QBiz: Power Generation Drops; Bank CEOs’ Half Pay To Be Variable
Catch the latest business news for the day.
1. Power Generation Falls for Third Straight Month in October
Power generation in the country fell 12.7 percent year-on-year (y-o-y) in October, recording the third straight month when electricity produced was less than the corresponding year-ago month.
According to provisional data from the Central electricity authority, 105.6 billion units (BU) were generated in the month compared with 121 BU in October 2018.
Thermal power plants generated 78.3 BU, 19.8 percent lower than October last year, indicating a further fall in their plant load factors (PLF). Renewable energy sources decreased their generation by 6.4 percent y-o-y in the same month to 7.3 BU, in spite of a 15 percent rise in its installed capacity.
(Source: FInancial Express)
2. For Private Bank Chiefs, Half of Their Salary to Be Linked to Performance
The Reserve Bank of India (RBI) on Monday, 4 November, said chief executives of banks should have at least half of their pay based on performance, as the regulator tries to tweak incentives to prevent the reckless risk-taking that has burdened India’s lenders with record bad loans.
Employees, RBI said, were often rewarded for increasing short-term profit without adequate recognition of the risks and long-term consequences that their activities posed to the organizations. Misaligned compensation practices, especially of large financial institutions, were among the important factors that contributed to the global financial crisis in 2008, the regulator said.
3. India Opts out of RCEP; PM Modi Says Key Issues Remain Unresolved
The government on Monday said India will not join the Regional Comprehensive Economic Partnership (RCEP) deal, adding that doing so would adversely affect the national interest.
This was a nod by the government to concerns raised by domestic industry and farmers, most of whom had opposed the pact, fearing it would lead to uncontrolled dumping by China.
“India conveyed its decision to not join… (There are) significant issues of core interest and the impact it would have on the livelihood of vulnerable sections. India has participated in good faith in the RCEP discussions and had negotiated hard with a clear-eyed view of our interests,” said Vijay Singh Thakur, secretary (east), Ministry of External Affairs, in Bangkok.
(Source: Business Standard)
4. Banks to Insist on New Investor for DHFL Before Clearing Resolution Plan
The Reserve Bank of India (RBI) is understood to be uncomfortable with the idea of banks buying a 51 percent stake in Dewan Housing Finance (DHFL), sources told FE. Banks have been waiting for clarity from the central bank to implement DHFL’s resolution plan.
Meanwhile, a mid-sized public-sector bank (PSB) with an exposure of Rs 1,000 crore to DHFL is understood to have classified the account as a non-performing asset (NPA) on 31 October. If a resolution eludes banks, their total exposure to DHFL of around Rs 38,342 crore would need to be classified as NPAs.
(Source: Financial Express)
5. Infosys Says Found No Evidence to Support Wrongdoing Charges
Infosys Ltd said it hasn’t received any evidence to support allegations, including that of inflating profit, made by anonymous whistleblowers against top company officials, including Chief Executive Salil Parekh.
“An anonymous letter with certain allegations and no supporting evidence cannot be regarded as being credible or concrete. Therefore, the company is not in a position to determine the concreteness, credibility and materiality of the anonymous complaints," Infosys said in a stock exchange filing. The statement sent the company’s stock soaring as much as 6.47 percent in intra-day trading on Monday, 4 November.
6. Vistara Looks to Increase Fleet to 42 by March Next Year
Vistara, a joint venture between Tata Sons and Singapore Airlines, is looking to increase its fleet size to 42 aircraft by March 2020. The airline currently operates across 34 routes and about 200 flights a day, with a fleet of 26 Airbus A320 and nine Boeing 737 aircraft.
Last year, Vistara had ordered 50 Airbus aircraft, including the A320neo, to be delivered by 2023. Of these, the airline has already inducted three A320neo and expects to add six more by December 2019.
Vistara CEO Leslie Thng said, “Network expansion is one of our top business priorities at present and we are proud to have recorded significant progress on this front by adding 11 new destinations in India and abroad in the current financial year so far. With our fleet expansion, we will continue to grow our domestic and international network, including the commencement of medium and long-haul international flights in 2020.”
(Source: Financial Express)
7. Onion Set to Bring Tears to Consumer as Retail Price Nears Rs 100 a Kg
Barely two days after the government showed conviction over price decline due to steady increase in supply, onion prices jumped by 10 percent to trade at over four-year high of Rs 55.50 a kg in the benchmark Lasalgaon mandi on Monday.
Onion is currently trading between Rs 70 and Rs 80 in retail markets across the country and is approaching the Rs 100-mark fast.
The rates have shown a four-fold increase in the last three months in wholesale markets from Rs 13 a kg in early August to Rs 55 now and retail price from Rs 20 to Rs 80.
Traders attribute the sudden spurt in prices to the very little quantity from last year’s production, crop damage due to unseasonal rain across the country and unfavourable government policy.
(Source: Business Standard)
8. Wall Street Hits Record High on Energy, Tech Boost and US-China Trade Deal Hopes
Gains in technology and energy shares pushed Wall Street's three main indexes to record highs on Monday, 4 November, as hopes of a US-China trade deal and an improving domestic economy boosted risk appetite.
Washington and Beijing said on Friday they had made progress in defusing an economically damaging trade war, with US officials indicating that a deal could be signed this month.
Adding to the optimism, Commerce Secretary Wilbur Ross said on Sunday licenses for US companies to sell components to China's Huawei Technologies Co Ltd would come "very shortly".
9. Investors Reward HDFC as It Weathers Tough Market With Focus on Retail Loans
What is the best place to find out the intimately linked story of a troubled real estate sector and the liquidity crunch non-bank finance companies have found themselves in since last year?
The answer is the balance sheet of the largest non-bank lender to housing. The adjoining chart shows how cautious HDFC Ltd has turned on non-individual housing loans. In other words, HDFC has been going slow in lending to real estate developers over the last several quarters. For housing finance companies such as HDFC, it was a question of prudence but for many others it was simply a question of having no money to lend because of funding channels being choked.
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