BQuick On June 17: Top 10 Stories In Under 10 Minutes
Here is a roundup of the day’s top stories in brief.
1. Lenders Will Refer Jet To NCLT
Lenders to Jet Airways (India) Ltd. have decided to approach the National Company Law Tribunal to initiate insolvency proceedings against the crisis-hit airline, according to a statement issued on behalf of lenders on Monday.
- Jet Airways Lenders met in Mumbai on Monday to discuss an offer put forward by Etihad Airways PJSC and the Hinduja Group.
- However, lenders were not prepared to accept the terms of the offer and decided to opt for insolvency proceedings instead, two people in the know told BloombergQuint on condition of anonymity.
- Lead lender State Bank of India will approach the NCLT within a day, they said.
The lenders said that they have decided to seek a resolution under IBC since only a conditional bid was received.
2. IndiGo Places Its Largest Order Ever
Budget carrier IndiGo is ordering jet engines worth $20 billion from a joint venture of General Electric Co. and France’s Safran SA, a sign that the biggest buyer of Airbus SE A320neo planes is moving away from a rival engine by Pratt & Whitney following a series of glitches.
- The order by IndiGo, operated by InterGlobe Aviation Ltd., for 280 engines to power Airbus A320neo and A321neo aircraft will include service and maintenance, the airline statement said.
- CFM International, the GE-Safran venture, will deliver the first engine by 2020.
- The order is a blow to Pratt, a division of United Technologies Corp., which has grappled with delivery delays and groundings in India after spending $10 billion to develop its fuel-efficient geared turbofan for single-aisle jets.
- The deal strengthens CFM’s presence in India, the world’s fastest growing aviation market last year, with the local affiliate of Singapore Airlines Ltd. and state-run Air India Ltd. already using its turbines.
IndiGo had ordered 430 A320neo-family jets, and chose Pratt to supply turbines for the first 150 of them.
3. Sensex Sheds 500 Points, U.S. Stocks Rise
Indian equity benchmark S&P BSE Sensex declined for the fourth consecutive trading session, clocking its worst four-day fall since May 13.
- The 31-stock index closed 491 points or 1.25 percent lower at 38,960.
- The NSE Nifty 50 Index fell for the second consecutive trading session to settle below 11,700.
- The broader market index represented by the NSE Nifty 500 Index closed 1.31 percent lower.
- All the 11 sectoral gauges compiled by NSE fell.
Follow the day’s trading action here.
U.S. equities gained, led by FANG shares, while most European stocks slipped following a mixed session in Asia as a big week for central-bank policy gets underway.
- Facebook, Alphabet and Netflix led the Nasdaq Composite higher, while the S&P 500 was little changed and the Dow Jones Industrial Average weakened.
- The Stoxx Europe 600 Index was in the red for a second day. Deutsche Bank boosted lenders on reports that it’s considering creating a “non-core unit” to wind down legacy assets as part of a broader overhaul.
- The dollar weakened after a Federal Reserve survey of factories in New York State plunged in June by the most on record.
- Treasuries pared a drop on the news, but they stayed lower alongside European bonds as investors looked ahead to a week in which the Fed, the Bank of Japan and the Bank of England all set monetary policy.
- West Texas Intermediate fell 0.8 percent to $52.07 a barrel.
Get your daily fix of global markets here.
4. Majority Stake Sale Of Weak PSU Banks?
India is considering selling controlling stakes in some of the smaller state-run banks in a bid to raise funds to boost spending on programmes for the poor, people with knowledge of the matter told Bloomberg News.
- The proposal being considered involves offering a majority stake in some of the weaker banks and use the proceeds to fund Prime Minister Narendra Modi’s rural housing programme, the people said, asking not to be identified as the proposal is at an early stage.
- The details are still being worked out and, if approved, it could be included in the budget to be unveiled on July 5, the people said.
If a plan is finalised, the government will need to amend a law to enable it to sell majority control in state-run banks.
5. Das Won’t Hesitate To Maintain Financial Stability
Amid concerns that a crisis across India’s non-bank lenders is deepening, Reserve Bank of India Governor Shaktikanta Das has reiterated that the central bank stands ready to take any steps needed to ensure financial stability.
- “The Reserve Bank will continue to monitor the activity and performance of this (NBFC) sector with a focus on major entities and their inter-linkages with other sectors,” said Das at a speech in Mussorie.
- “The Reserve Bank will not hesitate to take any required steps to maintain financial stability,” he added.
- Das’ comments come at a time when fresh concerns have emerged about the health of some large NBFCs and housing finance companies.
Das said that “the primary objective of the monetary policy is to maintain price stability while keeping in mind the objective of growth”.
6. Pirmal Offloads Shriram Transport Stake
Piramal Enterprises Ltd. has exited Shriram Transport Finance Company Ltd. by selling its entire stake in the asset financier.
- The billionaire Ajay Piramal-backed company sold 9.96 percent stake in Shriram Transport to third-party investors.
- A total of 2.26 crore shares of Shriram Transport changed hands via two block deals in the National Stock Exchange—1.3 crore shares were sold at Rs 1,023.55 apiece and another 0.9 crore shares at Rs 1,027.25.
- The total value of the deal stood at Rs 2,316 crore—a gain of 42 percent since 2013 when Piramal Enterprises had bought 10 percent in Shriram Transport for Rs 1,636 crore.
Piramal has been looking to consolidate the financial services businesses.
7. HUL’s Biggest Brands
Food has emerged as the latest growth driver for Hindustan Unilever Ltd. even as personal care continues to dominate the top line of India’s largest seller of shampoos to staples.
- The company, a bellwether for consumption, has about 40 brands across home care, beauty and personal care, and foods and refreshment categories.
- About half of these are large brands with a contribution of at least Rs 500 crore each, together accounting for 54 percent of the company’s nearly Rs 40,000-crore revenue.
The contribution of personal care in HUL’s revenue has fallen marginally.
8. Can Natco Make A Comeback?
Natco Pharma Ltd. lost more than half of its value in the last two years as lack of new launches and the company’s inability to capitalise on exclusivity of its crucial flu drug in its largest market spooked investors.
- The Hyderabad-based company’s profit and revenue growth slowed in the few quarters after it lost exclusivity in the U.S. of generic Tamiflu—used to treat influenza—and rising pricing pressure in the domestic Hepatitis C segment.
- Also, Natco Pharma’s partner Mylan cut prices for multiple sclerosis drug Copaxone to grab higher market share from innovator Teva, further hurting margin.
- Once an outperformer, Natco Pharma’s stock tumbled 20 percent from the start of the year compared with an 8 percent decline in the Nifty Pharma Index. The drugmaker has lost more than 50 percent from its peak in 2017.
The drugmaker’s next big product will not hit the shelves before three years.
9. The Controversial Issue Of Arrests Under The CGST Law
There’s no denying that the Central GST law gives commissioners wide powers to arrest without registering a first information report or police complaint. But does the Constitution permit this? That’s the debate that will soon play out in the Supreme Court determining the balance between a government’s right to crack down on economic offences and the constitutional right to natural justice for citizens.
- On May 30, a three-judge bench headed by the Chief Justice of India Justice Ranjan Gogoi issued notices after Solicitor General for India Tushar Mehta approached the apex court seeking clarification over the power to arrest under the GST law.
- Arrest powers in indirect tax laws are not a new development, Mekhla Anand, partner, indirect tax at Cyril Amarchand Mangaldas pointed out.
- The Central Excise and Service Tax legislations also had arrest provisions, introduced in 2013; and the abuse of these provisions first came to the limelight when the director of Makemytrip was arrested in 2016, she added.
But the Central GST Act does away with the need for show cause notices and first information reports.
10. Bengal Doctors Call Off Strike
The protesting doctors in West Bengal on Monday agreed to withdraw their week-long stir after Chief Minister Mamata Banerjee announced steps to scale up security at hospitals.
- An assurance to call off the strike came at a meeting Banerjee held with representatives of the striking doctors at the state secretariat.
- "We are satisfied with the meeting," a representative of the doctors said, assuring Banerjee that the strike is going to be called off.
- A formal announcement on withdrawal of the strike is likely to be made from the epicentre of the protest, the NRS Medical College and Hospital.