BQuick On Feb. 15: Top 10 Stories In Under 10 Minutes

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

1. Good News For Small Businesses

Delayed payments from clients, including large firms and sometimes even government units, has been a persistent problem for the country’s small businesses. While large businesses may also face similar problems, smaller firms find it tougher to get the working capital needed to tide over a period of delayed payments.

• To address this problem, the Reserve Bank of India proposed the Trade Receivable Discounting System in 2015 and licensed three entities to set up these platforms.
• These include Receivables Exchange of India Limited, Invoicemart by A.TREDS, and M1xchange. RXIL began operations three years ago, followed by Invoicemart and M1xchange in 2017.
• In the time that these platforms have been live, volumes have picked up, although financing is limited to suppliers of large firms.

Here’s what data compiled by BloombergQuint showed.

2. Beneficial Ownership Rules Now Sharper, Clearer

Misuse of corporate vehicles has prompted regulatory authorities world over to lay down mechanisms to identify real owners behind these structures. For instance, the English company law was amended in 2015 to require certain companies and limited liability partnerships to create and maintain a ‘Persons with Significant Control’ Register and make it available to public.

• India too had taken the first step towards this in January last year by amending Section 90 of the Companies Act, 2013 to say that every individual – acting alone or together- who is a significant beneficial owner must disclose this fact.
• But the rules, notified in June last year, to identify SBOs were unclear, open to interpretation and onerous.
• Now the revised rules, issued last week, are amply clear in their scope and companies have four months to disclose individuals who are their significant beneficial owners.

There is a clearer articulation of how one determines a significant beneficial owner.

3. IL&FS Crisis Scorches Mutual Funds

Fourteen mutual funds saw their debt assets erode by about a tenth in four months since fears of a credit shortage triggered redemptions from debt schemes.

• Overall assets declined by Rs 61,000 crore since September for these funds, according to disclosures and data collated by BloombergQuint.
• Defaults by IL&FS group led to a credit crunch, especially for non-bank lenders and triggered fears of a contagion.
• The credit crisis led to many investors withdrawing their money from debt schemes, especially liquid schemes, said Dhirendra Kumar, founder and chief executive officer at Value Research.

Here's a look at the funds worst hit by the IL&FS crisis and ones that outperformed.

4. Sensex Slips Again, U.S. Stocks Rise

Indian equity benchmarks clocked their worst weekly decline since Oct. 28, halting their two-week rally.

• S&P BSE Sensex closed 0.19 percent lower today at 35,808.
• The NSE Nifty 50 Index ended at 10,724, down 0.2 percent.
• The market breadth was tilted in favour of sellers.
• About 1,093 stocks declined and 634 shares advanced on National Stock Exchange.
• All the sectoral gauges compiled by NSE declined led by the NSE Nifty Pharma Index’s 3.1 percent decline.

Follow the day’s trading action here.

U.S. equities followed European stocks higher as positive developments in the trade outlook overshadowed lingering concerns about global growth.

• The S&P 500 rose as regular trading began Friday, led by energy and financial shares, on reports that the U.S. and China reached consensus in principle on the main topics in their trade negotiations. Talks broke off with a promise to resume next week.
• Treasury yields climbed with the dollar.
• West Texas Intermediate crude rose 1.6 percent to $55.31 a barrel.

Get your daily global markets fix here.

6. Trade Deficit Widens

India’s trade deficit widened in January over last month on higher imports.

• The gap between exports and imports stood at $14.73 billion compared with $15.67 billion a year ago, according to a release from the Ministry of Commerce.
• Trade deficit had narrowed to the lowest in 10 months in December at $13.08 billion.

Here are export and import highlights.

7. Kashmir Tragedy Has Many Authors

The India of the past would grit its teeth and absorb a blow like this. But Indian public opinion is no longer as patient as it was during the attack on Parliament in 2002 or the siege of Mumbai in 2008, writes Mihir Sharma.

• Earlier, only the generals in Rawalpindi were held responsible for attacks such as this one.
• Today, Beijing’s leaders will have to accept their share of the blame.
• Yet Modi’s government has a lot of introspection to do as well.

It’s possible Pakistan may want to stir up trouble in Kashmir. But, if it succeeds, then it is New Delhi that will have failed, Sharma writes.

8. The Mystery Of The Unspent, Untransferred Cess

Are Indian governments utilising the cess or specific purpose tax they collect from citizens for the right purpose? A report by the Comptroller and Auditor General raises several concerns about this.

• The report points to deficiencies in transfer and utilisation of cess and in one case says a particular cess was levied and revenue collected even after it had been abolished.
• For instance, the CAG report on the union government’s accounts for financial year 2017-18, states that Rs 94,036 crore was collected as Secondary and Higher Education Cess since 2006-07 but continues to be retained in the Consolidated Fund of India.
• A separate fund, Madhyamik and Uchchtar Shiksha Kosh, was created in August 2017 but remained unoperationalised through FY18.
• The CAG had raised this issue in its report on the government’s FY17 accounts as well.

An economist has called it "alarming" that fiscal accounting conventions are being disregarded.

9. As Oyo Gets Bigger, So Does Its Challenges

As Indians travel more for business and leisure, Oyo Hotels and Homes’ pivot from an aggregator to an operator of a hotels franchise is paying off as its sales soared. But its frenetic expansion overseas means profit will have to wait as expenses rise.

• Revenue from operations for India’s largest hospitality chain jumped threefold to Rs 415 crore for the year ended March 2018, according to the last available data with the Registrar of Companies.
• Losses remained stable at Rs 360 crore.
• That comes as India’s hotels industry continues to recover as demand outpaced supply for the sixth straight year, according to an HSBC note.
• Still, there’s is lot that can go wrong given that more than half of Oyo’s inventory is international, said Satish Meena, a New Delhi-based analyst at Forrester Research.

A bigger concern for Oyo is how it makes money in mature international markets.

10. Amazon’s Pain, Paytm’s Gain

India’s online retail industry has been in turmoil since the government implemented stringent new rules to rein in major players like Amazon.com Inc. and Walmart Inc.’s Flipkart.

• Amid the uproar, Vijay Shekhar Sharma -- whose two-year-old Paytm Mall is backed by Alibaba Group Holding Ltd. -- is quietly devising ways to outstrip his rivals.
• Sharma said that his business stands to gain from the Indian government’s new regime that forbids retailers from holding any business interest in online merchants.

Here are excerpts from Sharma’s interview with Bloomberg.