BQuick On Aug. 29: Top 10 Stories In Under 10 Minutes
Here is a roundup of the day’s top stories in brief.
1. RBI’s Income More Than Doubles In FY19
The Reserve Bank of India’s annual report shows that the central bank’s total income more than doubled in 2018-19, allowing it to transfer a significantly higher surplus of Rs 1.23 lakh crore to the Government of India.
- The annual report released on Monday showed that the central bank had a total income of Rs 1.93 lakh crore for the financial year ended March 31, 2019, up 146.5 percent from a year ago.
- Expenditure for the year, meanwhile, fell to Rs 17,045 crore, from Rs 28,277 crore in 2017-18.
- A significant part of the jump came from other income.
- Other income rose to Rs 86,199 crore in FY19 from Rs 4,410 crore a year ago. This was primarily due to a steep rise in income from domestic sources.
- Foreign sources contributed Rs 29,143 crore to the other income.
There were three reasons why RBI’s income increased...
Bank Frauds Spike 74% In 2018-19
Bank frauds in India have jumped 74 percent by value, driven by loan-related incidents.
- The total amount involved in fraudulent transactions rose to Rs 71,543 crore in the financial year ended June 30, the Reserve Bank of India said in its annual report for 2018-19.
- Public sector banks accounted for 90 percent of these worth Rs 64,509 crore.
- Private and foreign banks reported Rs 5,515 crore and Rs 955 crore worth of frauds, respectively.
The total number of bank frauds also rose to 6,801 incidents from 5,916 a year ago.
2. Adani Buys Essel Group's Solar Assets
Essel Group moved forward with its asset divestment process to repay lenders as it signed an agreement with Adani Green Energy Ltd. to sell solar assets of Essel Green Energy Pvt. Ltd. and Essel Infraprojects.
- The Adani Group firm will buy 205 megawatts of operating solar assets from Essel at an enterprise value of Rs 1,300 crore.
- The assets are located in Punjab, Karnataka and Uttar Pradesh.
- All assets have long-term power purchase agreements with various state electricity distribution companies.
- Last month, Invesco Oppenheimer Developing Market Funds agreed to hike its stake in Zee Entertainment by 11 percent for about 4,224 crore.
3. Nifty Extends Slide, U.S. Stocks Rally
Indian benchmark indices fell for the second day as private banks dropped.
- The S&P BSE Sensex ended 1.02 percent lower at 37,068.93.
- The NSE Nifty 50 fell 0.89 percent to 10948.30.
- The broader markets represented by the NSE Nifty 500 Index fell 0.72 percent.
- Ajit Mishra, vice president (Research) at Religare Broking, said that global cues will continue to dictate the market trend in the absence of any major domestic event scheduled in the near term.
- Seven of the 11 sectoral gauges compiled by NSE ended lower.
Follow the day’s trading action here.
U.S. equities rallied alongside European stocks while Asian shares pared declines after China indicated it wouldn’t immediately retaliate against the latest American tariff increase.
- The S&P 500 Index rose on Thursday after a spokesman for China’s commerce ministry said escalating the trade war won’t benefit either side, and that it was more important to discuss removing the extra duties.
- Treasuries edged down, while a dollar gauge held near a nine-month high.
- West Texas Intermediate crude increased 0.7 percent to $56.19 a barrel.
Get your daily fix of global markets here.
4. CG Power Ousts Gautam Thapar
CG Power & Industrial Solutions Ltd.’s board has removed Gautam Thapar as chairman after an investigation by a legal firm unearthed governance and financial lapses at the company.
- “This decision has been taken in the interests of the company and its stakeholders in discharge of the fiduciary responsibilities of the board,” the power equipment maker said in an exchange filing on Thursday.
- On Aug. 20, CG Power had told the bourses that a probe by a legal firm revealed that the Gautam Thapar-founded Avantha Group flagship understated its liabilities and advances made to related and unrelated parties, among other financial irregularities.
- The company’s investors and lenders have since wanted Thapar to be removed as chairman.
In May, CG Power had also sent CEO and MD KN Neelkant on leave pending an investigation.
5. Air India Chairman’s Blunt Message
Air India Ltd. has sought help from the government as the national carrier continues to grapple with mounting debt, its chairman and managing director said on Thursday.
- “We definitely require some funds from government to meet the gap,” said Ashwani Lohani said.
- While the airline expects to post operating profit this year, debt servicing will remain a huge problem, he added.
- On how long Air India can continue without equity infusion, he said, “It is a difficult question to answer.”
Lohani admitted that even if it becomes the best airline, it won't be able to service its debt.
6. A State-Run Icon On The Verge Of Shutdown
The government may shut down Scooters India Ltd.—once the maker of iconic Lambretta scooters in India—after the state-owned company failed to attract any buyers.
- The Finance Ministry is planning to sell the manufacturing plants and machinery of Scooters India to suitable buyers and shut the firm down, two people familiar with the development told BloombergQuint requesting anonymity.
- The loss-making public sector undertaking manufactures three-wheelers under the brand name ‘Vikram’.
- The other option being considered is to sell non-core assets, with a separate sale of the company’s manufacturing plant and machinery in a bid to revive the firm and the brand.
7. 100% FDI In Commercial Coal: No Silver Bullet
India’s move to permit 100 percent foreign direct investment in commercial coal mining—over a year after it allowed mining by private contractors—is expected to have little impact.
- The government’s decision, said multiple brokerages including Bank of America Merill Lynch and Emkay Global, fails to address some of the key regulatory issues such as delay in environmental clearances and land acquisition, lack of availability of coal rakes, among others.
- They cited little impact of this development over Coal India Ltd. and its monopoly, at least in the short term.
- The world’s largest coal miner missed production target for 13th consecutive year in 2018-19.
- And it delayed the production target of 1 billion tonnes by two years till financial year 2024-25.
The measure is "laudable" but it doesn’t solve the real problems of the industry.
8. Understanding Asset Allocation
An optimal asset allocation strategy can help you minimise portfolio risk while maximising returns, writes Radhika Gupta.
- Investors must invest in a mix of asset classes to weather all market conditions.
- Identify which portion of your portfolio is strategic, and which portion is tactical.
- The broad approach is governed by three main factors: the investor’s goals, risk profile and time horizon.
Here’s how you can stop constantly trying and time the markets.
9. Chidambaram Gets Interim Protection
The Supreme Court on Thursday said it will pronounce on Sept. 5 its order on former Finance Minister P Chidambaram’s plea in the INX Media case lodged by the Enforcement Directorate.
- A bench of Justices R Banumathi and AS Bopanna also extended interim protection from arrest granted to Chidambaram till next Thursday.
- Chidambaram offered before the bench to remain in the custody of Central Bureau of Investigation till Monday.
- The court refused to comment on it after Solicitor General Tushar Mehta said that the extension of remand can only be done before the CBI court.
The bench also asked ED to submit material in a sealed cover which it wants to produce for the court’s perusal.
10. Why This Small Automation Firm Is In A Fix
Affordable Robotic & Automation Ltd.—a 13-year-old company listed on the BSE—is a supplier of welded lines to automakers such as Mahindra & Mahindra Ltd., Tata Motors Ltd., Bajaj Auto Ltd., Maruti Suzuki India Ltd., among others.
- As the auto and real estate industries started facing headwinds, it ventured into government tenders, supplying to “smart cities” under Prime Minister Narendra Modi’s Smart Cities Mission launched in 2016.
- But a change of guard in Andhra Pradesh has left the small-sized company’s capital tied up in stalled projects.
- “We took two government tenders of smart cities. One was Visakhapatnam and one was Tirupati. Unfortunately, both were under the Andhra government and the government got changed and all the projects were stalled,” according to Milind Patole, managing director of the company.
We took two government tenders of smart cities. One was Visakhapatnam and one was Tirupati. Unfortunately, both were under the Andhra government and the government got changed and all the projects were stalled.Milind Patole, Managing Director, Affordable Robotic & Automation
Find out more about the challenges faced by India’s small-and-medium enterprises in BloombergQuint’s special series Real Economy Check.