QBiz: Final GST Draft, Delhi’s Power Woes and Soaring Food Prices
All the top business stories that you need to know.
1. GST Final Draft Submitted to State Finance Ministers’ Committee: ET
A group of officials belonging to both Central and state governments, set up to frame the proposed Goods and Service Tax (GST) Bill, has submitted its final draft. According to The Economic Times, the draft will be taken up by a committee of state finance ministers.
The draft law could be made public after it has been reviewed by the committee headed by West Bengal finance minister Amit Mitra. The government is expected to make a renewed push for the passage of the constitutional amendment bill to roll out GST in the upcoming monsoon session of Parliament, armed with more members in the Rajya Sabha and a broad-based national support for this reform.
The constitutional amendment will merely allow for this single tax, which is not possible under the current structure of taxation. At present states are not empowered constitutionally to tax services and the central government cannot tax goods sold in retail.
2. Market Backs Firms with Good Q4 Results: BS
The market seems to be saluting companies that reported better-than-expected performance in the quarter ended March. According to Business Standard, an analysis of 844 companies from the BSE 500, mid and small-cap indices which announced their March quarter earnings, reveals that stocks of 316 companies outpaced benchmark indices after the results.
These 316 firms have reported 31 percent year-on-year (y-o-y) growth in their aggregate net profit. On the other hand, the remaining 528 companies that underperformed the market have recorded 25 percent y-o-y drop in their combined net profit.
According to analysts at Motilal Oswal Research, major earnings surprises were from Tata Motors, L&T, UltraTech Cement, Nestle India, Kotak Mahindra Bank, Mahindra & Mahindra Financial Services, Hindalco, JSW Steel, Bharat Petroleum Corporation, Tech Mahindra, Bharti Airtel and Idea Cellular. On the other hand, they were disappointed by ICICI Bank, Bank of Baroda, Britannia, Maruti, BHEL, Cipla, Dr Reddy’s, Titan, and Coal India’s numbers. Markets, too, acknowledged the performance. Tata Motors, L&T, Hindalco Industries, YES Bank and HDFC gained around 15 percent each as compared to a less than six percent rise in the benchmark index after the March quarter results.Business Standard Report
3. Delhi Power Woes: BSES Owes NTPC Over Rs 800 Crore
After missed payments, threats and a compromise, Anil Ambani’s power distribution companies in Delhi will still owe state-run NTPC over Rs 880 crore by September. Reliance Infrastructure distributes power in Delhi via two subsidiaries, BSES Yamuna Power Limited (BYPL) and BSES Rajdhani Power Limited (BRPL).
By 30 September, BRPL would owe NTPC Rs 520 crore and BYPL will owe Rs 366 crore. BSES has outlines a payment schedule according to which, the company will pay Rs 580 crore in July 2016 for fresh procurement and clearing the dues. BSES proposes to bundle payments for fresh procurement with the existing dues to mitigate costs.
BSES has pointed out that tariff has not kept pace with the cost of power in Delhi. The company has now all its hopes pinned on the new tariff order that is expected to be notified by September. But this could also mean higher power bills for Delhiites starting October
Read more on The Quint.
4. Food Prices Soar on Monsoon Delay: BS
Food prices have begun to shoot up, following declining output, due to two back-to-back years of drought. The delay in monsoon has also added to market jitters.
According to Business Standard, pulses, wheat, milk, sugar and oilseeds are 10-21 percent costlier since May, when the first monsoon forecast was issued by the Indian Meteorological Department.
Government price-control measures in sugar and pulses have not helped much. Sugar, pulses and wheat have seen a decline in production from the previous season and traders are estimating an output lower than the government’s earlier projections.
The Reserve Bank of India said in its latest monetary policy that the upsurge in inflation in April was led by food and commodity prices. Inflation based on wholesale prices rose 0.34 percent in April against a 0.85 percent decline in March.
5. Capacity of Renewable Projects Surpasses Hydel Power in India: ET
India’s efforts for green energy achieved a huge milestone on Thursday as the renewable energy plants – solar and wind energy – surpassed the capacity of hydroelectric projects. According to The Economic Times, renewable energy projects now boast a capacity of 42,850 megawatt, surpassing hydropower which stands at 42,783 MW.
Supply from renewable plants depends on sunshine or wind, which are not consistently available. But officials said the surge in renewable capacity marks a significant structural change in the energy landscape of India.
India has now emerged as the world’s fastest-growing renewable energy market that has companies from Finland and South Africa participating in auctions for solar-powered projects.
However, the country still depends primarily on thermal power, which has a much higher installed capacity.
6. Flipkart Restructures its Tech Leadership Team, Again: Livemint
India’s largest e-commerce player, Flipkart, has made changes to its tech leadership team for the second time in year. According to Livemint, the firm has moved engineering head Peeyush Ranjan to the role of Chief Technical Officer.
Ranjan will now handle mobile technology and machine learning. He will also be head of technology strategy.
Other key changes included promoting Hari Vasudev, Sr Vice President of engineering to head technology function of two of Flipkart’s most important businesses – marketplace and Ekart.
Flipkart has hired former Amazon.com and Micromax Informatics executive Ashish Agrawal as senior vice-president of engineering. Both Vasudev and Agrawal will report to Flipkart chief executive officer Binny Bansal.
7. IKEA Plans to Double Sourcing From India: HBL
Peter Agnefjall, CEO of IKEA on Thursday said that the company is keen at sourcing not just the mandatory 30 percent but a lot more. According to The Hindu Business Line, the world’s largest furniture retailer wants to make a more affordable offer to Indian customers and create a manufacturing industry in India.
Agnefjall said that they will open their first store in Hyderabad by the summer of 2017. He also added that they have bought plots in Mumbai and are looking for plots in Delhi-NCR to open more stores in future.
Agnefjall added that the government is supportive and the purchasing power of Indian consumers has grown, hence the sourcing opportunity is immense.
8. Choosy Investors Make it Tough to Survive in the Primary Market: HBL
Investors in the primary market are becoming more and more selective as they are becoming less likely to welcome the company that fails to impress them. According to The Hindu Business Line, of the 132 IPO applications approved by the Securities and Exchange Board of India (SEBI) since 2011-12, 67 have lapsed.
In FY16-17, of the 13 companies that were cleared to launch their IPOs, seven didn’t reach the market. Similarly in FY15-16, four out of 16 IPOs failed to make it.
Experts believe that more companies may be turned away now as investors are biased towards large IPOs.
On the bright side, in FY16, 22 companies raised a total of ₹16,565 crore through IPOs, the highest in the past five years. The ones left behind are naturally filtered out by investors.
9. Videocon’s Debt Pile Worries Banks: Livemint
Videocon Industries’ faltering financial performance, a move by worried lenders to put it on a watch-list and a downgrade by a credit rating firm point to the simmering trouble at the conglomerate, reports Livemint. Declining fortunes of oil producers and aggressive diversification in the 2000s has hit the company adversely.
Lenders to Videocon Industries have decided to put in place a so-called corrective action plan (CAP) for the company, which has seen an increase in financial stress on its balance sheet over the past year, said two bankers involved in discussions with the company. A CAP, typically initiated when bankers fear that a company may not be in a position to pay its dues for long, can involve restructuring of a company’s loans, even the forced sale of assets to reduce debt.Livemint Report
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