BQuick On June 11: Top 10 Stories In Under 10 Minutes
Here is a roundup of the day’s top stories in brief.
1. Passenger Vehicle Sales Slump The Most In 18 Years
Sales of cars and utility vehicles fell the most in nearly 18 years in May as the slowdown in demand, which started since festival season last year, continues.
- The domestic passenger vehicle sales declined 20.55 percent year-on-year to 2,39,347 units last month, according to Society of Indian Automobile Manufacturers.
- That’s the steepest drop since September 2001 when passenger vehicle sales fell 21.91 percent, it said.
- Domestic car sales in May declined 26.03 percent over last year to 1,47,546 units.
Still, SIAM is optimistic that demand will pick up in the second half of the year.
2. DHFL Honours Overdue Debenture Payments
Dewan Housing Finance Ltd. has paid out Rs 962 crore in overdue interest payments on its non-convertible debentures, the company said in a notice to stock exchanges on Tuesday.
- Last week, the housing finance firm had delayed payments due to a continuing liquidity crunch. While DHFL said it would make the payments within a seven-day “cure period”, credit rating agencies downgraded the company to ‘Default’ grade in anticipation of further payment delays.
- So far, though, the company has managed to avoid further delays and has paid the overdue interest.
- Last Friday, the company repaid around Rs 276.05 crore towards these NCDs.
- On Monday it paid another Rs 45.02 crore, it said in a filing.
- With the additional payments made on Tuesday, the company said it is now current on its payments.
On Monday, the company also managed to redeem about Rs 100 crore in commercial paper.
3. Anil Ambani’s Promise
Anil Ambani pledged to reduce debt at his infrastructure-to-finance conglomerate to a “bare” minimum, seeking to bolster investor confidence in an empire that’s grappling with high leverage and delayed asset sales.
- The Reliance Anil Dhirubhai Ambani Group has repaid Rs 35,000 crore in the past 14 months, an amount entirely raised through disposal of assets, Ambani, told reporters in a rare conference call Tuesday without elaborating.
- His businesses have been straining since a government crackdown on bad loans, while his telecommunications unit is facing insolvency.
- “Reliance Group is committed to meeting all future debt obligations” and becoming “capital light, with bare minimal debt,” Ambani said. He didn’t take questions from reporters.
Ambani also didn’t directly address allegations of fund diversion against his NBFC arm.
4. What Reliance Jio’s Core Revenue Reveals
Reliance Jio Infocomm Ltd.’s growth slowed sharply in the fourth quarter even as it continued to add users. So did Bharti Airtel’s.
- The Mukesh Ambani-led telecom operator’s adjusted gross revenue rose 3.8 percent sequentially in the three months ended March, according to data from the Telecom Regulatory Authority of India.
- That compares with an average growth of 15 percent in the last four quarters. It came despite the addition of 2.7 crore new subscribers.
- What that means is that Reliance Jio earned less from new users.
Find out what Bharti Airtel’s revenue trend reveals.
5. Sensex Heads Higher, S&P 500 Climbs
Indian equity benchmarks closed higher for the third consecutive trading session, led by the gains in Reliance Industries Ltd. and ICICI Bank Ltd.
- The S&P BSE Sensex closed 166 points or 0.42 percent higher at 39,950.
- The NSE Nifty 50 closed at 11,965, up 0.36 percent.
- The broader market index represented by the NSE Nifty 500 Index ended 0.43 percent higher.
- Nine out of the 11 sectoral gauges compiled by NSE advanced.
Follow the day’s trading action here.
U.S. stocks extended their winning streak, joining a global rally in riskier assets amid optimism on the outlook for trade talks and speculation U.S. monetary policy will be supportive. Treasuries were steady.
- The S&P 500 Index headed to its sixth consecutive advance as banks led gains.
- In Asia, China equities outperformed after news that local governments may spend more on infrastructure helped offset President Donald Trump’s threat to raise tariffs again if President Xi Jinping doesn’t meet with him at the Group of 20 summit at month’s end.
- The dollar edged higher.
- West Texas Intermediate crude climbed 0.6 percent to $53.56 a barrel.
Get your daily fix of global markets here.
6. Yes Bank Board: Another Shuffle
Private sector lender Yes Bank Ltd. continues to see a churn at the board level with another two directors stepping down this week.
- The churn follows a reshuffle of the bank’s top management with founder Chief Executive Officer Rana Kapoor stepping down after being denied an extension by the Reserve Bank of India.
- Kapoor, who continues to hold 10 percent in the bank, was replaced by Ravneet Gill as CEO in March.
- On Tuesday, Mukesh Sabharwal, who has been non-executive independent director on the board of the bank since April 2012, stepped down.
- On Monday, the bank had disclosed that Ajai Kumar, who was a non-executive, non-independent director on the board, has stepped down.
Rumblings within the Yes Bank board had begun last year.
7. Europe Formally Blocks Tata-Thyssenkrupp Deal
Thyssenkrupp AG and Tata Steel Ltd.’s collapsed joint venture was formally blocked by the European Union, the sixth deal vetoed by antitrust chief Margrethe Vestager, whose tough stance may bolster her chances of landing a top EU job.
- Allowing the deal to proceed would have reduced the number of suppliers and increased prices for steel used in packaging and in the car industry, the EU said in an emailed statement.
- The failure of the tie-up has been costly for the two companies, putting in doubt the future of Tata’s two giant European plants and ending Thyssenkrupp’s plans to split itself in two.
- Tata now has "limited options" for its European business which may mean looking for a non-European buyer to clear regulatory hurdles, its chief executive officer said.
The companies threw in the towel, citing insurmountable antitrust concerns.
8. Arvind Subramanian Says India’s GDP May Be Overestimated
India's economy is likely to have grown between 3.5 percent and 5.5 percent from 2011 to 2016, instead of the reported average growth of 6.9 percent, according to former Chief Economic Advisor Arvind Subramanian.
- This finding relates to averages over the 2011-2016 period, which encompasses both the Congress-led United Progressive Alliance and the Bharatiya Janata Party-led National Democratic Alliance governments, the paper said.
- Subramanian cited evidence, which stated that methodology changes introduced for the post-2011 GDP estimates led to an over-estimation of its growth.
- If the findings are correct, it would imply that both monetary and fiscal policies over the last years were overly tight from a cyclical perspective, he said.
The evidence is too broad and robust, the anomalies and puzzles too numerous, the magnitudes of over-estimation too large, and the stakes for the economy and country too high for this evidence not to be debated seriously.Arvind Subramanian, Former Chief Economic Advisor
Here’s how an over-estimation in data may have affected India’s reforms.
9. RBI Friendlier Regulator Under Das
If there was one stand-out feature of former Reserve Bank of India Governor Urjit Patel’s tenure, it was the zero-tolerance approach he took towards the country’s lenders. Bankers were an unhappy lot those days. Much has changed since then. Shaktikanta Das, who was appointed as RBI Governor six months ago on Dec.11, 2018, has given bankers a patient hearing and, in many cases, taken a softer approach to bank regulation.
- Two senior public sector bankers, who spoke to BloombergQuint on conditions of anonymity, said that the RBI under Das has proved to be a friendlier regulator.
- According to the first banker quoted above, over the last few years the regulator had taken an adversarial approach to regulations, which was tough on lenders.
- The second lender quoted above said that when regulators listen to stakeholders, it creates a more practical regulatory environment, which ensures compliance but is not taxing on banks.
Here’s how the RBI has changed in the six months under Das.
10. More And More Borrowers Going Online
Loan marketplaces, which allow borrowers to evaluate a host of options across banks and non-bank lenders, have gained traction over the last three years as customers become more accustomed to seeking credit online. While industry-wide data is not available, these loan marketplaces speak of increased volume of visitors and loan conversions.
- BankBazaar.com, which launched in 2008, claims to have seen website traffic grow from 7 million visits a month to over 40 million visits in the last four years.
- Paisabazaar.com, another such platform, says it gets 21 million website visits a month today compared to 7 million last year.
- While initially a large share of the applications via these websites were for personal and retail loans, categories such as small business loans are also gaining traction.
The increased traffic seen by loan marketplaces tells a story of a rapid shift towards digital lending.