BQuick On Oct. 15: Top 10 News Stories In Under 10 Minutes
This is a roundup of the day’s top stories in brief.
1. IL&FS: Optimism Vs Reality
What Infrastructure Leasing & Financial Services Ltd. earns from a sale will in part depend on its intangible assets. That’s the accounting term for something which doesn’t exist physically but has the potential to add value or generate revenue for a company: like patents, trademarks, copyrights, goodwill and brands.
- In the case of IL&FS, these intangible assets include the rights to collect toll on highways built by its subsidiaries. And there’s a fear that they are not worth what the group has disclosed.
- For two straight years, IL&FS Transportation Networks Ltd., or ITNL, didn’t write down the value of these intangible assets despite losses, cost overruns, litigation and arbitration. Companies are required to review the value of such assets every year.
- Even the Ministry of Corporate Affairs, in its Oct. 1 note, said that IL&FS may have exaggerated the value of intangible assets worth Rs 20,000 crore, mostly contributed by its largest subsidiary ITNL.
2. NCLAT Respite For IL&FS
An appellate tribunal stayed the company law court’s order that denied the IL&FS group a moratorium against legal action even as a government-picked board seeks to rescue the systemically important builder and financier of highway and metro projects.
- The National Company Law Appellate Tribunal has granted interim relief till the next hearing in November, said Corporate Affairs Secretary Injeti Srinivas.
- The newly constituted board of the stressed infrastructure financier and the government had moved the National Company Law Tribunal seeking a three-month moratorium under the Companies Act.
- They sought protection for IL&FS and its 348 subsidiaries from legal proceedings—including action stemming for debt defaults—by any court, tribunal, arbitral panel or authority. The NCLT on Oct. 12 denied that relief.
3. What Mutual Funds Bought And Sold
The crisis at IL&FS spurred the biggest monthly outflow from money market schemes in at least a decade in September as mutual funds faced redemption pressure.
- Yet, inflows into equity mutual funds rose during the month, snapping a four-month decline.
- Net investments in equity funds rose 33.4 percent sequentially to Rs 11,172 crore in September, according to data released by the Association of Mutual Funds of India.
- The industry, however, witnessed an overall outflow of Rs 2.3 lakh crore during the month compared with an inflow of Rs 1.74 lakh crore in August.
4. Sensex Jumps; U.S. Stocks Decline
Indian equity benchmarks extended gains for the second day, led by the rally in technology and pharmaceutical shares.
- The S&P BSE Sensex Index closed 0.38 percent or 132 points higher at 34,865.
- The NSE Nifty 50 Index rose 0.38 percent or 40 points to 10,512.
- The market breadth was tilted in favour of buyers.
- Eight out of 11 sectoral gauges compiled by NSE advanced, led by NSE Nifty Pharma Index's 2.7 percent gain.
- On the flipside, NSE Nifty Auto Index was the top sectoral loser, down 0.6 percent.
U.S. stocks fell along with the dollar as political tensions added to a growing list of investor concerns.
- The S&P 500 Index deepened its decline following its biggest weekly retreat since March as President Donald Trump threatened on Sunday to impose another round of tariffs on China.
- Oil traded around $71 a barrel amid tensions between Saudi Arabia and the U.S. over the disappearance of a prominent journalist.
- The dollar touched a two-week low against peers, while the 10-year Treasury yield fell after U.S. retail sales disappointed in September.
- Gold headed toward its fourth advance in five days.
5. Q2 Earnings: IndusInd Bank, Indiabulls Housing
IndusInd Bank Ltd.’s second-quarter profit missed estimates as the bank chose to make contingent provisions against its loans to the IL&FS group.
- Net profit rose 4.5 percent year-on-year to Rs 920 crore.
- Net interest income, or the core income of the bank, rose 21 percent to Rs 2,203 crore.
- Gross bad loan ratio contracted to 1.09 percent from 1.15 percent in the previous quarter.
- Provisions jumped 68 percent quarter-on-quarter to Rs 590 crore.
Here’s how IndusInd is reassessing its lending to the NBFC sector.
Indiabulls Housing and Finance Ltd.’s profit for the quarter ended September rose in line with analysts’ estimates.
- Net profit grew 21.2 percent to Rs 1,044 crore.
- Net interest income rose 14.4 percent to Rs 1,424 crore.
- Gross bad loan ratio remained flat at 0.77 percent.
- Capital adequacy ratio stood at 23.4 percent.
6. Trade Gap Narrows; WPI Rises
India’s trade gap narrowed to a five-month low in September, driven by slower growth in imports even as exports contracted compared to a year ago.
- The gap between exports and imports stood at $13.98 billion, compared with $8.9 billion in the same month last year, according to a release from the government’s Press Information Bureau.
- The trade gap has narrowed from a five-year high to $17.4 billion in August.
- Imports rose 10.45 percent in dollar terms.
- Exports fell 2.5 percent in dollar terms.
India’s wholesale price-based inflation rose in September after two months of easing, driven by an increase in cost of fuel.
- Wholesale inflation in September, measured by the Wholesale Price Index, rose 5.13 percent compared with the same month last year, according to data from the Ministry of Commerce.
- WPI, that tracks changes in the price of goods in stages before the retail level, was pegged at 5 percent in September by a Bloomberg poll of economists.
7. $10-Billion Clean Air Push
Steel pipe makers are set to become beneficiaries of India’s $10 billion push to expand its natural gas network to more of its urban masses and cut pollution.
- India has just completed its biggest city gas distribution auction that would extend coverage to more than half of its 1.3 billion people across a third of the nation’s area.
- “There will be a lot of requirement for steel pipelines coming in from next year,” said ES Ranganathan, managing director of Indraprastha Gas Ltd., which supplies gas for homes and transport in New Delhi and its suburbs. This will require about 12,500 kilometers of pipes within the next three to four years, he said.
- This project aims to see 10 million homes linked to gas grids by 2020 and bring relief to smog filled cities.
8. Insurers Grapple With How To Cover HIV/AIDS
Insurers say pricing HIV/AIDS insurance will be a challenge till there’s enough historical data after the regulator made such covers compulsory in India, the nation with the world’s third-highest HIV burden.
- The Insurance Regulatory and Development Authority of India, in compliance with the HIV and AIDS (Prevention and Control) Act 2017, had directed insurers on Oct. 10 to not deny insurance to such patients “unless supported by actuarial studies”.
- “Insurers must cover the condition either under comprehensive health plans or design separate products for patients suffering from it,” said Subhash Chandra Khuntia, IRDAI chairman.
- The premium calculation will depend on actuarial assessment and data analysis by the insurers, he said.
- Nearly 21.4 lakh people in India were infected with HIV and AIDS in 2017. Over 40 percent of the patients didn’t have access to antiretroviral therapy, according to UNAIDS.
9. Data Localisation = Unchecked Surveillance?
The United States and China are both global leaders in AI, yet no one would argue that China’s data localisation policies have helped it or that America’s lack of data localisation polices have hampered it, writes Pranesh Prakash.
- On the question of foreign surveillance, data mirroring will not have any impact, since the Srikrishna Committee’s recommendation would not prevent companies from storing most personal data outside of India.
- Even for “sensitive personal data” and for “critical personal data”, which may be required to be stored in India alone, such measures are unlikely to prevent agencies like the U.S. National Security Agency or the U.K’s Government Communications Headquarters from being able to indulge in extraterritorial surveillance.
- While data mirroring will not help in improving the enforcement of any data protection or privacy law, it will aid Indian law enforcement agencies in gaining easier access to personal data.
10. #MeToo In The Workplace
Union minister MJ Akbar on Monday filed a criminal defamation complaint against journalist Priya Ramani who recently levelled charges of sexual misconduct against him as the #MeToo campaign raged in India. While the the country faces numerous instances of women coming out with their harrowing accounts, official data shows registered cases of sexual harassment at Indian workplaces went up 54 percent between 2014 and 2017.
- In all, 2,535 such cases were registered over the four years ending July 27, 2018--that is nearly two cases reported every day--as per government data tabled in the Lok Sabha on July 27, 2018 and Dec. 15, 2017
- Over the first seven months of 2018, ending July 27, 533 cases of sexual harassment were reported across the country, as per the data.