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

Introducing Election Soundtrack, a daily podcast that’ll get you up to speed with everything that you need to know about Elections 2019. Today, we tell you about Priyanka Gandhi’s ‘boat pe charcha’, why Mayawati said ‘thanks, but no thanks’ and why Hardik Patel thinks Rahul Gandhi will be prime minister.

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

1. Hotel Leela Venture Left With Just One Hotel

Thirty three years ago, Hotel Leela Venture Ltd. opened its first hotel in Mumbai. Now that’s all the insolvent company will be left with after it completes the sale of prime properties to Brookfield Asset Management.

• The company will sell four Leela hotels in Bengaluru, Chennai, Delhi and Udaipur, and another property it owns in Agra, to a Brookfield-sponsored private real estate fund, according to a stock exchange filing.
• The deal also includes all assets and liabilities related to the properties, and all hotel management contracts currently in operation as well as contracts for hotels currently under development.
• The total transaction value is Rs 3,950 crore.

These properties contributed nearly 80 percent of Hotel Leela Venture’s net income.

2. Anil Ambani Avoids Jail; Jio Deal Terminated

Anil Ambani averted a three-month jail term after his telecommunications company settled dues it owed the local unit of Ericsson AB, with just a day left before a court-set deadline.

• Reliance Communications Ltd. has paid the required Rs 550 crore ($80 million), said Ruchika Batra, a spokeswoman for Ericsson.
• Repeated failures to pay and Ambani’s personal guarantee landed him in trouble last month, with the top court giving him a month’s notice to comply or spend time in prison.
• Bloomberg-compiled data show his current net worth is about $300 million, compared with at least $31 billion in 2008, based on the current foreign-exchange rate. That marks a stunning fall for the scion of one of India’s most storied business families.

Read more on Anil Ambani’s rare distinction.

• Meanwhile, RCom and Mukesh Ambani’s Reliance Jio Infocomm Ltd. have mutually agreed to terminate the agreement for sale of some telecom assets, according to a statement on the exchanges.
• RCom cited reasons including non-receipt of consents and objections from over 40 foreign and Indian lenders, and failure to get requisite permissions from the Telecom Department.

The transaction has “become incapable of being consummated”, said RCom.

3. Mittal One Step Closer To Essar Steel

The appellate tribunal refused to stay the National Company Law Tribunal’s order approving ArcelorMittal’s bid to take over insolvent Essar Steel Ltd.

• The two-judge bench of the National Company Law Appellate Tribunal said ArcelorMittal’s resolution plan will be implemented subject to the final orders of the appellate tribunal.
• The U.K.-based steelmaker will pay Rs 42,000 crore against financial creditors’ claims of more than Rs 49,000 crore.
• This helps ArcelorMittal clear the penultimate legal stage in the pursuit of Essar Steel. In October 2018 its resolution plan was approved by the company’s committee of creditors.
• The final stage would be a favourable decision by the Supreme Court, but no appeal has yet been filed there.

Essar’s takeover takeover has been delayed by multiple cases in the NCLT and NCLAT.

4. The Battle For Mindtree

Subroto Bagchi, one of the founding members of Mindtree Ltd., resigned as the head of Odisha’s Skill Development Authority to return to the information technology company in Bengaluru.

• He announced the resignation on late Sunday night on Twitter, saying that he must protect the company from the people trying to destroy it.
• “Mindtree has not been designed as an asset to be bought and sold,” he wrote in another tweet. “It is a national resource. It has a unique culture that humanizes the idea of business. It sets the standards of corporate governance. I need to be there in its time of difficulty. Hence the hard decision to return.”

This comes as L&T Infotech has reportedly emerged as the leading bidder for a major stake in Mindtree.

Mindtree will need a new white knight to fend off any hostile takeover, co-founder Ashok Soota told BloombergQuint.

• Soota, former chairman of mid-sized software services provider, had exited the company by selling shares in the Bengaluru-based company to Siddhartha’s Coffee Day Group.
• Siddhartha has been a white knight for nine years and investor for 10 years, according to Soota.
• But now with the Coffee Day founder looking to sell stake to pare his own company’s debt, L&T has become the frontrunner to take over.

Watch Soota’s full interview here.

5. Sensex Swings, Rupee Rises

Indian equity benchmark S&P BSE Sensex ended higher after a topsy-turvy trade, clocking its longest gaining streak since Dec. 19.

• The 31-stock index ended 0.19 percent higher at 38,095, its highest level since Sept. 07.
• The NSE Nifty 50 Index extended gains for the sixth consecutive trading session, its longest gaining streak in over a month.
• The 50-share gauge ended at 11,462, its highest level in six months.
• Eight out of 11 sectoral gauges compiled by NSE advanced.

Follow the day’s trading action here.

• The Indian rupee too continued to advance from strength to strength, cementing its position as the best performer among the emerging market peers.
• The currency advanced 0.9 percent on Monday to 68.46 per dollar, its highest level since Aug. 2018, widening month-to-date gains to 3.4 percent.

The currency has been bolstered by prospect of Prime Minister Narendra Modi’s re-election.

U.S. equities gained at the start of a week filled with potentially significant catalysts from central bank meetings, geopolitical developments and economic data.

• The S&P 500 opened slightly higher, led by financials and energy shares, while chipmakers helped propel an advance in the Nasdaq 100.
• The Dow Jones Industrial Average fought to hold gains as Boeing Co. declined on reports that the U.S. Transportation Department was examining the 737 Max’s design certification.
• Equities are grinding higher and volatility is declining on expectations the Fed will point the way to just one rate hike in 2019 when it meets this week.
• Treasuries and the dollar drifted lower.

Get your daily fix of global markets here.

6. Nifty 500’s Lopsided Rally

The 1,000-point rally in the Nifty 500 Index in the past five months has been lopsided.

• Large-cap stocks in the Nifty 50 index accounted for close to three-fourths of the jump in the broader index since the previous low on Oct. 26 last year till March 13, contributing nearly 720 points.
• The remaining 450 accounted for 280 points.
• That’s almost equivalent to the contribution of just three Nifty 50 heavyweights—Reliance Industries Ltd., HDFC Bank Ltd. and ICICI Bank Ltd.
• While Nifty 500 rose 12.3 percent during the period, 57 percent (or 285) stocks lagged the index, returning less than 8 percent gains.

Find out which stocks moved the NSE 500 Index.

7. Fintech Red Flag?

It was the early 2000s and a pick-up in credit card spending was all the rage. Then came the global financial crisis and a slowdown in the Indian economy. Many lenders were left holding a pile of bad credit card debt.

• Fast-forward to 2018 and the rage is now about lending to customers with lower credit scores. This time its not the banks but fintech firms which are arguing that improved credit assessment tools will minimise the higher risk associated with such borrowers.
• They may very well be right but some analysts are keeping a wary eye out for any build-up in risk.
• “Risk models work until they don't,” wrote Gautam Chhugani, analyst at Bernstein in a March 11 note titled ‘Are fintech lenders increasing systemic risk?’

Here’s how the system currently works.

8. NSE-SGX Final Order Deferred

The Bombay High Court deferred the final decision in the National Stock Exchange of India Ltd.’s arbitration with Singapore Exchange till Dec. 31, 2020, allowing the foreign partner to continue with single-stock Nifty 50 futures that had triggered the dispute about a year ago.

• The arbitrator—in agreement with both the parties—was given an extension “to decide the dispute between the parties and pass his award”, said an order signed by Bombay High Court Judge SJ Kathawalla on March 13.
• Multiple extensions have already been granted in the matter by the arbitrator. The parties were first given an additional year from the first hearing on May 29, 2018, a person close to the development told BloombergQuint seeking anonymity since he is not authorised to speak to the media.
• Both the sides then approached the arbitrator and got another six months till November 2019, he said, adding that the arbitrator has now been given time till Dec. 31, 2020 for the final hearing.

While the court order did not mention the grounds for the latest extension, the person cited above had some insight.

9. The RBI Is Full Of Surprises These Days

Several theories explain why India’s new central bank governor took his boldest step yet. Little attention has been paid to the consequences, writes Andy Mukherjee.

• Last week, Governor Shaktikanta Das made an unexpected tweak to the Reserve Bank of India's traditional management of longer-term liquidity in the banking system: by buying and selling government bonds.
• India’s currency, sovereign-debt and credit markets were all caught off-guard by the announcement of a three-year, dollar-rupee swap.
• The RBI will buy $5 billion from banks for its reserves by giving them rupees, and reverse the trade in 2022. This preemptive move would prevent the currency's appreciation, according to one theory.
• The central bank may want to scoop up incoming dollars from ArcelorMittal’s long-awaited $5.8 billion check for Essar Steel India Ltd., lest the rupee strengthens from an oversupply of greenbacks.

Another hypothesis ties the swap to elevated funding costs for nonbank financiers.

10. CAs Vs Economists In Letter Writing Showdown

After 108 economists and statisticians raised concerns about India’s data integrity and stressed on transparency, 131 chartered accountants have issued a statement calling the concerns “bogus” and “choreographed”.

• The economists had cited two specific instances that triggered concerns: the back-casting of a new GDP series released in 2015 and the government’s decision to withhold the periodic labour force survey conducted by the National Sample Survey Organisation.
• The chartered accountants, however, said the economists’ concerns resemble the “previous ‘Award Wapsi’ drama, which too was enacted just before a crucial state election. A political tendency is being developed to disown institutions.”
• Stressing that India was left behind by peers between 1960 and 2014, they said none of these economists or social scientists “ever made an appeal in those 54 long years that India is on a slow track and is being left behind”.

Read the full text of the letter here.