QBiz: Warrant Against Mallya, India’s Trade Deficit at Record Low
1. PMLA Court Issues Non-Bailable Warrant Against Vijay Mallya
A special PMLA court on Monday issued a non-bailable warrant against business tycoon Vijay Mallya on Enforcement Directorate’s (ED) application over the Rs 900-crore IDBI loan default case. ED had moved the court after Mallya failed to appear before the investigating agency despite three summonses.
The ED will now submit the warrant to the immigration department and request them to issue a new look-out notice for Mallya. This notice will be sent to all the airports in the country so that Mallya can be arrested the moment he enters Indian soil.
The ED may also write to Interpol and request it to issue a Red Corner Notice against Vijay Mallya. According to sources, Mallya who has huge business stakes in India does want to return to India. The sitting Rajya Sabha MP is trying desperately to settle his dues with the banks.
2. TCS Q4 Figures Better Than Infosys on Several Parameters
The fourth quarter results for India’s largest IT service provider Tata Consultancy Systems (TCS) were out on Monday and they were mostly in-line with market expectations.
According to Business Standard report, on volume and revenue basis, TCS outplayed its closest rival Infosys. TCS fourth quarter net profit came in at Rs 6,341 crore up 64.4 percent year-on-year (y-o-y) and 3.8 percent sequentially.
On the volume front TCS managed to beat Infosys with a growth of 3.2 percent, while the latter reported a growth of 2.4 percent.
However, TCS was not as lucky as Infosys in terms of profitability with the operating margin contracting by 50 basis points at 26.1 percent owing to currency volatility and drop in realization. One big positive for the company was the continuous growth in its digital services and its increasing share in the revenue.
3. India’s Trade Deficit at Record Low in March
India recorded its lowest trade deficit in March 2016 despite a slump in country’s total exports. A decline in gold imports helped in decreasing India’s deficit as imports reduced at a faster rate than the exports.
According to the data revealed by Union commerce ministry, even as the exports decreased for straight 16th month by 5.47 percent, the imports reduced at higher 21.56 percent leading to $5 billion trade deficit. Meanwhile, China’s exports grew by 11.5 percent and the imports shrunk by 7.6 percent leaving the Indian neighbours with trade surplus of $29.9 billion.Livemint Report
India’s share of world exports declined from a peak of 1.7 percent in 2014 to 1.6 percent even as the share of some major advanced economies and peer Emerging Market and Developing Economies (EMDEs) increased. Among the major items, export of gems and jewellery (4.6 percent), pharmaceuticals (4.1 percent) and chemicals (0.2 percent) increased, while export of engineering goods (-11.2 percent), readymade garments (-4.1 percent) and petroleum products (-21.4 percent) fell.
4. State-Run Banks to Freeze Funding to Punjab Government
State-run banks that are already finding it tough to deal with the mounting pile of bad loans have decided to freeze lending to the Punjab government on Monday.
According to Economic Times, after a two-hour-long meeting, the banks came to a unanimous conclusion that they will not lend any more to Punjab unless the issue of missing foodgrain is resolved. The group, including more than 30 bankers, was led by State Bank of India (SBI).
The new move by banks can have a disastrous effect on Punjab’s economy as the state is one of the leading buyers of foodgrains.
According to a stipulation by the Reserve Bank of India, all banks with loans to Punjab need to provide at least 15 percent against potential losses as there is no security for the loans. The banks believe that since the discrepancy has existed for some years now and there are no signs of it getting resolved, a provision has to be made even though it’s a sovereign loan.
5. Ola and Uber Suspend Surge Charges During Odd-Even Scheme
Cab service providers in the national capital – Ola Cabs and Uber – have temporarily suspended the surge charges on their rates from Monday evening. Many commuters travelling on Monday morning and afternoon had reported a “peak pricing” charge for three to five times the actual fare as Delhi was undergoing the ‘odd-even’ road rationing scheme.
However, after Delhi government issued an order to impound the cabs that were charging higher than the government prescribed limit, the cabs rolled back on the surge charges. The government order came within hours of a complaint that was filed in Delhi High Court by an organisation called Magic Sewa.
Read more on The Quint.
6. E-Commerce Giant Flipkart to Scale Down Contribution of WS Retail
India’s leading e-commerce player Flipkart has decided to scale down contributions from WS Retail to abide by the new rules that stipulate no vendor will be allowed to account for more that 25 percent of total sales on an online market place. WS Retail will, however, remain the largest seller on Flipkart.
According to Economic Times, Flipkart will now concentrate on increasing market shares of other vendors. Mobiles and consumer electronics, the two biggest segments, will increasingly be sold via new vendors, not through WS Retail.
WS Retail which was owned by Flipkart’s founders until 2012, currently dominates Flipkart’s market space as a vendor and is said to have a share that well exceeds 25 percent of total sales. For instance, all Flipkart-exclusive brands such as Xiaomi, Motorola, LeEco, Sansui are sold through WS Retail.
7. Tata Steel Reaches Out to 190 Investors for UK Asset Sale
Tata Steel has reached out to 190 potential investors for its UK assets, the company said in a statement to stock exchanges on Monday, reports Livemint.
On 11 April, Tata Steel Europe initiated the sale process for its UK assets and appointed KPMG Llp as an adviser for the divestment of its entire shareholding in its subsidiary Tata Steel UK.
“Over the last seven days, the advisers for Tata Steel Europe have begun initial exploration of interest in Tata Steel’s UK operations, reaching out to 190 potential financial and industrial investors worldwide,” the company said in its statement.
On Monday, Tata Steel also announced the appointment of Standard Chartered Bank as additional adviser to the process, “to ensure the coverage and reach of the universe of potential buyers, especially to Asia and Far East”, the company said. Standard Chartered will work with KPMG on the sale process.
8. How Anil Ambani is Readying to Target Big-ticket Defence Projects
Anil Ambani’s latest big bet is on defence, reports Economic Times. For a country that spends more than $40 billion every year in defence, India is still largely dependent on imports to meet military requirements.
These days, the Reliance Group boss spends more than 70 percent of his working hours on what is seen as a sunrise sector for Indian industry. In the past year, he visited at least two global defence equipment manufacturers every month and signed partnerships with several of them. In between, from Paris to Dubai, Moscow and Abu Dhabi, he hasn’t missed any major defence and aerospace shows.Economic Times Report
The government’s Make in India campaign to boost domestic manufacturing has opened up opportunities for Ambani’s Reliance Infrastructure, but he will also have to compete with more established players like the Mahindra and Tata groups and Larsen & Toubro. These companies have been building capacity and gathering technology in the sector for the past few years.
9. Small Enterprises Rather Than Big Corporations are Driving the Economic Recovery
India’s MSME (micro, small and medium enterprises) sector now includes a total of 48 million enterprises. They contribute to 37.5 percent of the gross domestic product (GDP), provide employment to 111.4 million people and account for over 40 percent of India’s exports. However, this “distressed” sector has been often overlooked, writes Tulsi Jayakumar for Livemint.
The ministry of corporate affairs (MCA) website shows that non-government private limited companies comprise 94 percent of the 1,067,925 active companies limited by shares as on 31 January 2016. The data the MCA has collected from the audited annual accounts of these small, unlisted, private companies—essentially, MSMEs—presents a heartening picture, both at an aggregate and disaggregated level. When it comes to both return on equity and efficiency, these companies are ticking all the boxes.Tulsi Jayakumar