BQuick On Aug. 16: Top 10 Stories In Under 10 Minutes
Here is a roundup of the day’s top stories in brief.
1. DVR Norms Relaxed
In a fillip to startups, the government has relaxed norms for shares with differential voting rights that will help such companies to retain control while raising equity capital.
- With the amended rules, companies can now have up to 74 percent Differential Voting Rights shares of the total post issue paid up share capital.
- The limit has been revised from 26 percent.
- The ministry noted Indian promoters have had to cede control of companies that have prospects of becoming unicorns due to the requirements of raising capital through issuance of equity to foreign investors.
The norms for shares with DVRs have been amended to enable promoters of Indian companies to retain control.
2. Why Were Adani Group Cases Heard Out Of Turn: Dushyant Dave Asks Chief Justice
Senior Advocate and former Supreme Court Bar Association President Dushyant Dave has written a letter to the Chief Justice of India Ranjan Gogoi raising questions about the process followed by the apex court in listing and hearing cases pertaining to Adani Group companies.
In the letter, of which BloombergQuint has a copy, Dave has alleged that these cases were heard out of turn by a summer bench headed by Justice Arun Mishra.
My Lords, I am not in any manner commenting on the merits or otherwise of the Judgments referred above. Nor am I suggesting anything other than procedural violations which resulted in these matters being taken up by the Benches presided by Hon’ble Mr. Justice Arun Mishra. To say the least, such listings appear to be extremely unjustified as per established practice and procedure followed by this Hon’ble Court.Dave’s Letter To Justice Gogoi
- In the letter, Dave begins by questioning the constitution of summer benches in 2019 by Chief Justice Gogoi. That the chief justice included himself and Justice Mishra was surprising, said Dave, as senior judges generally don’t sit on vacation benches.
- Dave then raised issue with the handling of the Parsa Kenta Collieries Ltd v. Rajasthan Rajya Vidyut Utpadan Nigam Limited case.
His letter suggests the case was not ready to be heard.
3. Sectors That Got Hit Most By FPI Outflows
Banking and software services sector witnessed the highest foreign fund outflows in July after Finance Minister Nirmala Sitharaman announced a buyback tax and higher levy on the super rich in the Union Budget 2019-20.
- Foreign portfolio investors pulled out $940 million and $865 million from the baking sector and the software and services sector respectively last month, according to the data available on NSDL.
- Both the sectors witnessed the highest fund outflows in nine months.
- This after the NSE Nifty Bank Index declined 7 percent in July, the worst monthly returns since September 2018.
- The NSE Nifty IT Index fell 2 percent during the period.
Foreign investors turned net sellers for the first time in six months.
4. Nifty Clocks Weekly Loss; U.S. Stocks Rise
Indian equities marked their fifth weekly loss in six after a volatile session on Friday, as investors mulled the outlook for company earnings and economic growth.
- The benchmark S&P BSE Sensex rose 0.1 percent to 37,350.33 after paring earlier loss of as much as 0.9 percent.
- The NSE Nifty 50 Index rose 0.2 percent.
- Both gauges still capped a weekly decline of 0.6 percent each, though markets were closed Monday and Thursday for holidays. However, the benchmarks resumed their weekly declines as it ended lower for fifth time in six weeks.
Follow the day’s trading action here.
U.S. stocks pared a third weekly decline as investors got a reprieve from a tumultuous week of back-and-forth posturing on trade.
- The S&P 500 cut its drop in the week to 1.8 percent, with chipmakers pacing Friday’s advance after Nvidia Corp.’s after quarterly sales and profit beat estimates.
- The Stoxx Europe 600 Index advanced, extending gains once some U.K. stocks began to trade following a delay caused by a technical glitch.
- The dollar edged higher even as new-home construction in America unexpectedly fell in July for a third month. Gold declined.
- Treasuries nudged lower, lifting yields from multiyear lows.
Get your daily fix of global markets here.
5. Indiabulls Real Estate’s Net Debt Free Plans
Indiabulls Real Estate Ltd. aims to be net debt free in the ongoing financial year by selling stakes in its various businesses.
- The company will sell stakes in commercial and leasing business assets to third-party investors or internationally renowned private equity firms at an equity valuation of around Rs 4,400-4,800 crore, according to an exchange filing.
- This includes the sale of its 50 percent stake in a joint venture with Blackstone Group LLP, which houses the flagship ‘Sky’ projects and other commercial assets.
- Indiabulls Real Estate will also divest the London Hanover Square property for an enterprise value of £200 million (about Rs 1,730 crore), subject to applicable regulatory and corporate approvals.
After the divestments, Indiabulls Real Estate will be left with a few residential projects.
6. FMCG Distributors’ Distress
Distributors of consumer goods across India are dealing with bloated inventories as consumers ration spends on daily essentials like soaps and detergents.
- Slowing demand from retailers has increased inventory days, distributors from five states told BloombergQuint requesting anonymity fearing business repercussions.
- They now carry stock for 20-40 days compared with 15 days four months ago and about 10-12 days a year earlier.
And FMCG companies don’t foresee an immediate uptick.
7. Ujjivan Small Finance Bank’s Rs 1,200-Crore IPO
Ujjivan Financial Services Ltd. has filed a draft red herring prospectus for the listing of its wholly-owned small finance bank. Ujjivan Small Finance Bank will raise Rs 1,200 crore through the initial public offering, the company said in a notification to stock exchanges on Friday.
- Ujjivan Small Finance Bank will raise Rs 1,200 crore through the initial public offering, the company said in a notification to stock exchanges on Friday.
- "Ujjivan Small Finance Bank is proposing to undertake an initial public offering of equity shares of face value of Rs 10 each of USFB, comprising a fresh issue of equity shares by USFB aggregating up to about Rs 1,200 crore," it said in a statement.
- The decision to list the small finance bank independently of Ujjivan Financial Services stems from a regulatory diktat.
RBI had clarified to promoters of small finance banks that they must list their banking units separately.
8. HPCL Eyes Electric Vehicle Opportunity
Hindustan Petroleum Corp. is planning a pilot program for swapping batteries of electric two- and three-wheelers at its outlets by December, people familiar with the matter told Bloomberg News.
- The initiative is aimed at helping the company maintain its grip on a segment of the mobility market that’s rapidly shifting to cleaner power sources, said the people, who asked not to be identified because the plans aren’t public.
- The ultimate capacity of the programme hasn’t been decided.
The pilot will allow consumers to replace depleted batteries with fully charged ones in just a few minutes.
9. What’s Hurting Smaller Drugmakers
Second-generation businessman Amit Sheth followed his father into India’s pharma industry, nurturing a near 40-year-old business to a point where it now deals in finished formulations, active pharmaceutical ingredients and their import and export to 50 countries around the world. The company even manufactures for some of India’s bigger drugmakers.
But Sheth is now in a quandary rarely experienced.
Pharma is the only sector in the world which has never, ever de-grown globally, which is primarily the essential nature of the goods. This is the first time ever, in the domestic pharma industry, that as the contract manufacturer we are facing de-growth of the entire assembly belt.Amit Sheth, Director, Orbit Lifesciences.
Find out where the challenges lie for small and medium companies like Orbit in BloombergQuint’s special series Real Economy Check.
10. A Change In Stance On Nuclear Weapons?
India today hinted that it may be rethinking its doctrine of “No First Use” for nuclear weapons.
- Defense Minister Rajnath Singh tweeted to say the South Asian nation remains “firmly committed” and “has strictly adhered to” the doctrine but “what happens in the future depends on the circumstances.”
- India is engaged in ongoing tensions with nuclear rival Pakistan over its decision to revoke autonomy of Kashmir region, to which both countries stake a claim.
- Singh tweeted after visiting India’s nuclear weapons testing site at Pokharan.
India has had a no-first-use policy since 1998, while Pakistan does not.