BQuick On July 18: Top 10 Stories In Under 10 Minutes

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

1. Gill Says Yes Bank’s Bad Loan Troubles Have Peaked

Private sector lender Yes Bank Ltd. returned to profit in the April-June 2019 quarter but reported poor asset quality, as the bank’s new Chief Executive Ravneet Gill continued to clean up the books. Gill today spoke to BloombergQuint about the way forward.

• Yes Bank’s bad loans have peaked in the April-June quarter, said Gill, adding that the BB-rated and below loan book is only going to contract from here on.
• Gill expects two of the bad loan accounts to recover within this quarter, boosting recoveries for the private lender. Underlying assets of some of the BB and below companies are very good, he added.
• Yes Bank aims to achieve a provisioning coverage ratio of 60 percent in the near term, said Gill. The lender’s PCR currently stands around 43 percent. A PCR of around 70-75 percent is considered to be healthy.

Watch the full interview here.

2. What Jet Airways Owes Financial Creditors

Financial creditors to Jet Airways (India) Ltd. are owed Rs 8,463 crore, according to claims admitted by the resolution professional.

• The claims were declared on the Jet Airways’ website on Thursday by Ashish Chhawchharia, the resolution professional.
• Financial creditors, which included banks and financial institutions, claimed Rs 10,400 crore worth loans due to them, according to the details released.
• State Bank of India with an exposure worth over Rs 1,600 crore is the largest lender in the consortium, followed by Yes Bank Ltd. and HSBC Middle East with exposure of over Rs 1,000 crore each.

Operational creditors, other than workmen and employees, have made a claim of over Rs 12,000 crore.

3. Vodafone Idea's $1.9-Billion Fiber Assets Sale

Vodafone Idea Ltd. has hired Bank of America Corp. and Morgan Stanley to help sell its fiber assets as India’s largest mobile carrier by users seeks to bolster its finances, people familiar with the matter told Bloomberg News.

• The bankers will initiate discussions with potential buyers for the fiber assets, which could be valued at as much as Rs 13,000 crore ($1.9 billion), the people said, asking not be identified as the talks are private.
• A final decision has yet to be made on the valuation and the stake to be sold, and the company could bring in more banks for the sale, the people said.
• Representatives for Vodafone Idea and Morgan Stanley declined to comment, while a Bank of America spokesman didn’t immediately respond to requests for comments.
• A deal, if successful, would help the phone-service provider add to the funds it’s been raising to pare debt and fend off rivals Bharti Airtel Ltd. and billionaire Mukesh Ambani’s Reliance Jio Infocomm Ltd., an upstart that upended the market after its debut in 2016.

Vodafone Idea is building a war chest as India readies for a 5G network.

4. Sensex Halts Rally, U.S. Stocks Fluctuate

Indian equity benchmarks snapped the three-day rally, driven by losses in auto stocks and Yes Bank Ltd.

• The S&P BSE Sensex closed 0.81 percent or 318 points lower at 38,897.46.
• The NSE Nifty 50 ended at 11,596.90, down 0.78 percent.
• The broader market index represented by the NSE Nifty 500 Index closed 0.91 percent lower.
• Yes Bank was the top loser on both Sensex and Nifty indices after it fell over 12 percent.
• The market breadth was tilted in favour of sellers.
• Nine out of 11 sectoral gauges compiled by NSE closed lower.

Follow the day’s trading action here.

U.S. stocks fluctuated as investors weighed corporate earnings and the outlook for global trade.

• Netflix Inc. plunged after reporting a slump in U.S. customers and much slower growth overseas, while EBay Inc., Philip Morris International Inc., Union Pacific Corp. rallied after earnings beat forecasts.
• Morgan Stanley fluctuated as its results showed the steepest trading slide on Wall Street.
• Benchmark 10-year yields climbed as the Federal Reserve Bank of Philadelphia’s survey of factories surged the most in a decade.
• Oil tumbled amid signs of increased Russian crude output and continued nervousness over the global economy.
• The pound climbed as the British Parliament backed measures to prevent the next prime minister suspending the legislature to pursue a no-deal Brexit.

Get your daily fix of global markets here.

5. Why Specialty Chemical Stocks Are Tumbling

Lower demand forecast by global chemical companies for the ongoing financial year led to a selloff in stocks of domestic manufacturers in the last one month.

• Shares of SRF Ltd., Atul Ltd., UPL Ltd., Aarti Industries Ltd. and PI Industries Ltd., among others, fell in the range of 5-13 percent during the period, according to Bloomberg data.
• Emerging slowdown in the agri-chemical end market and domestic auto sales could weigh on the near-term performance of SRF and PI Industries, especially after they rallied more than 40 percent in the January-June period, Citi said in a note.
• SRF, Atul, UPL, Aarti Industries and PI Industries didn’t immediately respond to BloombergQuint’s emailed queries.

Here's what is threatening the profitability of these chemical makers.

6. Gold: A Safe Haven Even For NBFCs

India’s non-bank lenders, many of whom have struggled to raise funds from the markets in recent months, have pulled back on loan growth amid tighter liquidity conditions. There was, however, a notable exemption: Disbursements of gold loans doubled over the year-ago period, even as total disbursements contracted by a third.

• Industry executives that BloombergQuint spoke to point to increased demand for gold loans for a host of reasons.
• While the value of gold loans disbursed has partly risen due to higher gold prices, demand has also increased as availability of other forms of NBFC credit has fallen.
• Non-bank lenders, too, see gold loans as a safer option compared to other unsecured loans.

Rising prices have further helped the industry with lenders pushing gold loans through targeted marketing.

7. Hurdle For PSU Bank Employees’ Salary Revision

A proposal to revise the wage and salary structure of public sector bank employees and officers has hit a roadblock, with no consensus emerging on linking a part of the remuneration to performance.

• Back in October 2018, the Indian Banks’ Association had proposed a new formula to determine the salary structure of bank employees and officers.
• While negotiations with trade unions have gone on for the last eight months, there has been little progress in finalising the new formula under the 11th bi-partite wage talks.
• As a part of the 10th bipartite negotiations PSBs implemented a 15 percent increase in the wages for bank employees.
• The 11th bi-partite wage negotiation will determine the salary structure for PSB employees and officers retrospectively, with effect from Nov. 1, 2017.

Trade unions are opposing the new proposed salary structure on two grounds.

8. The Financial Advisory Crisis Of The Sandwiched Generation

Is this your long-term ‘To-Do List’?

• Plan well for child’s future.
• Care for ageing parents.
• Pay down home loan.
• Improve own lifestyle.

Then you belong to a ‘sandwiched generation’ that needs much more financial planning than you think, warns Abaneeta Chakraborty.

10. Karnataka Crisis: High Drama, No Decision Yet

The Karnataka assembly was adjourned till Friday morning amid acrimony during the debate on the motion of confidence moved by Chief Minister HD Kumaraswamy to decide the fate of his 14-month-old government.

• The House was adjourned by Deputy Speaker Krishna Reddy as the Congress members persistently shouted slogans against the Bharatiya Janata Party as the proceedings wore on with Kumaraswamy yet to make his speech on the motion.
• Before the House was adjourned, BJP leader BS Yeddyurappa declared that his party members would stay put in the House itself overnight and even till the time the trust vote was decided.
• The floor test debate in the assembly turned dramatic with DK Shivakumar and other Congress leaders holding up pictures of rebel Congress MLA Shrimant Patil lying on a stretcher.

Here's what went down in the Karnataka assembly today.