BQuick On March 13: Top 10 Stories In Under 10 Minutes
This is a roundup of the day’s top stories in brief.
1. The DHFL-Wadhawan Money Trail
Did Dewan Housing Finance Corporation Ltd. use public money to directly or indirectly extend loans to entities owned by or associated with its promoters – the Wadhawans?
- For several weeks BloombergQuint examined financials of over 40 entities, filed with the registrar of companies, to establish a money trail that indicates the non-banking finance company gave loans to real estate developers, ostensibly to develop projects, who in turn used the money to fund various companies owned or linked to the Wadhawans.
- In a special series of stories BloombergQuint reveals the modus operandi - of a complex web of transactions between entities whose ownership kept changing.
- But in most of them one thing remained constant - the Wadhawan connection.
The multiple layers of transactions all center around one key entity.
2. Nudge Or Push?
Top managements at India’s public sector lenders are nudging employees to step up subscriptions to recently introduced employee stock option schemes, in an attempt to prove the success of a rare structural reform in this segment of banking.
- The nudge, which could have been justified as a way to familiarise employees with the newly introduced incentives, has turned into a push, with many employees feeling pressured to subscribe to these schemes.
- At least ten public sector bank employees who spoke to BloombergQuint on the condition of anonymity, claimed that they faced pressure from their bank’s management to purchase shares under the stock purchase plans.
Here’s why some PSU banks are trying to coax employees into picking stock options.
3. Airfares May Rise 20%
A pilot shortage for one. A cash crunch for another. And now the Boeing Max crisis. As Indian airlines ground plane after plane, passengers can expect to pay a lot more.
- Airfares for domestic travel may rise by 20 percent heading into the annual school break, a prime time for families to travel, according to an online booking firm.
- “At least 50 planes are out of action owing to multiple reasons,” said Sharat Dhall, chief operating officer of the business-to-consumer segment at Yatra Online Pvt Ltd.
- Meanwhile, Indians just keep flying more. The sector recorded 46 straight months of double-digit growth through to June 2018, according to International Air Transport Association.
With robust demand, airfares have only way to go: up
4. Nifty, Dow Rise Again
Indian equity benchmarks ended higher for the third consecutive trading session, closing at a fresh 2019 high.
- The S&P BSE Sensex ended 0.58 percent or 216 points higher at 37,752.
- The NSE Nifty 50 ended at 11,341, up 0.36 percent.
- The market breadth, however, was tilted in favour of sellers.
- Six out of 11 sectoral gauges compiled by NSE ended lower.
Follow the day’s trading action here.
U.S. equities climbed as data showed better-than-expected demand for durable goods and modest pressure on inflation.
- The S&P 500 Index gained for a third day, wiping out last week’s losses and reaching a four-month high as it held above the key 2,800 level that it has struggled to breach in recent weeks.
- The pound jumped before another Brexit vote and the dollar dipped.
- Crude oil rose toward $58 a barrel in New York.
- Treasury yields ticked higher as data showed orders for business equipment rebounded in January by the most in six months as the producer price index rose less than forecast in February.
Get your daily global markets fix here.
5. More Transparent Audits
Starting next financial year, India Inc.’s auditors will have to be more transparent in how they assess financials of listed companies
- April onward, a new auditing standard - Key Audit Matters - will apply to financial statements of listed companies.
- The standard will require auditors to disclose areas where they exercised significant judgment and methods they used to arrive at conclusions.
- These areas will have to be selected from matters communicated with those charged with governance i.e. audit committees, board and the management.
Broadly speaking, this is good news for shareholders and investors.
6. Modest Revival In Private Corporate Investments
After a period of sluggishness, private corporate investments in India have shown a revival, albeit a modest one. The investment pick-up is expected to strengthen over the medium term, said an analysis by the Reserve Bank of India included in the central bank’s monthly bulletin.
- “...the trend is expected to gather pace in the medium term, buoyed by the pipeline projects lined up by private corporates and efforts to strengthen balance sheets of both corporates and the banking sector,” the RBI said.
- “Improved capacity utilisation and business expectations in the first quarter of FY19 also indicate reinvigoration of investment activity,” the central bank said.
- Data provided by the RBI give details of the projects approved over the last two years.
- The project data do not include central or state government driven projects. It includes only projects financed through banks, financial institutions, external borrowings and initial public offerings.
Five charts that show the anatomy of India’s private corporate investments.
7. Premji’s Philanthropy
Azim Premji, chairman of Wipro Ltd., just increased his commitment to philanthropy.
- The billionaire earmarked all economic benefits from 34 percent of his shares in Wipro—worth about $7.5 billion and held by entities controlled by him—for philanthropy purposes.
- With this, the corpus of funds under the family’s endowment trust, which supports the Azim Premji Foundation’s philanthropic activities, has risen to nearly $21 billion (Rs 1.45 lakh crore).
Activities of the foundation are expected to scale up significantly over the next few years.
8. Digital Lending Boom
If payments were the chosen flavor of the fintech universe a few years ago, then digital lending, particularly to small business, is the newest opportunity attracting young entrepreneurs.
- As the number of digital lending platforms rise and the availability of data around small businesses improves, digital lending to the country’s micro small and medium enterprises could surge, said a report co-authored by consulting firm BCG and philanthropic investor Omidyar Network.
- MSME digital lending has the potential to increase between 10 and 15-fold to reach Rs 6-7 lakh crore in annual disbursements by 2023, the report said.
- The report estimates the need for SME credit at Rs 45 lakh crore. Of this, Rs 15 lakh crore is met via formal lending to these entities and another Rs 10 lakh crore comes in the form of borrowing by proprietors of these companies.
The remaining Rs 20 lakh crore is still sourced from the informal sector.
9. YouTube Music Comes To India
Google has introduced its YouTube music app in India, offering local and global songs to a booming market that saw the entry of Spotify just a few days ago.
- The YouTube Music streaming and download service in India includes popular Bollywood Hindi scores and other local-language music.
- The free service is supported by commercials, while a premium version with no advertisements costs Rs 99 ($1.42) a month.
- YouTube is already India’s most popular online music source via its free mainstay video service.
But it won’t be a cakewalk against Amazon, Spotify and JioSaavn among others.
10. Why Nehru Fought The Cow Slaughter Ban
Jawaharlal Nehru and Mahatma Gandhi opposed enacting legislation to ban cow slaughter, though they might have believed in protecting the cow, writes Abhinav Chandrachud.
- There was no blanket prohibition on cow slaughter in British India.
- During much of the colonial period, Muslims were told by the law that they could slaughter cows provided that they did so discreetly.
- Jawaharlal Nehru intended to keep things that way.
- However, he fought a losing battle within his own party over this question.