QBiz: More Signs of Economic Stress; Maruti Suzuki Cuts Output

Catch the latest business news in today’s QBiz.

5 min read
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1. More Signs Emerge of Stress in the Economy

Growth in eight infrastructure industries that make up two-fifths of the index of industrial production (IIP) slowed to 2.1 percent in July, indicating that India’s economic slump may deepen unless the government takes additional measures to reverse it.

Growth in July slowed from 7.3 percent in the year-ago period due to contraction in output of coal, crude oil, natural gas and refinery products, official data released on Monday showed. Earlier in the day, a private survey showed India’s manufacturing output in August grew at the slowest pace in 15 months.

(Source: Livemint)

2. As Sales Fall, Maruti Suzuki Cuts Output by 34%

A day after reporting a massive 36 percent year-on-year drop in sales — its steepest so far — in the domestic market in August, Maruti Suzuki India on Monday said it has reduced output by 34 percent (y-o-y) during the month, its seventh consecutive month of production cut to align output with reduced consumer demand.

With sales of automobile products across segments in the slow lane for the past straight 10 months now, almost all manufacturers of passenger vehicles and two-wheelers have been resorting to production cuts in the past 6-7 months to clear unsold inventory. In a stock exchange notice on Monday, Maruti said it produced a total of 111,370 units last month.

(Source: The Financial Express)

3. SBI Group Co IPO Process Begins; To Decide Soon When to Hit the Market

SBI Card has initiated the process for an initial share sale and the decision on when to come out with the offer will be taken at an appropriate time, a senior company official said on Monday.

As per the request for proposal for book running lead managers (BRLMs) floated by the SBI Card, the company intends to tap capital markets via IPO through ‘offer for sale’ by dilution of up to 14 percent of the issued and paid up capital (up to 13.05 crore) equity shares and primary issuance of up to Rs 1,000 crore.

(Source: PTI)

4. Synergy Ready to Take Majority Stake in Jet Airways, but Conditions Apply

Synergy Group Corp., one of the three potential investors for Jet Airways (India) Ltd, is willing to take a majority stake in the grounded airline if lenders agree to take a deep haircut and convert their debt into equity, a representative of the South American company said.

“We are consulting lawyers and exploring (whether) Synergy Aerospace as a financial investor can take a majority stake in Jet Airways," Antonio Guizzetti, president of Washington-based Guizzetti & Associates, legal adviser to Synergy Group on the Jet Airways acquisition, said in a phone interview. Synergy Aerospace wants to take a 51 percent stake in the airline, he added.

(Source: Livemint)

5. PNB to Consider up to Rs 18,000 Cr Capita Infusion on 5 Sept

The board of Punjab National Bank (PNB) will consider raising Rs 18,000 crore capital infusion in the next meeting on Thursday. On 31 August, the bank had informed exchanges that it would consider infusion upto Rs 16,500 crore by the government through preferential issue of equity shares and fixing date of extraordinary general meeting (EGM) for obtaining shareholders approval in this regard at a price determined in terms of the market regulator SEBI.

“In continuation to our intimation dated 31.08.2019, the exchange is hereby informed that the board shall consider capital infusion upto Rs 18000 Crore (Rupees Eighteen Thousand Crore Only) in its meeting scheduled on 5 September 2019,” PNB had said in a regulatory filing. Shares of PNB ended the trade on last trading day on Friday at Rs 65, down 0.050 points, or 0.077 percent on BSE.

(Source: The Financial Express)

6. NHAI to Offer Roads as Collateral, in Talks With SBI to Fund Projects

The National Highways Authority of India (NHAI) is expected to raise money by keeping its assets as collateral. The agency is in final stages of discussion with State Bank of India (SBI) to raise funds for its future projects under this new mode.

According to the terms of the agreement, SBI will lend the NHAI 80 percent of the project value; the rest of the money will be arranged by the highways authority. The loan would be repaid over at least 15 years; the money to repay the loan will be earned through toll revenue from securitised highways.

(Source: Business Standard)

7. Fewer Banks May Mean Faster Debt Resolutions

The proposed merger of state-run banks announced by finance minister Nirmala Sitharaman on Friday could speed up the resolution process of bankrupt companies, experts said.

Fewer lenders will mean that the time taken to get necessary approvals from the boards of banks to approve a resolution plan will shrink and the process is more likely to be completed on time, according to bankers and legal experts.

For a resolution plan to be accepted, 66% of creditors to a stressed company have to approve it, according to the Insolvency and Bankruptcy Code (IBC).

(Source: Livemint)

8. Government Restores Duty-Free Replenishment Facility for Jewellery Exporters

The government has again permitted gold and silver jewellery exporters to replenish the precious metal duty free after selling it at international exhibitions, a move which would help in promoting growth of the sector.

This facility of duty-free replenishment of precious metals was stopped after the implementation of the goods and services tax (GST).

(Source: PTI)

9. Tata Steel to Shut Some Operations in Europe, Affecting Around 400 Jobs

Tata Steel said on Monday that it proposed to close two sites in the United Kingdom, affecting around 400 jobs.

The company in May 2018 had announced about the potential sale of five non-core businesses. Buyers had been found for Kalzip and Firsteel earlier, a move that helped secure 275 jobs.

Tata Steel on Monday said that it had signed a sales and purchase agreement with Japanese steel giant JFE Shoji Trade Corporate for Cogent Power Inc (CPI), which is part of Cogent Electrical Steels, one of the five non-core businesses. CPI manufactures cores for electrical distribution transformers and employs nearly 300 people.

(Source: Business Standard)

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