BQuick On Jan. 10: Top 10 Stories In Under 10 Minutes
The sun sets behind buildings in Tokyo, Japan. (Photographer: Tomohiro Ohsumi/Bloomberg) 

BQuick On Jan. 10: Top 10 Stories In Under 10 Minutes

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

1. GST Relief For SMEs

The GST Council today gave relief to small businesses by increasing the Goods and Services Tax exemption threshold from Rs 20 lakh to Rs 40 lakh and extending the composition scheme to service providers.

  • The new exemption threshold—the minimum annual turnover for businesses supplying goods to register under the GST—will be effective from Apr. 1, 2019, Finance Minister Arun Jaitley told reporters.
  • For hilly states and those in the North East, the threshold has been doubled to Rs 20 lakh.
  • States can decide if they want to maintain the exemption limit at Rs 20 lakh or Rs 40 lakh in a week.
  • However, the threshold for mandatory registration of service providers would remain at Rs 20 lakh and Rs 10 lakh in special category states, according to a statement by Ministry of Finance.
  • The higher exemption threshold will allow around 20 lakh taxpayers to opt out of GST if they choose to.
  • Revenue Secretary Ajay Bhushan Pandey told BloombergQuint that states opting for different registration thresholds will not lead to any distortions as the exemption limits are only for those taxpayers doing business within a state.

It’s difficult to estimate how much revenue the government will forgo from the threshold limit hikes.

2. CBI Director Sacked

Alok Verma has been removed as the Central Bureau of Investigation director after a meeting of high-powered selection committee led by Prime Minister Narendra Modi.

  • Verma was removed on charges of corruption and dereliction of duty, PTI reported citing unnamed officials.
  • Verma is the first director in the history of the agency to face such action.
  • There were eight counts of charges against him in the Central Vigilance Commission report presented before the Committee also comprising Leader of Congress in Lok Sabha Mallikarjun Kharge and Supreme Court Justice AK Sikri, the report added.
  • Verma will now be Director General - Fire Services, Civil Defence and Home Guards, the government said in a notification.

Nageshwar Rao will look after the CBI director’s duties in the interim.

3. Earnings: TCS, Bandhan Bank

Tata Consultancy Services Ltd.’s profit rose even as its margin narrowed the most in six quarters in October-December, a seasonally weak period for information technology companies due to the holiday season.

  • Net profit rose 2.6 percent sequentially to Rs 8,105 crore.
  • Revenue rose 1.3 percent to Rs 37,338 crore missing estimates.
  • Revenue in constant currency terms rose 1.8 percent.
  • Revenue in dollar terms stood at $5,250 million.
  • Ebit fell 2.2 percent to Rs 9,559 crore.
  • Operating margin fell 90 basis points to 25.6 percent.

Here’s how big deal wins led to more hiring and lower margins.

Bandhan Bank Ltd.’s provisions more than doubled in the third quarter, slowing its profit growth.

  • Profit rose 10.4 percent year-on-year to Rs 331.3 crore in the three months ended December, according to the microlender-turned-commercial bank’s exchange filing.
  • That’s because the bank’s provisions jumped to Rs 377.6 crore from Rs 124.2 crore in the previous quarter.
  • Net interest income, or the core income of the lender, surged 53.6 percent year-on-year to Rs 1,124 crore.

Gross bad loan ratio nearly doubled.

4. BQSurvey: How FMCG Firms Performed In Q3

Consumer goods makers’ volume growth is expected to ease in the usually strong third quarter, which coincides with the festival season, because of lower urban demand and a higher base, according to a BloombergQuint survey of distributors.

  • Sales volumes of distributors in cities declined in the three months ended December, the survey conducted across seven states revealed.
  • Some urban distributors lost more than 30 percent of their business during the period.
  • Volumes rose more than 10 percent in rural areas, helped by Diwali demand.

But distributors sales in cities are falling. Here's why.

5. Sensex Snaps Rally, Dow Drops

Indian equity benchmarks snapped their four-day winning streak led by declines in private sector lenders.

  • The S&P BSE Sensex Index fell 0.29 percent or 106 points to 36,106.
  • NSE Nifty 50 Index declined 0.31 percent or 34 points to 10,822.
  • Seven of 11 sector gauges compiled by National Stock Exchange ended lower led by the Nifty Private Bank Index's 0.9 percent decline.
  • On the flipside, Nifty Pharma Index was the top gainer, up 0.3 percent.

U.S. stocks fell as retailers plunged on expectations of a sales slowdown in 2019 and investors weighed the consequences of political tensions in America with the partial government shutdown continuing and the possibility of the China trade dispute easing.

  • All major equity indexes were lower, with the S&P 500 Index being dragged down by clothing makers and retail.
  • West Texas crude slipped below $52 a barrel after Wednesday’s 5 percent increase, putting it on pace for its first drop in two weeks.
  • The Bloomberg Dollar Spot Index climbed 0.1 percent.

6. How To Beat Volatility In Mid Caps

Mid-cap stocks are trading at a valuation on par with the NSE Nifty 50 scrips after their recent correction.

  • But, according to CLSA, it shouldn’t be the only criteria for investors to invest in these stocks.
  • That’s because the research firm expects mid caps to face bouts of volatility this year.
  • Reason being the macroeconomic uncertainties and narrowing gap of earnings growth with the benchmark index.

Here are the seven mid-cap stocks that CLSA recommends

7. Long Road Ahead For Bankers

For India’s lenders, recovering money from stressed power projects was always going to be the toughest. Many of these projects were dealing with cost overruns, lack of adequate fuel linkages and power purchase agreements. Bringing in new buyers under these conditions was a tough ask.

  • While that remains the case, some early deals have started in this sector, offering temporary relief to bankers.
  • Lenders have been able to find buyers for three plants, bankers in the know told BloombergQuint.
  • The average recovery rates across these three transactions range between 35-54 percent.

8. Jet Restarts Bailout Talks With Tata Group

Jet Airways India Ltd., the airline which had its credit rating cut to default this month, is weighing a resumption of stake-sale talks with the Tata Group as the carrier is poised to run out of cash, people with knowledge of the matter told Bloomberg News.

  • While its founder and Chairman Naresh Goyal has been discussing a deal with Etihad Airways PJSC, talks with the foreign partner stalled over the latter’s demand that Goyal step aside from his management role, the people said, asking not to be identified as the discussions are private.
  • With Jet Airways set to run out of cash in about a month, the carrier is now looking to restart talks with India’s biggest conglomerate, they said.

Creditors are open to lending $500 million to Jet if Goyal and Etihad inject a similar amount into the company.

9. JLR To Fire Nearly 10% Of Workforce

Jaguar Land Rover plans to eliminate 4,500 jobs worldwide, as the U.K.’s biggest automobile maker responds to the sales slowdown caused by Brexit, flagging demand for diesel-powered vehicles and a downturn in China.

  • The layoffs, representing roughly 10 percent the company’s workforce, come on top of the 1,500 people who left in 2018, the company said Thursday in a statement.
  • Today’s move is part of a 2.5 billion-pound ($3.2 billion) push announced last year to reduce costs and boost cash flow through 2020.

The cuts at Jaguar come on the same day that Ford Motor Co. said it would cut thousands of jobs in Europe.

10. Kohli Is The Most Valuable Indian Celebrity

Indian cricket team Captain Virat Kohli topped the list of the most valuable celebrity brands in the country for the second year in a row, with an 18 percent increase in his brand value at $170.9 million in 2018, according to a report.

  • The cricketer endorsed 24 brands as of November 2018, the global valuation and corporate finance advisors Duff & Phelps said in its fourth edition of the report on India's most valuable celebrity brands on Thursday.
  • He is followed by Bollywood actress Deepika Padukone, who jumped a place higher from the previous ranking, with a valuation of $102.5 million.
  • The top two are the only celebrities with a valuation of over $100 million.

Kohli and Padukone have been structuring endorsement deals with an equity element.

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