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Mumbai, Jul 2 () The RBI has asked banks, financial institutions and NBFCs to reclassify micro, small and medium enterprises on the basis of the new criteria. Last month, the government notified new criteria for classification of micro, small and medium enterprises (MSMEs) on the basis of turnover and investment in plant and machinery. "We advise you to initiate necessary action for reclassification of enterprises as per the new definition w.e.f July 1, 2020 and issue necessary instructions to your branches/controlling offices in this regard, at the earliest," RBI said in a communication to banks, financial institutions and non banking financial companies (NBFCs). After 14 years since the MSME Development Act came into existence in 2006, a revision in MSME definition was announced in the Atmanirbhar Bharat package on May 13. The Reserve Bank further said in case of an upward change in terms of investment in plant and machinery or equipment or turnover or both, and consequent re-classification, an enterprise will maintain its prevailing status till expiry of one year from the close of the year of registration. As per the revised definition, an enterprise is micro where the investment in plant and machinery or equipment does not exceed Rs 1 crore and turnover does not cross Rs 5 crore. An enterprise is now classified as small enterprise, where the investment in plant and machinery or equipment does not exceed Rs 10 crore and turnover is not over Rs 50 crore. For medium enterprise, as per the new classification, the investment in plant and machinery or equipment should not exceed Rs 50 crore and turnover should be below Rs 250 crore. NKD CS ANU ANU

RBI asks banks to reclassify MSMEs as per revised criteria

<div type="image" title="FILE PHOTO: Abdelaziz Abdou, a Deliveroo delivery rider, poses with a bag of Aldi groceries, as discount supermarket chains Aldi and Lidl look poised to accelerate their push into home delivery to satisfy burgeoning demand for online grocery shopping in a shift expected to endure beyond the coronavirus crisis, in London, Britain, June 17, 2020. REUTERS/Toby Melville" height="3712" width="4949" msid="81735052" hostid="261"></div><ul class="summary-list"><li>Amazon-backed <keyword id="2850943" type="PERSON" weightage="60" keywordseo="Deliveroo">Deliveroo</keyword> is under fire from delivery riders and fund managers ahead of its IPO next month.</li><li>They say its reliance on gig economy workers is variously unethical or a long-term cost risk.</li><li>The float is also test of UK investor appetite for unprofitable startups.</li></ul>Amazon-backed food delivery firm Deliveroo has faced a barrage of criticism in the run-up to its highly anticipated float on the London Stock Exchange, as big-name investors and activists criticized its reliance on gig economy labor and questioned its underlying business model.Deliveroo is set to float on March 31, <a href="https://www.businessinsider.com/deliveroo-targets-12-billion-valuation-2-5-billion-ipo-2021-3">aiming to raise up to $2.5 billion and at a target valuation</a> as high as $12 billion.At least six investment firms have said publicly they would not invest in Deliveroo's float, including Aviva Investors, <a href="https://www.businessinsider.com/rathbones-multi-asset-to-skip-deliveroo-ipo-governance-profitability-2021-3">Rathbones</a>, Legal &amp; General, and Standard Life Aberdeen.Also in the last week, the Bureau of Investigative Journalism <a href="https://www.thebureauinvestigates.com/stories/2021-03-25/deliveroo-riders-earning-as-little-as-2-pounds">published an analysis of 300 Deliveroo riders' earnings</a>, based on invoices voluntarily submitted online, finding that two-thirds made less than the minimum wage.Meanwhile the IWGB, a small but vocal trade union for gig economy workers, says it has organized Deliveroo riders to strike when the firm's float opens to retail investors on April 7, and published <a href="https://cdn.iwgb.org.uk/bucket/CLB/Deliveroo/DeliverooInvestorBrief-Spring2021.pdf">an investor briefing</a> advising prospective backers to call the firm out on riders' rights.Deliveroo's IPO will be a test for the UK startup industry, where valuations for privately held firms have become increasingly bullish. When CEO Will Shu chose to list in London rather than the US, it was heralded as a victory for a post-Brexit UK.But its target valuation, as high as $12 billion, lack of profitability, and perceived business model risks have provoked skepticism this week.The firm in its prospectus posted a £225.5 million ($311 million) pre-tax loss for the full-year 2020, a narrower loss than the £317.7 million ($438 million) it lost in 2019. Revenues were up 54% to £1.1 billion ($1.5 billion) from 2019."What's unusual is that it's going public at such a high valuation, at the top range, and it hasn't made a profit," Susannah Streeter, investment analyst at Hargreaves Lansdown, told Insider. "If it has to change the working conditions for its riders, that's going to eat into its profit forecast."Uber's Supreme Court loss in February, which <a href="https://www.businessinsider.com/uber-driver-lost-uk-legal-battle-court-worker-rights-employment-2021-2">forced the ride-hailing firm to reclassify its drivers</a> as workers with more rights, has raised the specter of regulatory action for Deliveroo.While Deliveroo has won or settled similar regulatory fights in the UK, it has lost battles in <a href="https://www.reuters.com/article/us-spain-deliveroo-idUSKCN1UI17O">Spain</a> and <a href="https://www.reuters.com/article/us-italy-prosecutors-riders-idUSKBN2AO2FG">Italy</a>, and has set aside £112.2 million to deal with fines and costs. It still faces action from the IWGB in the UK, as well as legal action in France and the Netherlands."The winds of change are blowing, in terms of the gig economy going through a big upheaval," added Streeter.In its 224-page investor prospectus, Deliveroo acknowledges the risk, stating:"The independent contractor status of riders, which applies in most of the jurisdictions in which we operate, has been and continues to be the subject of challenge in certain markets, including in our key markets.... The costs associated with defending, settling, or resolving pending and future litigation or governmental agency investigations relating to the independent contractor status of riders could be material to our business (including additional taxes and penalties) and, regardless of outcome, could negatively affect our reputation."Aviva, the first investment firm to say it wouldn't back Deliveroo, cited its gig-economy model as a risk. (Insider's Theo Golden subsequently <a href="https://www.businessinsider.com/deliveroo-ipo-aviva-invest-despite-stakes-in-gig-worker-stocks-2021-3">analyzed Aviva's holdings and found it had exposure</a> to a number of other gig-economy firms, such as Uber.)Equally seriously, fund managers are skeptical that Deliveroo can parlay its pandemic growth into long-term success.Rathbones' chief strategist <a href="https://www.businessinsider.com/rathbones-multi-asset-to-skip-deliveroo-ipo-governance-profitability-2021-3">told Insider that Deliveroo's continued unprofitability made him wary</a>, adding that the boom in takeaway during the pandemic would not continue after lockdowns lift. "I think people are extrapolating that this trend will continue, and I don't believe that," he said.Streeter is likewise skeptical. "I think more people are going to want their food delivered from a waiter's tray than two miles on the back of a person's bike," she said.Deliveroo signaled that it has had "significant" investor demand for its stock debut, which takes place March 31."This proud British business looks forward to listing on the London Stock Exchange," a spokesperson said, adding: "The Roadshow began on Monday and the deal was covered by demand across the full price range by the end of the first morning."Demand has continued to build since then, including via our community offer, and we look forward to welcoming new shareholders next week alongside our currently highly respected existing investors."And while the firm acknowledged in its prospectus the risks to its business model from any reclassification of its 100,000-plus delivery riders, it publicly shot back against both the Bureau of Investigative Journalism's research and the IWGB union.The firm argued that its riders were given "freedom" to accept or reject deliveries and that it received a regular flow of new driver applications. It argued that the Bureau's findings were "misleading" and "unverifiable" and that it had analyzed earnings of a minority of its 100,000-plus riders. It said riders can earn £13 per hour, higher than the national living wage of £8.72 per hour.Post-pandemic growth is possible, according to Streeter, if the firm can boost the amount customers spend per order."If Deliveroo can corner the higher-end restaurant market - I think it's still got a bit of a takeout tag attached to it - there is potential for growth," she said. "That could offset losses if it was forced to change worker conditions.""But," she added, "It does have competition, Just Eat, Uber Eats. There's lots of competition for Deliveroo's business."

Amazon-backed Deliveroo heads to its $2.5 billion IPO facing rider strikes and investor snubs over its business model

<div class="KonaFilter image-container display-table"><div><div class="image on-image">Chris Hondros/GettyThe S&amp;P/GICS reclassification will create a new sector for tech companies.</div></div></div><ul><li>MSCI and S&amp;P are soon to make some changes to how tech companies are categorized on the S&amp;P 500 for the first time since 1999. </li><li>On September 28, a new Communication Services sector will replace the current Telecoms sector, and will include some of the biggest stocks including Facebook and Netflix. </li><li>It's only the second sector addition since 1999, and is a recognition of how consolidation has melded the telecom, media, and internet industries together. </li><li>Exchange-traded funds that track S&amp;P 500 sectors will be most affected by the reclassification, and some big providers are already making changes ahead of the implementation. </li></ul>Some big changes are coming to the US stock market.On September 28, S&amp;P Dow Jones Indices and GICS will create a new sector for tech, media, and telecoms companies, and it's a change that will affect many of the the biggest and most popular stocks on the market. Here's what you need to know. <h2>What is happening? </h2>S&amp;P and MSCI are ditching the existing Telecoms sector and creating a new Communications Services sector. This new sector will include companies that provide platforms for communication, of course, and those that operate various kinds of media.It will also fold in companies in the Consumer Discretionary Sector that are currently classified in the Media and Internet &amp; Direct Marketing Retail sub-industries, and some companies in the existing Information Technology sector.Communications Services will be the largest sector of the S&amp;P 500 with about a 10% weighting, according to Wells Fargo. Here's a detailed map of all the changes: <div class="KonaFilter image-container display-table click-to-enlarge"><div><div class="image on-image"><a title_source="Morgan Stanley" title_caption="" class="zoomin" href="https://static-ssl.businessinsider.com/image/5b756a8a8905f2fa1e8b456d-960/screen shot 2018-07-30 at 113449 am 1.png"></a>Morgan Stanley</div></div></div><h2>Why does it matter? </h2>Apple is currently housed in the Technology sector, and in the Communications Equipment industry. These categories are determined by the Global Industry Classification Standard, or GICS, which is maintained by MSCI and S&amp;P.These boxes make sense for <a href="https://markets.businessinsider.com/stocks/aapl-stock">Apple</a>, considering that the world's most valuable company still makes most of its money by selling iPhones. But over time, these categories have become more fluid for other tech companies. Is Verizon, with its recently acquired media arm Oath, really just a telecoms company? Is Facebook, now one of the world's largest distributors of news, a social network or a media company or both?The new sector aims to address these questions. The GICS is keeping up with how much evolution has taken place in tech. <a href="https://markets.businessinsider.com/stocks/fb-stock">Facebook</a> didn't even exist at the height of the tech bubble in 1999, the same year that MSCI and S&amp;P first implemented the GICS.And so, the GICS reclassification is a reminder of sorts to markets about what these companies really do, and it aims to reflect where companies earn most of their revenues from."The lines among media, communications, and content are blurred," David Blitzer, chairman of the index committee at S&amp;P Dow Jones Indices, said. "It is time to acknowledge this convergence and the overlapping services these companies provide."The most recent precedent for this kind of GICS reclassification also provides insight into why the 'right' sector grouping matters. In September 2016, S&amp;P and MSCI removed real estate companies and some real estate investment trusts (REITS) from Financials to create a new sector. Real Estate, from its breakout as a sector through August 15, 2018, returned almost nothing - 0.5% - versus a 39% rally for Financials. This performance gap suggests investors focused on very different fundamentals for these once-unified sectors. <h2>Which stocks are going to be affected? </h2>The change is going to affect some of the biggest and most popular tech companies, including Facebook and Alphabet. Both will move from the old tech sector to the new communication services group. Also, their sub-industry will change from one called internet software &amp; services to interactive media &amp; services. Netflix, another one of the so-called FANG stocks, is also getting reshuffled. It's going from the consumer discretionary sector, where it lives with companies like <a href="https://markets.businessinsider.com/stocks/mcd-stock">McDonald's</a> and <a href="https://markets.businessinsider.com/stocks/rl-stock">Ralph Lauren</a>, to the new communication group. Disney and 21st Century Fox are making the same industry move."DVD rentals" is not the only thing that comes to mind when Netflix is mentioned these days. Big spending on original content and licenses is a key part of its business. So Netflix's sub-industry will change from Internet &amp; Direct Marketing Retail to the more appropriate Movies &amp; Entertainment category. MSCI plans to release a final list of all the stocks affected before flipping the switches on September 28. <h2>What does this mean for the stock market?</h2>Exchange-traded funds designed to track specific industries will be affected.Vanguard, the $5.1 trillion investor that essentially invented the equity index fund, announced in March that it was temporarily creating <a href="https://institutional.vanguard.com/VGApp/iip/site/institutional/researchcommentary/article/NewsInstInfo030218">custom benchmarks</a> for the Vanguard Consumer Discretionary Index Fund, the Vanguard Information Technology Index Fund, and the Vanguard Telecommunication Services Index Fund. "These changes don't require any action from investors," Vanguard said in a statement, indicating that it's doing the heavy lifting behind the scenes. BlackRock is <a href="https://www.ishares.com/us/products/239751/ishares-global-telecom-etf">overhauling</a> its iShares Global Telecom ETF to become the iShares Global Comm Services ETF, and changing the kinds of companies it tracks accordingly. "Longer-term, the 'less sexy' &amp; somewhat 'forgotten' Telco names may gain mindshare &amp; potentially garner more portfolio-manager interest/dollars as reclassification stirs a re-acquaintance," Chris Harvey, the head of US equity and quant strategy at Wells Fargo, said.But unlike the Real Estate reclassification, most investors are no strangers to a good number companies being reshuffled, such as FANG stocks. Wells Fargo estimates that the reclassification will affect about 10% of the S&amp;P 500, and so investors need not do much on the drawing board. Some stocks are getting moved around, but their weights on the index are not, so the reshuffle itself may not be a big market mover. <h2>See also:</h2><ul><li><a href="https://www.businessinsider.com/stock-market-investors-complacent-ahead-of-likely-correction-morgan-stanley-says-2018-8?r=promo-below-article">Investors have turned complacent and are in danger of being sideswiped by a 'likely correction' that's approaching, Morgan Stanley says</a></li><li><a href="https://www.businessinsider.com/stock-market-mutual-fund-outflows-data-moodys-2018-8?r=promo-below-article?utm_source=markets&amp;utm_medium=ingest" target="_blank" rel="noopener">MOODY'S WARNS: Mutual funds are bleeding cash at an unprecedented rate, and they're increasingly vulnerable to the next market meltdown</a></li><li><a href="https://www.businessinsider.com/stock-market-and-mutual-fund-performance-best-stocks-in-2018-2018-7?r=promo-below-article?utm_source=markets&amp;utm_medium=ingest" target="_blank" rel="noopener">GOLDMAN SACHS: Big-money investors are dominating the market with the help of 10 stocks - here's the list and how they can continue crushing it</a></li></ul> <div class="margin-top"> <h3>NOW WATCH: <a href="https://www.businessinsider.com/woke-up-430-am-like-navy-seal-exercise-discipline-2018-7">I woke up at 4:30 a.m. for a week like a Navy SEAL</a></h3> <div> </div> </div>

The biggest tech companies are about to undergo a major reshuffling on the stock market - here's what's coming, and why it matters

<ul><li>The Institute of Chartered Accountants of India (<keyword id="6364696" type="UNKNOWN" weightage="20" keywordseo="ICAI">ICAI</keyword>) has issued an advisory on the factors that companies should keep in mind while reporting earnings for FY 2019-20.</li><li>The advisory covers 20 key items spread across five categories.</li><li>Given that this is an advisory, the nature and extent of items to be considered will differ between companies.</li></ul>The COVID-19 pandemic has had an adverse impact on all aspects of the economy, be it earnings, supply chains, operational efficiencies and the stock markets. Since the financial year ends on March 31, 2020 in India, it falls amidst the COVID-19 pandemic. This will have an impact on the way companies report their earnings for the financial year 2019-20. To deal with the accounting issues caused due to the volatility, financial uncertainty and fluctuating valuations, the Institute of Chartered Accountants of India (ICAI) has <a href="https://www.icai.org/new_post.html?post_id=16413">issued an advisory</a>. <div type="Article" hostid="261" msid="75200249" title="The road to being classified a bad loan just got longer with RBI’s relaxation" mstype="2" mssubtype="0"></div> Nangia Andersen, a tax practice firm has summarised the top 20 accounting challenges that companies will have to keep in mind while reporting earnings this year. These challenges are divided across five key categories: Assets measurement and impairment Property, plant and equipment (PPE) The expected useful life and remaining useful life of PPE will have to be reassessed if needed. If there are any changes in this regard, the depreciation and amortisation will have to be assessed and recorded accordingly. Inventory valuation Assess whether inventory needs to be written down as at balance sheet date due to reduced movement, declined selling prices or obsolescence. Physical verification of inventory Physical verification of inventory to be done at an alternate date. Companies will have to do the necessary reconciliation to arrive at an estimated inventory count as on the balance sheet date. Impairment of non-financial assets If there are any indicators suggesting impairment of non-financial assets like Goodwill, Intangible assets, immovable properties and fixed assets, companies will have to reassess and record the estimated values of these assets after accounting for impairment. Impairment of loans &amp; receivables Analyse the recoverability of loans and receivables and incorporate post-balance sheet events like insolvency of debtors. Accordingly, write off or create a provision for bad debts. Impairment of investments Account for any long-term decline in the value of investments. Loans &amp; advances of banks and insurance companies Classification of loans and advances into Standard, Sub-standard, Doubtful and Loss categories based on guidelines issued by RBI and IRDAI. <a href="https://www.businessinsider.in/finance/news/the-road-to-being-classified-a-bad-loan-just-got-longer-with-rbis-relaxation/articleshow/75200249.cms">RBI has suspended</a> asset reclassification as NPA during the moratorium period of 92 days – from March 1 to May 31. Income, expenses &amp; provisions Revenue recognition Revenue to be recognized keeping in mind the certainty of collection. Companies should also consider likely increases in sales returns and discounts. If there is significant uncertainty in revenue collection, companies should evaluate the need to defer or postpone revenue recognition. Insurance claims Insurance policies that cover loss of profits due to business disruptions to be recognized if the recovery is virtually certain (highly probable). Income taxes Companies which have deferred tax assets should reassess forecasted profits and account for the change in the value of assets accordingly. Onerous contract provisions Identification of contracts which have become onerous (where the costs exceed the economic benefits) and accounting for them accordingly. Provision for penalty Ensure appropriate provision for penalty/liquidated damages towards delay in completion of contracts or for non-fulfilment of performance obligations. Modification or termination of contracts Consider specific accounting standards and guidance notes applicable for contract modifications or terminations like share based payments, insurance contracts, etc. Leases Any changes in lease arrangements due to COVID-19 should be suitably accounted for. However, anticipated revision should not be considered. Post-balance sheet date events and disclosures Post-balance sheet date events Adjustments to assets and liabilities are not appropriate for events occurring after the balance sheet date, if such events do not relate to conditions existing at the balance sheet date. Accounting disclosures <ul><li>Disclosure of events occurring after the balance sheet date that represent material changes and commitments affecting the financial position of the enterprise. </li><li>Disclosure of significant recognition and measurement uncertainties that might have been created in measuring various assets and liabilities. </li><li>Disclosure on how impact of COVID -19 on the financial position and financial performance of the entity is dealt with. </li><li>Disclosure of information about the impact of COVID-19 on nature, amount, timing and uncertainty of cash flows arising from revenue may be considered. </li></ul>Going concern &amp; internal controls Going concern Impact of COVID-19 and measures taken by an entity on ability to continue as going concern shall be factored in assessing going concern. Internal controls Companies should evaluate effectiveness of existing internal controls and may need to offer alternate controls in work-from-home environment, data inaccessibility, absence of authorised person etc. Discounting and foreign exchange translation Discounting rate Discount rate used to determine the present value may need to incorporate any risk associated with COVID-19. Foreign exchange translation For restatement of monetary items and foreign operations using closing rate where closing rate may not be reasonable or realistic, the restatement to be done at the amount which is likely to be realised from, or required to disburse. See also: <a href="https://www.businessinsider.in/finance/news/the-road-to-being-classified-a-bad-loan-just-got-longer-with-rbis-relaxation/articleshow/75200249.cms">The road to being classified a bad loan just got longer with RBI’s relaxation</a> <a href="https://www.businessinsider.in/india/news/rbi-governor-shaktikanta-das-speech-highlights-on-april-17/articleshow/75193359.cms">RBI Governor opens up a ₹50,000 crore lifeline to flailing small businesses</a> <a href="https://www.businessinsider.in/business/news/without-rbis-help-rupee-value-might-slump-to-80-per-dollar-says-report/articleshow/75273796.cms">Without RBI’s help, Rupee value might slump to 80 per dollar says report</a>

COVID-19 will change how companies report earnings – these are the top 20 things execs need to keep in mind

A star equity investor in India with over ₹1,000 crore worth of assets under management has been forced to write yet another letter to his investors explaining the poor performance of his portfolio. Porinju Veliyath of Equtiy Intelligence's latest letter rued the seemingly endless sell-off in mid and small-cap stocks in India for over 18 months. Making matters worse for Veliyath, who has over a million followers on Twitter, are the provisions of the latest budget presented by the newly appointed Finance Minister Nirmala Sitharaman. The following the full text of his latest letter addressed to his investors on July 18. Dear Investors, Eighteen months since the sell-off in broader markets began and yet there has been no respite to small and mid-cap investors like us. All the recovery we made from February 2019 lows has been sold into and we are back to the February levels. Longevity of the ongoing bear market in mid and small caps - of this magnitude has been astounding to even the most seasoned equity investors. I had felt elections could be the turning point for investors to come back to equities. Unfortunately, the positives of the continuity in government has been lost with the market unfriendly provisions in Budget, at least for the near term. Though the maiden budget of Modi 2.0 laid out a long-term vision that the government aims to achieve, some provisions in it has been disappointing from a near term stock market perspective. While the monetary impact of these changes is minimal, the message it gives to the larger investment community is rather regressive. Intentions of the present government without doubt have been good and their efficiency in utilizing tax revenues has been excellent, but these factors aside, it seems that policy makers are not acknowledging the cardinal principles of a free market economy. Past few years saw several challenges emerging in the economy. Though we were cognisant of many of them, we underestimated the extent of the first and second order consequences of some. Government's noble and welcome efforts to strengthen tax base, improve traceability, reduce black money and corruption seem to have chocked the economy for the near term, more than anyone anticipated. Despite RBI repo rate cuts, transmission of the reduction has not happened and the cost of capital to corporates have remained tight, thereby delaying any major industrial recovery. IL&amp;FS scam, instead of getting resolved, have spread to other major NBFCs and banks. IBC process has been entangled in judicial processes and is frustratingly slow. Broader markets are yet to recover from the forceful selling in small and midcap companies triggered by SEBI directives on reclassification to mutual funds industry. Overall, there has been a divergent and narrow market performance for a long time now. Though Nifty has held up, broader markets have shaved off 50% or more in this period. Close to 90% of listed stocks are down anywhere from 30% to 90% whereas top 10% large companies have not fallen much. All the matters above that has affected the universe of the companies in which we have been investing in and for which our clients have entrusted us the funds, sadly, are beyond our control. Most of the stocks in our portfolio are fundamentally strong and some of them are industry leaders with the potential to create wealth. But when will the market acknowledge the underlying value of these companies and reflect them in the stock prices? Having experienced the vagaries of markets for the past three decades, I see a significant recovery going forward, that looks inevitable to me, but I cannot give a time frame for this - I have gone wrong many times earlier in this regard. Many of you would be wondering why we are holding on few underperformers in the portfolio. After a significant draw-down, to sell any under-performing company and shift to alternate opportunities, we need to take a call on many aspects, including: <ul><li>Has the original investment thesis been permanently jeopardized or delayed indefinitely, that makes shifting a better decision than waiting? </li><li>What would be the implicit costs of liquidating these investments in a sentimentally depressed market devoid of buyer participation? </li><li>Is there an alternate opportunity with potential upside that can compensate the draw-down in these stocks available? </li><li>What is the further downside in these stocks and what is the probability that when market sentiment turns around these stocks would perform better than the available alternatives? </li></ul> Considering all the above and a host of other factors in a dynamic and evolving environment, we have been doing whatever in our opinion is best possible. Hoping for better times and waiting patiently for the sentiments to change. SEE ALSO: <a href="https://www.businessinsider.in/warren-buffets-advice-for-investment-manager-porinju-veliyath-who-lost-millions-by-not-cutting-losses/articleshow/67522607.cms" data-type="tilCustomLink" target="_blank">A star money manager in India made a rookie mistake that cost millions</a>

Full text of Porinju Veliyath's latest letter to his investors

<ul><li>In October 2017, the Securities and Exchange Board of India enforced rules to make mutual-fund categories more uniform and standardised. For example, <keyword id="136469" type="PERSON" weightage="20" keywordseo="large-cap">large-cap</keyword> stock schemes had to comprise at least 80% large-cap <keyword id="6354298" type="DEFINITION" weightage="20" keywordseo="Stocks">stocks</keyword>. </li><li>The rules were meant to declutter the mutual fund industry and improve investor choice, but instead they diverted inflows from <keyword id="419945" type="PERSON" weightage="20" keywordseo="small-cap">small-cap</keyword> companies by reducing the exposure of large-cap schemes to smaller stocks. </li><li>According to data from Prabhudas Lilladher, small-cap stock schemes recorded a net outflow of ₹220 million between January and June 2018, compared to a net inflow of ₹56.5 billion a year ago. </li></ul> When the Securities and Exchange Board of India (<keyword id="35210" type="ORGANIZATION" weightage="20" keywordseo="sebi">SEBI</keyword>) order the reclassification and rationalisation of open-ended mutual fund schemes <a href="https://www.sebi.gov.in/legal/circulars/oct-2017/categorization-and-rationalization-of-mutual-fund-schemes_36199.html">in October 2017</a>, its intentions were clear. It wanted to declutter the mutual fund industry by implementing procedures for standardisation and allowing investors greater ease in choosing and comparing schemes. Among the SEBI’s many rulings, one stood out. It made the categorisation of schemes into large-cap, <keyword id="71797" type="PERSON" weightage="20" keywordseo="Mid-cap">mid-cap</keyword> and small-cap stock schemes mandatory. This created a specific category for each scheme, which limited the exposure that each scheme had to other stock types. For example, large-cap stock schemes, which involve the shares of the top 100 companies by market capitalisation, had to be comprised of at least 80% large-cap stocks. Midcap schemes, which comprise the next 150 companies by market cap, had to be overwhelmingly weighted with stocks of mid-cap companies and so on. Fast forward to mid-2018, and the rules have had an unintended effect. They have led to a significant reduction in inflows to small-cap mutual fund schemes, comprising the shares of all other companies outside the top 250. Hence, the rules have shifted the power balance in favour of large companies. According to data from Prabhudas Lilladher, a brokerage house, small-cap stock schemes recorded a net outflow of ₹220 million between January and June 2018, compared to a net inflow of ₹56.5 billion in the same period of 2017. Meanwhile, large-cap and mid-cap schemes recorded a net inflow of ₹219 billion and ₹145 billion in the first six months of 2018. Why the focus on large and mid-caps? It all stems from an investor aversion to risk. 2018 represents a markedly different year from 2017, which was characterised by a booming stock market, an influx of cheap money and high investor optimism. However, this year, domestic <keyword id="31671" type="CITY" weightage="20" keywordseo="markets">markets</keyword> have suffered amid concerns of a trade war between the US and China as well as rising oil prices, a falling rupee and widening fiscal deficit. Hence, investors have sought to play it safe by redirecting their investments into larger companies. Small-cap stocks are considered to be more volatile and risky in these kinds of market conditions. The general rule of thumb is that larger companies are safer and better-capitalised to manage risk than smaller ones. Small-cap stocks might come with higher returns but that’s offset by higher risk. And yes, India’s markets have <a href="https://www.businessinsider.in/heres-what-led-to-the-indian-stock-markets-record-highs/articleshow/65161389.cms">had a bull run as of late</a>, but this has not extended to small-cap stocks. The Bombay Stock Exchange’s Small-Cap Index is down nearly 12% since the start of the year. If global market conditions pick up, and mutual fund houses start promoting small-cap schemes, there could be a resurgence in inflows to small-cap companies. The SEBI should keep an eye on the situation, and if necessary, reduce weightage and product restrictions for mutual fund schemes in the interest of diversification.

India’s securities regulator has hurt smaller companies with its recently-implemented mutual fund rules

Now, startups will not have to look overseas for funding as the <keyword id="6355630" type="ORGANIZATION" weightage="100" keywordseo="Securities-and-Exchange-Board-of-India">Securities and Exchange Board of India</keyword> (SEBI) on Tuesday relaxed its norms for startups to list and raise funds through a platform on domestic stock exchanges. 
 
Under the new norms approved by SEBI’s board, the stock exchanges would have a dedicated institutional trading platform for listing of startups from the new age sectors, including e-Commerce firms, while the minimum investment requirement would be Rs 10 lakh. 
 
For startups, SEBI has relaxed the mandatory lock-in period for the promoters and other pre-listing investors to six months, as against three years for other companies 
 
Addressing mediapersons after the board meeting, SEBI Chairman U.K Sinha said the disclosure requirements for these companies have also been relaxed. 
 
At least 25% of their pre-issue capital would need to be with institutional investors for technology start-ups, while this requirement would be 50% for companies from other areas. 
 
“Indian start-up space is very vibrant and the country is ranked number five as far as start-ups are concerned. More than 3,100 start-ups are there in the country and a large number of M&amp;As have also happened,” said the chairman. 
 
Under the new norms, 75% shares can be reserved for institutional investors, while allocation can be on discretionary basis for such investors. 
For non-institutional categories, it will be on proportional basis. 
 
SEBI has also provided for reclassification of promoters as public investors provided they let go all their special rights, including voting powers, and do not own more than 10% stake. 
 
However, an outgoing promoter can serve as a CEO or hold other senior positions for up to three years if the same is approved by the company's board. 
 
(Image: Indiatimes)

Good news for startups,
SEBI relaxes listings, fund-raising norms for them

<div class="image-container float_right" style="width:400px"><div class="image"></div>Reuters</div><keyword id="6354703" type="COMPANY" weightage="60" keywordseo="Natural-gas">Natural gas</keyword> prices are up more than 3 percent this morning after the Energy Information Association (EIA) reported a drop in supplies.
For the week ended March 1, U.S. reserves fell -146 billion cubic feet.
According to Citi's Timothy Evans, the drop in supply was much higher than every forecast:
Citi Futures 120 bcf Dow Jones Survey 131 bcf Reuters Survey 134 bcf Bloomberg Survey 134 bcf Five-Year Average 102 bcf 
Here's the chart:
<table class="image-container" width="200"><tr><td><div class="image"></div><a href="http://www.investing.com/commodities/natural-gas">Investing.com</a></td></tr></table>
Evans calls it a "bullish shock" to the market. Here's his take:
The 146 bcf net withdrawal was significantly more than expected, a bullish shock to the market. There were no reports of reclassifications and so this looks like a straight-up tightening of the background supply/demand balance for the period, with supportive implications that offset today's milder temperature outlook. The case for a rally to $3.70-3.80 is improved.
Prices are not expected to come down for a while.

A 'Bullish Shock' To Natural Gas Supplies Just Sent Prices Exploding Higher

<div class="KonaFilter image-container display-table float_right"><div><div class="image on-image"><a href="https://www.flickr.com/photos/airmanmagazine/15120696825/">U.S. Air Force</a></div></div></div>The February jobs report crushed expectations with US payrolls growing more than expected while wage growth was disappointing. Equity markets were little-changed in response to this number while US Treasury yields backed up following this report. First, the scoreboard:<ul><li>Dow: 16,996, +52, (+0.3%)</li><li>S&amp;P 500: 1,999, +5, (+0.3%)</li><li>Nasdaq: 4,717, +8, (+0.2%)</li><li>WTI crude oil: $36.20, +4.8%</li></ul><h2>Jobs Report</h2>The jobs report handily beat expectations. In February, <a href="http://www.businessinsider.com/us-jobs-report-february-2016-2016-3">nonfarm payrolls in the US rose by 242,000</a>, way more than the 195,000 that was expected by economists and better than the 172,000 jobs that were created in January. January's number was revised to this level from an initial report of 151,000 new jobs. Wage growth, however, <a href="http://www.businessinsider.com/average-hourly-earnings-growth-february-2016-2016-3">was disappointing as wages fell 0.1%</a> compared to the prior month and rose just 2.2% over last year. Expectations were for these numbers to rise 0.2% and 2.5%, respectively. Ian Shepherdson at Pantheon Macro, however, <a href="http://www.businessinsider.com/ian-shepherdson-on-the-february-jobs-report-2016-3">noted that a calendar quirk</a> is likely to blame for this disappointing wage numbers - a quirk that will still be in place in March - and so the read shouldn't be that overall, wage growth has stalled out. The most important part of recent jobs reports for Fed watchers has been and remains the wage figures as wages are the necessary condition to create a sustained uptick in inflation. If we consider that inflation is too much money chasing too few goods, then consumers need more money in order to goose prices higher. The unemployment rate in February remained steady at 4.9%. (<a href="http://www.businessinsider.com/february-2016-more-precise-unemployment-rate-2016-3">Well, actually, 4.918497%</a>.)Also of note in the jobs report is that the <a href="http://www.businessinsider.com/labor-force-participation-rate-february-2016-2016-3">labor force participation rate rose to 62.9%</a>, the third straight month that this number has increased. The labor force rate has often been cited as the sign that something is broken, fundamentally, in the US labor market as this measure has been sitting near 30-plus year lows for some time. The reality is that this ratio is being dragged down not only by a soft labor market but by the structural shift seen among the US labor force given the rate at which Baby Boomers are retiring.<h2>Flows</h2>Under the surface of the headline employment numbers are a few encouraging trends for not just the future of the labor market but the future of the broader US economy. In February, <a href="http://www.businessinsider.com/february-great-for-black-hispanic-workers-2016-3">62% of total job gains were for black or Hispanic workers</a>, a sign that groups which had seen higher-than-average unemployment rates making gains as the labor market more fully heals itself following the financial crisis. In February, the unemployment rate for black workers fell to 8.8% - down from 10.3% last year - while the Hispanic unemployment rate is down to 5.4% from 6.7% two years ago. In addition to minority workers seeing larger gains in February, lower- and middle-income workers have also seen an increase in employment, indicating a broadening of the labor force gains. Torsten Sløk at Deutsche Bank argued that it is gains among these lower-income workers that serve as a major positive for the economy as these consumers have a higher marginal propensity to consume - meaning that the less total amount of money you bring in, the more you're likely to spend an additional $1 of new income - which has beneficial knock-on effects for consumer spending, the engine of the US economy. Also!The flows in the labor force are and have been decidedly positive over the last year. This chart, which comes to us from Deutsche Bank, shows the trend of workers moving from outside the labor force altogether to back in the labor force.<div class="KonaFilter image-container display-table"><div><div class="image">Deutsche Bank</div></div></div>This is the most dramatic re-classification of workers within the labor force and shows an economy that is able to absorb more and more slack, a bullish both for future wage growth, inflation, and general economic prospects. <h2>Stock Market</h2>This year has been all about end-of-day rallies. According to data from <a href="https://www.bespokepremium.com/">Bespoke Investment Group</a>, the average intraday performance for the final hour of trading is far outperforming any other period of the day, which the firms says investors often seen as a sign of "smart money" activity. (The old market adage is "sell the open, buy the close.")<div class="KonaFilter image-container display-table"><div><div class="image">Bespoke Investment Group</div></div></div>Here's Bespoke:Many consider stronger price action at the end of the day to be an excellent indicator of "smart money" activity. This theory suggests that early day trading is noisy and distorted by hasty reactions to economic data or earnings announcements. Later on, though, we get the more patient investors making decisions. So far in 2016, that theory has been basically correct; while stocks are still down on the year, the huge selling to start the year has been almost reversed and the price action over the last week or so (strong breadth, consistent higher highs, and broken downtrends) has been indicative of a market that wants higher levels. If you're looking at it from the "smart money" perspective, stocks are still being bought, too, as the chart [above] shows clearly. <h2>Oil</h2>Oil prices continued their rally this week, rising nearly 5% on Friday as West Texas Intermediate crude oil, the US benchmark, hit $36.20 a barrel, the highest level in about two months. In related oil news, the latest <a href="http://www.businessinsider.com/baker-hughes-rig-counts-march-4-2016-3">Baker Hughes rig count</a> showed the number of US oil rigs in use fell to the lowest since the week of December 4, 2009 this week. Total rigs in use is now at 392. Earlier this week, <a href="http://www.businessinsider.com/oil-rig-count-to-zero-by-august-2016-2">a note from Morgan Stanley's Ole Slorer said</a> that at the current rate of decline oil rigs in use would hit 0, though of course this is unlikely to happen. Slorer forecast a decline in the oil rig count by the summer, but the read from the market is that as the decline slows and signs increase that perhaps US oil production has topped out and traders betting against oil prices get exhausted, we're nearer and nearer to a bottom. Shares of oil driller Seadrill, meanwhile, <a href="http://www.businessinsider.com/seadrill-share-price-rally-march-4-2016-3">were up more than 100%</a> at one point on Friday after speculation its owner John Fredriksen raised about $150 million in cash to bail out the company. <h2>Additionally</h2><a href="http://www.businessinsider.com/financial-advisor-insights-march-4-2016-3">Jim Rogers thinks there's a '100% chance' the US will have a recession within a year</a>.<a href="http://www.businessinsider.com/how-much-average-family-saved-for-retirement-2016-3">Here's how much the average US family has saved for retirement</a>. <a href="http://www.businessinsider.com/new-york-city-snow-follow-bizarre-pattern-2016-3">In the past 75 years, 81% of New York City's biggest snowstorms fell on a weekend. The odds of this happening were 500 to 1</a>. <a href="http://www.businessinsider.com/lula-arrest-undermines-brazil-2016-3">Brazil arrested its former president</a>. <a href="http://www.businessinsider.com/microsoft-canceled-8-billion-slack-bid-due-to-bill-gates-and-satya-nadella-pushback-2016-3">Bill Gates apparently talked Microsoft out of buying Slack for $8 billion</a>. <a href="http://www.businessinsider.com/oj-simpson-knife-found-2016-3">New evidence in the O.J. Simpson murder case</a>. <a href="http://www.businessinsider.com/lapd-on-new-oj-simpson-evidence-its-possible-the-whole-story-is-bogus-from-the-get-go-2016-3">But the whole thing might be bogus</a>. <a href="http://www.businessinsider.com/canadas-prime-minister-needs-to-stop-being-so-canadian-2016-3">Canada's Prime Minster needs to stop being so Canadian</a>. <div class="margin-top"> <h3>NOW WATCH: <a href="http://www.businessinsider.com/tinder-popular-woman-men-dating-mistakes-2016-2">A woman who's gone on 150 Tinder dates reveals the worst mistakes men make</a></h3> <div> <div> <div class="ooyala-video-player" data-video-autoplay="false" data-video-id="9mMjljeDr_6WliUr0ZyT6U42MqF72ioq" data-player-variable="ooyalapopvideo" id="ooyalaplayer_popvideo" style="width:1280px;height:720px"></div> </div> </div> </div>

JOBS REPORT CRUSHES, STOCKS RISE: Here's what you need to know

<div class="KonaFilter image-container display-table float_right"><div><div class="image on-image">Bernard Weil/GettyImages</div></div></div>Last month, the California Labor Commission made a <a href="http://www.businessinsider.com/california-labor-commission-rules-uber-drivers-are-employees-2015-6">ruling against Uber</a> that could have big implications for the $50 billion ride-hailing company.A San Francisco driver, Barbara Ann Berwick, filed a federal class-action claim against Uber saying she should be considered an Uber employee, not a contract worker. The California Labor Commission agreed with Berwick because it deemed Uber drivers are "involved in every aspect of the operation."Uber argues that the <a href="http://www.businessinsider.com/shannon-liss-riordan-the-lawyer-behind-ubers-lawsuit-2015-5">class-action part of the suit</a> should be dropped and is appealing the ruling.But if Uber doesn't get its way, the lawsuit could seriously impact Uber's business model. In a worst case scenario for Uber, it would have to reclassify all of its California drivers as W-2 employees, as opposed to independent contractors, which would be expensive.The cost difference between employing W-2 workers and 1099 contractors, which is what Uber's drivers currently are, is a lot. For common-law W-2 employees, employers need to withhold income taxes, Social Security and Medicare taxes, and pay unemployment taxes, <a href="http://www.irs.gov/Businesses/Small-Businesses-&amp;-Self-Employed/Independent-Contractor-Self-Employed-or-Employee">according to the IRS</a>. The same is not necessarily true for an independent contractor.Full-time employees also get benefits that contractors often aren't offered, and in general they have more labor protections and job stability.There are some benefits to being a contract worker though. An employer can't really control how a contract worker behaves - which hours they clock in, how to dress, or customer interaction, for example. Uber argues that not all of its drivers would actually want to be full-time Uber employees, because they have flexible lifestyles as contractors. But let's imagine the worst-case scenario for Uber were to happen.How big a deal would it be for Uber to turn thousands of drivers into actual employees? It's estimated to have <a href="http://recode.net/2015/07/14/uber-could-have-to-pay-an-additional-209-million-to-reclassify-its-drivers-in-california/">45,000</a> drivers in California alone. And how much would it cost? We talked to some startups that have decided to classify their laborers as employees to get a better sense of what kind of an undertaking a reclassification would be for Uber.<h2>The bigger a startup is, the more difficult it is to reclassify its workers</h2>In May 2013, before Marcela Sapone officially launched her startup Alfred, she and her cofounder Jessica Beck were using contractors to run errands for their clients. Alfred is a startup that seeks to <a href="http://www.businessinsider.com/alfred-founders-explain-why-they-created-a-startup-to-do-your-chores-2015-6">automate weekly errands and home chores</a> with an army of local workers.Five months later, Alfred's cofounders decided to convert their laborers (Alfreds, as they're called) into W-2 employees. "We spent hours and hours with lawyers - we spoke to four law firms - about the potential implications and the differences between the two classes of workers," Sapone told Business Insider. "And then we actually had to change our whole payroll system. We couldn't use [payroll provider] Zenefits because we had two different classes of workers, even though they were both W-2s."<div class="KonaFilter image-container display-table"><div><div class="image on-image">Hello Alfred</div></div></div>Sapone says it took a lot of time to get up to speed and there were a lot of administrative costs to reclassify her workers. Then, she and her cofounder had to increase the hourly wage of their employees "because we no longer did overtime," she says.And then there was the paperwork. "We had to get everyone to sign these documents about what it meant to do the switch and how we were going to do tax withholdings and had to get everyone to sign W-2 forms," she said.At the time that Alfred reclassified its employees, the company was in its infancy - it still only operated in Massachusetts. "Reclassifying would be incredibly difficult to do if we had waited longer," Sapone says. Because labor laws are localized, it requires work on a state-by-state basis. "It would have been even harder if we were in more than one geography," she adds.Uber is currently operating in more than 300 cities.<h2>Educating employees can take a while</h2>Last month, on-demand shipping startup Shyp <a href="http://www.businessinsider.com/shyp-is-reclassifying-its-workers-as-employees-2015-7">announced it would be reclassifying its couriers</a>, known as Shyp heroes, to W-2 employees (its warehouse workers and drivers were already W-2 employees). <a href="http://blog.shyp.com/shyp-ceo-note/">A memo from Shyp CEO Kevin Gibbon</a> said the move was meant to invest "in a longer-term relationship with our couriers," and was an operational decision to let the company have better quality control over the Shyp experience. "A move of this magnitude takes so much planning cross-functionally ... it requires so much work from operations, HR, marketing, engineering," Johnny Brackett, Shyp's head of communications told Business Insider. "Now that we've reached such a high volume of shipments in all of our active markets and we have such aggressive plans for expansion, it just wouldn't be sustainable at scale to maintain the Shyp experience with the 1099 model because of scheduling and training and things like that. So over the past year it's literally been on the first two agenda items of every executive team, every board meeting."<div class="KonaFilter image-container display-table"><div><div class="image on-image">Shyp</div></div></div>Since laws vary by location, Shyp is rolling out the changes city-by-city. "We are going to launch in Chicago later this year, this summer or early fall, so that will be the first Shyp market that is entirely W-2 from launch," Brackett said. "It's just going to take some time to transition the other guys."To implement its W-2 plan, Shyp's courier managers - basically community managers that oversee Shyp's delivery people - will sit down with each and every courier and give them a job offer. The responsibilities will vary from their current roles as delivery people: there will be added supervision and training, and implemented scheduling, which Shyp cannot legally have its couriers carry out as contractors."The courier gets told, 'We're reshaping the courier role, we're so grateful to have you on board, here's what it looks like, are you interested?' We want to take our time transitioning because the couriers who are not interested in moving forward with the W-2 role, we want to make sure they have time to make other adjustments in their life," Brackett said. "We get that this is a change. We're thrilled about it. But we understand some of the couriers are not going to be thrilled about it."Brackett declined to say how many couriers Shyp has, but he says the company has "hundreds" of laborers, including its newly employed delivery people.<h2>The cost of a 1099 vs a W-2 employee</h2>Limited available data makes it impossible for us to know just how much Uber may have to pay up if its drivers get reclassified. But one figure repeatedly comes up in conversations with startups who have gone the employee route: it costs roughly 20 to 30% more to hire W-2 employees as opposed to independent contractors.Munchery, <a href="http://www.businessinsider.com/munchery-2015-3">a full-stack food delivery startup serving up gourmet meals made by in-house chefs</a>, hired its delivery team as employees. Those who work more than 30 hours a week can get benefits, worker's comp, overtime, and paid sick days.<div class="KonaFilter image-container display-table"><div><div class="image on-image">MuncheryMunchery founders Conrad Chu and Tri Tran.</div></div></div>The company says that hiring its drivers as employees adds an estimated 20-30% to cost per hour. "However, the aggregate increase in labor cost is lower because classifying team members as employees improves retention and enables us to train them, increasing their efficiency," says Munchery's VP of Operations, Kris Fredrickson. "The primary additional costs a company that issues W-2s must bear are payroll taxes, workers' compensation premiums, and employee benefits for qualifying employees."Likewise, Sapone says that when Alfred made the W-2 employee switch, her overall cost structures increased "by 20 or 30%.""Suddenly you're paying health benefits. The employee pays some of those benefits, but you're paying anywhere from $200 to $600 in health benefits [per full-time W-2 employee per month]," she said. "You're also having to withhold more, and all of the accounting that comes with it - there's administrative costs that come with it. State by state, all of the employment laws are a little bit different." Shyp doesn't have hard numbers for how much it will cost to employ its couriers as W-2s."In financial projections, there's nothing surprising for us. The fact that we've always had our satellite drivers and warehouse employees as W-2s is really just closing that gap," Shyp's Brackett said. "It's transitioning the one-third of that group that hasn't been W-2."Brackett says Shyp has already accounted for increased costs.<div class="KonaFilter image-container display-table"><div><div class="image on-image">Instacart</div></div></div>In June, <a href="https://www.cbinsights.com/research-unicorn-companies#">$2 billion</a> online grocery delivery company Instacart announced plans to convert part of its workforce from contractors to part-time employees. Like Shyp, Instacart said the decision to reclassify wasn't a response to the Uber lawsuit - it's meant to improve customer service and efficiency. The company ran a pilot program earlier this year, making some of its shoppers part-time W-2 employees."Our shopper experience was better and therefore made decision that it made sense to replicate this model in other places," Andrea Saul, Instacart's VP of communications, told Business Insider. "The biggest cost increases we incur are workers compensation, payroll taxes, unemployment, social security, and Medicare. But even though the model was costlier for us, if it did improve our customer service we thought it was worth it for better service for our customers in the long term, and therefore grow our business."<h2>The problem: none of these startups operate on Uber's scale</h2>The problem with comparing these startups to Uber is that none of them are close to Uber's size. Shyp has hundreds of couriers and delivery people. Alfred has 86 Alfreds. Instacart says it has 100 part time employees in Chicago and about 200 in Boston, just two of its markets. Uber operates in hundreds of cities globally. It has had more than a million people drive for the company. It's raised $5.9 billion in venture capital funding and counting. And its core, non-driver team is presumably much larger than that of any other on-demand company.<div class="KonaFilter image-container display-table"><div><div class="image on-image">Flickr / Rob Nguyen</div></div></div>The most comparable worker reclassification case study isn't a Silicon Valley startup - it's FedEx. Like Uber, FedEx had been classifying its delivery drivers as independent contractors and not employees, even though they wore FedEx uniforms and drove trucks with the FedEx logo. A Massachusetts judged recently ruled in favor of FedEx workers, and the case has been repeated in several other states. (FedEx has now <a href="http://www.dcvelocity.com/articles/20150219-judge-rules-in-favor-of-fedex-ground-hunt-in--massachusetts-worker-classification-cases/">successfully appealed</a>, and it is back in court.) When FedEx lost its class-action lawsuit in California, it <a href="http://investors.fedex.com/news-and-events/investor-news/news-release-details/2015/FedEx-Corp-Adopts-Mark-to-Market-Pension-Accounting/default.aspx">had to pay a $228 million settlement</a>.For Uber, $228 million would still be a drop in the bucket. The company is flush with VC funding and is generating hundreds of millions of dollars in revenue annually in its biggest markets. But if Uber has to pay other costs - things like overtime pay and gas and car repair expenses - it could add up.Uber CEO Travis Kalanick has dealt with brutally expensive lawsuits before. Kalanick dropped out of UCLA to work on a file sharing company, Scour, which was ultimately <a href="http://www.businessinsider.com/travis-kalanick-bio-and-ubers-founding-2013-7">sued for a quarter of a trillion dollars</a> and filed for bankruptcy. At least this time, Kalanick is armed with a war chest of cash and his company is prepared for battle. <div class="margin-top"> <h3>NOW WATCH: <a href="http://www.businessinsider.com/lexus-hoverboard-teaser-video-skating-2015-7">Lexus reveals another teaser video that claims to show a working hoverboard</a></h3> <div> <div> <div class="ooyala-video-player" data-video-autoplay="false" data-video-id="l2ank4djpQOQ2vbGbe-q7wDlb2y6AegL" data-player-variable="ooyalapopvideo" id="ooyalaplayer_popvideo" style="width:1280px;height:720px"></div> </div> </div> </div>

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