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Moody's Investors Service has placed the ratings of 51 Russian companies on review for downgrade.

The action, announced by the ratings agency on March 2, comes after it placed Russia and Ukraine's ratings on review for downgrade on February 25 after President Vladimir Putin approved an invasion of Ukraine.

Moody's currently has a Baa3 rating on Russia and B3 on Ukraine.

Also read: Russia Ukraine War News LIVE Updates

"Today's rating actions on the affected corporates are a direct consequence of the sovereign rating action and reflect Moody's view that a potential downgrade of Russia's sovereign ratings and lowering of its country ceilings could or would lead to downgrades of the affected corporates' ratings, because of their strong interlinkages with the sovereign rating," Moody's said in a statement on Mach 

The review for downgrade, in particular, will take into account (1) Russia's sovereign ratings and country ceilings following the conclusion of the sovereign review; (2) the affected corporates' individual credit factors, including the effect of sanctions on their credit quality; and (3) the likelihood of potential state support to the corporates in the event of financial distress," it added.

The Russian companies affected by Moody's latest announcement include energy heavyweights Rosneft and Gazprom. The entire list of affected companies can be found here.

The invasion of Ukraine has hurt Russian companies hard, with economic sanctions driving down their share prices. Russian authorities have looked to soften the blow, with the government announcing a plan to purchase shares worth 1 trillion rubles of companies that have been sanctioned.

On February 25, Moody's had said that "serious concerns" around Russia's ability to manage the impact of the economic sanctions on the economy, government finances, and the financial system may result in a ratings downgrade.

"However, in the low likelihood that Moody's concluded that significant new economic and financial sanctions were to have a very limited impact on Russia's economy and financial buffers, one possible outcome of the review will be to confirm Russia's ratings with a negative outlook," the agency had said.

Article Source:- Moneycontrol

Ukraine's President Volodymyr Zelensky on Wednesday accused Russia, which has launched an invasion of his country, of seeking to "erase" Ukrainians, their country and their history.

In a video address, the Ukrainian leader said a missile strike on a target at the site of a Holocaust massacre shows that "for many people in Russia our Kyiv is completely foreign.

Since the fight between Ashneer Grover and BharatPe’s board began two months back, the company for the first officially accused the embattled founder's family and relative of misappropriating funds on Wednesday.

“The Grover family and their relatives engaged in extensive misappropriation of company funds, including, but not limited to, creating fake vendors through which they siphoned money away from the company’s account and grossly abused company expense accounts in order to enrich themselves and fund their lavish lifestyles,” said BharatPe.

“The company reserves all rights to take further legal action against him and his family. The Board will not allow the deplorable conduct of the Grover family to tarnish BharatPe’s reputation or that of its hard-working employees and world-class technology. As a result of his misdeeds, Mr. Grover is no longer an employee, a founder, or a director of the company,” it added.

The company also said that the Board is taking all necessary steps to further strengthen the company’s corporate governance, including the appointment of an audit committee, an internal auditor, and the implementation of other key internal controls.

"I am appalled at the personal nature of the company’s statement, but not surprised. It comes from a position of personal hatred and low thinking. I think the Board needs to be reminded of $1 million of secondary shares investors bought from me in Series C, $2.5 million in Series D and $8.5 million in Series E," said Ashneer Grover in response to BhatatPe allegations today.

"I would also want to learn who among Amarchand, PWC and A&M has started doing audit on ‘lavishness’ of one’s lifestyle ? The only thing lavish about me is my dreams and ability to achieve them against all odds through hard work and enterprise. I hope the Board can get back to working soon - I as a shareholder am worried about the value destruction. I wish the Company and the Board a speedy recovery," he added.

Business Standard reported earlier that the fintech unicorn is looking to hire a chief financial officer, an internal audit head and stren­gthen its procurement processes in the next one month, according to sources close to developments.

Grover resigned as managing director (MD) and company’s board director on Monday. The company later said Grover’s resignation letter was received within minutes after a board meeting was called to deliberate on an audit report by accounting firm PwC.

Although the board meeting happened on Tuesday night, the company has not disclosed what decisions were taken – and whether an FIR will be filed based on the audit report.

"The Board of BharatPe noted the termination of employment of Ashneer Grover as a consequence of his resignation from the post of MD as well as Director. However, as he resigned without the approval of the board and majority investors, consequences under the Shareholder agreement have now been triggered," said a source close to the developments.

Grover currently has around 9 per cent shareholding in the company. The board meeting, which started late Tuesday evening (as some directors are in the US), was expected to touch upon the possibility of clawing back his shares in accordance with the articles of association and shareholding agreement.

A source close to the development said Grover currently has 9.5 per cent shareholding in the company. However, the board meeting, which started late Tuesday evening (as some directors are in the US), was expected to touch upon the possibility of clawing back his shares in accordance with the articles of association and shareholding agreement.

“They can’t do anything with the shares since the shareholder agreement (SHA) does not allow them at all (to claw back shares),” Grover earlier told Business Standard earlier this week.

Grover’s resignation came days after a plea filed by him with the Singapore International Arbitration Centre was dismissed. In his petition, the BharatPe co-founder had sought indemnity from the audit report and asked to render it invalid as it did not comply with the SHA.

Also Read Investor-founder relation in India is one of master-slave: Ashneer Grover

Manufacturing is one of the principal growth engines that helps a country chug along the economic development track. To boost domestic manufacturing and cut down on import bills, the Centre, in March 2020, had introduced a production-linked incentive (PLI) scheme that aims to give companies - domestic and foreign - incentives on incremental sale of products manufactured locally. In almost two years now, 13 sectors have been covered under the scheme. Uncannily, the PLI scheme implementation coincided with the outbreak of the Covid-19.  Moneycontrol Pro thought it would be worthwhile to check the progress of the scheme in this pandemic-whacked period. 

Starting today, India Ratings and Research (Ind-Ra)  — a 100 percent Fitch group company — will review the progress of each of the sectors every week on Wednesdays. To begin with, Ind-Ra dissects the PLI scheme for large-scale electronics manufacturing, the first sector that was notified under the programme in April 2020. 

As part of the Digital India drive, the electronics sector has been on the central government’s radar for quite some time now. Several schemes were introduced in the past that aimed to provide a leg-up to the industry by way of grants and subsidies. In spite of all the incentives provided by the government, a sharply rising domestic demand (the digital “boom”) for electronic items far surpassed local production, leading to higher imports. The share of electronics in India’s total import bill rose to 4.2 percent in FY20 from1.8 percent in FY15.

To boost domestic production of mobile phones and specified electronic components and attract investments, the central government had notified the Production-Linked Incentive (PLI) scheme for electronics components in April 2020. Under the scheme, eligible companies are allowed to claim an incentive of 4-6 percent on incremental sales (over the base year of FY21) of manufactured goods for a period of five years. The government has already approved 16 players with a total envisaged investment of Rs 11,000 crore and expects a production value of Rs10.4 lakh crore in the next five years, of which about 60 percent is likely to be exported. The scheme is also likely to enhance the competitiveness of local electronics products.

It is expected that the assembling of mobile parts may become the most attractive activity, as the incentive of 4-6 percent is about 50-100 percent of the total assembly cost of mobile phones. The manufacturing of some of the basic components with low value addition, such as casing, batteries, and audio, may also pick up momentum, while high-end components, such as camera, display, and memory, will take time.

Shortcomings

The PLI scheme still needs to address a few issues. First, to ramp-up local production, the scheme offers incentives only for a fixed period of five years, starting from the base year of FY21. With the raging global supply-chain issues and the pandemic-led demand disruption, mobile phone manufacturers may not be able to achieve the near-term production targets and claim incentives.

Second, the incentives of 4-6 percent is pretty meaningful given that operating profit margins for large mobile phone manufacturers range between 3-7 percent. This may improve the competitiveness of Indian manufacturers substantially over the scheme period. However, the competitiveness of the manufacturing facilities in the absence of the incentives remains to be seen.

Third, the current scheme aims at providing big incentives to large corporate houses in select sectors, who can quickly build the scale. This is a deviation from the earlier schemes (MEIS, RoDTEP), which aimed at providing small incentives to a much wider corporate landscape. In order to provide a complete manufacturing ecosystem, active participation of small-scale players will also be required. It remains to be seen how much of the PLI incentives percolate down to SME/MSME participants.

Finally, issues relating to the availability of skilled manpower and high-latency infrastructure facilities need to be addressed.

Opportunities

In Ind-Ra’s view, the advantage of the PLI scheme should be seen beyond its present stated scope. For instance, committed investments, at present, are predominantly focused on low value-added services such as assembling or manufacturing low-cost components (casings), which form less than 10 percent of a mobile phone’s total Bill-of-Material. In order to achieve the stated target of increasing the gross domestic value addition from the current 15-20percent to 35-40 percent for mobile phones and 45-50 percent for electronic components, a shift to higher value-added products/processes is required. Nevertheless, companies would expect a robust manufacturing ecosystem before committing investments and starting with low value-added activities will provide the adequate boost.

Moreover, India now attracts manufacturing activities for low-cost smartphones or feature phones, which have lower Average Selling Price ASP), and hence, lower likely incentives. A progressive shift towards higher ASP brands or products would improve the stickiness of cash flows in the long term.

Structurally, many global telecom OEMs are focusing more on R&D and marketing activities, while outsourcing low value-added manufacturing activities to their suppliers. These OEMs have preference for a focused set of suppliers with whom they intend to have long-term contracts. A timely execution of orders by Indian corporate houses may open up future business potential.

In summary, the PLI scheme for mobile handsets provides a leg-up to manufacturing by providing meaningfully big incentives to a few large players. It still needs to address a few issues, including structural competitiveness in the absence of PLI incentives, availability of skilled manpower and high-latency infrastructure, benefits to the SME/MSME segment, and near-term supply-chain issues. Nevertheless, the benefit of the PLI scheme should be seen beyond its present stated scope. The progression from low-cost components to high-cost components, or from low-ASP products to high-ASP products can throw up much larger opportunities.

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