BQuick On August 6: Top 10 Stories In 10 Minutes
This is a roundup of the day’s top stories in brief.
1. Uday Kotak Rises In Defence Of Deepak Parekh
Veteran banker Uday Kotak has sought regulation of international proxy advisers after two such firms asked investors to vote against reappointment of Deepak Parekh on the board of HDFC Ltd.
We have seen the concentration of voting through global proxy advisory services, leading to concentration of voting power in the hands of a few global agencies.Uday Kotak, Managing Director And Chief Executive Officer, Kotak Mahindra Bank
- “This questions the very basis of well-run, widely held companies and diversified ownerships”, Kotak added on the sidelines of the listing ceremony of HDFC Asset Management Company Ltd.
- Two U.S. proxy advisories—Glass Lewis & Co and Institutional Shareholder Services—had asked investors to vote against Parekh and two other board members—citing the number of directorships they hold, lack of attendance and overall independence of HDFC’s board.
- Kotak recently led a committee constituted by Securities and Exchange Board of India to review corporate governance norms applying to listed entities.
- It is on the recommendations of this committee that SEBI’s regulations now require that any director above the age of 75 seeking reappointment must do so via a special resolution.
Here’s why Uday Kotak wants India to regulate international proxy advisers
2. Bring Back LoUs, Says Parliamentary Panel
A parliamentary panel suggested that the letters of undertaking/comfort should be restored, and the Reserve Bank of India’s move to ban such guarantees after the fraud at Punjab National Bank was a “knee-jerk” reaction.
- Issuance of LoUs/LoCs should be restored with proper safeguards, said a report by the Parliamentary Committee on Commerce headed by Rajya Sabha member Naresh Gujral.
- Necessary steps should also be taken to simplify and streamline the processing of letters of credit—another such instrument that wasn’t banned.
- The central bank had banned LoUs/LoCs after Nirav Modi and Mehul Choksi had allegedly secured fraudulent LoUs in connivance with some of the employees at a PNB Mumbai branch.
Read more on the Parliamentary suggestions for LoUs
3. HDFC AMC’s Day 1 Performance
HDFC Asset Management Company Ltd.’s market debut was the sixth best in more than two years. The stock ended 65 percent higher at Rs 1,816 apiece on the BSE, compared with its issue price of Rs 1,100.
- Salasar Techno Engineering Ltd. clocked the highest listing day gains of 151.94 percent, followed by Astron Paper & Board Mill Ltd., and the rest.
- HDFC AMC Managing Director Milind Barve’s stake is now worth Rs 212.47 crore—the most among the key management personnel of the country’s second-largest asset manager.
Read more about HDFC AMC’s market debut
4. Sensex, Nifty End At Record Closing Highs; U.S. Stocks Fluctuate
- The S&P BSE Sensex Index closed 0.36 percent or 136 points higher at 37,691.89.
- The NSE Nifty 50 Index closed 0.2 percent or 26 points higher at 11,387.10.
- The market breadth was tilted in favour of buyers.
- Seven out of 11 sectoral gauges compiled by NSE advanced, led by NSE Nifty PSU Bank Index’s 2.6 percent gain.
- On the flipside, NSE Nifty Pharma Index was the top sectoral loser, down 0.97 percent.
Follow the day’s trading action here
The dollar rose against most of the major currencies after China signalled it won’t flinch in a trade war. U.S. stocks struggled for direction and European equities fell.
- The S&P 500 Index fluctuated in trading about 10 percent below the average volume for this time of day.
- The Dow Jones Industrial Average edged lower.
- Carmakers led gains in the Stoxx Europe 600 Index while banks fell, after HSBC’s earnings disappointed.
- Oil crept higher and most metals fell. The yield on 10-year Treasuries steadied at 2.96 percent.
Get your fix of global markets update here
5. Earnings Update: Adani Ports, Britannia Industries
Adani Ports and Special Economic Zone Ltd.’s profit fell for the second straight quarter due to foreign exchange losses.
- Net profit during the April-June period declined 9 percent year-on-year to Rs 691 crore.
- Revenue fell 12 percent to Rs 2,411 crore.
- Earnings before interest, tax, depreciation and amortisation rose a percent to Rs 1,588 crore, while margin rose to 66 percent after declining for two successive quarters.
Here's how Adani Ports fared in the April-June period
Britannia Industries Ltd.’s net profit for the April-June period matched estimates.
- Profit rose 19.4 percent year-on-year to Rs 258 crore.
- Revenue increased 12.4 percent to Rs 2,544 crore.
- The earnings before interest, tax, depreciation and amortisation rose 23.3 percent to Rs 389 crore.
- Operating margins expanded 80 basis points to 15.3 percent.
- Company will consider a stock split on Aug. 23.
Here's a snapshot of Britannia’s quarterly performance
6. This May Soon Be India’s Seventh Largest Bank By Value
Bandhan Bank Ltd. is close to overtaking Yes Bank Ltd. as India’s seventh most valuable lender in just over four months of making its market debut.
- Shares of the microlender-turned-universal bank have surged 88 percent since its March 27 listing.
- Bandhan Bank briefly surpassed the market cap of Yes Bank last Thursday but failed to close above it.
- The stock is the best performing banking stock of the year, and it commands a market capitalisation of over Rs 83,000 crore.
- Increasing reach in geographies where a lender enjoys a cultural and linguistic advantage—and which is usually untapped by top private banks—is a strategy successfully exploited by regional lenders like Bandhan Bank, a Bernstein report noted.
- Bandhan Bank still largely offers high-yielding micro-loans and low-cost deposits, with current and savings account deposits contributing 35 percent. Together, these helped it garner the highest margin among banking peers at around 9-10 percent in FY18.
Find out more on what’s working for Bandhan Bank
7. Pepsi’s Nooyi Ends 12-Year Run as Company’s First Female CEO
Indra Nooyi is stepping down as chief executive officer of food and beverage giant PepsiCo Inc., handing the reins to a top lieutenant.
- Nooyi will leave the CEO role in October and remain the chairman until early 2019.
- Ramon Laguarta, who has been a candidate to take over since a promotion last year to president, will be just the sixth CEO in the 53-year history of the company.
- Nooyi is the first foreign-born CEO of Pepsi and the first woman to lead the chips-and-soda behemoth, whose revenue topped $63 billion last year.
Here’s a glimpse of Nooyi’s 12-year tenure as Pepsi’s CEO
8. Here’s Apple’s Plan To Fix Its Problems In India
In June Michel Coulomb--a well-regarded veteran Apple executive--spent three days with senior employees from throughout India at Apple’s sales and marketing headquarters in Gurugram, laying out a strategy to rekindle iPhone sales that focused on better retail deals with higher sales targets.
- The executives also devised strategies to improve apps and other services aimed more closely at Indians, including a revamped version of Apple Maps by 2020.
- Instead of officially lowering its prices in India, Apple is in talks with retailers and banks to offer holiday deals all year round, according to people familiar with the plans.
- Apple is also asking some individual stores to more than quadruple sales targets, to 40 or 50 iPhones a week, and plans to cut off retailers that consistently fail to hit the mark.
Here’s more on Apple’s comeback strategy in the world’s fastest growing smartphone market
9. How Should India Tax The Digital Economy?
Technology giants like Facebook, Google, Amazon, Alibaba and other such digital companies derive considerable value from a large user base. For instance, some digital companies sell user data for targeted advertising. It’s this value that nations now want to tax.
- Europe, for instance, has proposed a tax on turnover. Australia is mulling a tax on digital advertising. Singapore has announced a sales tax on digital services, starting 2020. India isn’t far behind.
- India now wants to tax the business profits of digital companies, for which the taxman has reached out to various stakeholders for consultation.
- Experts told BloombergQuint the move will run into two problems: attribution of profits among countries i.e. who can tax how much, and treaty troubles.
Read more on the nitty gritties of taxing the digital economy
10. The National Health Stack: An Expensive, Temporary Placebo
Both limbs of the Ayushman Bharat strategy remain oblivious to the reality of the situation. If there is no established, well-functioning healthcare delivery system to support, then what help is a 'National Health Stack' as proposed by the NITI Aayog, ask Murali Neelakantan, Swaraj Barooah, Swagam Dasgupta, and Torsha Sarkar. The goal of increasing insurance enrollment without a functioning system could result in two highly problematic scenarios:
- Either health and wellness centres will effectively act as enrollment agencies rather than providers of healthcare,
- Or the government would fall back on its ‘Aadhar approach’ and employ external enrollment agents.
Read more on the goals of the NHS and where it falls short