Foxconn’s India arm files papers for Rs 50 billion IPO
Foxconn’s Indian unit Bharat FIH Ltd filed draft papers for an IPO in India to raise Rs 50 billion. The proposed initial share sale by the maker of Xiaomi brand of mobile phones aims to raise Rs 25 billion in fresh capital. A Foxconn unit holding shares of Bharat FIH will also divest a portion of its stake to raise an equal amount.
Why it’s important: India has had a record year for IPOs, with the strong trading debuts of large initial offering such as Nykaa and Zomato feeding into the enthusiasm for such share sales. This has encouraged more firms to tap the public markets to raise funds.
Enough demand in India to take care of 5-6 fab plants
Communications and IT minister Ashwini Vaishnaw said in an interview that there is a huge demand for chips from automobiles, electronics, railways, defense, and power electronics in India. The country already manufactures electronics worth $ 75 billion, which is good enough to take care of 5-6 fab plants, the minister said.
Why it’s important: The central government in recent days announced a major semiconductor policy through with it aims to help 20 companies to achieve turnover of more than Rs 15 billion in the next five years. The government will provide up to 50% of project cost for two semiconductor and two display fabs. The application window starts on January 1 and will be open for 45 days.
Five million customers to be affected as tokenization set to disrupt e-commerce from January 1
E-commerce and online service providers are bracing for disruption on January 1 when the Reserve Bank of India’s order on tokenization takes effect. They will have to delete any credit and debit card data stored on their platforms, and replace them with a surrogate code, known as tokens, to secure card details of consumers.
Why it’s important: About 5 million customers in the country — the most frequent and biggest online spenders — will likely be impacted the most. Merchants, banks, card providers and payment gateways say there hasn’t been enough time to make the backend changes for the measure announced in September to protect cardholders from fraud.
ZEE and Sony sign agreement to create India’s second-largest entertainment network
Sony Pictures Networks India has signed definitive agreements to merge with Zee Entertainment Enterprises, even as the latter is embroiled in a legal battle with largest shareholder Invesco over control of the media company. The new merged company will be listed in India.
Why it’s important: The merger, subject to shareholder approval, will create India’s second-largest entertainment network by revenue and create an entity with 75 TV channels, two video streaming services (ZEE5 and Sony LIV), two film studios (Zee Studios and Sony Pictures Films India) and a digital content studio (Studio NXT).
Pandemic curbs to keep year-end celebrations muted
A day after the central government asked states to activate war rooms to tackle the rising Omicron threat, state governments stepped up their guards with fresh restrictions on religious and social gatherings. They also limited capacity in restaurants and bars.
Why it’s important: Restaurants and bars, which have been among the hardest hit due to drastically reduced footfalls during the Covid-19 pandemic, typically see heightened business during the New Year festivities. New restrictions on capacity utilization will again impact their business, making recovery even more difficult.
Income Tax raids at premises of Chinese smartphone brands
More than 20 premises in the national capital region, Mumbai, Rajkot, and Karnataka linked to Oppo and Xiaomi, makers of mobile phones, were searched by the tax department. Searches were also conducted at the offices of OnePlus, the Chinese phone maker that has merged into Oppo but operates as a separate brand. A day earlier, anti-smuggling agency Directorate of Revenue Intelligence had searched the factories of Foxconn India’s unit, Bharat FIH, and Dixon Technologies in South India. Bharat FIH and Dixon are contract manufacturers for Xiaomi.
Why it’s important: The raids on suspicion of tax evasion are the latest of actions against Chinese companies in India. In the past three months, taxmen have conducted search operations on telecom and technology firms as well as companies involved in mining, chemicals, manufacturing of heavy machinery and their associate companies, which are controlled by Chinese entities. This could face retaliatory action by Chinese authorities.
Several MNCs under tax scanner for deals done through Mauritius firms
After private equity firms and fund houses, taxmen have raised the specter of capital gains and judicial General Anti Avoidance Rule (GAAR) over several multinationals that had invested in India or sold part of their assets through Mauritius entities between 2013 and 2016.
Why it’s important: Many companies fear that the tax department’s stand puts them in a tricky position. Neither can they dismantle holding structures, nor can they send dividends back to holding companies for similar, or in some cases, entirely separate investments. The development might hurt business sentiments.
Tighter GST rules come into effect from January 1
The central government will bring into effect a dozen amendments to the Central Goods and Services Tax Act from January 1, tightening the indirect tax regime. While indirect tax evasion by errant companies using fake invoices has been a major headache for the government, the tighter tax credit rules compel businesses to ensure their suppliers disclose transaction details promptly in their monthly sales returns.
Why it’s important: Although the move is likely to reduce the incidence of tax evasion, it might also raise compliance costs for all companies. That could spell trouble for medium and small firms that have already seen their business erode due to the Covid-19 pandemic.
Amazon sues Enforcement Directorate to quash probe into Future Group deal
Amazon is taking the Enforcement Directorate to court, seeking to quash an investigation into one of its 2019 deals. India’s agency to investigate financial crimes has for months been probing Amazon’s $ 200 million investment in India’s Future Group for suspected violations of foreign investment laws.
Why it’s important: The 2019 investment has triggered more than two dozen legal cases between Amazon and Future Group in courts and the tribunals. The dispute has put on hold for more than a year a deal in which Future Group agreed to sell its assets to Reliance Retail for Rs 250 billion.
Amazon seeks approval to buy Catamaran’s stake in Cloudtail
Amazon is seeking regulatory approval to acquire Catamaran Venture’s stake in Prione Business Services, which houses Cloudtail, one of the largest sellers on the ecommerce giant’s Indian platform.
Why it’s important: If the deal receives the nod from the Competition Commission of India, Cloudtail may have to change shareholding pattern to continue as a seller on Amazon India as regulations prohibit an entity running an online marketplace and its group companies from owning equity in any of the sellers on the platform or having control over their inventory.
