BQuick On July 1: Top 10 Stories In Under 10 Minutes
Here is a roundup of the day’s top stories in brief.
1. GST Collections Miss Rs 1 Lakh-Crore Mark
The goods and services tax collections fell below the Rs 1 lakh-crore mark after three months.
- The mop-up for May (collected in June) stood at Rs 99,939 crore against Rs 1,00,289 crore in April, according to a statement by the Ministry of Finance.
- That’s a decline of 0.3 percent over April and an increase of nearly 4.5 percent over the year-ago period.
- The number of GST returns filed during the month improved over the previous month.
- The total number of GSTR-3B returns filed for May by June 30 were 74.38 lakh compared with 72.45 lakh filed for April, and 72.13 lakh for March.
GST revenue looks set to fall short of the government’s FY20 target, says PwC’s Pratik Jain.
2. ICRA Sends CEO On Forced Leave
Domestic rating agency ICRA Ltd. on Monday decided to send its Managing Director and Chief Executive Officer Naresh Takkar on forced leave, pending an enquiry into the "concerns" raised by the capital markets regulator.
- The agency has appointed Chief Financial Officer Vipul Agarwal as the interim chief operating officer who will be reporting to the board, according to a statutory filing.
- Action against Takkar has been taken "pending enquiry into the concerns raised in an anonymous representation, that was forwarded to the company by the Securities and Exchange Board", said the agency that is majority owned by international rating agency Moody's.
The action is effective immediately.
3. Automakers’ Struggle Continues In June
There was no respite for Indian vehicle manufacturers in June as the auto slowdown extended further. All automakers that reported their monthly sales figure today noted a decline.
- The largest carmaker Maruti Suzuki India Ltd. saw sales fall 14 percent over last year to 1.25 lakh units.
- Ashok Leyland Ltd.’s sales declined 19 percent, led by a fall in medium and heavy commercial trucks.
- Mahindra and Mahindra Ltd. reported an 18 percent decline in their tractor sales.
- Royal Enfield sales fell 22 percent year-on-year.
Follow all June auto sales updates here.
4. Setback For GVK Power
South Africa’s Bidvest Group Ltd. won court approval to sell its holding in Mumbai International Airport to a third party, dealing a blow to majority holder GVK Power & Infrastructure Ltd.’s bid to increase its ownership.
- The ruling allowed unit Bid Services Division (Mauritius) Ltd. to divest its 13.5 percent stake, dismissing GVK’s effort to exercise its right of first refusal.
- The judge said GVK failed to show any preparedness to purchase the shares.
- GVK’s appeal was "ambitious" and it "inflated" the company’s readiness to buy, the court said.
- Despite several rounds of negotiations to reach an out-of-court settlement, GVK didn’t show a "genuine inclination" to complete the transaction, according to the ruling.
- GVK, which is trying to increase its stake to 74 percent from 50.5 percent, had offered in March to buy a 10 percent stake held by a unit of Airports Co. South Africa.
Gautam Adani’s Adani Enterprises Ltd. is reportedly eyeing a stake in Mumbai airport.
5. Sensex Bounces Back, U.S. Stocks Hit Record
Indian equity benchmarks ended higher, erasing the losses they clocked during the last two trading sessions.
- The S&P BSE Sensex closed 0.74 percent or 292 points higher at 39,686.
- The NSE Nifty 50 ended at 11,864, up 0.65 percent.
- The broader market index represented by the NSE Nifty 500 Index closed 0.57 percent higher.
- The market breadth was tilted in favour of buyers.
- Nine out of 11 sectoral gauges compiled by NSE ended higher.
Follow the day’s trading action here.
U.S. stocks rallied to all-time highs, with semiconductor shares leading the charge after President Donald Trump agreed to ease a ban on American companies supplying to Chinese tech giant Huawei.
- The Nasdaq 100 Index jumped 1.8 percent, with chipmakers from Micron Technology Inc. to Skyworks Solution surging more than 5 percent on speculation they’ll be able to supply to their biggest customers in Huawei.
- The gains put the S&P 500 Index and Dow Jones Industrial average on track to surpass all-time closing highs, as industrial and farm stocks joined the trade-fomented advance.
- The 10-year Treasury yield climbed as much as four basis points before cutting that in half.
- Gold fell 1 percent, trimming a plunge that earlier topped 2 percent.
- Crude surged, sending West Texas Intermediate toward $60 a barrel, after major producers agreed to extend output cuts.
Get your daily fix of global markets here.
6. New Challenge For City Gas Distributors
The three suppliers of piped natural gas—Gujarat Gas Ltd., Indraprastha Gas Ltd. and Mahanagar Gas Ltd.—may face competition as India plans to improve penetration of the cleaner alternative to kitchen and auto fuel for curbing pollution.
- The Petroleum and Natural Gas Regulatory Board has uploaded on its website a concept paper for determining network tariffs that a third-party or a new entrant would pay for using the network and compressed natural gas infrastructure of existing city gas distributors where marketing exclusivity has ended.
- The draft regulations proposed by the petroleum regulator provide two options for determining the tariff—first, based on 14 percent return-on-equity; and second, based on auction process.
- The regulator has invited comments from public within 21 days, that’s till July 19. It will then conduct an open house to discuss the comments on July 25.
Here’s what brokerages have to say about the possible ending of exclusivity of gas distributors.
7. Chinese Lenders Look To Sell RCom Loans
Chinese lenders to Reliance Communications Ltd., including China Development Bank, Exim Bank of China and Industrial & Commercial Bank of China, are in the midst of negotiations with foreign funds to sell their loan exposures to the insolvent telecom firm, two people in the know confirmed.
- The three lenders have a total exposure of over Rs 15,000 crore to RCom, which is currently undergoing insolvency proceedings.
- RCom owes more than Rs 49,000 crore to all its financial creditors, according to data provided by the resolution professional of the company.
- The Chinese lenders have been in talks with U.S. based fund Varde Partners and other distressed asset investors such as SC Lowy Financial HK Ltd. and Bank of America Merill Lynch for the sale of these loans.
- Discussions were first initiated six months ago but a deal has not yet been struck, the people quoted above said.
Negotiations on a possible sale are continuing.
8. PwC Red Flags Eveready’s Financials
The statutory auditor to Eveready Industries (India) Ltd. cited its inability to analyse the impact of battery maker’s financial support to promoters as a reason for its resignation. Price Waterhouse & Co. Chartered Accountants LLP pointed to a more serious implication of this lack of clarity.
- PwC said it was “unable to opine on the truth and fairness of the financial statements” of Eveready, according to its resignation letter filed with the Ministry of Corporate Affairs. BloombergQuint has reviewed a copy.
- The point on “fairness” of financial statement wasn’t disclosed in the exchange filing by Eveready on Saturday.
- BloombergQuint awaits Eveready’s response to its emailed queries on PwC’s resignation letter.
- PwC’s resignation letter also reiterated its May 27 audit report that said the auditor couldn’t analyse the extent of loss allowance or impairment that was required on the inter-corporate deposits and liability to be recognised on corporate guarantees given to promoter entities, as it was unable to obtain sufficient appropriate audit evidence from the company.
Recognition of impairment or liability decreases a company’s profits.
9. NS Vishwanathan Gets One-Year Extension
The government has extended the term of Reserve Bank of India Deputy Governor NS Vishwanathan by one year, according to an order by the Appointments Committee of the Cabinet.
- Vishwanathan’s term was to end on July 3, but under the latest order his term would be extended till July 4, 2020.
- He was first appointed as RBI deputy governor in June 2016. At the time he was replacing HR Khan, who had then superannuated.
- It is common for the appointments committee to extend the terms of key decision makers at the RBI who have been handling important portfolios.
The decision to give Vishwanathan another year comes amid churn at the central bank’s top offices.
10. Rajiv Lall Maps India's Next Generation Infrastructure Challenge
Urban India is choking. Sanitation, water, low-cost housing, public transportation are all under huge stress or are non-existent, warns infrastructure financing veteran Rajiv Lall.
- There are distinct limits to private financing of infrastructure services.
- The China model for urban infrastructure financing is one we must learn from, not the U.S. model.
- Build on the successful examples of the few development authorities in India that have done precisely what the Chinese did, like MMRDA.
- Set a goal of creating at least 100 government-owned land development authorities that focus on monetising government land.
Here’s what Lall thinks India must do.