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Renault to propose joint holding company with Nissan: Nikkei report

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Tokyo : Renault SA will propose to Nissan Motor Co a plan to create a joint holding company which would give both firms equal footing as the French automaker seeks further integration with its Japanese partner, the Nikkei newspaper reported on Friday.
Under the proposal, both firms would nominate a nearly equal number of directors to the new company in which ordinary shares in both Nissan and Renault would be transferred on a balanced basis, the newspaper said, without citing sources.
This would effectively dilute the stake held by the French government in Renault to around 7-8 percent, from its current 15 percent, it added. The new company would be headquartered in a third country, such as Singapore.
Renault plans to make the proposal to Nissan soon, the Nikkei said, having modified an earlier merger idea which Nissan rejected on April 12.
Nissan declined to comment on the issue. The Financial Times newspaper reported that both Nissan and the Japanese government have refused to engage in merger talks with Renault.
The report of the proposal comes as the outlook for the alliance – one of the world’s top automaking partnerships – has clouded since the arrest in November of its main architect, Carlos Ghosn, for suspected financial misconduct.
It also comes as Nissan’s financial performance struggles following years of focusing on volume sales over building its brand, particularly in the United States, its biggest market.
This week, the Japanese automaker slashed its profit forecast for the year just ended to its lowest in nearly a decade, citing weakness in its U.S. operations.
Renault for years has been vying for a closer merger with Nissan, which it rescued from the brink of bankruptcy two decades ago. Ghosn had been working to achieve a deeper integration before his arrest on financial misconduct charges in November last year.
While the automakers have been consolidating many of their operations over the past decade, including procurement and production, many executives at Nissan have opposed an all-out merger with Renault.
Instead, Nissan has argued for a more equal footing with Renault, which holds a 43 percent stake in its bigger partner. Nissan holds a 15 percent stake in Renault.
It was unclear whether Renault would hold the casting vote in major decisions at the new company, as it did in Renault-Nissan B.V., a strategic management company jointly held by both companies which oversaw operations for the partnership.
That company was disbanded last month after an internal investigation by Nissan following Ghosn’s arrest indicated that the company may have been involved with financial misconduct by the former chairman.
Nissan’s partnership with Mitsubishi Motors Corp, in which it holds a 34 percent stake, would remain unchanged under the new proposal, the Nikkei said.


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ADB cuts India’s FY20 GDP growth forecast to 7% on fiscal shortfall worries

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New Delhi: Asian Development Bank on Thursday lowered India’s GDP growth forecast to 7 per cent for the current year on the back of fiscal shortfall concerns.

“India is expected to grow by 7 per cent in 2019 (FY20) and 7.2 per cent in 2020 (FY21), slightly slower than projected in April because the fiscal 2018 outturn fell short,” ADB said in its supplement to the Asian Development Outlook 2019.

For the south Asian region, ADB said the outlook remains robust, with growth projected at 6.6 per cent in 2019 and 6.7 per cent in 2020.

 

Earlier in April this year too, the Manila-based multi-lateral funding agency had lowered India’s growth forecast for FY20 to 7.2 per cent from 7.6 per cent estimated previously due to moderation in global demand and likely shortfall in revenue on the domestic front.

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Jalan panel proposes ‘nominal’ transfer of RBI funds to govt over 3-5 years

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New Delhi: The Union government may not get the windfall gain it was expecting from the Reserve Bank of India (RBI) reserves as the Bimal Jalan committee, tasked with reviewing the central bank’s economic capital framework, has proposed a “nominal” transfer of surplus to the central government in a phased manner, according to a source in the know.

“The report has proposed a formula for a nominal transfer of a portion of the RBI’s reserves to the central government in a period of three-five years. This is in line with the current practice being followed by the RBI for transferring dividend annually,” a person close to the development said.

The person said the panel members might “not be unanimous” on the suggestions the committee made. These will be submitted to RBI Governor Shaktikanta Das “in a few days”. The RBI’s central board, headed by Das, will take up the matter.

 

The report would likely include a dissent note by Finance Secretary Subhash Chandra Garg, who is the government’s representative on the panel.

The committee has recommended a periodic review of the RBI’s economic capital framework, according to the source.

Initially, the finance ministry had expected around Rs 3 trillion from the RBI’s reserve funds, which were at the heart of a conflict between the regulator and the government last year.

On the insistence of the finance ministry, the central board of the RBI formed a six-member committee — headed by Jalan and co-chaired by former RBI deputy governor Rakesh Mohan — in December to review the central bank’s economic capital framework.

The main difference of opinion within the panel was over transferring the RBI’s “excess” capital reserves. While most panel members are in favour of a phased transfer of the RBI’s capital reserves to the government over the years, the government’s view, voiced by Garg, was for a one-time transfer.

For this financial year, the government had accounted for around Rs 20,000 crore as “additional dividend” from the RBI, a finance ministry official said. This, the official said, is unlikely to happen.

In the Receipts Budget, allocation towards the “dividend or surplus of RBI, nationalised banks and financial institutions” was increased by Rs 23,130 crore to Rs 1.06 trillion in 2019-20, compared to the Interim Budget.

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Nod to bankruptcy code changes, will help home buyers

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New Delhi: The government today gave its approval to seven amendments to the Insolvency and Bankruptcy Code (IBC), a move that will benefit unsecured creditors like home buyers in a big way.

Minister for Information and Broadcasting Prakash Javadekar said, the IBC (Amendment) Bill, 2019, would be introduced in Parliament during this session and will have retrospective effect. An official statement read: “The amendments aim to fill critical gaps in the corporate insolvency resolution framework as enshrined in the Code.”

of all financial creditors, including unsecured ones (home buyers) covered under Section 21 (6A) “shall be cast in accordance with the decision approved by the highest voting share (more than 50 per cent) of financial creditors on present and voting basis”, it said. It also said greater emphasis had been given “on the need for time-bound disposal at application stage and a deadline for completion of CSRP within an overall limit of 330 days, including litigation and other judicial processes”. Experts say this provision will help unsecured creditors (mostly home buyers) in a big way.

 
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