BQuick On Dec. 31: Top 10 Stories In Under 10 Minutes  

This is a roundup of the day’s top stories in brief.

1. Modi Government’s $1.5 Trillion Infrastructure Push

India outlined the contours of a $1.5 trillion plan to build infrastructure over the next five years to shore up economic growth.

• The programme will include existing projects in the energy, road and railway sectors in the pipeline, Finance Minister Nirmala Sitharaman told reporters.
• Private companies will account for 22-25 percent of the investments, with the central government and states contributing the rest, she said.
• The push to increase spending on infrastructure was unveiled by Prime Minister Narendra Modi in August and a panel was subsequently formed to identify the projects.
• Building new roads, rail links and other social and economic infrastructure is key for attracting investments and spurring growth.

Several governments have tried to implement public-private partnerships for infrastructure in India, but have fallen short.

2. Fiscal Deficit Widens As India Plans Spending Curbs

India’s fiscal deficit widened further in November raising concerns that the country will breach its budgeted target for a third straight year.

• The gap between the government’s revenue and expenditure widened to Rs 8.07 lakh crore as of November, according to data released by the Controller General of Accounts.
• That’s 114.8 percent of the budgeted estimate of Rs 7.04 lakh crore for 2019-20.
• Tax revenue stood at 45.5 percent of the budgeted target of Rs 16.4 lakh crore.

Non-tax revenue stood at 74.3 percent of the budgeted target of Rs 3.13 lakh crore.

Meanwhile, the government has reduced the spending limits available to ministries and departments, as lower-than-expected revenue collections put pressure on fiscal deficit goals.

• Expenditure in the last quarter of the financial year ending March 31 has been capped at 25 percent of the budget estimate from 33 percent allowed earlier, the Finance Ministry said in an office memorandum this week.
• That means departments, which have spent only 67 percent of the money allocated to them by December, won’t be able to use at least 8 percent of the budgeted funds.

Spending in the last month of the fiscal year has been restricted to 10 percent of budget estimate from 15 percent earlier.

Things for the economy worsened on the industrial side too with growth in eight core sectors contracting for the fourth straight month in November.

• The index of eight core sector industries fell 1.5 percent in November, according to data released by the Ministry of Commerce and Industry.
• On a cumulative basis, the index remained flat from April to November compared to a growth of 5.1 percent in the previous year.

Five of the eight sectors within the index contracted in November.

3. Ambani Ups The Ante Against Amazon

Reliance Industries Ltd. started testing its online shopping portal, moving a step closer to billionaire Mukesh Ambani’s goal of setting up a digital platform to take on e-commerce giant Amazon.com Inc. in India.

• JioMart, open to select customers who pre-register, promises more than 50,000 grocery products, free home delivery and a return policy that asks no questions.
• Labeled ‘the nation’s new store,’ it is currently available in only three neighborhoods surrounding Mumbai, according to the website.
• The pilot site provides an early glimpse of how the energy-and-petrochemicals conglomerate controlled by Asia’s richest man is stepping up consumer offerings in a pivot toward newer businesses.

Ambani is giving shape to his online retail ambitions by spending billions of dollars on a string of small acquisitions.

4. Auto Dealers Don’t Want To Rejoice Yet

Dealers of cars and two-wheelers remained cautious even as retail sales picked up in December on the back of year-end discounts, according to a BloombergQuint survey of eight large dealerships.

• The pick-up comes ahead of the new year when automakers usually hike prices of popular models.
• “We are seeing an uptick in sales for all our dealerships with stockout situation in case of certain models and variants,” R Chandrashekhar, executive director of Regent Honda & Kamal Hyundai, said.
• December may just prove to be an aberration as dealers remain nervous over the outlook.
• While the ongoing month saw attractive offers, there are concerns if demand will sustain, said another dealer who spoke to BloombergQuint on the condition of anonymity.
• Although the liquidity situation has improved from pre-festival months, it still remains below the normal levels, an indication of continued weakness in consumer sentiment, he said.

Read what dealers are saying about auto sales in December ahead of the retail numbers tomorrow.

5. Nifty Falls But Caps A Good Year For Benchmark Indices

Indian equity benchmarks registered their second-best yearly gains in five years as trading in 2019 came to a close on Tuesday.

• BSE S&P Sensex fell fell 0.7 percent or 304.26 points to 41,253.74, while the NSE Nifty 50 index fell 0.65 percent to 12,168.45.

Follow the day’s trading action here.

During the year, the 50-stock index returned nearly 13 percent. The broader markets, however, continued to remain under pressure.

The gains in the Nifty were led by Bajaj Finance Ltd., Bharti Airtel Ltd. and ICICI Bank Ltd. On the flip side, Yes Bank Ltd. was the worst performer, after declining the most since listing.

Here are three other charts that tell the story of Indian markets in 2019.

6. Behind India’s Largest IBC Recovery

In July 2017, top lenders to Essar Steel Ltd. met in Mumbai to discuss pitches by restructuring firms that wanted to run the steelmaker’s for the nine months during the insolvency period. They looked at technical and financial merits of the firms and decided to go with Alvarez & Marsal India. Not because the U.S.-headquartered turnaround specialist offered to take up the job for the least amount of money—it didn’t. But because it had successfully managed large stressed firms.

• Other consultancy firms offered to do it for a lower fee but Alvarez & Marsal had the maximum experience, a former public sector banker present in that meeting told BloombergQuint—he spoke on the condition of anonymity as details aren’t public.
• For a consortium led by public sector banks, such a selection was surprising. The suggestion came from private lenders like ICICI Bank Ltd. and Axis Bank Ltd., and their state-owned peers went with it, the banker added.
• This preference for quality over price was kept alive all through the insolvency period, and paid off ultimately more than 850 days later when lenders recovered roughly 92 percent of their Rs 49,000 crore dues.

BloombergQuint gets you the complete Essar Steel story.

7. Why Lodha Is Confident Of Increasing Sales And Paring Debt

As India’s developers struggle to raise cash, even the real estate company owned by the nation’s richest property tycoon couldn’t escape the crunch. It’s troubles stem from slower sales due to a stricter housing law leaving the developer saddled with debt and unsold inventory. Besides, defaults by IL&FS dried up funding for non-bank lenders that provided bulk of the funding to real estate companies. Since then, Macrotech--formerly known as Lodha Group--saw multiple downgrades by Moody's Investor Services and Fitch Rating citing delay in refinancing, lower sales and weak liquidity position.

• Still, Macrotech rejected those concerns. Abhishek Lodha, managing director and son of the company’s founder, told BloombergQuint that he’s confident that the company would not only meet the bond payment but will also pare the debt substantially this fiscal and later, aided by cash flows from sales of residential and commercial property.
• So far, in April-October, Macrotech has sold apartments worth Rs 4,000 crore and Rs 1,350 crore in office properties, according to Lodha.

The company expects total sales of Rs 7,000 crore in 2019-20.

8. How Big Are The Big 4

They’re known as the Big 4 of the accounting world for a reason: they continue to be the auditors for six out of every ten of the top 500 listed firms in India.

• KPMG, EY, Deloitte and Pricewaterhouse will handle the audits of 283 companies in the Nifty 500 index for 2019-20, according to a joint report by NSE and Prime Database Group.
• Even in the broader universe of all listed firms on the NSE, the Big 4 are auditors for 26 percent of the 1,813 companies.
• While that figure is slightly lower than that of the previous fiscal—28 percent—it only underscores how the four global audit giants have grabbed the lion’s share of India’s audit business within over a decade and a half.

Read more about their dominance and the rise of a new challenger.

9. What Comes First – Business Strategy Or Structure?

How Saurabh Mukherjea looks for companies that ideate like entrepreneurs and execute like MNCs.

• Discover clean companies that have the courage and clarity of thought to prioritise strategy over structure.
• Creators of structure knowingly or unknowingly become creatures of that structure.

Fluidity and flexibility in structure would imply the true liberation of an organisation’s strategy.

10. New Year Protest Parties!

Protesters across India are planning to use the New Year’s eve holiday to throw street parties to continue their fight against the country’s new religion-based citizenship law that they say is discriminatory.

• Activist and student groups in New Delhi, Mumbai, Chennai and several other cities have taken to social media asking people to join them at midnight to ring in 2020.
• They plan to have standup comedy sessions, music, poetry and readings of India’s secular constitution at the gatherings.
• The organizers are asking people to bring their own placards and candles and to “shake a leg on the songs of freedom,” and “relish the rich taste of justice.”

Protesters allege the new law will alter the country’s secular ethos and violates the constitution.