BQuick On Jan. 28: Top 10 Stories In Under 10 Minutes

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

1. Tax Break On The Cards To Lure Buyers For Stressed Assets

The government is planning a revamp of the insolvency process to make the mechanism simpler and attractive for buyers of stressed assets, according to a senior official.

• It’s considering tax concessions for such buyers, the official said on the condition of anonymity as details aren’t public yet.
• Some of the concessions being considered are waiver of stamp duty, registration fees, past customs dues and GST imposed on sale of some assets, the official said.
• The Insolvency and Bankruptcy Board of India is working on the proposals and Finance Minister Nirmala Sitharaman is expected to announce some of these concessions in the Union Budget 2020-21 to be tabled on Feb. 1, he said.

The revamped guidelines could mean that tax authorities can no longer challenge a resolution plan approved by the NCLT.

2. Biggest Tax Shortfall In A Decade

India set itself an ambitious tax target. Now it’s far away from achieving it. Perhaps, the farthest it has been in 10 years.

• The central government had budgeted a 25 percent increase in net tax collections for 2019-20, despite a fall in the previous year.
• Till November, the Centre’s tax revenue had only grown 2.6 percent—the worst since 2009-10—or after the global financial meltdown.
• According to BloombergQuint’s calculations, the government’s net tax collection will have to rise by a whopping 119 percent in the final four months of 2019-20 to meet the target.
• That has never happened in the past 10 years. On average, net tax collections between December and March increase by 93.6 percent.
• That could be a shortfall of Rs 1.96 lakh crore.

The estimates are based on historical trends and the actual shortfall could turn out to be worse.

3. Task Force Sounds Alarm Over Money Laundering Loopholes

The scourge of black money has probably been the biggest impediment to India’s economic growth as massive tax evasion, at the very least, leaves a big hole in government coffers.

• The Direct Tax Code Task Force has identified some such provisions in the current Income Tax Act, that according to it, are instruments of money laundering.
• To this effect, the Task Force in its report, makes prominent mention of the presumptive taxation regime as one which is being abused to launder undisclosed income.
• The presumptive taxation scheme allows small taxpayers to declare income at a prescribed rate and spares them the tedious job of maintenance of books of account.
• In particular, the Task Force refers to sections 44AD and 44AE of the income tax law, and suggests amendments to them.

Read the third story of the collaboration between Taxsutra and BloombergQuint to find out the amendments proposed.

4. DHFL’s Creditors Lay Down Eligibility Rules For Bidders

Financial creditors to Dewan Housing Finance Corporation Ltd. have finalised the eligibility criteria for applicants looking to submit resolution plans for the housing finance company under the insolvency framework.

• As per the terms set by the financial creditors, the company will be split into three parts—retail, wholesale and slum rehabilitation projects.
• Bids will be accepted from investors who might be looking to buy the company as a whole, or in parts.
• The decision to allow bidders to submit resolution plans even for parts of DHFL’s business is expected to help draw in a wider set of potential bidders.

Here’s all that’s on offer and who are the bidders that can apply.

5. Nifty Falls Again, U.S. Stocks Rebound

Indian indices ended lower for the second consecutive trading session, led by the declines in Reliance Industries Ltd. and ICICI Bank Ltd.

• The S&P BSE Sensex fell 0.46 percent or 188.26 points to end at 40,966.86.
• The NSE Nifty 50 fell 0.52 percent to close at 12,055.80.
• The broader markets represented by the NSE Nifty 500 Index fell 0.43 percent.
• The market breadth was tilted in favour of sellers.
• Seven out of 11 sectoral gauges compiled by NSE ended lower.

Follow the day’s trading action here.

U.S. stocks rebounded from the worst sell-off in four months on speculation that global efforts to contain the coronavirus will prevent a major economic fallout.

• The S&P 500 Index climbed, led by technology and financial shares.
• Chipmakers and casino operators, which are among the hardest hit companies during the equity rout, rallied on Tuesday.
• Demand for havens cooled, sending 10-year Treasuries and gold lower.

Get your daily fix of global markets here.

6. Earnings: Maruti Suzuki, Airtel Africa, United Spirits

Maruti Suzuki India Ltd.’s profit met estimates in the three months ended December as sales rose after five quarters.

• Net profit of India’s largest carmaker rose 5 percent year-on-year to Rs 1,565 crore.
• The third-quarter profit was aided by cost cuts, lower operating expenses, fall in commodity prices and reduction in corporate tax rate, partially offset by a rise in sales promotion expenses, higher depreciation, and lower fair value gains on invested surplus.

The company sees some uptick in rural demand and expects SUVs to drive growth.

Airtel Africa Plc’s operating profit beat estimates in the quarter ended December. Not just that, it also breached its previous record to hit a new all-time high as revenue rose, operating leverage improved, and costs fell.

• Operating profit of the continent’s second-largest mobile operator rose 24 percent year-on-year to $399 million, according to its statement.
• Margin of Bharti Airtel Ltd.’s Africa unit expanded more than 400 basis points to 45.2 percent.
• The company’s revenue in constant currency terms increased 14.2 percent—the eighth straight quarter of double-digit growth—in the three months to December.

Here are Airtel Africa’s key earnings metrics.

Shares of United Spirits Ltd. rose nearly 14 percent a day after the company announced its earnings for the quarter ended December.

• The company noted that 3 percent rise in revenue was aided by the Prestige and Above segment that contributes 66 percent sales.
• A mix of higher-priced brands, including premium scotch, aided sales. Yet, the company said the segment remained under pressure due to lower demand.
• It was difficult to have an outlook on demand for products, the company said, adding that it expects its efforts and investments on marketing to pay dividends, especially in the P&A segment.

Here are highlights of the earnings analysts call.

7. Tata Launches Electric Version Of Nexon

Tata Motors Ltd. rolled out the electric version of its Nexon sports utility vehicle, the first product under N Chandrasekaran’s ‘One Tata’ initiative to increase collaboration between different companies of the $111-billion conglomerate.

• “We have four more products under this—two more SUVs, one hatchback and one sedan,” Chandrasekaran, chairman at group holding company Tata Sons Pvt. Ltd., said at the launch of the Tata Nexon EV.
• This comes two years after Tata Motors launched the battery-powered Tigor sedan, the company’s first electric vehicle.
• The Tata Nexon EV is priced at Rs 13.99-15.99 lakh, ex-showroom.
• Tata Power Company Ltd. will set up home charging stations within 15 days of bookings that will initially begin at 60 dealerships and Croma stores in Mumbai, Delhi and Bengaluru.

Find out how Chandrasekaran's 'One Tata' plan will see companies combining to bring the Nexon EV on road.

8. Microfinance Risk Brewing In Assam?

Social unrest and protests in Assam have led to an increase in delinquencies for banks and microfinance lenders across the state, according to rating agency ICRA.

• Assam has been one of the fastest growing markets for microfinance in recent years, with outstanding loans rising to Rs 12,600 crore.
• According to ICRA, the share of the portfolio which is overdue between 0 and 30 days rose sharply to around 10 percent in the quarter ended December 2019 from 1.5 percent in September.
• Loans which are 30-days past due rose to 2 percent from 1 percent over the same time period, the rating agency said.
• The rating agency, however, said non-performing assets, including loans overdue by more than 90 days, may remain low.

ICRA attributed signs of increased stress to recent protests.

9. A U.S.-India Trade Meeting Ahead Of Donald Trump's Visit

U.S. Trade Representative Robert Lighthizer will be in India in the second week of February to finalise a trade deal ahead of President Donald Trump’s expected visit, people with knowledge of the matter told Bloomberg News.

• India is keen to sign an agreement during Trump’s visit and Commerce Minister Piyush Goyal has invited Lighthizer to discuss the details of a possible pact that has been stalled since before Prime Minister Narendra Modi’s U.S. visit in September.
• India expects to sign deals to raise its defense and energy purchases from the U.S. during the president’s visit.

New Delhi and Washington are still working out the contours of a possible deal.

10. How To Cure The Cancer Of Money-Power In Our Democracy

The conventional thinking around this subject is mistaken, in both description and prescription, writes Amit Varma.

• We think of politicians as venal, political parties as corrupt mafia gangs and voters who take bribes as apathetic and bad citizens.
• This is true at the surface level of their behaviour, but the behaviour is a symptom, not an underlying cause.
• They are rational human beings responding to incentives. And the incentives are wrong.

Varma also goes against popular opinion to say that transparency of political funding is also a terrible idea.