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India’s Reliance Industries said on Thursday it would invest Rs 1670 cr to create a joint venture (JV) with U.S.-listed Sanmina Corp for making electronic products in Chennai.

The JV aims to make hardware for 5G communications, cloud infrastructure, healthcare systems, and defense and aerospace, Reliance said in a regulatory filing.

Reliance will hold a 50.1 per cent stake in the JV after the investment in Sanmina's existing Indian entity through a Reliance unit. Sanmina will contribute its existing contract manufacturing business to the JV.

All manufacturing will initially take place at Sanmina's campus in Chennai, with an option for expansion in other manufacturing sites within the country.

The day-to-day business will continue to be managed by Sanmina’s existing management team in Chennai, said a statement from the two sides. The JV will create an electronic manufacturing hub, prioritising high technology infrastructure hardware

“We are excited to partner with Reliance to build the premier integrated manufacturing solutions company in India,” stated Jure Sola, Chairman and Chief Executive Officer of Sanmina.

“We are delighted to work with Sanmina to access the significant market opportunity for high-tech manufacturing in India,” said Akash Ambani, Director, Reliance Jio, said.

Sanmina's campus in Chennai is spread over 100 acres and hosts a "centre of excellence" for electronics manufacturing, research and prototyping.

Completion of the transaction is subject to customary closing conditions, including regulatory approvals. The transaction is expected to close no later than September 2022.

Also Read | Amazon may file criminal case against Future over store transfers: Report

For more than a year, Amazon and Future Group have been in a legal stand-off that has stalled Future's $3.4 billion sale of assets to Reliance Industries.

Amazon successfully halted Future's asset sale to rival Reliance since 2020 by citing violation of certain contracts.

Future, India's second largest retailer, denies any wrongdoing. Amazon's position has been backed by a Singapore arbitrator and Indian courts.

Reuters reported this week that Reliance had started to take over around 500 of Future's stores, rebranding them as its own outlets.

Reliance had previously transferred leases of some of Future's flagship supermarkets to its name, but allowed Future to continue to operate them. Reliance has now begun to take possession of them after Future failed to make rental payments to it, sources have said.

Amazon plans to initiate criminal proceedings against Future in a New Delhi court, and to urge the court to order an investigation into the matter, one of the sources, who has direct knowledge of the plans, said.

Two other sources said the lawsuit could be filed as early as this week.

Future, Amazon and Reliance did not immediately respond to Reuters' emails seeking comment.

Amazon will allege that Future concealed information during legal proceedings and allegedly transferred leases of its stores to rival Reliance, even though a Singapore arbitrator had halted any transfer or disposal of assets in the ongoing dispute, the first source added.

"This is going to be Amazon's last attempt (to stop the deal)," said this source.

The plan to start criminal court proceedings would mark a significant escalation in the legal battle between Amazon and its Indian retail rivals - Future Retail and Reliance, which is led by Indian billionaire Mukesh Ambani.

The protracted fight over Future's assets is seen as a battle for retail supremacy between Reliance and Amazon in India's booming retail market.

In blocking the Future-Reliance transaction, Amazon has long argued that Future violated the terms of a 2019 deal in which the U.S. company invested $200 million in part of the Indian company. 

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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.

Read Also| February GST collections at Rs 1.33 lakh crore, down 5.6% from January

Goods and Services Tax (GST) collections for February declined to Rs 1.33 lakh crore, down 5.6 percent from the first month of 2022, data released on March 1 by the finance ministry showed.

Of the total, Central GST was Rs 24,435 crore, State GST was Rs 30,779 crore, Integrated GST was Rs 67,471 crore, and compensation cess was Rs 10,340 crore.

Also Read: No adversarial relationship between Centre and states on GST: FM Sitharaman

In February, the government settled Rs 26,347 crore to Central GST and Rs 21,909 crore to State GST from Integrated GST. As such, the total revenue for the month post settlement was Rs 50,782 crore for the Centre and Rs 52,688 crore for State GST.

"February, being a 28-day month, normally witnesses revenues lower than that in January. This high growth during February 2022 should also be seen in the context of partial lockdowns, weekend and night curfews and various restrictions that were put in place by various States due to the omicron wave, which peaked around January 20," the finance ministry said in a statement.

While total GST collections declined sequentially last month, they were up 17.6 percent from February 2021. This is also the eighth month in a row that total GST mop-up has come in above the Rs 1-lakh-crore mark.

The GST compensation cess collected in February is the highest ever, crossing the Rs 10,000-crore mark for the first time. The finance ministry said this indicated a recovery in certain key sectors, such as automobiles.

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

In his resignation letter to the Board, BharatPe co-founder Ashneer Grover has hit out at the investors in his company. In the wee hours of Tuesday, the embattled founder of the fintech unicorn quit as the managing director and one of the directors of the Board.

Shedding light on his fraught relationship with the company’s investors, Grover wrote: "You treat us founders as slaves – pushing us to build multi-billion-dollar businesses and cutting us down at will. Investor-founder relation in India is one of master-slave. I am the rebel slave who must be hung by the tree so none of the other slaves can dare to be like me ever again."

"None of you, including the ones based in India, have ever been to our office even once, since the pandemic turned our lives upside down and sought to suffocate the economy. Not even once. Not Micky. Not Harshjit. Not Mohit. Not Teru San. Not Rahul. Not Deven. No one. None of you even turned-up despite an invitation for the inauguration of our new office," he added.

Grover was referring to Micky Malka of Ribbit Capital, Harshjit Sethi of Sequoia, Teruhide Sato of Beenext, Rahul Vijay Kishore of Coatue, and Deven Parekh of Insight Partners.

Ribbit Capital owns 11 per cent of shareholding in the company, Beenext holds 9.6 per cent, Sequoia 19.6 per cent, Coatue 12.4 per cent, according to data from Tracxn. Insight Partners holds around 10 per cent of the company, according to media reports.

Grover has resigned amid a tussle in the company where Grover has found himself on the opposite side of the Board, key investors in the company and his co-founders.

Meanwhile, the Singapore International Arbitration Centre (SIAC) has refused to grant emergency relief to Grover from a governance review being conducted by the company, according to sources.

Earlier this month, he had filed an arbitration plea earlier this month to stop a probe into alleged financial mismanagement in the company. The BharatPe MD, who went on leave last month till March-end, is also said to be seeking indemnity against future action by the company through the plea.

The company and Grover are also reportedly in talks to settle the matter by buying out the latter’s stake in the unicorn. Grover’s stake of 9.5 per cent in the company was worth Rs 1,915 crore based on the last funding round in August, when BharatPe was valued at $2.8 billion.