QBiz: Govt Unveils Big Ticket FDI Reforms; Yes Bank Shares Fall 7%

Catch the latest business news round-up in today’s QBiz.

4 min read
Union Ministers Prakash Javadekar and Piyush Goyal during a Cabinet briefing, in New Delhi.

1. Govt Makes Fresh Growth Push with Big-Ticket FDI Reforms

The Union cabinet cleared a raft of changes in foreign direct investment (FDI) regulations, including easing rules for overseas single-brand stores and permitting FDI through the automatic route in contract manufacturing and all areas of coal mining.

“The changes in FDI policy will result in making India a more attractive destination, leading to benefits of increased investments, employment and growth," a cabinet statement said on Wednesday.

(Source: Livemint)

2. Toyota, Suzuki Deepen Ties, Pick up Stakes in Each Other

Toyota Motor Corp and Suzuki Motor Corp deepened their ties by buying small stakes in each other as the two Japanese companies attempt to negotiate the disruptive changes that threaten to alter the existing order in the global automotive industry.

While Japan’s biggest automaker Toyota will acquire a 4.94% stake in Suzuki for about 96 billion yen ($907 million), the latter will buy 48 billion yen worth of shares in Toyota, the companies said in a joint statement on Wednesday.

(Source: Hindustan Times)

3. IOC to Invest Rs 2 Trillion over 5-7 Years, Says Chairman Sanjiv Singh

National oil refiner and marketer Indian Oil plans to invest around Rs 2 trillion over the next five to seven years to expand the core petrochemical business and to ensure comprehensive energy solutions to the nation. The company, which controls a third of the country’s 5 million barrels a day oil refining capacity through its 11 refineries, is also entering newer areas like renewable energy, battery storage, city gas distribution, among others involving an investment of around Rs 2 trillion, chairman Sanjiv Singh told reporters here after the AGM. For city gas city distribution alone, IOC will invest around Rs 10,000 crore over this period, he added.

(Source: PTI)

4. Safe to Fly Airbus Neo Jets, Says DGCA

India’s aviation regulator on Wednesday asked aircraft engine maker Pratt and Whitney (P&W) to ensure more availability of spare engines to prevent the grounding of Airbus Neo planes flown by Indian airlines, which have been hit by a series of engine snags.

The Directorate General of Civil Aviation (DGCA) called an urgent meeting on Wednesday with IndiGo and GoAir, which fly the Neo, to discuss the glitches that have surfaced in the P&W engines that power the Neo over the past two weeks.

(Source: Hindustan Times)

5. Mutual Funds Double Share in Household Financial Savings

Mutual funds have doubled their share in household financial savings to 6% in FY18 from 3% in FY14, clocking a 31% compounded annual growth rate (CAGR), as against an overall CAGR of 15% in financial assets, according to a report published by the Amfi, in association with the BCG.

The gross yearly household savings in India amounted to Rs 392 lakh crore in FY18, of which financial savings accounted for 60% – a CAGR growth of 15%. Meanwhile, the share of traditional savings instruments like fixed deposits of the total household savings fell by 200 bps to 39% in FY18 from 41% in FY14. “This growing popularity of MFs among retail investors is driven by the increasing realisation that investments in MFs generate higher returns than any other traditional investment,” noted the AMFI-BCG report.

(Source: Financial Express)

6. Apple Can Now Aim for a Bigger Bite of India Market as Government Eases Rules

After recording double-digit revenue growth in India for the June quarter, Apple may now gain from the Centre’s move to further relax foreign direct investment in single-brand retail trade (SBRT) for companies looking to invest in India and opening retail stores.

The move will benefit the US-based premium smartphone maker, facing challenging times in the Indian smartphone market amid stiff competition from Chinese companies.

(Source: Livemint)

7. Yes Bank Falls over 7% on Moody’s Ratings Downgrade

Shares of Yes Bank Ltd fell more than 7% on Wednesday after Moody’s Investors Service downgraded its long-term foreign currency issuer rating, citing the bank’s capital raise that fell short of its expectations. The sharp fall in share price will also challenge Yes Bank’s ability to raise sufficient capital to maintain ratings, the global rating agency said in a report.

At closing, the Yes Bank scrip was at ₹59.50 on BSE, down 7.47% from its previous close. The stock has declined nearly 84% in the last one year.

(Source: Hindustan Times)

8. RBI’s FY19 Surplus Large Owing to Open Market Operations

At Rs 1.23 lakh crore, the Reserve Bank of India (RBI)’s surplus for 2018-19 was higher than the surplus in recent years as a result of an unusually large amount of open market operations (OMOs) conducted by the central bank during the year and no need for fresh risk provisions.

The additional interest income from OMOs was Rs 36,000 crore and a change in the formula for determining forex gains and losses yielded gains to the tune of Rs 21,000 crore, said a senior RBI official. On Monday, the RBI said that it would transfer a dividend of Rs 1.76 lakh crore to the government for FY19, including a Rs 1.23 lakh-crore surplus and Rs 52,637 crore worth of excess provisions as per the new economic capital framework (ECF) evolved by the Bimal Jalan committee.

(Source: Financial Express)

9. Renault Bets on Semi-Urban, Rural Areas to Boost Sales

Renault SA is seeking deeper inroads into India’s semi-urban and rural areas to boost sales after having struggled in the past two years with products like Captur and Lodgy failing to make a substantial impact.

The French automaker is hoping that its latest product, the Triber multipurpose vehicle, will carry on the success it enjoyed initially with the Duster and Kwid models.

(Source: Hindustan Times)

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