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Flipkart undertakes USD 350 mn buyback ahead of Walmart deal

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New Delhi: Moving closer to its deal with Walmart, e-commerce major Flipkart has bought back over 1.8 million shares worth more than USD 350 million from minority investors, as per information filed by Flipkart with Singapore’s Accounting and Corporate Regulatory Authority.

The filing, which was sourced by data platform Paper.vc, claimed that the move will also help Flipkart convert itself into a private company under Singapore law and values the Bengaluru-based firm at a whopping USD 17.69 billion.

The development assumes significance as US retail giant Walmart is close to sealing its deal to acquire majority stake in Flipkart. If completed, this would be one of the largest deals in the Indian retail sector and by far, the biggest in the country’s booming e-commerce market.

 

There is also buzz that Flipkart rival, Amazon, has made a formal bid, priced slightly higher than Walmart along with a breakup fee of USD 2 billion, to buy majority stake in the Indian e-commerce company founded by Sachin Bansal and Binny Bansal.

As per the documents cited by Paper.vc, Flipkart has purchased 18,95,574 redeemable preference shares and 1,74,319 non-redeemable preference shares in a transaction that closed on April 27.

According to market watchers, the move is aimed at helping Walmart buy stake from a single entity rather than multiple parties. Flipkart had undertaken a similar move earlier this year, following the closing of its Softbank-Microsoft-Ebay deal.

However, unlike the previous transaction, the current share purchase is easing the exit of a number of Flipkart’s minority shareholders. Shareholders who are said to be exiting include Shekhar Kirani of Accel, Deep Nishar (SoftBank) and a large number of pension funds, according to Paper.vc.

This would still leave biggies like Tiger Global, Accel, Microsoft, Naspers and Ebay on the deal table, it said adding that Flipkart’s holding company is now a private company – Flipkart Pte Ltd.

According to sources, Walmart is expected to pump in as much as USD 12 billion for primary and secondary shares, valuing Flipkart at about USD 20 billion — far higher than the USD 17.6 billion valuation of the current buyback.

India is a critical market for both Walmart and Amazon, and a deal with Flipkart would help either player in consolidating their position in the booming e-commerce market here.


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Cabinet clears setting up of centralised GST appellate authority

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New Delhi: The Union Cabinet on Wednesday approved setting up of a centralised Appellate Authority for Advance Ruling (AAAR) under the goods and services tax that would decide on cases where there are divergent orders at the state level.

The setting up of a centralised AAAR would require amendments to the GST Acts. The centralised authority as an appellate body will only take up cases wherein the Authority for Advance Ruling (AAR) of two states have passed divergent orders.

The Goods and Services Tax (GST) Council, headed by Finance Minister Arun Jaitley, and comprising state counterparts, in December decided to establish the centralised AAAR.

 

“The Cabinet has cleared the GST appellate authority,” a source said after the meeting of the Cabinet headed by Prime Minister Narendra Modi.

In view of the confusion created by contradictory rulings given by different AARs on the same or similar issues, the industry had been demanding a centralised appellate authority that could reconcile the contradictory verdicts of different AARs.

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Urbanisation to be big driver of Indian economic growth: Kant

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Davos: Urbanisation will be a big driver of economic growth in India going forward, supported by favourable macroeconomic factors, accelerated infrastructure building and continuing reforms, NITI Aayog CEO Amitabh Kant said.

Speaking here at an event on sidelines of the World Economic Forum Annual Meeting, he also said the Indian economy may even exceed the IMF growth forecast of 7.5 per cent for the country.

Kant said IMF has forecast 7.5 per cent growth for India despite a gloomy outlook for the global economy and this itself is good, though there are expectations that this estimate would be surpassed. He said India is giving a big push to urbanisation with more than 100 smart cities being developed.

 

The country is also using technology in a big way to change the way business and governance is done, he added. Besides a massive infrastructure building is happening, bank credit flow has rebounded and macroeconomic factors like inflation and fiscal deficit are also being supportive, Kant said.

DIPP Secretary Ramesh Abhishek noted that states are competing with each other to attract investments and all political parties have adopted the economic reform process. He listed various reform initiatives undertaken in India, including on areas like ease of doing business, FDI, manufacturing and taxation.

They were speaking at Institutional investors’ breakfast roundtable, organised by the industry chamber CII and Kotak Mahindra Bank. Other participants included CII Director General Chandrajit Banerjee and leaders from Indian and foreign companies.

On questions about some persisting issues in doing business including on tax and insolvency related issues, Abhishek said a lot of efforts have been put in to remove all bottlenecks and starting a business doesn’t take more than a day. Besides, special provisions have been made for startups and angel investors, he added.

Kant said efforts are also being made to remove all physical intervention and digitise the entire process of inter-ministerial and inter-department consultations to fast-track the decisions.

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India will surpass China, says Raghuram Rajan

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Davos: India will eventually surpass China in economic size and will be in a better position to create the infrastructure being promised by the Chinese side in South Asian countries, former RBI Governor Raghuram Rajan said.

Addressing a session on Strategic Outlook for South Asia, Dr Rajan said that the Indian economy would continue to grow while growth rate is slowing down in China.

“Historically, India had a bigger role in the region but China has now grown much bigger than India and has presented itself as a counter-balance to India in the region,” Dr Rajan said at the WEF Annual Meeting 2019.

 

“India will become bigger than China eventually as China would slow down and India would continue to grow. So India will be in a better position to create the infrastructure in the region which China is promising today. But this competition is good for the region and it will benefit for sure,” he said.

The comments assume significance with China working on a lot of infrastructure projects across the region. In 2017, India became the sixth largest economy with a GDP of $2.59 trillion while China was the second large with a GDP of $12.23 trillion.

At the same session, Nepal PM K.P. Sharma Oli cited collaboration with China as well as India as reasons for the economic growth.

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