BQuick On Feb. 13: Top 10 Stories In Under 10 Minutes

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

1. Modi’s Rafale Deal Cheaper: CAG

The Indian government’s $8.7 billion purchase of French warplanes was cheaper than a bid negotiated under the previous government, the country’s auditor said, potentially weakening an opposition campaign alleging corruption ahead of federal polls.

• Prime Minister Narendra Modi bought 36 Rafale fighters in 2015 from Dassault Aviation SA at a price 2.86 percent lower than a bid by the former coalition government headed by the Congress Party, India’s Comptroller and Auditor General said in the report tabled in parliament today.
• The delivery of all 36 jets will be faster by one month, it found.
• The Congress party rejected the CAG’s report on Rafale saying “this is the first time in history that a CAG report to Parliament has redacted numbers. This in itself raises a big question mark on the report.”

The report is unlikely to end the debate about the deal.

2. IL&FS Fiasco: Probe Sought Into Role Of LIC, Rating Agencies

A parliamentary panel demanded that the government probe the IL&FS group’s largest stakeholder, the Life Insurance Corporation of India, as well as agencies that gave higher ratings to entities of the insolvent infrastructure group.

• “The governance failures and indecision/indiscretion on the part of the IL&FS Board should also be thoroughly probed,” the Parliamentary Standing Committee on Finance said in a report titled “Strengthening the Credit Rating Framework in the country” that was tabled in Parliament today.
• The panel suggested that the Securities and Exchange Board of India should explore “mandatory rotation” of rating agencies to avoid long association between companies issuing securities to be rated and rating agencies.
• The suggestion that the panel received was to alternate with rating agencies every three years as debt instruments are mostly of long tenures, according to the report.

The panel was constituted after the defaults and credibility of rating agencies was questioned.

3. Forensic Audit Of Loans To DHFL

Public sector lender Bank of Baroda has initiated a forensic audit of loans to Dewan Housing Finance Corporation Ltd., after news website Cobrapost alleged that the company has re-routed loan funds back to promoter group entities.

• According to three people in the know, Bank of Baroda initiated the forensic audit after it received a letter from the Ministry of Finance directing it to do so.
• A similar letter was sent to State Bank of India as well.
• Consultancy firm KPMG has been appointed by Bank of Baroda for this audit.

A forensic audit would show if the loans were used to fund legitimate business or funneled into related parties.

4. Amtek Auto Resolution 2.0

The Chandigarh bench of the National Company Law Tribunal, on Wednesday, allowed the financial creditors of Amtek Auto Ltd. to start the resolution process from scratch, more than 18 months after it was first initiated.

• According to three people in the know, the tribunal ordered that the process be restarted and completed within a short time frame of approximately 140 days.
• The Chandigarh bench decided to give additional time based on the period between the date of submission of the first set of resolution plans in March 2018 and the date on which the bench approved Liberty House UK as the winning bidder for Amtek Auto.
• According to the people quoted above, the committee of creditors to the auto parts manufacturer and the resolution professional Dinkar V had approached the NCLT after Liberty House refused to honor its payments despite receiving the tribunal’s approval.

Amtek Auto owes nearly Rs 12,312 crore to its financial creditors.

5. Venkataramanan To Leave Tata Trusts

R Venkatarmanan, managing trustee of Tata Trusts that controls about two-thirds of Tata Group’s parent, will step down by March 31 at the end of his five-year term.

• Venkataramanan had informed the chairman and trustees that he had been considering other options, according to a media statement by Tata Trusts.
• The trustees, at a meeting today, accepted his request to be relieved.
• A committee comprising Tata Trusts Chairman Ratan Tata, and Vice Chairmen Vijay Singh and Venu Srinivasan will oversee operations and find a new chief executive.

Last year, he was named in CBI probe for bribing government officials to obtain a flying permit for AirAsia India.

6. Sensex Extends Slide, Dow Rises Again

Indian equities reversed gains in the last 30 minutes of trade and the benchmark index fell a fifth day, its longest losing streak in nearly five months.

• The S&P BSE Sensex closed at 36,034, down 0.33 percent.
• The NSE Nifty 50 Index ended below 10,800, declining 0.35 percent.
• The market breadth was tilted in favour of sellers.
• About 1,094 stocks declined and 643 shares advanced on National Stock Exchange.
• Eight out of 11 sectoral gauges compiled by NSE fell, led by the NSE Nifty PSU Bank Index’s 2.1 percent decline.

Follow the day's trading action here.

U.S. stocks extended gains on Wednesday after President Donald Trump signalled a more conciliatory stance toward China, fueling hopes of a breakthrough in the trade war.

• The S&P 500 Index, Nasdaq 100 and Dow Jones Industrial Average all climbed as Trump also appeared to move closer to accepting a border deal that would avoid another government shutdown.
• The dollar gained and Treasuries edged lower after data showed U.S. inflation remained contained.
• The euro weakened after a report showed industrial production across the 19-nation region is falling at the fastest pace since the financial crisis.
• West Texas Intermediate crude climbed 1.21 percent to $53.74 a barrel after Saudi Arabia pledged to deepen output cuts.

Get your daily fix of global markets here.

7. CG Power’s Tumble

Shares of CG Power and Industrial Solutions Ltd. fell as much as 32.3 percent—its worst single-day decline since listing—after the company wrote off loans to third parties and adjusted loans to promoters against future royalty payments.

• The company’s net loss widened to Rs 150 crore in the quarter ended December, the power equipment maker said in an exchange filing.
• That was due to an exceptional loss worth Rs 117 crore, mainly contributed by Rs 108-crore write-off against third-party receivables—or payments from clients.
• CG Power said the write-off was as a result of its “conservative accounting practices”.
• “Whenever it receives payment from the debtors, the amount will be reversed,” the Mumbai-based company said in a conference call post its third-quarter earnings.

It expects another potential write-off worth $5-7 million in the coming quarters.

8. Apollo Hospitals’ Founders May Exit Insurance JV

Prathap C. Reddy and his family, founders of India’s Apollo Hospitals Enterprise Ltd., plan to sell their holdings in an insurance venture with Munich Re AG to repay debt, people with knowledge of the matter told Bloomberg News.

• The family is seeking to sell its entire holding of 41 percent in Apollo Munich Health Insurance Co., for about Rs 1,200 croreo ($170 million) in six months, the people said asking not to be identified as the discussions are private.
• The proceeds will be used to repay part of the debt raised by pledging Apollo Hospital’s equity as collateral, the people said.

Shares of India’s biggest hospital chain operator plunged the most in seven years on Monday. Here’s why.

9. There Was Once An IDBI

There are two parts to the IDBI story – its significant past and its crisis-ridden present. Banking historian Amol Agrawal writes about IDBI’s early years as the institution stares at another change in direction, under LIC’s ownership.

• It took an industrialist finance minister just 8 months in 1964 to take IDBI from a blueprint on paper to an operational bank.
• Did you know that IDBI started out as a fully-owned subsidiary of the RBI?
• It is because of IDBI that RBI expanded to four deputy governors, with one of them responsible for managing IDBI.

Lessons from IDBI will help us design new institutions better and avoid making the same mistakes, Agrawal writes.