BQuick On May 8: Top 10 Stories In Under 10 Minutes
Here is a roundup of the day’s top stories in brief.
1. Vodafone Idea Shares Pledged
Vodafone Plc. pledged its entire stake in Vodafone Idea Ltd. with seven banks after India’s largest telecom operator issued new stock to promoters to raise funds to pare debt.
- Shareholders of Vodafone Promoter Mauritius and Vodafone Promoter Indian pledged about 44.39 percent stake, the company said in a filing.
- Vodafone Group owns the stake through 12 entities based in India and Mauritius. The stake is valued at close to Rs 18,304 crore.
- Emailed queries and calls to Vodafone Plc remain unanswered.
The pledge was created on May 8, after the rights issue shares started trading on exchanges.
2. Why Infibeam Wants To Sack Its Auditor
For most of the last year, Infibeam Avenues Ltd.’s auditors questioned its accounting practices. Now the company is pointing a finger at one of its auditors. Infibeam initiated an internal preliminary investigation and sought details from the audit firm.
- In its internal investigation, SRBC & Co. examined official email accounts of 28 audit team members who worked on the Infibeam account between November 2016 and February 2019.
- It found that certain emails containing unpublished price sensitive information pertaining to Infibeam were sent by some of the audit firm’s employees from their official email accounts to their personal email accounts.
- The audit firm also found that in one instance, in February 2017, a member of the audit team “inadvertently marked a third party” on an email that contained unpublished information pertaining to the company’s financial statements.
SRBC says that there was no fraudulent act on its part and Infibeam's EGM notice does not represent the communication between the two.
3. Essel Firms, Mutual Funds And Unanswered Questions
In the last five years, key companies of the Subhash Chandra-promoted Essel Group doubled their debt thanks to the largesse of mutual funds.
Even though they had no capacity to service it and had to borrow further to make interest payments. Now, they’ll be able to repay the debt only if and when they succeed in selling assets, ranging from road projects to a substantial stake in the group’s flagship listed company Zee Entertainment Enterprises Ltd.
A BloombergQuint investigation examines how mutual funds continued to finance these three companies despite their worsening debt profile.
- Sprit Infrapower & Multiventures Pvt. Ltd.
- Edisons Infrapower & Multiventures Pvt. Ltd.
- Konti Infrapower & Multiventures Pvt. Ltd.
The financials of these Essel group companies beg the question—why did mutual funds miss recognising the risks before the Essel Group defaulted?
4. Sensex Slides, U.S. Stocks Mixed
Indian equity benchmarks closed lower in today’s trade, dragged down by losses in Zee Entertainment Ltd., Reliance Industries Ltd. and auto stocks.
- The S&P BSE Sensex ended 1.27 percent lower at 37,789.
- The NSE Nifty 50 ended at 11,359, down 1.20 percent.
- The broader market index represented by the NSE Nifty 500 Index ended 1.17 percent lower.
- All sectoral gauges compiled by NSE ended lower.
Follow the day’s trading action here.
U.S. stocks swung between gains and losses as investors questioned President Donald Trump’s suggestion that a trade deal with China remained possible this week.
- The S&P 500 was virtually flat after at two-day trade-fomented rout wiped more than $500 billion from the value of American equities.
- Trump had stemmed the losses with a tweet that China had just informed “us” that they “are now coming to the U.S. to make a deal.”
- Equities fell earlier in Europe and Asia, with big declines seen in Japan and Hong Kong. Treasuries climbed as investors sought haven assets.
- The euro edged higher on upbeat German factory data. The dollar rose for a third day.
Get your daily fix of global markets here.
5. Shanghvi Still Has Faith In Suzlon
Dilip Shanghvi intends to stay invested in unprofitable wind-turbine maker Suzlon Energy Ltd. even though the company’s financial health has worsened over the last few years.
- “If I look at outcome then clearly that investment hasn’t had a great outcome,” Shanghvi said in an interview in Mumbai, adding that Suzlon has to solve its own challenges.
- Shanghvi, founder and managing director of Sun Pharmaceutical Industries Ltd. said policy hurdles were responsible for lower demand for Suzlon’s wind turbines and the resultant cash squeeze.
- Shanghvi proved a white knight for Suzlon in 2015 when he bought 23 percent stake for $258 million.
He said that Suzlon had the product and future pipeline to grow.
6. Titan Struggles
Titan Company Ltd.’s lower operating margin and exceptional loss in the January-March period has had a bearing on the company’s profit.
- Net profit of India’s largest branded jewellery maker was up 4.4 percent year-on-year to Rs 294.6 crore.
- Profit missed estimate due exceptional items including early retirement schemes worth Rs 5.7 crore and impairment of investments in subsidiary Favre Leuba was worth Rs 70 crore.
- Operating margin contracted by 90 basis points to 9.7 percent.
Its core jewellery business grew slower than expected.
7. Mortgage Lenders Seek Cover
Banks and housing finance companies, which are slowly expanding the pool of customers that they are willing to give home loans to, are experimenting with mortgage guarantees as a way to reduce the risk of default.
- Mortgage guarantees—a product common and, in some cases, mandatory in developed markets—is relatively new to India.
- The India Mortgage Guarantee Corp. was the first such firm to be set up in 2014 as a joint-venture between the National Housing Bank, International Finance Corporation, Asian Development Bank and Genworth Financial Inc.
- In the five years since, IMGC has seen its portfolio grow to nearly Rs 7,000 crore as of March 2019, Sovan Mandal, chief commercial officer at IMGC told BloombergQuint.
Most of the guarantees are for loans in the affordable housing segment.
8. What Ruchi Soya Brings To Baba Ramdev’s Patanjali
Patanjali Ayurved Ltd. is set to become one of India’s largest edible oil makers as its bid was approved by lenders to insolvent Ruchi Soya Ltd.
- The Yoga guru Baba Ramdev-backed company will pay Rs 4,325 crore to the lenders after Adani Wilmar Ltd., the maker of Fortune cooking oil, withdrew from the resolution process citing deterioration of Ruchi Soya’s assets due to “significant delays”.
- Patanjali has created a special purpose vehicle that will receive a Rs 800-crore loan from the State Bank of India, Bank of Baroda and Union Bank of India, said a person aware of the transaction on the condition of anonymity as details are not public.
Here’s how the remaining amount will be financed.
9. The Silence Of Good Men And Women
If the Supreme Court in-house committee hoped its decision would exonerate the chief justice and restore the prestige of the court then exactly the opposite has happened, writes Menaka Doshi.
- Due process failures began the very day the allegations came to light.
- This must be the fastest the Supreme Court has ever concluded a matter.
- The fatal blow to this last standing bastion of fundamental rights is the silence of every other judge of the apex court, except maybe one.
10. Apple Store In Mumbai?
Apple Inc. has finalised a short list of locations for its first retail store in India as the company redoubles its efforts in the world’s fastest-growing smartphone market.
- The iPhone giant has zeroed in on several upscale sites in Mumbai, and plans to make a final decision in the next few weeks.
- The vetted spots are comparable to iconic Apple locations on Fifth Avenue in New York, Regent Street in London or the Champs-Elysees in Paris.
- The Cupertino, Calif.-based company has struggled to establish itself in India where consumers have opted for less expensive Chinese brands such as Xiaomi and Vivo.
Apple has tried in recent years to gain ground as India eclipsed China as the fastest-growing smartphone market in the world.
Bonus: Baby Sussex, Seventh In Line To The British Crown
Prince Harry and Meghan, Duchess of Sussex, showed off their newborn baby boy to the public on Wednesday.
- The beaming couple said parenting had been a "dream" and "amazing" but kept the world guessing as to the name of their son, who was born on Monday.
- The baby was announced in October as they began their first overseas tour, visiting Australia, Fiji, Tonga and New Zealand around the Invictus Games in Sydney, Harry's Olympics-style event for wounded military veterans.
- The newborn son is set to attend his first photocall and meet his great grandmother — all in one day.
- Family members have welcomed the new arrival, with Prince William saying on Tuesday he was "absolutely thrilled."