BQuick On Nov. 20: Top 10 Stories In Under 10 Minutes
This is a roundup of the day’s stories in brief.
1. Zee Entertainment: Subhash Chandra’s Endgame
In a second effort to raise funds to pay off debt, Subhash Chandra-led Essel Group, the promoter of Zee Entertainment Enterprises Ltd., will sell 16.5 percent shareholding in the media major to financial investors.
- After this transaction, the promoter stake in Zee Entertainment will stand reduced to 5 percent, said a statement by the company.
- Essel Group will repay loan obligations to certain lenders of the group for whose benefit such shares are currently encumbered.
- The Group seeks to sell 2.3 percent stake in Zee Entertainment to OFI Global China Fund and its affiliates.
- It is also working on further divestment of its media and non-media assets.
Post the transaction, Essel’s overall holdings in Zee Entertainment will be 5 percent.
2. DHFL Is Headed For Insolvency
The Reserve Bank of India has superseded the board of Dewan Housing Finance Corporation Ltd. and intends to refer the non-bank lender for resolution under the newly introduced insolvency window for financial service providers.
- In a statement issued on Wednesday, the regulator said that the decision has been taken in light of governance concerns and defaults at the non-bank lender.
- The RBI appointed R Subramaniakumar, former managing director and chief executive officer of Indian Overseas Bank, as the administrator of DHFL.
- Non-bank lenders have been struggling since last year when a default by Infrastructure Leasing and Financial Services Ltd. led to a liquidity squeeze for some of the firms.
- DHFL defaulted on its dues in June and has been working with lenders on possible resolution plans, none of which have yet been finalised.
The newly introduced window for financial service providers under the Insolvency and Bankruptcy Code will play a role in resolving the DHFL situation.
3. GST Compensation: States Vs Centre
At least four states have raised the issue of not receiving compensation for losses incurred on account of implementation of the goods and services tax.
- Finance ministers of Punjab, Kerala, Delhi and West Bengal have made an appeal to Union Finance Minister Nirmala Sitharaman to release the pending compensation from the central government.
- “The state of Kerala has not received a [total] compensation Rs 1,600 crore for the last two months,” Thomas Isaac, finance minister of Kerala, said after a meeting of the empowered committee of states’ finance ministers.
- Manish Sisodia, deputy chief minister of Delhi, said the union territory has Rs 2,355 crore in pending dues, including arrears dating back to August, while West Bengal Finance Minister Amit Mitra said Rs 1,500-crore compensation is due to the state.
- According to Punjab’s Finance Minister Manpreet Singh Badal, compensation due to the state is Rs 2,100 crore. Another Rs 2,000 crore worth arrears is due to the state, he said.
Read more about what states are demanding from the central government.
4. Modi’s Aggressive Make In India Push
India is planning to offer 324 companies including Tesla Inc. and GlaxoSmithKline Plc incentives to set up factories in the South Asian nation in a bid to capitalise from the trade war between China and the U.S., according to a document seen by Bloomberg.
- The government proposes to provide the manufacturers land to set up a factory along with power, water and road access, according to draft of the document prepared by the Department for Promotion of Industry and Internal Trade and Invest India.
- Other companies that officials will reach out to include Eli Lilly & Co., South Korea’s Hanwha Chemical Corp., and Taiwan’s Hon Hai Precision Industry Co.
- While the trade war has benefited countries such as Vietnam and Malaysia, rigid land acquisition rules and labour laws have prompted investors to largely ignore India when looking for alternatives to China.
Here’s what the move could mean for the Indian economy.
5. Sensex Hits Record, S&P 500 Slips
Indian equity benchmark—S&P BSE Sensex—ended at a record high.
- The 31-share index rose 0.45 percent to end at an all-time high at 40,651.64.
- The Sensex had risen as much as 0.86 percent to hit 40,816.38 intraday.
- The NSE Nifty 50 rose 0.49 percent to close near 12,000.
- The broader markets represented by the NSE Nifty 500 Index rose 0.44 percent.
- Eight out of 11 sectoral gauges compiled by NSE ended higher.
Follow the day’s trading action here.
U.S. equities slumped following declines in Europe and Asia on concern that American support for Hong Kong protesters could complicate trade talks with China.
- Telecom and tech shares led the S&P 500 Index lower, overshadowing gains for Target and Lowe’s after the retailers raised sales forecasts, a surprise following disappointing reports from rivals.
- The 10-year Treasury yield fell to a two-week low and the offshore yuan slipped after China’s threat of unspecified retaliation following the Senate’s passage of a bill that sought to support Hong Kong’s autonomy from Beijing.
- West Texas Intermediate crude increased 1.1 percent to $55.81 a barrel.
Get your daily fix of global markets here.
6. SEBI’s New Rules For Portfolio Managers, Default Disclosures
The Securities and Exchange Board of India today made a host of announcements pertaining to portfolio managers, rights issues and default disclosures.
- A significant announcement was the new loan disclosure norms for listed companies. In case of default beyond 30 days, listed companies will have to disclose the failure to repay within 24 hours of the 30th day. This will apply from 2020.
- Portfolio managers now have to have a minimum networth requirement of Rs 5 crore instead of Rs 2 crore earlier. Even the minimum limit of new investments by clients has been increased to Rs 50 lakh from Rs 25 lakh earlier.
- The SEBI board has also approved a proposal to reduce the time taken to complete a rights issue to about 31 days from about 55 days currently.
What do the new norms mean for portfolio managers and bankers? Watch here.
7. How Lower Taxes Boosted India Inc. In Q2
More than half of the companies in the benchmark Nifty 50 Index have switched to lower tax rates, saving nearly Rs 4,323 crore in the six months ended September.
- Finance Minister Nirmala Sitharaman on Sept. 20 announced a cut in the headline corporate tax rate from 30 to 22 percent to shore up the economy battling its worst slowdown in six years.
- While analysts said actual benefits through private investments will show up in a few years, the move aided the net profit of Indian companies that opted for the lower rates.
- For the 27 that opted for the new rates, a reduced tax outgo made up for the decline in profitability. While their profit before tax fell 12.4 percent year-on-year in the first half ended September, profit after tax rose.
Click here for a detailed analysis.
8. The Sun Stops Shining
Interest rates could surge, exchange rates may collapse, the sun might stop shining brightly.
- Every conceivable danger an investor needs to be aware of in an initial public offering is discussed in the August prospectus of Sterling and Wilson Solar Ltd., among the world’s biggest engineering contractors to solar farms.
- And yet, the risk that struck hapless shareholders was buried under related-party transactions on Page 37: that the Indian company’s storied founders won’t keep their promise.
- The 42 percent carnage in Sterling and Wilson shares over three trading sessions in Mumbai is the story of this broken pledge.
Andy Mukherjee explains how shabby treatment of minority investors by the company has become a cautionary tale about India's real estate industry.
9. Indian Army Cuts Sniper Rifle Orders
The Indian Army plans to buy just 1,800 state-of-the-art sniper rifles and 2.7 million rounds of ammunition -- less than a third of its total requirement -- driven by budgetary constraints and the need to speed up deliveries, people with knowledge of the matter told Bloomberg News.
- The military pruned its original requirement of 5,720 sniper rifles and 10 million rounds of ammunition, which would have cost $140 million, to prioritise spending and advance the purchase of more modern equipment, they said, asking not to be identified as the information isn’t public.
- The move to buy sniper rifles is part of Prime Minister Narendra Modi’s $250-billion modernisation plan for the Indian defence forces.
- Plans to buy new equipment from global manufacturers have been hit by bureaucratic delays and the Modi government’s desire to meet the needs of the armed forces through the domestic industry under his ‘Make in India’ initiative, a key plank to boost local defence manufacturing and woo his core supporters.
The army's previous efforts to procure over 5,700 rifles was scrapped in July as vendors failed to meet technical requirements.
10. World’s Rattled Rich Hunt For Safe Deposit Boxes
A few blocks from Grosvenor Square in Mayfair, 46 Park Lane resembles a private club with wood-paneled walls and an ornate fireplace dating back to Britain’s Victorian era. But down a flight of stairs is one of the most secure rooms in London. Built by IBV International Vaults, the steel-walled stronghold is scheduled to open next month and will cater to billionaires looking for a place to stash their most prized possessions.
- From London to Switzerland to parts of the U.S., the rich are looking to store precious metals, cash and cryptocurrency.
- For some, it’s the threat of a global recession.
- Others are avoiding bank deposits as negative interest rates force lenders to charge for holding cash.
- Many are concerned about natural disasters.
Here’s how the richest in the world are looking to hoard their wealth.