BQuick On Sept. 1: Top 10 Stories In Under 10 Minutes
This is a roundup of the day’s top stories in brief.
1. Telecom Dues Verdict And What It Means For Operators
The Supreme Court has granted telecom operators 10 years to pay thousands of crores worth of statutory dues stemming from the top court's October 2019 verdict that upheld the government's calculations on adjusted gross revenue.
The carriers, however, will have to pay 10% of the pending dues by March 31, 2021, according to an order by the apex court’s three-judge panel headed by Justice Arun Mishra.
The chairmen of the telecom companies will have to give undertakings for payments, it said, adding that a default on payment instalments will invite interest, penalty and contempt of court.
The Supreme Court also said that NCLT will decide on whether spectrum can be sold during insolvency.
The judgment will have a major bearing on Vodafone Idea Ltd. and Bharti Airtel Ltd., the operators with the largest pending dues.
Bharti Airtel needs to pay Rs 3,871 crore every year—about 8.6% of the annual operating income, according to BloombergQuint's calculation based on outstanding dues.
The additional interest cost over 10 years will be Rs 12,376 crore, assuming an interest rate of 8%.
For Vodafone Idea, at an assumed rate of interest of 8% a year on the staggered payments, the company will have to pay Rs 7,511 crore annually and will create an additional interest liability of Rs 24,710 crore over 10 years, according to BloombergQuint's calculation.
But can these operators afford to pay up?
2. GST Collections Steady In July
The government’s goods and services tax collection remained steady as the economy gradually opened up after the nation eased lockdown curbs.
GST collections for July, collected in August, stood at Rs 86,449 crore, according to a statement by the Ministry of Finance.
That was 1% lower than June and 12% than the year-ago period.
July’s collections include the tax paid by small businesses with turnover up to Rs 5 crore for March and April as the due date was extended to July 3 and July 6, respectively.
While collections have fallen over the previous year, Abhishek Jain, partner at EY India, said a significant part of the dip is attributable to imports as Covid-19 impacted international trade.
However, there is a sign of recovery too.
3. Franklin Templeton Takes Biyani Hit
A privately held Future Group entity has defaulted on its scheduled debt obligation due to Franklin Templeton Mutual Fund on Aug. 31, two days after the Kishore Biyani-founded group sealed a deal with Reliance Industries Ltd.
Franklin Templeton Mutual Fund had invested in the non-convertible debentures of Rivaaz Trade Ventures Pvt. through four fixed income schemes, according to a statement by the asset manager.
These funds were among the six debt schemes that the fund house shuttered in April citing redemption pressure amid the Covid-19 crisis.
“Due to default in payment, the securities of Rivaaz Trade will be valued at zero basis AMFI standard hair cut matrix. Accordingly, this would be reflected in the NAV (net asset value) movement for Aug. 31, 2020,” the statement said, adding this is the third company after Nufuture Digital (India) Ltd. and Future Ideas Co. that had defaulted on payment obligation resulting in NCDs being valued at zero.
Rivaaz Trade is one of the 11 promoter group entities that are being merged into Future Enterprises Ltd.
4. Sensex Recovers; Nasdaq's Record Run Continues
Indian equity markets managed to partly recover Monday's losses, ending a volatile trading session with gains.
The S&P BSE Sensex ended 0.7% higher at 38,900 while the NSE Nifty 50 index ended 0.73% higher at 11,470.
Metal and pharma were the outperforming sectors in today's session. I.T. was the top sectoral laggard.
Follow the day’s trading action here.
7. Robust Recovery Now Needs Further Stimulus
The set of leading indicators—some actually ‘nowcasters’—suggests that the sharp recovery in May and June had lost momentum in July, writes Saugata Bhattacharya.
Early signals in August do not indicate a renewed recovery.
Q2FY21 growth will be much improved, although still probably negative, in lower single digits.
RBI’s determined, innovative, and expanding pushback has done much to contain and gradually reverse the shock.
But the fight now forth will need to have a larger fiscal component.
8. Infratel-Indus Merger Gets The Green Light...Finally
Bharti Infratel Ltd., the wireless phone tower firm controlled by India’s No. 2 carrier, approved a merger with rival Indus Towers Ltd. in a deal that includes paying about Rs 4,000 crore ($549 million) for stakes owned by debt-strapped mobile operator Vodafone Idea Ltd.
Shareholders of Bharti Infratel will own 68.6% of the combined entity, while Vodafone Group Plc, the U.K.-based partner of Vodafone Idea, will own 28.2%, the affiliate of Bharti Airtel Ltd. said Tuesday in a statement.
The percentages are subject to change based on closing adjustments.
The deal had been languishing for over two years as a relentless price war forced some operators to combine or exit.
9. Auto Firms Gain Some Momentum In August
The auto sales in India gathered some momentum in August, with the segment leaders Maruti Suzuki India Ltd. and Hero MotoCorp Ltd. seen outperforming the industry.
Sales of largest carmaker Maruti Suzuki stood at 1.24 lakh units—17.1% higher than last year.
Domestic sales of Hero MotoCorp Ltd. rose 7.55% year-on-year to 5.84 lakh units.
The two factors that are causing the resurgence are festive season stocking and an easing supply chain, according to data compiled by BloombergQuint from three brokerages.
Get a complete picture of India’s auto sales in August here.
10. India's New Covid-19 Cases Fall Below 70,000 For First Time In Six Days
Daily Covid-19 infections in India fell below the 70,000-mark for the first time in six days even as the country continued to be the hotbed of new cases in the world.
India added 69,921 cases in 24 hours, taking the total tally to more than 36.9 lakh, according to the health ministry's 8 a.m. update.
This includes over 65,000 deaths and over 28.3 lakh patients who have recovered.
At the current trajectory, India’s outbreak will eclipse Brazil’s in about a week, and the U.S. in about two months.
Track all Covid-19 related news and updates in India, here.
Globally, cases crossed 2.53 crore with deaths exceeding 8.47 lakh.
U.S. coronavirus cases topped 6 million, with outbreaks accelerating on college campuses. Arizona recorded the smallest one-day increase in cases since May, and California’s infection rate fell to the lowest since June.
AstraZeneca Plc has begun a large-scale human trial of its coronavirus vaccine.
Italy reported 996 new coronavirus infections on Monday, the fewest in almost a week.
Follow the global spread of the virus here.