BQuick On July 16: Top 10 Stories In Under 10 Minutes
Here’s a roundup of all the top stories of the day in brief.
1. Pharma Market Grows At Slowest Pace In 5 Years
India’s pharmaceutical market grew at its slowest pace in five years in the quarter ended June because of a fall in volumes even as prices remained stable.
- The year-on-year growth stood at 7.9 percent in the three-month period, the lowest since the quarter ended June 2014, Jefferies said citing data released by AIOCD-AWACS—a pharmaceutical market research organisation.
- In June alone, the growth moderated to 6.6 percent—the slowest pace in two years.
- That, according to Macquarie, compares with an annualised rate of 13-14 percent over the past 10 years.
- The slowdown in domestic market comes at a time Indian drugmakers are facing intense competition and pricing pressure in the U.S.—one of the biggest contributors to sales for some of them—forcing the companies to cut prices and settle for lower margin.
Here’s what led to the slowdown.
2. Suzlon Defaults... Again
Suzlon Energy Ltd., which became India’s biggest convertible-note defaulter in 2012, said it missed payments on dollar-denominated convertibles due Tuesday.
- The stressed wind-turbine maker faced a July 16 deadline to repay $172 million outstanding on such securities that were issued as part of a debt restructuring.
- While that revamp helped the company’s shares surge in 2014-2015, they’ve since slumped after India’s shift to auctions for building wind projects increased competition and diluted Suzlon’s market share.
- “The company is working on holistic solution for its debt and continues to be in discussions with various stakeholders in relation to its outstanding debt (including the bonds),” it said in an exchange filing.
Suzlon’s stumble adds to strains in India's credit market.
3. Mumbai’s Coastal Road Hits A Speed Bump
The Bombay High Court today set aside the clearance granted to the Brihanmumbai Municipal Corporation for the Mumbai coastal road project by the Coastal Regulatory Zone Authority and the central government, while ordering that construction work be halted.
Hearing the Mumbai coastal road case, a division bench comprising Chief Justice Pradeep Nandrajog and Justice NM Jamdar also:
- Quashed approvals granted by Maharashtra Coastal Zone Management Authority and Environment Approval Committee in January 2017 and March 2017, respectively. It also quashed the project approval granted by the Ministry of Environment, Forest and Climate Change in May 2017.
- Directed BMC to obtain environmental clearance from the Ministry of Environment in accordance with the Environment Impact Assessment Notification, 2006.
- Ordered BMC to obtain permission for the Mumbai coastal road project under the Wildlife Protection Act, 1972.
- Directed that environment impact assessment must be done for the Mumbai coastal road project in entirety and not in parts.
The court said it must strike a balance between conservation and human development, viewing them as interlinked aspects.
4. Air India Sale: Government Signals Flexibility
India is considering inviting expressions of interest to sell Air India Ltd. by the end of next month as the government aims to complete the transaction this year, people with knowledge of the matter told Bloomberg News.
- The government will conduct roadshows as well as be open to meet prospective buyers even before the expressions of interest are sought, the people said, declining to be identified as the discussions are private.
- The process will likely allow the bidders to look at the accounts of the airline except for some portions that are confidential and also see the share purchase agreement, they said without providing details.
- The government is looking to sell all its stake in the carrier, they said.
Potential bidders will have the option to make suggestions for changes in the sale terms.
5. Sensex Jumps, S&P 500 Slips
Indian equity benchmarks extended gains for the second consecutive trading session.
- The S&P BSE Sensex closed 234 points or 0.6 percent higher at 39,131.04.
- The NSE Nifty 50 ended at 11,662.60, up 0.64 percent.
- Yes Bank Ltd. was the top performer, rising 11 percent ahead of its quarterly results tomorrow.
- The broader market index represented by the NSE Nifty 500 Index closed 0.64 percent higher.
- Nine out of 11 sectoral gauges compiled by NSE ended higher.
Follow the day’s trading action here.
Treasuries slumped and the dollar rallied after solid U.S. retail sales and factory output data added to signs the world’s largest economy is holding up.
- Stocks fell as traders assessed mixed results from big banks.
- The S&P 500 Index dropped from a record high as JPMorgan Chase & Co.’s disappointing lending outlook offset better-than-estimated results in Goldman Sachs Group Inc.’s trading unit.
- Technology shares declined as some of the industry’s giants are headed for their biggest antitrust showdown with Congress in 20 years.
- Benchmark 10-year yields halted a two-day slide, while the greenback advanced against most major currencies.
- Gold dipped 0.2 percent to $1,410.70 an ounce.
Get your daily fix of global markets here.
6. Can Bajaj Twins Replicate HDFC Peers’ Success?
HDFC Group’s two lending arms are celebrated as a model for investor wealth creation by offering nimble banking services and home mortgages in a banking system dominated by laid-back public-sector lenders. In the past decade, another set of financial twins have upstaged them, at least on the stock market.
- Shares of Bajaj Group’s two non-bank lenders outpaced financial-sector peers since 2009 as the companies grew business by offering insurance, mutual funds and consumer loans to buy everything from a car to a mobile phone.
- That’s given the two stocks a place in India’s benchmark of 50 large caps alongside HDFC group companies, though with a much lower weight.
Yet, their surge came on a low base. But there are similarities that put them almost in a similar basket.
7. Debt Downgrades Pick Up Pace Again
After a few months of stability, the pace of debt downgrades increased once again in the April-June quarter, shows data from two domestic credit rating agencies.
- The downgrades spanned a range of firms, such as non-bank lenders which continued to face liquidity stress and corporations who have found it difficult to refinance borrowings due to stress in the domestic debt markets.
- Data provided by rating agency ICRA Ltd. shows that the debt-weighted credit ratio, which reflects the total volume of debt upgraded versus the debt downgraded during the period, slipped to 0.1 in the April-June quarter compared to 0.3 in the previous quarter.
- This ratio slipped back to the same level seen in the October-December 2018 quarter.
- ICRA’s entity-weighted credit ratio, which reflects the number of companies upgraded compared to those downgraded, also fell below 1 in the April-June period.
This is the first time since 2015 that the number of downgrades have outpaced upgrades.
8. Azim Premji Signs Off With Wipro’s Four Future Bets
Azim Premji outlined four key technologies that will drive Wipro Ltd.’s future growth, in his last annual general meeting speech to shareholders as chairman.
- Digital technologies, cloud computing, engineering services and cyber security are the four areas where Wipro will step up investments significantly, Premji told shareholders.
- He added that the company has also divested its datacenter business to improve return on capital employed.
- Wipro has also made investments to reskill employees in digital technologies, he said.
- These include awareness programmes, learning programmes through virtual labs and immersive programmes to build expertise.
- On his son Rishad taking over from him, Premji said his new way of thinking and competence will take Wipro to greater heights.
I am confident that the future of Wipro will far outshine anything that we have done before.Azim Premji, Outgoing Chairman, Wipro
9. Unanswered Questions About Related Party Transactions At IndiGo
Why did Rakesh Gangwal hold his silence all these years if he thought the related party transactions at IndiGo were “questionable”, asks Menaka Doshi.
- Why would any private company do business on adverse terms? What happened to ‘arm’s-length’?
- Who approved these related party transactions?
- Do the transactions violate InterGlobe’s Code of Conduct for directors?
Here’s more on India Inc.’s RPT cancer.
10. Arundhati Bhattacharya On Bank Nationalisation
She ran India’s largest lender. Managed a loan book which is now close to Rs 20 lakh crore. Executed a first-of-its-kind merger with five associate banks. Dealt with demonetisation and a bad loan crisis. But ask Arundhati Bhattacharya, former chairman of State Bank of India, about what banking looked like in the years after 14 banks were nationalised in July 1969, and the memories come tumbling out.
Rural service was mandatory. Come rain or shine. To make the office more comfortable, we used ‘khas khas’ drapes in the offices. But they only made it more muggy! Loan ledgers were manual, thick and unwieldy. They even broke my bangles soon after marriage! Loan melas were infamous in those days, while commodity companies were the biggest borrowers. When computerisation happened, we all rushed to learn how to operate the computers. But partly so we could sit in the air conditioned room!Arundhati Bhattacharya, Former Chairman, SBI
- Bhattacharya says that PSU banks play an important role in financial inclusion.
- While private banks can do everything to be profitable, the PSU banks don't have that particular aim alone she said. "That’s not their only goal... but you get compared on the same platform."
- The retired banker says that PSU model worked for a time but now a change may have to be considered.
Bhattacharya suggests the government look at the manner in which Singapore’s DBS Bank is run.