BQuick On March 8: Top 10 News Stories In Under 10 Minutes
This is a roundup of the day’s top stories in brief.
1. NCLT Win For ArcelorMittal, But...
The Ahmedabad bench of the National Company Law Tribunal approved ArcelorMittal’s bid to take over insolvent Essar Steel Ltd.
- Even as the bench delivered its order on Friday, the Ruias sought to stay the order on grounds that they had already approached the National Company Law Appellate Tribunal to reconsider their settlement offer.
- ArcelorMittal objected to the Ruias seeking a stay.
- The judge asked Ruias to wait till Monday when the written order will be made available.
- A statement issued by the Ruias soon after, reiterated that their offer was higher than that of ArcelorMittal.
We continue to believe that our settlement proposal of Rs 54,389 crore is the most compelling one available to Essar Steel creditors and fulfills the IBC’s declared overriding objective of value maximisation, which has been established time and again by courts at all levels.Essar/Ruia Statement
Meanwhile, ArcelorMittal welcomed the NCLT Ahmedabad order.
2. GST Relief For Consumer Goods Makers
Consumer goods makers won’t have to pay tax on that extra bar of soap offered free or two additional biscuits in a pack to lure buyers.
- The companies can also claim input tax credit on freebies offered under such promotional schemes, according to a circular on the website of the Central Board of Indirect Taxes and Customs.
- The clarification comes as a breather for companies which were asked by the Directorate General of Goods and Services Tax Intelligence to pay tax on free products or extra grammage.
- The department had approached companies as they don’t pay goods and services tax on freebies but claim credit for taxes paid on manufacturing inputs, BloombergQuint had earlier reported.
- On offers such as ‘buy two get one’ for the same product, a company doesn't have to pay GST, but can claim input tax credit for the whole product, Mayank Shah, category head at Parle Products Ltd., told BloombergQuint.
The rule is different for unrelated free samples or gifts.
3. Inflows Into Equity MF Fall... Again
Inflows into equity mutual funds, including equity-linked savings schemes, fell to their lowest in more than two years in February as investors hold back investments amid uncertainty ahead of the general election.
- Equity inflows declined 16.8 percent over the previous month to Rs 5,122 crore during the month, according to data released by the Association of Mutual Funds in India.
- That’s a fourth straight monthly decline and the lowest level since January 2017.
- “Election-related uncertainty could be one reason why people are holding back their investments,” said Aashish Somaiyaa, chief executive officer at Motilal Oswal Asset Management Company.
- “Performance of mid-cap stocks in the recent past is another overhang,” said Swarup Mohanty, chief executive officer at Mirae Asset Global Investments (India).
Overall, the mutual fund industry witnessed a total outflow of Rs 20,083 crore.
4. Portfolio Managers Who Outperformed Peers
India’s top portfolio managers suffered losses on average for the second straight month in February, mirroring the broader market which has fallen due to uncertainty over the upcoming general election.
- Still, about 21 of the 50 portfolio managers tracked by BloombergQuint—with Rs 1.03 lakh crore in assets—returned gains in February, according to data by Securities and Exchange Board of India.
- That compares with three firms that returned gains in January.
- The top 50 managers delivered a loss of 0.55 percent in February compared with a loss of 3.15 percent in January.
Here are the best and worst performing portfolio managers.
5. Nifty Slips, Dow Drops
Indian equity benchmarks clocked their longest stretch of weekly gains since November.
- The S&P BSE Sensex gained 1.68 percent this week to end at 36,671.
- The NSE Nifty 50 ended above the 11,000 mark, after gaining 1.58 percent this week.
- On Friday, both the 31-share index and the 50-stock index ended lower by 0.15 percent and 0.21 percent respectively, halting a four-day rally.
- Seven out of 11 sectoral gauges compiled by NSE fell, led by the NSE Nifty Metal Index’s 1.5 percent decline.
- On the flipside, the NSE Nifty Realty Index was the top sectoral loser, up 0.19 percent.
Follow the day’s trading action here.
U.S. stocks dropped with the dollar after a report showed American hiring was the weakest in more than a year while wage gains were the fastest of the expansion.
- The S&P 500 Index extended its losing streak to a fifth day, while benchmark Treasury yields dropped to a two-month low on concern that the labour market is starting to slow at the same time inflation pressures may be picking up.
- The euro steadied after closing at its lowest level since 2017 on Thursday, when the European Central Bank slashed growth forecasts.
- West Texas Intermediate crude dropped 3 percent to $54.98 a barrel.
Get your daily global markets fix here.
6. In Defense Of Equity-Backed Bonds
Brickwork Ratings is neither India’s oldest credit rating agency nor its largest. And yet, it leads one segment of the rating business. That of rating bonds backed by promoter equity. A financial instrument that one governance expert recently described as a “weapon of mass destruction”.
- There are an estimated over Rs 40,000 crore worth of outstanding equity-backed-bonds that are rated and listed, as earlier reported by BloombergQuint.
- And Brickwork has rated over 86 percent of them.
- But according to Brickwork, the total issuance of such instruments is much larger.
- The rating agency, one of seven in India, told BloombergQuint it has rated over Rs 30,000 crore of such bonds and has a 50 percent market share.
Around 75 percent of the equity-backed bonds BloombergQuint scrutinised were rated above ‘BBB’.
7. Why PE Firms Are Betting On Private Health Insurers
Falling profits and operating losses of Indian health insurers failed to deter private equity firms from acquiring two insurance companies in the last seven months.
- The reason for their optimism: prime minister’s health scheme for nearly 10 crore Indians and the opportunity presented by low insurance penetration in India.
- “Health insurers are attractive more because of their future growth potential than their present financial position,” according to Anirudh Jain, head-insurance at financial services firm, Centrum Capital.
- The consortium of WestBridge, Madison and Jhunjhunwala acquired Star Health at 1.48 times its trailing 12-month gross written premium—equivalent to sales.
- True North bought Max Bupa at 1.14 times its gross premium book
Still, it’s too early to expect that health insurers will outperform other segments.
8. Bankers’ Salaries: RBI Takes A Strong Step Forward
The Reserve Bank of India’s proposals on the pay of chief executives at private banks could result in tighter monitoring of CEO performance, and thus usher in a sea-change in governance at private banks, writes TT Ram Mohan.
- In highly leveraged firms such as banks, variable pay linked to performance has the potential to create bank-level as well as systemic risk.
- The big change is that RBI’s definition of CEO pay now includes stock options.
- ‘Variable pay’ as per the earlier rules was not just a lacuna; it was something of a joke.
- But, the effectiveness of these proposals will depend a great deal on disclosure and close supervision.
9. Supreme Court Orders Mediation In Ayodhya Case
The Supreme Court referred the long-standing Ram Janmabhoomi-Babri Masjid land dispute case to mediation, for which it has also set up a three-member panel.
- The panel will comprise the former Supreme Court judge, retired Justice FM Kalifulla, Sri Sri Ravi Shankar and Sriram Panchu.
- “We don't find any legal impediment in referring the matter to mediation,” Chief Justice of India Ranjan Gogoi said while pronouncing the order.
- The bench, which also included Justice SA Bobde, Justice DY Chandrachud, Justice Abdul Nazeer and Justice Ashok Bhushan, ordered the mediation panel to start work in a week, and give an interim report in four weeks.
- The apex court said the mediation process has to be completed within 8 weeks.
Here’s what lawyers for the deity Ram Lalla, the Sunni Waqf Board, and the Uttar Pradesh government said.
10. India's Richest Self-Made Woman
Kiran Mazumdar-Shaw was the only Indian in the list of the world’s self-made women billionaires, which was dominated by China.
- Mazumdar-Shaw, who founded Biocon Ltd. and has a net worth of $3.5 billion, was ranked 11th in the Hurun Global Self Made Women Rich List for 2019 along with U.S.-based Judith Faulkner, founder of healthcare software company Epic Systems, and China’s Zhong Huijuan of Hengrui Medicine.
- China dominated the list with 51 women, producing more than the half of world’s self-made female billionaires.
- That comes even as the Chinese stock market slumped more than 20 percent this year and its domestic currency declined 6 percent, in 2018.
- ‘China Property Queen’ Wu Yajun reclaimed her title of the world’s richest self-made woman after seven years.
Here are the top five richest self-made women.