QBiz: SBI Records Biggest-Ever Quarterly Loss; NSE Sues SGX
A quick look at top business stories of the day.
1. NPAs Surge, Push SBI to a Record Quarterly Loss
State Bank of India, the country’s largest lender, reported its biggest-ever quarterly loss on higher provisions but forecast that its asset quality will improve substantially in two years, sending its stock higher.
SBI reported a net loss of Rs7,718 crore for the quarter ended 31 March, the second highest quarterly loss reported by an Indian bank. It had reported a quarterly loss of Rs3,442 crore a year ago.
Investors, however, shrugged off the loss after SBI chairman Rajnish Kumar said that the worst is behind the lender and it is poised to capture growth opportunities with better focus on risk management and resolution. The stock surged as much as 6.2%, outpacing a 0.75% gain in the BSE Bankex. SBI shares ended up 3.69% on the BSE on Tuesday, 22 May.
2. Softbank Confirms Selling ‘Entire Stake’ in Flipkart to Walmart
Japan’s SoftBank has decided to sell its over 20% stake in e-commerce major Flipkart to US retailer Walmart for an estimated $4 billion.
“SoftBank confirms the sale of its entire stake in Flipkart to Walmart,” a SoftBank spokesperson said.
While the spokesperson declined to spell out the details of the transaction, the company is estimated to rake in about $4 billion from the sale.
The move by SoftBank ends nearly two weeks of suspense over whether the Japanese telecom and Internet powerhouse would exit or stay invested in Flipkart post the deal with Walmart.
Walmart had, on 9 May, announced that it will pay about $16 billion to buy about 77% stake in Flipkart.
3. Air India Privatisation: Govt Ready to Call off Sale If Bids Too Low
The government expects sale of Air India to be a success, going by the number of investor queries received so far, but is open to calling off the sale if bids do not meet expectations.
Civil aviation secretary RN Choubey on Tuesday, 22 May, told reporters that 160 queries have so far been received for the proposed sale of 76% in Air India Ltd, along with 100% stake in low-cost international carrier Air India Express Ltd and 50% in Air India SATS Airport Services Pvt Ltd.
“The government has the right to sell or not to sell Air India if the bid price is found to be inadequate,” Choubey told reporters here. Choubey expressed confidence that the sale will fetch the price it expects.
4. Fuel Price Hike: Govt to Find a Way Out, Says Union Minister Shiv Pratab Shukla
Union Minister of State for Finance Shiv Pratap Shukla on Tuesday, 22 May, said that recent hikes in prices of petrol and diesel in the country are a result of global crude oil price increase and US sanctions on Iran, even as he stressed that the government was “finding a way out”.
“The government has not failed in controlling the prices of petrol and diesel but it’s due to steep rise in crude prices in international market and breaking of US-Iran pact, which has affected not only India but other countries as well,” Shukla told reporters.
He, however, said the government was trying “to find a way out to bring down the prices”. Union petroleum minister Dharmendra Pradhan has also suggested bringing petrol under the GST to control prices but imposing the GST will not be possible until a general consensus is drawn by GST council, he said.
5. Govt to Ease Rules on Cancelling Air Tickets
Air travellers who cancel or re-schedule their tickets within 24 hours of booking will not have to pay penal charges if the government enforces a new charter, a draft of which was released on Tuesday.
This, and a host of other steps to protect rights of passengers, are part of the draft charter that was released by the Civil Aviation Ministry for public consultation.
The rights available to passengers under the proposed charter include compulsory refund of the full fare if flight cancellation is intimated to the traveller less than 24 hours prior to departure. If cancellation is informed before 24 hours but within a fortnight, the passenger should be offered either a refund or an alternative flight. The charter also says airports have to offer half an hour of free Wi-Fi to passengers.
6. SGX’s New Contracts Disregard Intellectual Property Rights, Says NSE
The National Stock Exchange has termed Singapore Exchange’s plan to start derivatives based on Nifty indices a “blatant disregard” of its intellectual property rights and “breach” of the licence agreement as it sued the bourse in the Bombay High Court.
SGX was looking to gain at NSE’s expense through “commercial exploitation” and replication of its proprietary data – 69 equity and 92 fixed income indices under the NIFTY brand of the NSE including Nifty50 and Nifty Bank indices, according to the petition that will come up for hearing on Wednesday. That would cause the exchange to lose out on revenue from licence fees, the petition said.
SGX announced that from 4 June it will start new contracts based on publicly available settlement data after the NSE decided to end its licencing agreement with the Singapore exchange. That came after India’s three stock exchanges decided to stop sharing data with foreign peers to prevent volumes from moving offshore and promote the international trading centre in Gujarat, Prime Minister Narendra Modi’s home state. Index and equity-linked derivatives are used by foreign investors to hedge their risk.
7. Dr Reddy’s Profit Declines For Fourth Straight Quarter
Dr Reddy’s Laboratories Ltd’s profit declined for the fourth straight quarter and fell short of analysts' estimates as the drugmaker continues to face pricing pressure in the US, it’s largest market.
Net profit stood at Rs 302.2 crore during the January-March period, a decline of 3.3 percent compared to the year-ago period, the pharmaceutical company said in an exchange filing. That’s lower than the Rs 379-crore consensus estimate of analysts tracked by Bloomberg.
Revenue fell 0.5 percent to Rs 3,534.9 crore, well below the consensus estimate of Rs 3,709 crore.
8. Infosys Puts a Break on Hiring Freshers
India’s second-largest information technology company, Infosys, is relying more on experienced hands than fresh graduates even though it weighs to its costs, according to the company’s latest annual report. This is happening when the sector is witnessing slower growth with increasing pressure on profit margins.
According to the latest annual report for 2017-18, the percentage of the Bengaluru-headquartered company’s employees in the age group of 18-25, came down to 28.16 per cent, from 31.19 percent in the previous financial year. In absolute terms, the number of employees in this group was 57,475, against 62,489 in FY17. Employees in this group largely constitute of newly-hired engineers from colleges.
9. NCLAT Rejects Dalmia Bharat's Plea for Status Quo on Bids for Binani Cement
The National Company Law Appellate Tribunal (NCLAT) on Tuesday declined to order a status quo on the bids to maximise the offer for debt-ridden Binani Cement by the two resolution applicants UltraTech Cement and Dalmia Bharat group.
The appellate tribunal said the final outcome of the bids to maximise the value would be subject to the outcome of the Dalmiya's petition filed before it.
"In the pendency of the order... interim orders passed earlier will continue," said an NCLAT bench headed by Chairman Justice S J Mukhopadhaya.
The NCLAT has listed the matter for next hearing on 10 July.
(Source: Business Standard)
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