Rosneft, Trafigura – UCP consortium close Essar Oil Deal at $12.9 billion

With the dawn of economic liberalisation, Essar was one of the handful of entrepreneurs who strived to make India self-sufficient in core sectors like crude, shipping, electricity generation, marine infrastructure and technology. Post liberalisation, Essar started building fully integrated global scale industrial assets in core sectors with a commitment of Make in India and Make for India. Vadinar Port along with Oil Terminal and Captive Power Plant is truly India’s pride. To establish swift trade of crude oil between India and the Middle East, Essar establishes Vadinar Port and state of art indigenous Vadinar Oil Refinery in the Gulf of Kutch. Essar’s state of art assets has been acquired by Russian – Dutch based company consortium with an asset development strategy.

 

The Essar Group has concluded the sale of Essar Oil to Russia based Rosneft along with the consortium of Trafigura and United Capital Partners (UCP). Transaction of Essar Oil deal is valued at whopping $12.9 billion. The transaction of this deal was initiated in the presence of PM Narendra Modi and Russian President Vladimir Putin at BRICS summit in Goa last year. Essar Oil Deal is Russia’s single largest investment made anywhere in the world. This transaction is also the single largest foreign investment in India and re-establishes the country’s image as an attractive destination for foreign investments.

Rosneft (through its subsidiary, Petrol Complex Pte. Ltd.) has acquired 49.13% stake, and Trafigura – UCP consortium (through Kesani Enterprises Company Ltd.) has acquired an equal stake. The remaining 1.74% stake continues to be held by retail investors. The deal gains access to Russia based Rosneft, UCP and Netherland’s Trafigura to do business in the vibrant Indian markets through world class assets and massive retail chain network. Looking at the size and complexity of the transaction, it can be said that the deal has been concluded in record time.

“I congratulate Essar on the conclusion of the US $12.9 billion Essar Oil deal. An asset, which was truly Made in India, has attracted investment interest from world class entities, demonstrating the spirit of dynamic entrepreneurship in India. I welcome, Rosneft, Trafigura and UCP to participate in the India growth story and wish them success.” – Dharmendra Pradhan, Minister of State, Petroleum & Natural Gas, Government of India.

Essar Oil deal includes Gujarat’s Vadinar Refinery, which is one of the largest state of the art refinery in the world. Vadinar Refinery has the capacity to clean crude of 20 Million Metric Tonne per Annum (MTPA). The transaction also includes Vadinar Oil Terminal [58 MTPA], Captive Vadinar Power Plant [1010 MTPA] and 3,600 retail outlets across India.

With this deal, Essar has successfully completed the monetisation and deleveraging program. It is to be noted that in recent years, no other Indian company has undertaken to deleverage at such mammoth scale. The transaction has substantially deleveraged Essar Oil Limited’s balance sheet by reducing the debt of over Rs. 70,000 crores (US $11 billion). With the completion of this deal, Essar Group is committed to growing in wider portfolio of businesses.

Essar Oil will continue to hold its strategic asset of Stanlow Refinery in the United Kingdom. Stanlow Refinery produces over 16% of UK’s transport fuels, serving north west of UK. The state of art refinery clocked its regional best crude run adding to $187 million net profit in FY 2016. Essar Group has also invested Rs. 4,000 crores in coal based methane project in Durgapur, West Bengal. It plans to increase production to 2 million cubic tonnes by 2018. Post transaction, Essar Group revenues are estimated to be $15 billion. Essar is poised for growth with assets ready to cater to growing demand and a positive economic outlook in the steel, power, port and shipping sectors.

Russia’s VTB Capital acted as an investment banking partner on the deal. VTB Capital guided Essar Energy on the financial and legal front for the sale of world-class assets to a strong consortium of investors.

- Chaitanya Kulkarni

ICICI Lombard introduces India’s First Live Video Inspection feature for faster claims.

Imagine you’re driving down to your office in the morning and an auto driver bumps into the rear of your brand new car. Your heart skips a beat worrying about the damages. The traffic, the honking adding the stress all around! You pull over your car out of the traffic to have a look. The traffic makes its way and leaves you wondering about the endless hassle of getting the car fixed and the dreadful wait of getting the damages reimbursed.

Wouldn’t it be better if processing claims would have been ‘Insta’ like all Insta hashtags we use on social media? Indian insurance business is growing at 32% but penetration of insurance is miniscule. That’s because we all hate paperwork! Innovation is the key here and ICICI Lombard motor insurance has raised the bar. ICICI Lombard has been an early adopter of fintech. With the advent of technology, ICICI Lombard General Insurance has been successful at processing paperless claims. Over 90% of its claims are settled with tabs. The ‘Insure’ mobile app has been a boon for an ‘on the go’ connect with its customers.

But wait, It’s not only paperless! How about we tell you that the ‘Insure’ app settles claims with its video streaming feature? ICICI Lombard launched India’s first live video inspection feature.

This novel feature allows its customers to simply stream a live video of the damaged vehicle to an ICICI Lombard claims manager with these 4 simple steps.

The claims manager then assesses the damage through the live video chat and informs the customer about the extent of liability. All you need to do is keep your driving license and vehicle registration copy handy. For a better experience, it is advised to use a smartphone with good picture quality (5 MP or more).

The customer can accept the claims manager’s assessment of the damage. The details and approvals are sent to the workshop even as the car is being transported there. The entire claim approval process takes a few hours; much lesser than most conventional claims processes.

The live video streaming feature has brought in

• On the spot vehicle inspection
• Reduced waiting time
• Clarity on coverage and deductions
• Greater transparency
• Assistance with vehicle pick-up services
• Faster claim settlements

An insurance contract is a contract of Uberrima fides or a contract of utmost good faith. The parties to an insurance contract are required to deal with each other in good faith and declare all material facts. Trust being the founding stone of an insurance contract, the InstaSpect feature helps build trust and transparency between the insurer and the insuree.

The InstaSpect feature has been a pathbreaking augmentation to the existing ‘Insure’ mobile app. It has not only reduced the insurer’s turn around time; it has allowed both the insurer and the insuree to optimize the claim settlement process.

As high speed internet spreads its web across India, such modern insurance tech will continue to transform this business sector. With the help of technology, ICICI Lombard has become India’s first private sector insurance company to achieve claim settlement ratio of 92.2% vis-à-vis industry average of 81.9%.

- Chaitanya Kulkarni

India aims to operationalise Chabahar Port by 2018

The government of India has reiterated its commitments to develop Chabahar Port in south-eastern Iran. The Minister of Shipping and Transport, Nitin Gadkari was invited in Tehran to represent India at the taking over of office by President Hassan Rouhani for the second term. Nitin Gadkari had a meeting with Iran delegation where the development of Chabahar Port was on the top agenda. ‘The government is keen on developing Chabahar Port and is hopeful of starting operations by 2018’ said the minister.

The civil works are progressing and tenders worth Rs 380 crores for the procurement of rail-mounted gantry cranes have been finalized, and efforts are under way to award contracts for other assets such as rubber-tire gantry cranes, reach stackers, empty handlers, and tractor-trailers. India plans to conduct business with Afghanistan via Chabahar Port. Indian officials are mulling a railway line link between Chabahar Port and Zahedan, an Iranian city near Afghanistan border for fast movement of goods.

Export Import Bank of India has agreed to issue $150 million credit facility for the development of Chabahar Port. The formal application is pending from Iran and both countries agreed to expedite the process. Further, India conveyed its readiness to help Iran begin interim operations at the port until concession contract conditions are fulfilled. Other issues that arose during the meeting include ratification of a trilateral transit treaty between India, Iran, and Afghanistan, where Tehran is yet to join.

In last week of July, Indian authorities have issued fresh Request for Quotation tender for the operation and management of container and multi-purpose cargo facilities at Chabahar Port. The winner will also design, develop, finance, operate, and maintain any other support infrastructure required for the efficient operation of the project, according to a tender notice issued by India Ports Global Ltd (IPGL). IPGL is a special purpose entity of JNPT Port and Kandla Port. Adani Ports & SEZ and Essar Ports Ltd has expressed interests to develop Chabahar Port. IPGL stated that construction of both terminals is nearing completion and the process for procuring equipment for the two terminals by IPGL is currently underway.

The RFQ notice is uploaded to JNPT website. The notice states, “Chabahar Port situated in the Sistan-Baluchistan province on Iran’s south-eastern coast [outside the Persian Gulf] is of great strategic importance for the development of regional maritime transit traffic to Afghanistan and Central Asia,”. Bids will be closed on 18 August 2017.

Chabahar Port is located in the Gulf of Oman, and is about 550 nautical miles from Kandla and 700 nautical miles from JNPT Port, Navi Mumbai. Chabahar Port will create a direct sea route to Iran, Afghanistan and Tajikistan, bypassing Pakistan. With port in place, India can also go ahead with long pending TAPI gas pipeline, excluding Pakistan out and adding Iran. Experts are of an opinion that India’s investment in Chabahar comes at a time when China is investing billions of yuan to develop Gwadar Port and Hambantota Port in the Indian Ocean. India, being the regional superpower wants to maintain its strategic interests and prove its dominance in South East Asia.

- Chaitanya Kulkarni

Soon, Send Money through WhatsApp via BHIM

As PayTM announced its foray into messaging business, WhatsApp is doing the opposite. WhatsApp is getting closer to enabling payments over United Payments Interface as the feature was spotted in the beta version of the app. The beta leak from WAbetaInfo stated that WhatsApp Payments will offer bank-to-bank immediate transfer with the UPI.

It seems like payments are the new frontier for messaging apps. The user needs to agree to the terms and conditions put forth by WhatsApp, National Payments Corporation of India and banks.

WhatsApp Payments will be a boost for Digital India and Make In India mission as it uses indigenous technology which is developed here in India. The UPI saw a 12% growth in the total transaction volumes taking place between June and July 2017. The Number of transactions grew by 1.28 million in July 2017 whereas the total amount transacted increased by, up by Rs 313 crores. In June 2017, volume had increased by 1.19 million and amount transacted had grown Rs 333.05 crores.

Dr Ajay Kumar, additional secretary for Ministry of Electronics and IT confirmed this news via Twitter. Proposed WhatsApp Payment system in India to be powered by NPCI BHIM app, he tweeted. Information regarding UPI payment address is yet unclear. Users on BHIM are allowed to select the primary and secondary address on its own @upi handle. For example, you can send me money on my UPI handle at theindiancapitalist@upi. Samsung Pay with its partnership with Axis Bank uses @pingpay handle. Experts are of an opinion that WhatsApp Payment users may get the choice of using both @upi and @whatsapp UPI handles.

WhatsApp has more than 200 million user base in India. It is also amongst the most misused application in India. Indians are continuously affected by scams, fake news and data stealing scandals on WhatsApp. For security purposes, WhatsApp needs to verify user KYC details. Some security protocols will need to be implemented around payments through WhatsApp. If it decides to use Aadhaar, then we will have to enable biometric authentication. It can also use BHIM enabled BharatQR for additional security features.

Payments through messaging app are widely used in China. Alipay and WePay have combined 1.1 billion users. Online payments through non-bank payment services in China expanded 60 per cent in the first quarter to 47 billion transactions valued at 26.47 trillion yuan (US$3.9 trillion), 43 per cent more than last year. India's payment revolution is sparked by Modi's daring demonetisation announcement. PayTM and BHIM was an instant hit among locals. PayTM's messaging app and BHIM partnership with WhatsApp will bring golden days in digital payment space in India.

- Chaitanya Kulkarni.

BharatQR - The Make in India payment movement

Scan and Pay! Quick Response codes have been in the Indian payments market for more than 3 years but its large scale acceptability was only witnessed post demonetisation.  Scan and Pay is a mobile-based payment facility that enables fund transfer by scanning a QR code using an app which supports this feature. It can be used for making payments at merchant outlets, e-commerce websites and grocery stores, among others. Customers simply need to scan the QR code of the merchant and fill the transaction amount. The amount gets transferred from customers bank account to merchant's bank account in seconds. It eliminates the need of expensive PoS machines and cards. PayTM was the largest beneficiary of cash ban as it had invested Rs. 600 crore of QR code technology. Even road side vendors accepted PayTM as trustworthy and easy to use payment solution.

India has 330 million debit cards holders against 1.5 million PoS machines. To eliminate the mismatch, Visa was the first to introduce mVisa back in 2015. During the demonetisation, Mastercard launched its MasterPay QR code service with RBL Bank. All these initiatives failed that they lacked interoperability. Collaboration is the key element for success in the payments industry. Visa, RuPay, MasterCard and American Express came together to announce BharatQR - a unique and inter-operable QR code standard, that lets merchants accept push payments from their customers.

India has the most sophisticated public payments infrastructure in the world. - Raghuram Rajan, former RBI Governor

BharatQR is the first of its kind initiative in the world where payment providers join hands to simplify the way we pay. No other country in the world has this kind of technology. India is the pioneer in QR code payments technology. We can be a guiding light for other economies in the field of public inclusion in digital payments. BharatQR is cheaper and easy to operate when compared to conventional PoS machines.

BharatQR is an open network solution. If a merchant has a BharatQR code, I can pay the merchant regardless of

• Which issuing bank’s app I am using (e.g. ICICI Pockets, HDFC Payzapp).
• Which card network’s card I have connected to the issuing bank’s app (e.g. Visa/Rupay/Mastercard/Amex).
• Which acquirer has setup the merchant account, and given him his BharatQR.

Currently, 10 issuers, 14 acquirers and 4 card networks have already signed up for BharatQR, and more (around 20) are expected to join in the next month. To use BharatQR, users need to install BHIM app or mobile banking apps of respective nationalised banks. BharatQR will act as a disruptor in payments scene in India but it's not an inclusive solution for 1.2 billion Indians. Feature phones have a penetration of more than 50% in India. Though BHIM works on all feature phones, yet the process to pay is too difficult to understand for first time users. For greater adaptability, payment providers and banks need to launch interoperable and secure solution for all Indians.

Tap and Pay with NFC is a far greater technology than Scan and Pay. Recently, Reliance Jio announced that its JioPhone would come NFC payments feature. Nearly all 4G enabled feature phones in coming months will have this technology. We are here talking about a technology similar to Apple Pay and Samsung Pay but superior due to its zero operational costs and wider acceptability. NFC payment receivers can be installed at trains stations, public buses and stores. India's largest bank, State Bank of India has said that it will install NFC receivers in 1,00,000 PoS machines. Post demonetisation, India is looking to find the perfect payment solution for conventional debit cards. Whether its Scan and Pay, Tap and Pay or Fingerprint banking, we are leading in inclusive payments technology.

- Chaitanya Kulkarni