BQuick On Nov. 5: Top 10 Stories In Under 10 Minutes
This is a roundup of the day’s top stories in brief.
1. Adani’s Debt Pile Is Changing Colour
In 2012, Credit Suisse released its first ‘House of Debt’ report in which were India’s top 10 over-leveraged corporate groups. Adani was one of them.
In seven years since, the Gautam-Adani founded Adani Group, with interests in ports, power, gas and other infrastructure, has seen its total debt double from Rs 69,201 crore to Rs 1.28 lakh crore. And while initially the funds came from Indian banks, Adani has in the last couple of years preferred to borrow offshore.
- Currently, approximately 30 percent of the group’s debt is foreign currency debt—the goal is 65 percent in the next few years.
- As a result, public-sector bank funding for the group is down from 55 percent of the total debt (listed companies) in March 2016 to 42 percent in March this year.
- While the private bank share has risen marginally, it’s the share of bonds that has close to doubled—from 14 percent to 25 percent.
- This is on account of issuance of foreign currency bonds.
Read this BQ Blue Exclusive story to see the reasons behind why Adani’s debt pile is changing colour.
2. Titan Slashes Jewellery Business Guidance, Tech Mahindra’s Profit Rises
Titan Company Ltd.’s quarterly profit missed estimates as employee benefit expenses and finance costs rose, and the company slashed its guidance for its jewellery business.
- Net profit increased 2 percent year-on-year to Rs 320 crore.
- Employee benefits expense rose nearly 30 percent.
- Net sales rose 0.7 percent to Rs 4,435 crore.
- Jewellery sales for the owner of Tanishq brand remained muted.
- The company also lowered the jewellery sales growth guidance for the second half of the current financial year to 11-13 percent from 20 percent earlier, it said in the earnings call.
Higher gold prices detracted customers from buying ornaments.
Tech Mahindra Ltd.’s quarterly profit beat analysts’ estimates aided by lower tax expense and record deal wins.
- Net profit rose 17.2 percent sequentially to 1,123.9 crore.
- Revenue rose 4.8 percent to Rs 9,069.9 crore.
- Tax expenses fell 31.7 percent to Rs 2,265 crore.
Deal wins were particularly strong for the software services firm.
3. Sensex Slips, U.S. Stocks Edge Higher
Indian equity benchmarks halted their seven-day gaining streak, their longest stretch of gains since March 20.
- The S&P BSE Sensex fell 0.13 percent or 53.73 points to end at 40,248.23.
- The NSE Nifty 50 fell 0.2 percent to close at 11,917.20.
- The broader markets represented by the NSE Nifty 500 Index fell 0.39 percent.
- Ten out of 11 sectoral gauges compiled by NSE ended lower.
Follow the day’s trading action here.
Meanwhile, India’s debt-laden firms could get kicked out of MSCI Inc's benchmark index later this week. Highly indebted companies including Vodafone Idea Ltd., Indiabulls Housing Finance Ltd. and Glenmark Pharmaceuticals Ltd. are likely to be removed from the MSCI India Index, according to brokers.
Read more on which are the likely deletions and additions from the global index.
U.S. equities edged mostly higher Tuesday as investors took confidence from signs that America and China are inching toward a trade deal.
- The S&P 500 opened higher after a record-setting Monday, spurred by mounting optimism the world’s two largest economies will sign the first phase of an agreement.
- Oil rose for a third day, while gold slipped below $1,500.
- Treasuries fell, while the yuan strengthened past 7 for the first time since August.
Get your daily fix of global markets here.
4. No Relief For Airtel, Vodafone Idea?
India won’t back down from collecting $13 billion of past dues from debt-laden telecom carriers because the industry is not under stress, a government official with knowledge of the matter told Bloomberg News.
- The move that could deepen Bharti Airtel Ltd. and Vodafone Idea Ltd.’s financial woes.
- India expects the carriers to pay up within 90 days as ordered by the Supreme Court last month, the official said, asking not to be identified, as the discussions are private.
- A panel of top bureaucrats could look at deferred payment plan for some of the dues, the person said.
- The government’s stand about the health of the industry mirrors comments made by billionaire Mukesh Ambani’s Reliance Jio Infocomm Ltd., which has said it has a “divergent view” from its rivals.
Still, the official said the government is working on a plan to reduce the license fee and a moratorium on pending payments.
5. Keki Mistry Wants A Tweak In NPA Norms
Keki Mistry suggested that the Reserve Bank of India could reconsider its asset classification norms to allow last-mile funding for developers of stalled projects as the real estate sector battles a cash crunch.
- The current norms don’t allow lenders to extend loans to such companies as it would be classified as a non-performing asset, Mistry, vice chairman and chief executive officer at Housing Development Finance Corporation Ltd., told BloombergQuint in an interview.
- “Earlier, real estate companies would depend on sale of homes to receive last-mile funding and finish their project. Now customers want to only buy flats which are completed,” Mistry said.
- “If the RBI could reconsider its guidelines for companies where there is still equity value, it could help the sector,” he added.
HDFC is “very selective” lending to non-individual borrowers such as real estate companies, says Mistry.
6. Services PMI Contracts For Second Straight Month
India’s main services index signaled a contraction for a second straight month, the weakest stretch since 2017, amid a prolonged economic slowdown.
- The IHS Markit India Services Index rose to 49.2 in October from 48.7 in September, but still below the 50 reading that indicates a contraction.
- The industry accounts for more than half of the nation’s gross domestic product.
- The composite PMI fell to 49.6 from 49.8, weighed by slowing factory output.
The weak reading in October belies any hope for signs of recovery.
7. New GDP Base Year: Coming Soon!
The Ministry of Statistics and Programme Implementation will decide on a new base year for the gross domestic product series in the next few months, a senior official said on Tuesday.
- The ministry is working to bring in a new series of national accounts which would result in change in the existing base year of 2011-12.
- Though the statistics ministry is considering 2017-18 as the new GDP base year, no decision has been taken as the committees of experts are awaiting some more data before finalising their opinion.
- On why a new GDP base year is needed, Srivastava said the change in base year captures the change in structures of the economy. The decision has to be taken considering global and national scenario as well, he said.
Srivastava also said that it is too early to comment whether growth will rebound.
8. Nobel Winner Stiglitz Has Strong Concerns About India
Joseph Stiglitz has become the latest prominent expert to join the chorus of experts expressing concern about India’s economic situation.
- “The data that I have seen reinforces very strong concerns [about the economy],” Stiglitz told IndiaSpend in the course of an interview.
I do not know anybody who is not in the government who is not worried.Joseph Stiglitz, Nobel Prize Winning Economist
- Governments tend to “suppress data when it is on shaky grounds”, he added.
- While India has been able to benefit from globalisation, there is a view that is “not an uncommon view but an unpleasant one”, that in a regulated market like India foreign players “have a disadvantage because the insiders know how to play the game”, he said.
Read the full interaction with Stiglitz where he talks about the problem of inequality in India.
9. India’s Trade Policy For Globalisation 2.0
It is imperative for India to join regional trade agreements to retain its position as a major trading nation, writes former Commerce Secretary Rajeev Kher, who was a member of the High-Level Advisory Group constituted by the Department of Commerce on boosting exports.
- India’s tariff reduction plan has gotten lost in the protectionist noise and appears to have been more or less given up since 2017, in order to pursue a ‘Make in India’ program.
- Despite a keen interest in India, investors shy away discouraged by the unhelpful environment.
We need to make regulation less burdensome and above all remove the underlying principle of ‘suspicion’ in every transaction.
10. Delhi Police Vs Lawyers
Scores of police officers and constables gathered outside the Delhi Police headquarters today demanding action after violent clashes between cops and lawyers at the Tiz Hazari court complex over the weekend. On Saturday, the clash, which began over a parking dispute, escalated after the lawyers alleged that some of them were injured due to police's open firing. Since then, angry men donned in black robes have taken to the street and multiple cases of assault on policemen by mobs of lawyers have been reported.
- Joint Police Commissioner Devesh Srivastava, in the evening, assured the protesters that their demands would be accepted and urged them to get back to work.
- He also said that those who were injured at Tis Hazari will be compensated with a minimum Rs 25,000.
- Meanwhile, the Delhi District Court Coordination Committee has decided that their strike will continue tomorrow. However, litigants will have access to court rooms.
- The Centre too rushed to intervene urging the Delhi High Court that its order for no coercive action against advocates should not be applicable on the subsequent incidents.