNMENT 

CBDT raises concerns as direct tax collection tracking significantly below target.

Short of Target: The Central Board of Direct Taxes (CBDT) has revealed that against the budget collection target of INR12,00,000cr, only 85.1% or INR10,21,251cr has been collected as of March 23.

As of Tuesday, direct tax collection was INR10.29tr, which is 12.5% up compared to the same period a year ago.

Good, Bad And The Ugly:  Growth in TDS was 18% to INR4.44tr as of March 11, while self-assessment tax rose 6.5% to INR83,465cr. However, the regular assessment tax showed a 5.4% fall vs last year.

Watch Out: The CBDT has sent a strongly worded letter to senior income-tax officials, warning them of the shortage of tax collection targets.

 

MINDTREE 

 

Mindree management open for negotiations with L&T.
 

Sign of Peace: Mindtree management has expressed willingness to negotiate L&T’s open offer to buy 66% of the IT firm.

In the Middle: The management has suggested that a middle ground could be explored through mutual discussions between the two parties to protect the interests of all stakeholders.  

The news is rather significant as it somewhat underlines signals a change in Mindtree's stance towards L&T’s takeover bid.

Another Offer: Two weeks ahead of L&T’s deal with V.G. Siddhartha, a global PE firm was very close to finalizing a deal with him, one that was acceptable to Mindtree promoters.

Can't-Wait: However, Siddhartha was forced to sell his stake to L&T because of a liquidity squeeze triggered by defaults in payments by IL&FS.


Read more on the matter here.

Still Unsure:  While the Mindtree acquisition could be oF great value to L&T, some experts are still sceptical of the logic behind L&T’s move. Find out why.

 

PAYMENTS 

Paytm raising c. $2bn from existing backers. Google Pay takes on competitors with offline offering.

Next Round: Paytm is in the process of raising c. $2bn from existing investors SoftBank Vision Fund and Alibaba’s financial affiliate, Ant Financial. The latest financing round is likely to peg the company’s valuation at $18bn.

SoftBank, which first invested in the company in 2017, holds a 19% stake. The Alibaba group, through Ant Financial and Alibaba directly, owns 38%.

Need the Help: The infusion is likely to help Paytm take on rivals such as payment units of global giants Google and Amazon besides local rivals such as Flipkart-owned PhonePe.

Bizarre Gossip: In a rather surprise turn of events, Ex Paytm executive Sonia Dhawan, one of the prime accused in an extortion bid against Founder Vijay Shekhar Sharma, is believed to have rejoined the company.

FYI: Dhawan was arrested on October 22, after Paytm senior VP Ajay Shekhar Sharma, lodged an FIR against her and several others accusing them of theft and extortion.

Competition: Google has collaborated with Pine Labs, to work on enabling offline transactions on Google Pay through Pine Labs' UPI-based digital payments product. The company also unveiled two other services through which its payments application users can book train tickets and buy gold.

New Tech: Pine Labs-branded POS terminals in offline stores can be used by merchants in offline stores to process Google Pay using a secure two-step process. Merchants can initiate a payment request using a Google Pay user’s mobile number.

 

CAPITAL 

Ola to invest in self-driving car service. More than a third of China’s population is invested in Ant Financial’s flagship fund Tianhong Yu’e Bao.

Solo Driver: Ola set to invest over $500m to launch self-drive services in a bid to broaden its portfolio of transportation solutions. The scale of the proposed service is likely to make Ola the largest self-drive car rental company in India.

The investment will come from a mix of debt and equity over the next couple of years. Ola is likely to raise debt via Ola Fleet Technologies to seed the new business.

Coming Soon: The company plans to deploy nearly 10,000 vehicles, including luxury sedans and SUVs, in major cities in coming months.

One of a Kind: Ant Financial Services Group has revealed that over 588 million users of Alipay, Ant’s highly popular mobile-payments network, had parked cash in its flagship Tianhong Yu’e Bao fund at the end of 2018. 

This suggests that more than a third of China’s population is now invested in the fund, whose assets under management totaled $168.26bn at the end of last year.

Quick Save: The fund lets users of Alipay invest their spare cash for short periods before they spend their money online. Many investors in the fund treat it like an online checking account, depositing money at all hours of the day and withdrawing funds whenever they need to spend money.

 

BREXIT 
 

Brexit talks stall as MP’s split on options. PM Theresa May announces that she would step down if Britain formally left the EU.

Still No Clue: MP’s of the House of Commons failed to come to an agreement after voting for 8 different options on how to proceed with Brexit. 

No More: Ahead of the debate, PM Theresa May had announced that she would leave office earlier than planned if she won the Parliament's backing for her withdrawal agreement with the EU. Mrs. May would resign as party leader after 22 May - the new Brexit date but would stay on as PM until a new leader is elected.

The Circle Goes On: If Mrs. May's deal is not approved this week, MPs are likely to resume discussions on some of options rejected through the indicative voting process.

Deep Dive: Fear of a no-deal Brexit has been driving the price of Sterling in recent months. A no-deal Brexit is likely to send the Sterling to its lowest level since 1985. Read more on this here.

 

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