1. Merger of Three PSU General Insurance Companies on Cards This Fiscal
The government is planning to expedite the merger of three public sector general insurance companies – National Insurance Company, Oriental Insurance Company and United India Insurance Company.
Though former Finance Minister Arun Jaitley had announced their merger in his Budget speech 2018-19, its implementation had little momentum. However, sources in the Finance Ministry have indicated that the government is now serious about the merger of the three companies.
“Earlier, the department of disinvestment had its own ideas as to how this merger of three companies has to happen to maximise the valuation potential. After examining everything over time, we have decided to go ahead with the merger plan that was announced in Budget 2018-19,” sources said.
(Source: The Indian Express)
2. IndiGo Row Intensifies: Bhatia Group Says Gangwal Was Keen to De-Risk
The feud between the two co-promoters of IndiGo Airlines, Rakesh Gangwal and Rahul Bhatia, escalated on Sunday, 14 July, with the latter’s InterGlobe Enterprise (IGE) hitting out at Gangwal again, claiming that he was often “missing in action”.
The issue could come to a head the coming week at IndiGo’s board meeting, the time and venue for which are yet to be finalised. There is also no clarity at the moment about whether Gangwal will attend the meeting in person or via video conferencing.
IGE said in a statement today that there were periods during IndiGo’s early days when Gangwal wanted to de-risk and pushed for the business to be sold. It was left to IGE as a “responsible founder” to fend for IndiGo, said the firm.
(Source: Hindu BusinessLine)
3. Suzuki’s Next Electric Vehicle in India Could Be Based on Ertiga
Suzuki Motor Corp plans to tap the popular multipurpose vehicle Ertiga to build its second electric vehicle for India, said two people directly aware of the development, as global automakers accelerate efforts to sell more eco-friendly vehicles in a country that is home to some of the world’s most polluted cities.
The electric Ertiga may differ in length from the current petrol and diesel versions of the vehicle, the people cited above said on condition of anonymity. It might also sport a new brand name, they said, adding that the plans are still being finalised.
(Source: Mint)
4. DHFL Fears It May Not Continue as a Going Concern; Posts Rs 2,223 Cr Loss in Q4
Housing finance firm DHFL has said that the developments in the last few quarters threaten its ability to continue as a going concern, as the company posted its biggest ever quarterly loss of Rs 2,224 crore for the fourth quarter which ended on 31 March.
The debt-ridden company had reported a profit of Rs 134.35 crore in the same quarter the previous fiscal.
“In the backdrop of a significant slowdown in disbursement and loan growth post September 2018, the financials of the company have been quite strained for the quarter impacting the overall performance of the year,” the company said in a late evening regulatory filing on Saturday.
The operating profit was Rs 372 crore for the quarter and Rs 2,378 crore for the whole year.
“However, due to the additional provisioning of Rs 3,280 crore (including net loss on fair value), the company reported a net loss of Rs 2,223 crore for the quarter and net loss of Rs 1,036 crore for the whole year,” it said.
(Source: The Times of India)
5. Nine of Top Ten Firms Lose Rs 88,609 Crore in M-Cap
Nine of the ten most valued firms suffered a combined erosion of Rs 88,609.87 crore in market valuation last week, with HDFC Bank and TCS taking the biggest knocks.
Reliance Industries Ltd (RIL) was the lone gainer among the top-ten frontline companies, adding Rs 11,415.21 crore to its market capitalisation (m-cap) for the week ended on Friday to reach Rs 8,11,782.20 crore.
On the other hand, HDFC Bank's valuation plummeted from Rs 22,395.4 crore to Rs 6,54,084.95 crore.
The m-cap of Tata Consultancy Services (TCS) dropped from Rs 20,150.31 crore to Rs 7,90,983.93 crore.
Hindustan Unilever Ltd (HUL) suffered an erosion of Rs 16,907.1 crore to stand at Rs 3,70,895.36 crore, while that of Kotak Mahindra Bank tumbled from Rs 6367.64 crore to Rs 2,83,393.30 crore.
(Source: The Economic Times)
6. Guidelines for PSU Banks to Pick Pooled Assets of NBFCs Likely This Week
In a bid to deal with stress in NBFC sector, guidelines will be issued soon for state-owned banks to take over pooled assets of non-banking financial companies, a finance ministry official said.
“Both Department of Economic Affairs, and Financial Services are in consultation. The eligibility norms for takeover should be out this week or latest by next week,” the official said.
To address the stress in the sector, Finance Minister Nirmala Sitharaman, in the Budget, proposed that public sector banks would purchase high-rated pooled assets of financially sound NBFCs, amounting to a total of Rs 1 lakh crore during the current financial year.
For this, the government will provide a one time six months' partial credit guarantee to PSBs for first loss of up to 10 percent.
The official further said the banks would be allowed to pick up primarily 'AAA' rated assets where chances of delinquency is the lowest and big state-owned banks will be allowed to participate in the same.
(Source: Business Standard)
7. Govt to Pay Damages to Consumers for Load Shedding: Power Minister
Union Minster R K Singh on 14 July said that the aim of the Centre is to have ‘One Nation One Grid’ and pay damages to consumers in case of load shedding.
The government will soon go ahead with structural reforms to achieve the objective of ‘One Nation One Grid’, Finance Minister Nirmala Sitharaman had said in her Budget speech earlier this month.
“The government will pay damages (to consumers) if load sheddings happen,” the Union Power Minister said, without elaborating.
(Source: MoneyControl)
8. Raghuram Rajan Flags Risks for Govt’s Overseas Borrowing Plan
India’s plan to issue foreign currency debt has no real benefit and is fraught with risks, according to former Reserve Bank of India Governor Raghuram Rajan.
A global bond sale won’t reduce the amount of domestic government bonds the local market has to absorb and the country should worry about short-term “faddish investors buying when India is hot, and dumping us when it is not,” Rajan has said.
“Could the resulting volatility in India’s debt traded on foreign exchanges then transmit to our domestic G-Sec market? Would the foreign tail wag the domestic dog?” Rajan said. India should instead relax the requirement for foreigners to register as foreign portfolio investors and increase the current ceilings on investment in government rupee bonds, he said.
(Source: The Indian Express)
9. Regulator Bound by Rules, Cannot Recommend Penalty Changes in Interconnect Case: Trai Official
The telecom regulator is not in the position to modify its previously recommended penalty on Vodafone India and Idea Cellular (now merged) and Bharti Airtel as it is bound by the provisions of Trai Act, according to a senior Trai official.
Citing the clauses in the Act, the regulator recently informed the Department of Telecom (DoT) that it is "constrained from offering any further comments" on the matter and the Centre now has to take a final call on the issue.
The regulator has already given its views once in response to a back reference in 2017 by DoT, the Trai official said adding that as per the provisions in the Act there is no scope for any further modification.
The Act makes it clear that once a recommendation is referred back to Trai by DoT, the regulator has to within 15 days, forward to the central government its suggestions after considering the reference made by the government.
After receipt of further recommendation, if any, the Centre shall take a final decision, the Act says.
The official, who did not wish to be named, said pursuant to the October 2016 suggestions of Trai on the penalty to be imposed on the three operators, the recommendations were referred back by DoT on 5 April 2017 for reconsideration, to which Trai sent its views to the government on 24 May 2017.
(Source: PTI)
(At The Quint, we are answerable only to our audience. Play an active role in shaping our journalism by becoming a member. Because the truth is worth it.)