BQuick On June 25: Top 10 Stories In Under 10 Minutes
This is a roundup of the day’s top stories in brief.
1. Zee’s Rs 175-Crore Loan To Promoters
Zee Entertainment Enterprises Ltd. offered financial support to its promoters at a time Subhash Chandra-led Essel Group struggled to repay lenders.
- The broadcaster provided loans, deposits and advances worth Rs 175.2 crore to related parties, including promoter-owned entities, in the financial year ended March 2019.
- The borrowers include Widescreen Holdings Pvt. Ltd., Konti Infra Power & Multiventures Pvt. Ltd. and Edisons Infrapower & Multiventures Pvt. Ltd., among others.
- The two entities have created problems for mutual funds by delaying bond payments, and its not good corporate governance on Zee's part, explained Deepak Shenoy, founder at Capital Mind.
Promoter debt has been a long-standing concern for Essel Group investors.
2. RBI Panel Suggests Larger Mudra Loans
A Reserve Bank of India appointed committee has recommended that loan limits under the Micro Units Development and Refinance Agency Ltd. scheme be raised to Rs 20 lakh from Rs 10 lakh currently.
- It also suggested that loans up to Rs 5 crore be eligible for online sanction via PSBloansin59minutes.com.
- The committee, set up to look at various issues being faced by micro, small and medium enterprises, was headed by former Securities and Exchange Board of India Chairman UK Sinha. The committee’s report was made public by the Reserve Bank of India on Tuesday.
- Among the key suggestions made by the committee is an increase in the limit for uncollateralised loans to Rs 20 lakh from Rs 10 lakh currently. These are loans which are not backed by any collateral, such as land or machinery.
Here are the other suggestions made by the panel.
3. Sensex Halts Two-Day Fall
Indian equity benchmarks halted a two-day fall, led by the gains in Reliance Industries Ltd. and Housing Development Finance Corporation Ltd.
- The S&P BSE Sensex ended 0.8 percent or 312 points higher at 39,434.
- The NSE Nifty 50 ended slightly below 11,800, up 0.83 percent.
- The broader market index represented by the NSE Nifty 500 Index closed 0.72 percent higher.
- All the 11 sectoral gauges compiled by NSE ended higher.
Follow the day’s trading action here.
U.S. stocks fell while gains in Treasuries pushed the 10-year yield below 2 percent as simmering geopolitical tensions damped investor appetite for risk.
- The S&P 500 dropped for a third-straight session, the longest since May 9, as U.S. officials downplayed expectations of a resolution to the trade war ahead of highly-anticipated meeting between President Donald Trump and China’s Xi Jinping this week.
- The 10-year Treasury yield slipped back below 2 percent, a level that until last week it hadn’t breached in three years, as fresh economic data added to concern the world’s largest economy is slowing.
- West Texas oil rose as investors weighed escalating tensions between the U.S. and Iran against the possibility of OPEC+ extending production cuts.
- Gold jumped to the highest in six years and the yen hit the strongest since January against the dollar. German bund yields fell to a record.
Get your daily fix of global markets here.
4. RIL Raises $1.85 Billion In Loans
Oil-to-telecom conglomerate Reliance Industries Ltd. said it has signed pacts with overseas lenders to avail long-term loans of $1.85 billion (about Rs 12,900 crore) to finance its capital expenditure.
- The fund raising comes amid reports of the company planning to infuse as much as Rs 20,000 crore into its telecom unit Reliance Jio Infocomm Ltd. to bolster broadband and e-commerce play ahead of a potential entry into 5G mobile telephony services in future.
- "The company has entered into agreements with offshore lenders for availing long-term loans aggregating $1.85 billion, primarily for meeting a part of its planned capital expenditure, in the normal course of its business," RIL said in a regulatory filing.
RIL didn't reveal more details of the loans such as tenure and the interest rate.
5. Royal Dutch Shell Can Now Sell Its MGL Stake
Royal Dutch Shell Plc. will now have an option to exit the city gas distribution business as the lock-in period for minimum promoter holding after listing of a company expires next month.
- The Netherlands-based energy and petrochemical company’s subsidiary BG Asia Pacific Holdings Pte Ltd.—a promoter of Mahanagar Gas Ltd.—has sold 35 percent stake in Mumbai’s only city gas distributor since listing, according to data compiled by BloombergQuint from the exchanges.
- The stake sale came after it changed its strategy to invest more in upstream exploration businesses.
- Shell is now left with 10 percent stake in Mahanagar Gas, but it was restricted from paring more for three years because of the market regulator’s listing norms. Mahanagar Gas was listed in June 2016 and the lock-in period expires on July 1.
If Shell chooses to exit Mahanagar Gas after nearly 23 years, it will only add to the overhang on the company’s stock price.
6. Who Is Hurting Most From India’s NBFC Crisis?
The liquidity crisis being faced by India’s non banking financial companies has persisted for nearly nine months now. Over this period, NBFCs have been forced to conserve liquidity and cut back on fresh disbursements.
- Data released by the Finance Industry Development Council, a self-regulatory organisation for NBFCs, shows that the impact of the ongoing liquidity crisis on fresh sanctions worsened in the fourth quarter.
- Fresh sanctions contracted by 30.8 percent year-on-year in the January-March 2019 quarter, steeper than the 16.7 percent decline in the third quarter.
- The data captures 95 percent of the assets under management of registered NBFCs. However, it excludes microfinance firms and housing finance firms. BloombergQuint could not independently verify the data.
These charts tell the story of the NBFC crisis.
7. Keki Mistry’s Advice To Government, RBI
The chief executive of Housing Development Finance Corporation Ltd. has urged the government and the Reserve Bank of India to encourage lending to non banking financial companies and mortgage lenders, which bore the brunt of a liquidity crunch after the IL&FS crisis.
“Risk averseness that set in the system has reduced to some extent but it hasn’t fully reduced,” HDFC CEO Keki Mistry told BloombergQuint in an interview.
The government and RBI should meet with bankers to give them the confidence to start lending again.Keki Mistry, CEO, HDFC
Mistry also suggested measures to revive the real estate sector.
8. Vodafone Idea Is Losing High-Paying Users
The number of high-paying users of India’s largest telecom operator fell the most in eight months in April.
- Vodafone Idea Ltd.’s broadband users—customers who predominantly use data and generate higher revenue—dropped by nearly 6 lakh, according to Telecom Regulatory Authority of India's report released on Monday.
- The wireless operator’s active subscriber base also declined by over 2.6 crore, the biggest drop since the merger of Vodafone India and Idea Cellular Ltd.
- The operator has seen a continuous decline in its active subscribers for the last one year. The base shrank by over 7.7 crore in the period.
Here’s what has led to the sharp decline.
9. India Opens Its Gates For Firms Moving Out Of China
India is weighing offering incentives to attract companies moving out of China amid its trade war with the U.S., a person familiar with the development told Bloomberg News.
- Financial incentives such as preferential tax rates and the tax holiday provided by Vietnam to lure companies are among measures being considered, the person said, asking not to be identified as the discussion is still private.
- Industries identified for incentives include electronics, consumer appliances, electric vehicles, footwear and toys, according to a trade ministry document seen by Bloomberg.
- Economies, including Vietnam and Malaysia, have benefited from businesses trying to sidestep tariffs, while India has largely missed out on any investment gains.
India’s effort is part of a larger plan to cut reliance on imports.
10. Kerala Is India’s Healthiest State
Kerala is India’s healthiest state and Uttar Pradesh ranks last in healthcare parameters, according to the Niti Aayog Health Index released Tuesday. Kerala was followed by Andhra Pradesh and Maharashtra while Uttar Pradesh had Bihar for company, the healthcare rankings showed.
- Gujarat, Punjab and Himachal Pradesh stood at fourth, fifth and sixth spots, according to the report titled Healthy States, Progressive India: Report on Rank of States and UTs.
- Uttar Pradesh, Bihar and Odisha were among the worst-performing states on the Niti Aayog Health Index.
There is room for improvement in all states, even among the best.