BQuick On April 25: Top 10 Stories In Under 10 Minutes
Introducing Election Soundtrack, a daily podcast that’ll get you up to speed with everything that you need to know about Elections 2019.
This is a roundup of the day’s top stories in brief.
1. Earnings: Axis Bank, Maruti Suzuki, Tata Steel
Axis Bank Ltd.’s profit missed analyst estimates for the final quarter of financial year 2018-19, despite a substantial rise in other income.
- Net profit stood at Rs 1,505 crore compared to a loss of Rs 2,188 crore in the same quarter last year.
- Domestic loan growth stood at 18 percent year-on-year.
- Gross NPA ratio stood at 5.26 percent compared with 5.75 percent.
Bad loan provisioning was at a 12-quarter low.
Maruti Suzuki India Ltd. forecast lower sales growth for 2019-20 than the previous financial year, signalling that India’s auto slowdown is far from over.
- It expects volume to grow between 4 percent and 8 percent in 2019-20.
- Net profit fell 4.6 percent year-on-year to Rs 1,795 crore.
The carmaker wants to phase out diesel vehicles by April next year.
Tata Steel Ltd.’s profit in the January-March quarter beat analyst estimates after its domestic steel output rose to a record last fiscal due to acquisitions and capacity ramp-up.
- Net profit fell 76 percent over last year to Rs 2,431 crore.
- Profit was expected to fall due to a one-time gain in the comparable quarter.
- Revenue rose 25.9 percent to Rs 42,424 crore.
- Adjusted operating profit (excluding Bhushan Steel Ltd. merger) rose 33 percent to Rs 7,814 crore.
While consolidated production was at a record, standalone volume growth was the slowest in four years.
2. Inquiry Ordered Into Alleged Conspiracy Against Chief Justice
The Supreme Court appointed retired Justice AK Patnaik to inquire the allegations of Delhi-based lawyer Utsav Bains that there was a conspiracy to frame Chief Justice Ranjan Gogoi on sexual harassment charges. Justice Patnaik will be assisted by the Central Bureau of Investigation, Delhi Police and the Intelligence Bureau, the top court said in its order. The Supreme Court bench, headed by Justice Arun Mishra, asked Justice Patnaik to submit the report in a sealed cover.
How is the Supreme Court, on the judicial side and the administrative side, conducting parallel hearings on the same matter, asks senior advocate Indira Jaising, who is intervening in the case before the bench presided by Justice Arun Mishra.
- We have one enquiry into the sexual harassment allegation on the administrative side, and one into the defence against that allegation on the judicial side.
- In the latter, the complainant is missing, no notice has been issued to her.
- Neither complies with the spirit of the Vishaka ruling. Neither has a woman judge presiding.
Read why Jaising thinks the court has failed on both sides.
3. Now ITC Under GST Scanner
The Goods and Service Tax investigation body has found that ITC Ltd. allegedly made undue profits by not passing on the benefit of GST rate cut to consumers.
- The Directorate General of Anti-Profiteering has accused the maker of Fiama Di Wills soap of not lowering the prices of its fast moving consumer goods, according to a person aware of the development.
- The investigation against the company is ongoing, he said.
- The GST Council had reduced goods and services tax on a range of consumer goods from 28 percent to 18 percent in November 2017, and the GST probe body has been acting on complaints received by it against companies which had not lowered prices of their products.
HUL is the latest to be probed after P&G, Nestle and Patanjali.
4. Stocks Slump, Brent Crude Tops $75
Indian equity benchmarks ended lower pressured by heavy selling in the final hour of trade and losses in metal stocks.
- The S&P BSE Sensex ended 0.83 percent lower at 38,730.
The NSE Nifty 50 closed at 11,641, down 0.72 percent.
- The broader market index represented by the NSE Nifty 500 Index ended 0.61 percent lower.
- Ten out of 11 sectoral gauges compiled by NSE ended lower.
Follow the day’s trading action here.
A drop in industrial shares overshadowed gains in technology stocks, sending major U.S. equities gauges lower as the dollar extended gains to a four-month high.
- While the tech-heavy Nasdaq 100 eked out an advance following strong results from Microsoft and Facebook, the broader S&P 500 Index slumped after 3M cut its earnings forecast and UPS reported a profit drop.
- The Stoxx Europe 600 slipped on a mixed day for bank earnings and as two major European mergers appeared to founder.
- Treasuries were steady after solid U.S. durable goods data, and most European sovereign bonds slid.
- Brent crude reached $75 a barrel for the first time since October as the U.S. decision to remove Iran sanctions waivers and a drop in Russian flows fueled supply fears.
Get your daily fix of global markets here.
5. Jain Irrigation’s Debt Trap
Jain Irrigation Systems Ltd. has lost nearly half of its value in the last one year as the world’s second-largest micro irrigation equipment maker grapples with mounting debt and weak cash flows.
- The company’s debt has more than doubled in the past eight years, according to Bloomberg data.
- That’s because the company continued to borrow to fund expansion as well as meet its working capital requirements.
- Shares of Jain Irrigation, controlled by Ashok Jain and his family, tumbled about 50 percent over last year and are down close to 80 percent from their all-time high in August 2010.
Here's what has been hurting the company's financials.
6. Will Tide Turn For Telecom Operators?
India’s telecom operators plan to raise cash and sell assets to pare debt as the tariff war unleashed by Asia’s richest man continues unabated. But that’s unlikely to help their core business unless they increase prices.
- The planned deleveraging will only allow the operators to lower debt but won’t improve operational performance.
- The operating income of India’s top two operators has fallen by half in the last two years.
- And growth has also slowed for the Mukesh Ambani-controlled disruptor, Reliance Jio Infocomm Ltd.
The only way to stem that is higher tariffs.
7. Red Flag For Graphite Electrode Makers
After a stellar run that lasted over a year, shareholders of graphite electrode makers HEG Ltd. and Graphite India Ltd. have seen their wealth erode by more than 60 percent since October. And there is more to worry.
- China is expected to add 40 percent capacity by 2019-20, according to a Citi note authored by analysts Alexander Hacking and Bella Peng.
- The supply will outpace estimated demand and lead to Chinese exports in the second half of the year, eventually putting pressure on the prices of steelmaking raw material, the report said.
- Curbs on polluting units in China had caused a global supply crunch, increasing prices of graphite electrodes.
- That widened the margins of HEG and Graphite India, and their shares returned more than 1,000-fold gains.
- But the stocks started falling since October 2018 on expectations of additional supply.
A 40 percent rise in supply could cause a 40 percent drop in prices.
8. It's Getting Harder To Hedge The Rupee
The success of the Indian central bank’s currency-swap auctions is leading to exaggerated moves in the onshore forwards market, making it harder for companies to hedge their foreign-currency borrowings.
- Tuesday’s $5 billion auction, which drew offers for more than three times the size, was covered by just five bids.
- Banks whose bids didn’t get accepted were left with excess dollars that sent the one-year annualized forward rate as high as 4.58 percent after the sale.
Forward premiums are staying more elevated due to excess dollars in the system.
Also read: India’s Secret Stimulus Is a Bad Sign
9. Homeowners Roll Up Sleeves To Complete Unfinished Flats
Lalit Vazirani, a computer programmer from Mumbai, never reckoned on having to turn amateur property developer.
- Yet here he is, a decade after putting down a deposit for an apartment near the city’s airport, dealing with architects, taxes, various planning permissions and even court hearings.
- All because the developer behind the $50 million project has gone bust, and nobody else has stepped in to finish the work.
- “We never in our wildest dreams imagined one day we would take on the functions and the role of a developer,” said Vazirani, 45, who bought the two-bedroom unit before construction started.
5. Election Commission’s Trial By Fire
From Yogi Adityanath calling the general election a “Ali-Bajrang Bali” contest between Muslims and Hindus to Mayawati’s appeal in Deoband to vote for the BSP-SP-RLD alliance and Azam Khan’s misogynistic ‘khaki underpant’ comment on actor-turned-legislator Jayaprada, campaigning is not only testing the lows political leaders can stoop to but also what the Election Commission of India can do to reign them in.
- Last week, the commission told Supreme Court that it can’t do much.
- But Chief Justice of India Justice Ranjan Gogoi’s warning to summon the Chief Election Commissioner spurred the body into action.
- Within 12 hours of telling the apex court that it can issue only advisories, the commission banned politicians across party lines from campaigning.
But that points to the question of how powerful is the Election Commission?