VSoft develops app for instant transfer of money

VSoft Technologies, a banking technology solutions firm, has developed an app for smoother transfer of money. Unlike in mobile wallets, the app doesn’t require people to store money in it. The app helps people to transfer and receive money instantaneously.

“With ‘Jeb’, money remains in the respective accounts and thus continues to earn money unlike in mobile wallets where you are supposed to store money for payments,” Murthy Veeraghanta, Chairman and Chief Executive Officer of VSoft Technologies, said. It enables transactions based on the United Payments Interface, promoted by the National Payments Corporation of India (NPCI), a common body for all retail payment systems in the country.

Showcasing the app here, he said the app has a one-time registration to come on board the technology platform.

“People can link their bank accounts using their phones, virtual ids and QR code (generated with the help of the respective banks) and Aadhaar card. The transactions are secured with a PIN number,” he said.

“Even in cases where the users do not possess cash and credit or debit cards and need to make an urgent purchase or transaction, the app comes in handy and empowers the users to instantly transfer money into the merchant’s bank account by the means of a mobile phone,” he said.

The firm is in talks with banks, financial institutions and retail businesses to promote the app, he added.

It will also be given as a white-label (banks and other institutes can brand it as their own) product, he said.

Federal Bank hopes to cash in on better credit growth in FY17

MD and CEO Shyam Srinivasan says NPA slippages are coming down and credit is picking up

Federal Bank posted first-quarter numbers above Street estimates, with profits rising 18.4 per cent to 167 crore albeit with some uptick in NPAs. Speaking to Bloomberg TV India, Federal Bank Managing Director and CEO Shyam Srinivasan says NPA slippages are coming down and credit is picking up. The bank aims to sustain credit growth of 19 per cent in FY17, he said. Excerpts:

Federal Bank’s profits have increased quite substantially. What contributed to the robust results?

The quarter began quite well from our stand-point — in terms of the areas where we wanted to see improvement. Operating profit grew close to 16 per cent and overall net profit grew by over 18 per cent.

The important features of the quarter were certainly in the balance-sheet growth — both the credit-deposit ratio and the asset portfolio grew way above the industry averages, and the assets growth was close to 19 per cent. The credit-deposit ratio expansion was close to 73 per cent. So we saw good utilisation.

And in terms of margin expansion, it was driven by few fundamental features such as credit deployment and the lower cost of deposits.

So the margin expansion, lower slippages leading to lower credit cost and good cost management saw improvements in net interest margins, profitability and our cost-income ratio, which showed up in the P&L (profit and loss statement).

Asset quality has not improved much as the NPAs in this quarter have been fairly flat. What is the outlook going forward for FY17?

The crucial part is to look not just at the (NPA) ratio, because the ratio is sometimes flattened if you have any sale to asset reconstruction company (ARC) or a technical write-off or a combination of both.

So the important part is to see the absolute movement in slippages. As against some 1,670 crore slippages in last quarter (Q4), the first quarter of FY17 saw the overall gross NPAs at 1,747, which is roughly about 80 crore increase in the slippages. So we think that trend is the most important one.

Importantly, the slippage for the quarter was almost half of the previous two quarters of FY16 — 280 crore was the slippage during this quarter. That is the improving trend we would like to continue. And if the trend continues, the outcomes are going to be better during FY17. So, what is important is to ensure that the slippages remain in control, and that trend is possible.

What is your outlook on the advances and deposit growth?

Last year (FY16) our credit growth was 19 per cent and we would certainly like to keep that trend. Credit growth has been quite robust during the last three quarters, including Q1 of FY17. A good proportion of that was largely driven by a good pick-up in our corporate lending in last year’s Q4. And we see that opportunity very much in the market on account of some banks being distracted and our own internal strength being enhanced.

So I see the ability to grow credit in and around the region of what we did in the first quarter. That’s quite possible.

What are your expectations on the upcoming credit policy?

I’m not going to second guess what the RBI Governor is intending to do. I think the liquidity is pretty strong.

So the decision to lower rates will be driven by many other factors. From our point of view, it is a very encouraging sign at where the bond yields are now and that would mean the treasury book will see some gain. And the focus is on leveraging the opportunity of good-quality liability profile and ensuring credit growth.

Solar power tariffs expected to fall to as low as Rs3.50 a unit in 3 years

Fall in solar power tariffs would be a shot in the arm for the government, which has pushed renewable energy to the top of its energy security agenda

Solar power tariffs in India, which have fallen below Rs.5 per unit since November, are expected to fall further as the industry doubles volumes every year and the cost of producing power continues to decline.

At least three industry experts Mint spoke to said that tariffs will fall to as low as Rs.3.5 per unit in three years owing to better use of technology, higher volumes, increased competition and a favourable regulatory environment.

“There is no question about whether they (tariffs) will go down or not. Typically we are seeing a 3-4% increase in efficiency and about 3-4% reduction in costs. So we expect that solar tariffs will continue to go down by 5-8% year-on-year,” said Vikram Kailas, managing director at renewable energy producer Mytrah Energy Ltd.

Solar module prices have already fallen sharply, down by 10% in the first half of 2016 , leading to higher margins and reviving projects which were termed unviable earlier, Mintreported on Monday.

“The cost of production continues to come down. The challenge of course is by how much and whether it becomes unsustainable in specific points in time,” said Vinay Rustagi, managing director, Bridge to India, a consulting firm.

Bridge to India sees tariffs falling by at least 5% annually and calls a sub-Rs.4 per unit tariff a realistic number.

“Other subsectors within power generation do not expect (a) decline in prices. So from grid-parity or competitive aspect, solar is the most attractive source of energy for long-term,” added Rustagi.

A fall in tariffs would be a shot in the arm for the government, which has pushed renewable energy to the top of its energy security agenda and has been looking to provide green power at less than Rs.4.50 a unit. India has targeted 100 gigawatts (GW) of solar and 60GW of wind energy capacity by 2022. It currently has about 8GW of solar capacity and about 27GW of wind power capacity.

Bigger factories and lower cost of manufacturing will ultimately lead to a reduction in tariffs over the next few years, said Pashupathy Gopalan, president, Asia Pacific, SunEdison Inc., which has over 1GW of operational and under-construction solar projects in India.

Indeed, solar tariffs hit a record-low in November last year when SunEdison bid Rs.4.63 per unit in a reverse online auction and fell to Rs.4.34 in Finland-based Fortum’s bid at a January e-auction.

To be sure, many have called the falling tariffs “unviable” and “suicidal”, citing instances of companies unable to find financial closure for their projects.

Power producers argue that they have been able to bid aggressively at government-provided solar parks thanks to ready-to-use infrastructure such as land and transmission facilities. Global firms such as Fortum, SoftBank and SunEdison have also used aggressive bidding as a means to get a foot in the door of this nascent sector.

Between 2010 and 2015, solar capacity addition had doubled annually. It is expected to grow even faster to touch 12GW by the end of this year. India will then become the fourth largest solar market, overtaking the UK, Germany and France.

While lower tariffs will be a positive for consumers and the environment, there are concerns that investors won’t get the returns they want. “This is, end of the day, a commodity industry,” SunEdison’s Gopalan said. Returns in the sector range from 12% to 16% depending on tariffs and other factors.

In India, which holds reverse auctions for tendering solar projects, the role of the buyer and seller is reversed and a business bid is won by quoting prices downwards. “In any other country, bidding is a double-edged sword, so they have a condition that one cannot bid below a certain price or IRR (internal rate of return). But India does not have any such condition. We believe that people will continue to be aggressive,” Mytrah’s Kailas said.

Tariffs will go down only if there will be a decrease in the overall cost of setting up solar projects from Rs.5.5 crore per MW to Rs.3-4 crore and plant load factors increase from the current 15-20%, said Anubhav Gupta, an analyst at Maybank Kim Eng Securities India.

India Weekly Market Updates from 16 July to 22 July 2016

India Market Weekly Economy: Service tax collection by the city zone department in the first quarter has increased by 23 per cent, which has helped it surpass the target by nearly 4 per cent for the period. http://buff.ly/2a4Bta0 Foreign investors have brought in over Rs 9,700 crore into the Indian capital markets in the first two weeks of this month on improving prospects for the economy. http://buff.ly/29Lkvtx Venkaiah Naidu on Sunday said that the tax-rate cap on GST in the Constitution bill sought by the Congress was not feasible but hoped that the GST bill will be passed. http://buff.ly/2a4Cqzn Amid a clamour among bankers for immunity from action by agencies like CBI and CVC, RBI Guv Raghuram Rajan has disapproved of any "blanket sort of relief." http://buff.ly/29VhU4o Labour Minister Bandaru Dattatreya has said the EPFO may invest up to 12 per cent of its investable amount in equities over a period of time. http://buff.ly/29VhJGh IDS: Taxmen to seek info from black money holders. http://buff.ly/29VhMBO Companies will now have to ensure that all statements annexed with the cost audit report are first approved by their board of directors before final submission. http://buff.ly/2a7aL2p Introduction of the much-awaited GST is likely to address issue of cascading and dual taxation impact on Indian media and entertainment industry, a sunrise sector, says report. http://buff.ly/29RTeGv Imports will become easier from the next year as the CBEC is planning to go paperless and move towards a completely integrated Customs system for facilitating documentation and fast-tracking clearances of consignments. http://buff.ly/29QHQQh Banks and financial institutions have sanctioned about Rs 78,830 crore funding for clean energy projects, of which Rs 33,482.83 crore has been released till March end this year, Parliament was informed on Monday. http://buff.ly/2a4nEZl In a bid to shore up cash- strapped public sector banks, the government on Tuesday injected Rs 22,915 crore capital in 13 lenders including SBI and Indian Overseas Bank to revive loan growth that has hit a two-decade low. http://buff.ly/29VpbBn GSMA launches mobile connect in India. At present, around 42 operators in 22 countries around the world are implementing Mobile Connect, making it available to nearly three billion customers. http://buff.ly/2a7QvvX The payments landscape in emerging markets, including India, is expected to transform in the wake of accelerating growth in electronic payments with advent of new and disruptive market players and alternative business models, a PwC report said. http://buff.ly/29SZ3EN The International Monetary Fund on Tuesday slightly trimmed India's growth projections to 7.4 per cent for 2016 and 2017, a drop of 0.1 per cent from its previous forecast, attributing it to a more sluggish investment recovery while declaring Brexit as a "spanner" in the global economic recovery. http://buff.ly/2a7YY2c Boeing Co (BA.N) said on Tuesday it expects Indian airlines to order 1,850 new aircraft worth $265 billion over the next 20 years. http://buff.ly/29NUeuP The National Highways Authority of India (NHAI) on Tuesday said it would issue bids for construction of roads and highways with a total length of 10,000 km by the end of the current fiscal. http://buff.ly/29UHvJG Minister of State for Finance Santosh Kumar Gangwar on Tuesday, quoting the Financial Stability Report of RBI, said bad loans of public sector banks may rise to 10.1 per cent by March 2017. http://buff.ly/29NVaPF Govt against raising FDI cap in newspapers, periodicals. http://buff.ly/29T3FL8 In face of a CAG report drilling holes into subsidy savings made on LPG, the government on Wednesday asserted that over Rs 21,000 crore was indeed saved in two years by directly transferring subsidy to user bank accounts. http://buff.ly/2a0xSuf Tesla motors on Saturday said that India will "definitely" be a market for their next generation low-cost sustainable model-3, with the Union road and transport minister Nitin Gadkari asking the iconic company to outline their proposals for entry into the Indian market. http://buff.ly/2a75FTu Negative global cues, combined with a logjam in parliament and disappointing quarterly results, subdued the Indian equity markets on Friday. http://buff.ly/29RvHW The additional capital infusion of Rs 22,915 crore into 13 weak banks announced recently by the central government is positive for them but the actual capital needs were much more higher, said global credit rating agency Moody's Investors Service. http://buff.ly/29SV89t Corporates:  Fashion apparel brand Spykar, which is expanding its presence in the women''s wear segment, is aiming to double its sales to Rs 700 crore in the next four years. http://buff.ly/2a79rfS In a bonanza to oil producing states like Assam, the government has ordered state-owned ONGC and Oil India to pay royalty to them on the gross price for crude oil and not the net rate they actually realise. http://buff.ly/29RHrrm Bandhan Bank on Monday further eased the micro lending rate by 60 basis points to bring interest rate down to 19.9% with immediate effect. http://buff.ly/29V5FET Homegrown FMCG major Dabur on Monday said it has acquired South Africa-based Discaria Trading (PTY) Ltd, a firm engaged in manufacturing and trading of cosmetics, for an undisclosed amount. http://buff.ly/29V6y0k Shares of Reliance Industries on Monday rose by nearly 3 per cent after the company reported a bigger-than-expected 18 per cent jump in June quarter profit. http://buff.ly/29VlDPn Infosys co-founder and former CII president Kris Gopalakrishnan has said that almost 70% of startups globally will fail and only 5 to 10% will become large and scale up. http://buff.ly/29VryUy? Storage battery major Exide Industries will be investing Rs 1,400 crore over the next two years, of which Rs 700 crore will be at Haldia in West Bengal to introduce high performance automotive batteries with new-age punch-grid technology. http://buff.ly/2a4PxAe Glenmark Pharmaceuticals has received final approval from the US health regulator USFDA for rosuvastatin calcium tablets, used in lowering cholesterol. http://buff.ly/2afSyPE Adani Group flagship Adani Enterprises on Wednesday said it plans to raise up to Rs 6,000 crore via issuance of securities to sustain rapid growth. http://buff.ly/29NjaXz Piramal Enterprises on Thursday said it is looking to raise up to Rs 1,000 crore through issuance of non-convertible debentures (NCDs) on private placement basis. http://buff.ly/29XSH6X Ford Motor Company is in the process of setting up a Research and Development (R&D) centre here, the first such facility to be located outside of the US, Finance Minister O Panneerselvam told the House. http://buff.ly/29Ybh2T ITC Ltd has planned multiple projects with an outlay of Rs 25,000 crore over the next five years, Chairman and Chief Executive Officer Y.C. Deveshwar told shareholders on Friday. http://buff.ly/29YtDAL Global events: The United States and India have agreed to take several key steps in petroleum and energy sector, aimed towards achieving the ambitious goal of energy independence. http://buff.ly/29ThLjN State-owned Saudi Aramco says it has signed a deal for a new gas project that will be worth more than 50 billion Saudi riyals (USD 13.3 billion) when complete in 2019 aimed at meeting the kingdom’s growing domestic demand for energy. http://buff.ly/2a129ZU Politics: American Ports have evinced a keen interest in a comprehensive port-led development, especially the ambitious Sagarmala programme, Indian officials said as the Union Road Transport and Highways Minister Nitin Gadkari concluded his week-long trip in Los Angeles. http://buff.ly/2a5zVvt

Emerging markets, including India, will drive innovation in payments industry: PwC

The payments landscape in emerging markets, including India, is expected to transform in the wake of accelerating growth in electronic payments with advent of new and disruptive market players and alternative business models, a PwC report said.

"The growth of economic power within the emerging markets and their potential to leapfrog developments in mature markets will aid the creation of a state-of-the-art payments ecosystem," multinational accounting firm PricewaterhouseCoopers said in its report.

'Emerging Markets - Driving the Payments Transformation' examines the dynamic nature of emerging markets, especially payments, which creates challenges that have never confronted the developed world, but also opens up opportunities for innovation and growth.

"Given the underlying infrastructural issues in emerging markets, there needs to be a focus on developing the infrastructure both for issuing and acceptance of payments products and instruments. Alternate payment instruments and modes like mobile wallets, virtual cards and accounts, social media and contactless payments are gaining traction for specific use cases, especially the unbanked customer base, driven by technology, customer needs and declining margin," said Vivek Belgavi, FinTech Leader, PwC India.

In India, the new payments banks (who cannot lend but can borrow up to a limit) are expected to start operations in 2016. Since their focus will be solely on transactions, they will look at providing seamless transaction options for payments of utility bills, mobile bills, and school or college fees, either electronically or through the banking touch points they create.

At the core of this change will be technology, which in addition to maintaining current standards of reliability, is expected to also reduce transaction times, improve security, increase acceptance channels (especially physical), and - in the case of merchants - lower transaction costs, it said.

"Given the large unbanked population and the growing regulatory agenda to engage these people into the financial system, emerging markets are in a unique position to drive growth in the payments industry," said Hugh Harley, financial services leader for emerging markets, PwC.

The report said that the payments ecosystem will also be redefined by regulatory interventions, to balance the disruption of alternative payment service providers with the reliability of traditional players.

Noting 85 per cent of the global population resides in emerging markets, it said that customer expectations are driving the change in payments industry in these markets.

"Nearly 90 per cent of people under 30, which account for 75 per cent of the online transactions, reside within the emerging markets. This is favouring the growth of online transactions, which is in turn curtailing the black economy and stimulating economic growth."

It said though literacy rates and urbanisation are on the rise, access to basic financial services poses a major challenge in these emerging markets, and in response, there has been a rapid expansion of new economically viable technologies and innovations like e-banking and mobile money.

With regulators in emerging markets realising the huge costs, risks and inefficiencies associated with cash transactions and recognising importance of electronic payment methods in promoting access to formal credit and savings instruments, drastic measures like introducing differentiated banking licenses, tax benefits on electronic payments, awareness campaigns are being taken to build a sustainable electronic payments ecosystem, it said. Many governments have opened their markets to non-bank players aimed at furthering financial inclusion, it added.

With the proliferation of smartphones and tablets, which are serving as a convenient, cash free and card-free financial transaction medium, emerging markets are driving the growth in e-commerce spending, and there is a rapid development of new payment concepts based on mobile infrastructure initiated by the online retailers.

"Banking on high customer adoption of these models, this has the potential to displace traditional cash with other electronic modes of payments," it said.   --IANS

Almost 70% of start-ups globally will fail: Infosys co-founder Kris Gopalakrishnan

Infosys Co-Founder and former CII President Kris Gopalakrishnan on Monday, said almost seventy per cent of start-ups globally will fail and only five to ten per cent will become large and scale up.

"Almost seventy per cent of start-ups will fail. About 20% will survive but will not grow. They will remain small enterprises, and may be only five to ten per cent will become large and scale up - that is the spastics globally," he told reporters at the announcement of the 12th Innovation Summit 2016 here, of which he is the chairman.

This should not, however, be treated as a concern or a challenge, but it is a part of natural process of evolution, he added.

"The key is what are the learnings, and how do we continue to nurture this," he said.
Asked who has made a mark globally as of now, Gopalakrishnan said Flipkart and Snapdeal have made a mark and may be in three to five years from now, people would start talking about these companies in a big way.

"I would say Flipkart and Snapdeal - these companies have made a mark. Paytm and Freshdesk - there are so many of them actually. They have made a mark and that process will continue. May be three years from now and five years from now, you would start talking about these companies in a big way," he said.

Asked if it is a worrying factor that most of the e-retailers are not making profits, Gopalakrishnan said there will be some consolidation and hoped some Indian-started entity will remain because global domination is possible in the internet field as it is not bound by any borders.

"When you look at transport, hospitality, logistics - these are the companies, which will be the names in future in years to come," he added.

Replying to a query, Gopalakrishnan said both private equity and venture capital funding has slowed down for different reason because the exits are not happening.

"Both private equity and venture funding have slowed down for a different reason because exits are not there. When this happens, money is not recycled," he said.

"Most of the venture funds are waiting for some exits to happen and the exits are happening through mergers and acquisitions - consolidation where you may no be able to get the full value of investment," he said.

Asked if he sees a Google-type company emerging out of India, Gopalakrishnan said, "Yes it is possible, but we also need to remember that, across the world there is one Google."

Renault's medium term strategy for India

Targeted at multiple segments of the market, Renault’s plan includes launching at least five new models between 2017 and 2019

Encouraged by the success of the small car Kwid, Renault India Pvt. Ltd plans to launch a raft of new models over the next three years as it seeks to further strengthen its hold on one of the fastest growing auto markets of the world.

Targeted at multiple segments of the market, the plan includes launching at least five new models between 2017 and 2019, two people familiar with the company’s plan said, requesting anonymity.

In an emailed response, Sumit Sawhney, managing director and chief executive of Renault India, said, “While I cannot divulge too many details on the future product strategy, I can confirm that we have an aggressive product plan for India, clearly demonstrating that India is one of the key markets in Renault’s global expansion plans.”

Sawhney pointed out that from a product perspective for the second half of 2016, one can expect a number of enhancements to the existing range.

It has already announced a 1-litre variant and automated manual transmission (AMT) option on the Kwid that will be launched this year.

Considering the popularity of sport utility vehicles (SUVs) in India, most of Renault’s future models would be targeted at SUV buyers, said the first of the two people cited above. Among others, Renault aims to be a serious rival to SUV market leader Mahindra and Mahindra Ltd. “In another two years or so, they will have at least one model that will be pitted against one in the Mahindra line-up,” he said.

Helped by new model launches, particularly in the utility vehicles segment, passenger vehicles sales in India have expanded for 12 consecutive months. Sales rose 3% to 223,000 units in June, compared with a year ago. Overall sales growth was outpaced by the growth in the utility vehicle segment, which expanded 35.24% to 55,825 units in the same month, according to industry body Society of Indian Automobile Manufacturer, or Siam (Siam). The SUV share in the overall passenger vehicle market rose 25% in the June quarter from 19% a year ago.

The first of the new model pipeline is likely to be a premium sedan based on the Megane hatchback. The model, slated for an India launch in 2017, will replace the Fluence sedan and is positioned between the Honda City and Civic. This is set to be followed by the new generation Koleos, a premium SUV that is expected to go on sale in India sometime in 2017-end or 2018-beginning, said the second of the two people cited above. Based on the Renault Nissan’s common module family (CMF) platform, Renault launched the new-generation Koleos in March 2016 at the Beijing Auto show. The CMF platform is a vehicle architecture developed by Renault SA and Nissan Motor Co. that allows developing multiple body types on a common structure. Considering the poor response of the current generation Koleos, Renault may re-engineer the car heavily as and when it decides to launch it here, he said. It is pitted against the Hyundai Santa Fe among other models, he added.

The Koleos is likely to be followed by the Kaptur, a seven-seater crossover that will compete with the Hyundai Creta, among other models, and is expected to be launched in India by the end of 2017, said the first of the two people. Renault also plans to bring out another model on the CMF platform. Resembling a van and expected in 2018, the model will compete with the Maruti Omni and Eeco. Also in the works is a rival to the Suzuki Vitara Brezza, a compact SUV, which is expected to be launched in India in the beginning of 2019, he said.

Kwid, an SUV-styled hatchback launched in September 2015, has helped the local arm of the French carmaker outsell rival Honda Cars India Ltd and become the fourth largest car maker in the June quarter, according to Siam.

In the three months that ended in June, Renault sold 25,374 units against Honda Cars India Ltd’s 25,064 units in the same period a year ago.

In a market where buyers have a strong preference for models from Maruti Suzuki India Ltd and Hyundai Motor India Ltd, Renault has managed to corner the much-sought-after 5% share for the first time since its entry in the passenger car segment. Renault’s market share during the June quarter was 5.33% against 0.17% over a year ago. Honda’s share slipped to 5.27% from 8.56% a year ago in the same period as sales of its flagship City and other car models, including Amaze and Brio, plummeted amid a change in buyer preference for petrol models and heightening competition. Since its launch in September 2015, Renault has sold over 65,000 units of the Kwid and received over 125,000 bookings, said Sawhney. A fast-paced expansion of sales outlets has also helped. Albeit still smaller compared with bigger rivals, Renault’s sales and service network went up to 250 at the end of 2015 from 157 a year ago. It plans to add another 20 by the end of the current calendar year.

“The success in the small car has given them (Renault) immense confidence. Considering that it constitutes a close to 86% of the market, no global car maker can succeed in India without cracking it,” said Abdul Majeed, auto practice leader at Price Waterhouse and Co., a consulting firm. He however, cautioned that Renault will need to constantly beef up its distribution and retain a sharp focus on the after-sales service to continue the momentum.