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Friday, July 28, 2017

Swiggy gets $80 million from Naspers and others, gains financial heft against Zomato

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Bengaluru: Online food delivery start-up Swiggy (Bundl Technologies Pvt. Ltd) Tuesday said it has raised $80 million in a Series E funding round led by South African media company Naspers Ltd. The fresh funds could help the company gain financial edge over rival Zomato Media Pvt. Ltd.

Existing investors Accel Partners, SAIF Partners, Bessemer Venture Partners, Harmony Partners and Norwest Venture Partners also participated in the funding round.

Mint reported on 27 March that Swiggy is in talks to raise at least $50 million from Naspers and existing investors.

The company plans to make significant investments in technology, including automation, data sciences, machine learning and personalization.

“In a span of three years, Swiggy has been instrumental in changing the way India eats by delivering delightful consumer experiences. As the market leader, we are leveraging our deep understanding of the Indian consumer and the gaps in the market to introduce disruptive and highly differentiated service offerings,” Sriharsha Majety, co-founder and chief executive at Swiggy, said in a statement.

Swiggy is among the best-funded food delivery start-ups in India, having raised at about $155 million in equity from Accel Partners, Bessemer Venture Partners, Harmony Partners, RB Investments, Norwest Venture Partners, SAIF Partners and Apoletto, the personal investment firm of Russian billionaire and founder of DST Global, Yuri Milner. It has also raised about $8 million in venture debt from InnoVen Capital.

This is second only to Zomato’s $224 million among home-grown food technology start-ups.

However, while Zomato offers restaurant listings and food delivery, Swiggy is purely into food delivery business.

Swiggy, which competes with Zomato and Foodpanda India, currently operates in eight cities—Bengaluru, Delhi, Mumbai, Chennai, Pune, Gurgaon, Hyderabad and Kolkata. The company is also piloting its own kitchens in Bengaluru.

Food start-ups are among the segments worst hit by a slowdown in funding, which have prompted companies to hold back on expansion while burning huge amounts of cash to lure customers through offers and discounts. Some investors released cash only when certain business goals were achieved.

Some food start-ups such as Dazo and Eatlo shut shop, while others were acquired. For instance, hyperlocal grocery delivery start-up Grofers bought Spoonjoy.

Swiggy posted a near 65-fold increase in losses for the fiscal year ended March 2016, indicating heavy cash burn in food start-ups, Mint reported on 18 November, citing the Registrar of Companies.

Swiggy’s revenue rose to Rs23.59 crore for the year ended 31 March from Rs11.59 lakh a year earlier. Losses bulged to Rs137.18 crore from Rs2.12 crore in fiscal 2015, the company’s filing with the Registrar of Companies shows. Total expenses stood at Rs160.77 crore, implying Swiggy burnt about Rs13 crore per month in FY16.

In April, Zomato claimed that its revenue in 2016-17 rose 80% from a year ago to touch $49 million due to growth in advertisements and the food delivery business. The company’s advertising revenue, its core business until it entered food delivery in May 2015, grew 58% year on year to $38 million in FY17, while the food delivery business clocked $9 million, an eight-fold growth over FY16.

Zomato claims to have recorded 2.1 million monthly orders in March.

Swiggy’s peers in the US such as Postmates and DoorDash charge a fee of $3-7 for each delivery. According to industry experts, the average order value in the US is around $20, significantly more than the average Rs300-400 in India. Consequently, delivery companies in India, which charge clients a commission of 10-20% of the order value, end up losing money on every delivery that costs upwards of Rs50

NR Narayana Murthy slams Infosys COO pay hike

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BENGALURU: In a continuing skirmish between Infosys’ founders and the board of the company over how executives are paid, only 24% of the promoters voted in favour of a salary hike for chief operating officer UB Pravin Rao, with the rest abstaining, according to results of a postal ballot filed with the Bombay Stock Exchange on Sunday evening.

In a letter addressed to reporters, Infosys founder NR Narayana Murthy said the quantum of increase would erode the trust of the rank-and-file employees.

“Giving nearly 60% to 70% increase in compensation for a top-level person (even including performance-based variable pay) when the compensation for most of the employees in the company was increased by just 6% to 8% is, in my opinion, not proper,” Murthy said.

In October, Infosys said it was raising Rao’s salary to include a fixed compensation of Rs 4.62 crore and variable compensation of Rs 3.88 crore per annum.

Also Read: Narayana Murthy’s mail to media on COO salary – ‘With what conscience can Pravin tell juniors to make sacrifices?’

This was put to vote on February 23, and voting ended on Friday. The postal ballot also asked shareholders to vote on the appointment of DN Prahlad as independent director and to approve an amendment to the company’s Articles of Association to allow it to buy back shares.

Overall, Rao’s salary hike passed with 67% of votes cast being in favour of it. About 33% of the votes cast were against the raise.

The promoters have abstained once before. The percentage of promoter votes cast were about the same as those that were voted in favour of extending Infosys CEO Vishal Sikka’s employment last year.

About 74% of shares held by public institutional shareholders also voted on Rao’s salary. Of those, 25% were against the increase. Of the 46% of shares that were voted by public– non-institutional shareholders – 67% were against the increase. Murthy said no previous resolution of the company had received such a low approval. Over 90% of the votes cast were in favour of the other resolutions on the ballot.

Murthy, who is at the centre of a governance battle with the company’s board, said abstention of the majority of the promoter shares from the vote was not a reflection of his faith in Rao. “This abstention has nothing to do with Pravin. Those of us who have always stood for fairness in compensation and practiced it, right from the day Infosys was founded, will have to demonstrate it when needed. This is a time when it is needed. Nothing more and nothing less,” Murthy said in the email sent to reporters.

He said the quantum of Rao’s salary increase was unfair, compared to the wage hikes given to the rest of the employees.

“The impact of such a decision will likely erode the trust and faith of the employees in the management and the board. With what conscience can a decent person like Pravin (a man schooled in Infosys values for over 30 years) tell his juniors that they should work hard and make sacrifice to reduce cost and protect margin?” he asked.

Shriram Subramanian, managing director of shareholder advisory firm InGovern, said the founders were reiterating their stand on high compensation.

“They have been talking about this. They abstained on the vote last year as well. They are making their stand on high compensation very clear. The low vote count is a reflection of that,” Subramanian said. He added there was nothing further to be read into the vote tally.

Infosys founders have also previously questioned the salary being paid to Sikka, which was raised to $11million last year. The founders have also been unhappy with the idea that the board could ignore the fact that targets have not been met, to give Sikka a higher proportion of variable pay. Murthy raised that concern too, in his email.

“Finally, given the current poor governance standards at Infosys, let us also remember that these targets for variable pay may not be adhered to, if the board wants to favour a top management person,” he said. Infosys’ founders have been asking for changes to be made to the board’s remuneration committee, especially over the outsize severance given to former chief financial officer Rajiv Bansal.

In an interview to ET in February, Murthy said: “The primary responsibility for this lack of fiduciary responsibility lies only with the chair of the nomination and remuneration committee and the chair of the board. They must accept responsibility and atone for it.” He wanted Infosys to name Prahlad as the chair of the remuneration committee.

Prem Watsa, Deepak Parekh and 2 others join BIAL board

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BENGALURU: Bangalore International Airport Limited (BIAL) has inducted Canadian billionaire Prem Watsa, HDFC chairman Deepak Parekh, Fairfax India CEO Chandran Ponnaiah Ratnaswami, and Fairbridge Capital MD Harsha Raghavan on its board, signalling the formal transfer of control from the Hyderabad-based GVK Reddy Group to Toronto-based Fairfax Group.

They are inducted as additional directors, and their appointments will be formally ratified by the EGM. The four members are expected to attend the next board meeting. Karnataka Industries and Infrastructure Minister RV Deshpande confirmed the developments, and said the present management, led by Hyderabad-based GVK Group, will continue to look after operations for some more time.

“Watsa told me that he wants to make Bengaluru international airport among the best in the world. Now that they are on board, they will be more aggressive,” he said.

A member of the Fairfax Group, not wanting to be identified, said the international airport at Bengaluru is the biggest entry and exit point in South India, and the new investors are keen to pursue capital expenditure plans to both increase the airport’s capacity and its efficiency.

Prem Watsa, Deepak Parekh and 2 others join BIAL board

Even with the existing capacity, the new investors think there is a lot of scope to improve the efficiency.

Traffic volumes at BIAL have been shooting up, calling for speedy addition of a second terminal. The Bengaluru airport recorded the largest growth at 22.5% in 2016 compared to other large Indian airports. Last year, the airport handled 22.18 million passengers.

“Fairfax is a globally renowned group which pursues its investments with a long term vision,” said DV Prasad, Additional Chief Secretary, Infrastructure Development Department, and a BIAL board member.

“They (Fairfax) will not only accelerate pending works, but will also surely draw out a proper perspective plan for the overall development of the airport with a medium to long term vision,” he said.

The board is likely to speed up decisions in a few significant subjects, including the award of contracts like airport operations, management and services.

“They (Watsa) are interested in many projects in Karnataka. They are discussing with us about building a convention centre (at the airport),” said Deshpande.

Watsa’s Fairfax Group had, in March last year, announced its decision to buy a 33% stake in BIAL from GVK Group for Rs 2,182 crore ($321million), valuing the eight-year-old airport at about Rs 6,600 crore.

A month later, Fairfax signed another deal to buy a 5% stake held by Flughafen Zurich AG in BIAL. The entry of Fairfax does not mean infusion of any fresh funds as equity into airport development, according to government officials.

Since the Union Government and Karnataka hold 13% stake each in BIAL through their respective investment vehicles, no private stakeholder can invest fresh equity without altering the shareholding pattern. The Centre or the State governments have no plans to invest any equity.

The Phase II of the airport development, officials said, is going to be funded only with borrowings and internal accruals. It is to be seen if the Canadian investors would explore innovative financing options that can reduce BIAL’s cost of funds. All along, BIAL has been borrowing from banks.

Fairfax Group holds controlling stakes in Thomas Cook (India) and Quess Corp, and its investment in BIAL marks its entry into the infrastructure sector. This is Watsa’s second investment in Karnataka. His investments in Quess have returned his group bumper returns.

Larsen & Toubro Construction wins orders worth Rs 1,725 crore

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NEW DELHI: Larsen & Toubro (L&T) today said that its construction arm has recently bagged orders worth Rs 1,725 crore across two of its business segments.

In the transportation infrastructure business, the company bagged contracts worth Rs 725 crore.

“An engineering, procurement and construction order has been secured from the Ministry of Road Transport & Highways (MORTH) for four-laning of the Wadpale to Bhogaon Khurd section of NH-17 in Maharashtra,” the company said in a statement.

The scope of work includes construction of 38.76 km of four lane dual carriageway with concrete pavement, 27.53 km of service/slip road, two major bridges, nine minor bridges and 17 vehicular and cattle underpasses along with other associated works.

The business has also received additional orders from various ongoing projects.

In heavy civil infrastructure business, the company has received engineering, procurement and construction orders worth Rs 1,000 crore under L&T GeoStructure.

Larsen & Toubro is an Indian multinational engaged in technology, engineering, construction, manufacturing and financial services with $16 billion in revenue. It operates in over 30 countries worldwide.

Narendra Modi refocuses on foreign policy after big wins in assembly polls

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New Delhi: After wrapping up the elections to four states this month, Prime Minister Narendra Modi will be refocusing attention on foreign policy especially ties with some of India’s immediate neighbours in South Asia next month.

There are at least four key visits lined up next month—two from South Asia and the others further afield. The dignitaries expected in Delhi include the prime ministers of Bangladesh and Australia, the president of Nepal and the foreign minister of Singapore.

The first to arrive will be Bangladesh prime minister Sheikh Hasina who will begin a three-day visit on 7 April. This will be Hasina’s first bilateral visit since January 2010 and the two countries are expected to sign a defence cooperation pact during the visit—the first of its kind between the two neighbours. The pact of concluded comes about six months after Bangladesh bought two Chinese built submarines—raising alarm in India over the increased Chinese footprint in India’s immediate periphery.

To strengthen its ties with Bangladesh, India is looking at outlining a roadmap for cooperation in the Bay of Bengal under a programme unveiled by Prime Minister Narendra Modi for cooperation with countries on the so called “Blue Economy”. This entails cooperation in the exploitation of hydrocarbons, marine resources, deep sea fishing and preservation of marine ecology besides disaster management. India is already extending help to countries along the Indian Ocean littoral undertaking hydrographic surveys.

The second visitor to arrive on 9 April will be Australian prime minister Malcolm Turnbull, who is on his first visit to India after taking over from Tony Abbott in September 2015. During his first year in office, Turnbull has focussed on improving ties with countries in the immediate neighbourhood like Indonesia with a visit in 2015 and to major trade partner China last year. This is a far cry from the tempo of India-Australia ties set under the Abbott government with Tony Abbott visiting India in September 2014—just months after Modi took office and the Indian Prime Minister returning the visit in November 2014.

Modi and Turnbull have met bilaterally on the sidelines of the G20 meeting in China last year. The two leaders could exchange notes on the new Trump administration in the US and its strategic and economic implications for the Asia-Pacific region.

Turnbull’s visit comes as India’s Adani Group is facing opposition to its plans to invest $16.5 billion in a coal mine in Queensland. Australia’s largest coal project—which could fuel power generation for 100 million Indians and create 10,000 jobs in Queensland—has ignited protests from environment groups concerned the development will increase carbon pollution and endanger the health of the Great Barrier Reef marine park in northern Queensland. Environmental opposition to the mine, which could begin production in 2020, has delayed the first phase of the project and prompted the company to cut underground capacity by 38 % according to a Bloomberg news report.

The third visitor to India in April will be the Nepalese president Bidhya Devi Bhandari who is expected to land in New Delhi on 17 April. Bhandari was to have visited India last year but her trip was called off at the last minute by the government of then prime minister K.P. Sharma Oli due to tensions with India over sections of Nepal’s new constitution that seemed to marginalize sections of the Nepalese population such as the Madhesis.

The fourth visitor expected in New Delhi is Singapore’s foreign minister Vivian Balakrishnan who could arrive in the third week of April. Bilateral ties and the uncertainty over US President Donald Trump’s Asia policy are the likely subjects of conversation between Balakrishnan and his Indian counterpart Sushma Swaraj.

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