QBiz: No Earnings Relief to India Inc, P-Note Crackdown and More

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Indian companies’ June-quarter earnings may be worse than in the previous three-month period. (Photo: iStockphoto)

1. Q1 Results: No Earnings Relief for India Inc Yet

If the results of the early birds are any indication of the final shape of things to come, Indian companies’ June-quarter earnings could be worse than in the previous three-month period. Growth in reported net profit of the 215 companies that have announced their results so far (excluding banking and financial services ones) has been five per cent over a year ago, compared with 12 per cent in the March quarter.

The reason is believed to be a 19 per cent increase in interest cost. For some heavyweights like Reliance Industries, Idea Cellular and Gas Authority of India Ltd, interest costs have risen between 50 per cent and 84 per cent.

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2. NITI Aayog Likely to Draw the Line on Poverty

A high-powered taskforce on poverty elimination, constituted under vice-chairman of NITI Aayog Arvind Panagariya, is expected to favour the need for a poverty line for comparing their impact of government programmes on the lives of lower strata of society over a period of time. However, the taskforce is likely to leave the responsibility of calculating that number open-ended.

Even as talks are on to use the recently-released Socio Economic Cast Census (SECC) of rural households and yet-to-be-released urban numbers for targeting government programmes and subsidies, the poverty ratio would give a better understanding of these distributions and help in improving these schemes.

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3. P-Note Crackdown May Weigh Heavy on Markets

The Supreme Court-appointed special investigative team’s (SIT’s) recommendation of stricter norms for participatory notes (P-notes), to check the flow of unaccounted money, is likely to be viewed negatively by the market.

The SIT had last week suggested the Securities and Exchange Board of India (Sebi) put in place regulations to help identify individuals holding participatory notes or offshore derivative instruments (ODIs), and take other steps required to curb black money and tax evasion through the stock market route.

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4. Bilateral Trade Agreements: Foreign Investors May Not be Treated on a Par With Locals

India is likely to stop treating overseas investors on a par with domestic ones until they establish a business in the country, marking a significant change in stance on comprehensive trade and investment agreements from the previous government. Such a move would be of a piece with the finance ministry—concerned that India has given too much away in such accords—gaining a role in the negotiation of investment agreements.

Concerns have been expressed in multiple quarters over the country getting a raw deal in a number of trade agreements, denting its manufacturing sector.

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5. Sharp Drop in Gold & Oil Prices Brings Cheer for Modi Govt; Public Investments May Rise Too

Drop in gold and oil prices may promote public investments. (Photo: iStockphoto)
Drop in gold and oil prices may promote public investments. (Photo: iStockphoto)

Gold has plunged to a multi-year low. Most analysts expect these trends to continue. The implications of god, gold and oil being kind to India now and in the near future means the festive season - India’s annual high point of consumerism - will likely see consumers feeling they can spend some serious money. Businesses will both have healthy demand and be free of fear of interest rate hikes. And the government may find it easier to pump prime the economy, thanks to better current account and fiscal situation.

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6. Telangana to Launch Rs 25,000-Crore Village Development Plan

Telangana Government will be spending a massive Rs 25,000 crore over the next 5 years for implementation of a new programme that aims at strengthening Panchayat Raj system and boosting village-level development in the State.

The project, “Gram Jyothi”, will be launched on August 15.

Read more here.

7. Ecommerce Companies Like Flipkart and Snapdeal on ‘Acquihiring’ Spree for Best Talent, Ideas

Rival ecommerce majors Flipkart and Snapdeal are betting big on acquihire, to pick up early-stage ideas along with entrepreneurs who could bring fresh energy and technology bandwidth to their companies. Others such as Jabong are warming up to the idea.

Read more here.

8. Amazon Posts Anomalous Profit, Wall Street Swoons

On Friday, Amazon shares closed at a record high of $535.50. (Photo: iStock)
On Friday, Amazon shares closed at a record high of $535.50. (Photo: iStock)

Investor enthusiasm for Amazon.com Inc is pretty consistent: the stock tends to rise, even though the company isn’t consistent about making profits. On Thursday it posted second quarter profit of $92 million on sales of $23.19 billion, only its third quarterly profit since the first quarter of 2014.

Amazon has reported an annual net profit in 10 of its 18 years as a public company, and only twice in the last four years. On Friday, Amazon shares closed at a record high of $535.50 and the company passed Wal-Mart in market value.

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9. Huawei’s ‘Make in India’ Project Hangs in Balance

Shenzhen-based Huawei Technologies’ plan to set up a new telecom equipment manufacturing unit in the Sriperumbudur special economic zone (SEZ) is frustrated by a lack of commitment from the commerce ministry to review a prohibitive 266% anti-dumping duty on the telecom gear (Synchronous Digital Hierarchy Transmission equipment) imported by the firm.

While Huawei said it would increase the value addition in India with the new assembling units to be set up, the ministry hasn’t given an assurance to the company that the duty would be revoked as a result.

Read more here.

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