1. No Corporate Tax Relief for Large Companies in the Union Budget
Finance minister Nirmala Sitharaman won’t cut the tax rate for large companies to 25% from 30% in the forthcoming budget and may raise the long-term capital gains tax, as the government grapples with a potential revenue shortfall and additional spending commitments.
The Narendra Modi administration is exploring ways to garner more tax revenue either by tapping new sources or by digging into existing ones, a person familiar with the discussions in the government said on condition of anonymity.
(Source: Livemint)
2. RBI to Enhance Monitoring of Shadow Banking Firms: Governor Shaktikanta Das
Reserve Bank of India Governor Shaktikanta Das said the central bank would closely monitor the health of non-banking financial companies (NBFCs) and it would not hesitate to take corrective measures, if needed, to address issues in the shadow banking sector. “We will not hesitate to take any required steps to maintain financial stability in the short, medium and long-term,” Das said in a speech on Saturday at a convocation ceremony in the western Indian city of Pune.
The comment comes at a time when there are fears that India may be facing a major crisis in its shadow banking sector after shares of Indian mortgage lender Dewan Housing Finance Corp Ltd (DHFL) plunged this week after two credit-rating firms cut their view of DHFL debt to “default” levels.
(Source: Financial Express)
3. Troubled NBFC Sector Likely to Further Starve Realty
Funds flow from non-banking finance companies (NBFCs) to the liquidity-starved real estate sector is expected to dry up further after DHFL’s recent downgrade, as other NBFCs wait out the latest uncertainty.
Not just NBFCs, the funding challenges will hit the real estate sector’s recovery and put pressure on property prices too. “Since the Reserve Bank of India (RBI) is custodian of the financial stability of the economy, we expect it to come out with specific measures relating to this crisis and not just stop at providing liquidity to the system,” said Samantak Das, chief economist (research and REIS, India), JLL.
(Source: The Economic Times)
4. Cash-Strapped Urban Ladder Lays off Hundreds of Employees
Omnichannel furniture retailer Urban Ladder has been trimming flab to sustain its operations, but its leadership team claims it is just a couple of months away from turning EBITDA (earnings before interest, tax, depreciation and amortisation) positive.
Industry sources as well as former Urban Ladder employees told BusinessLine that the start-up let go of 25 percent of its headcount in the quarter that ended in March.
In an emailed response to the Hindu Business Line story, Urban Ladder issued a clarification on the lay-offs. A statement from CEO Ashish Goel said:
“As an organization, February and March were not easy months for us, as we are a company that deeply appreciates its employees. Having said that, after taking those tough calls, that the employees parting ways from the company have used their time as a stepping stone to pursue other, great opportunities within the industry and beyond.”
Further, the statement provided some more clarity on the same:
In February/March, 90 employees (from the head office alone) had been let go from the organisation – the previous total headcount number was 957 and now is 711 which amounts to about 25 percent (and not 40 percent as sources online have revealed today) which includes third party employees and resources.
(Source: BusinessLine)
(Note: This section has been updated after Urban Ladder’s response to The Hindu Business Line report, clarifying on the number and providing more information on the lay-offs.)
5. Investors Cheer as Adani Ports Cut Related Party Loans, Step up Dividends
Shares of Adani Ports and Special Economic Zone Ltd have gained momentum in the past year, with the company reducing its financial exposure to group firms through related- party loans. Besides, the company has suggested that capital expenditure (capex) has peaked, which will result in balance-sheet deleveraging and improvement in profitability.
The reduction in related-party loans is visible in the sizeable drop in working capital during FY19. Besides, with the regulators paving the way for tariff renegotiation at a loss-making plant of group firm Adani Power Ltd, concerns about incremental loans to this entity have further abated.
(Source: Livemint)
6. ONGC, Vedanta Set to Win 9 Oil, Gas Blocks Each; Reliance-BP to Win One
State-owned Oil and Natural Gas Corp (ONGC) and mining billionaire Anil Agarwal-led Vedanta Ltd are set to win nine oil and gas blocks each in the latest auction, while Reliance Industries and its British partner BP Plc is set to win KG basin gas block. Sources said the Directorate General of Hydrocarbons (DGH) has completed the evaluation of the bids received for 32 oil and gas exploration blocks that were auctioned in the latest licensing round.
As per the bid evaluation, ONGC and Vedanta Ltd are top bidders in nine blocks each and state-owned Oil India Ltd (OIL) in 12 areas. Reliance-BP combine outbid ONGC in one Krishna Godavari basin block in the Bay of Bengal. The winners of the auction will be announced after the approval of the Cabinet Committee on Economic Affairs (CCEA) headed by Prime Minister Narendra Modi, sources added.
(Source: Financial Express)
7. Trade Setup: Nifty May See Intermittent Pullbacks, but Market Vulnerable to Profit Taking
Friday’s trade remained somewhat of consolidating nature as Nifty remained sideways for the entire session before ending with modest gains.
After a flat start and a dip soon after that, the index recovered from its immediate support area in the 11,740-11,760 zone. The index pulled back from these levels and then traded sideways in a capped range and ended the day with a gain of 26.90 points (up 0.23 percent).
(Source: The Economic Times)
8. Reliance Power Records Loss of ₹3,558 Crore in Fourth Quarter
Anil Ambani-group company Reliance Power has reported a loss of ₹3,558.51 crore for the March-ended quarter, as compared to the same period last year when it reported a profit of ₹189.21 crore.
This was due to impairment and higher finance costs incurred by the Mumbai-based power company. The company reported ₹4,170.19 crore as impairment loss, of which ₹1,017.02 crore was reduced through withdrawal from its general reserves.
(Source: BusinessLine)
9. Unicorns Outpace Technology Companies in Acquisitions
The top unicorns – shorthand for startups with valuations of $1 billion or more – in India are also the most acquisitive. Among other things, it indicates how many of these companies have used mergers and acquisitions (M&As) to scale up rapidly in a short period of time.
In contrast, among traditional technology companies in India, such deals are few and far between.
For instance, Quikr, the most acquisitive unicorn in India, has made 12 acquisitions since 2016, according to Tracxn, a technology data tracker. In comparison, India’s largest tech firm, Tata Consultancy Services Ltd, has made just two acquisitions, according to Crunchbase data.
(Source: Livemint)
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