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India’s burgeoning automotive demand and a sustained push by the government towards electric mobility has led to nearly a dozen Chinese companies entering India over the last three-to-four years.
While some of these companies are tying up with Indian entities, others have entered on their own and are setting up manufacturing facilities and R&D centres.
These China-headquartered companies manufacture e-scooters, e-bikes, electric three-wheelers, petrol-powered performance bikes, SUVs, luxury cars, buses and construction equipment.
Lesser known Chinese entities such as Benling, CFMOTO, SUNRA, Gemopai Electric, Evoke Motorcycles to name a few have already entered India. Zhejiang Rongda Industry & Trade, Jiangsu Kingbon Vehicle and Zhejiang Linghang Electronics have partnered Indian companies to jointly produce vehicles.
Some of these companies manufacture fully electric vehicles, an area where the Indian government is taking new strides. Benling India Energy and Technology, a direct subsidiary of Guangdong Sheng-based Dongguan Benling Vehicle Technology Co, for instance has invested Rs 10 crore to set up an assembly unit in Manesar for rolling out low-speed electric scooters.
Other more widely known brands like Volvo Cars (owned by Zhejiang Geely Holding Group), MG Motors (owned by SAIC Motor Corporation), Benelli (owned by Zhejiang Qianjiang Motorcycle Group Co), Great Wall Motors Company and Sany Heavy Industry Co have established manufacturing facilities and R&D operations.
There is a clear desperation by the Chinese companies to enter India. For instance CFMOTO, a $400 million Hangzhou, China-based company, has tied up with AMW Motorcycles, which is part of the now defunct and debt-ridden AMW Motors that produces medium and heavy trucks.
Revolt Intellicorp, promoted by Micromax Mobiles founder Rahul Sharma, showcased electric bikes in June that were based on bikes produced by Shanghai-headquartered SOCO. The Revolt RV400 looks identical to the Super SOCO TS1200R.
An aggressive lot
Market watchers, however, say that the current breed of Chinese companies have a different but aggressive approach towards the Indian market compared to the earlier flock.
“Earlier companies like Lifan and Beiqi Foton tried to find their footing in India. But bad product quality and corporate indecision led to their quiet exit from India. Today’s Chinese companies are different, they are much more ambitious and serious about having a slice of the Indian automotive pie,” said a senior executive who provides consultancy services to auto companies.
The Brihanmumbai Municipal Corporation (BMC) procured and ran several units of air-conditioned King Long buses. The BEST undertaking was forced to blacklist the company after multiple instances of the buses catching fire or breaking down. Till date many associate the buses with Chinese make, thanks to the misinformation spread by the BEST, while the buses were actually built in Punjab by JCBL. The damage to the brand, however, was done.
The Lifan Group, which had tied up with Delhi-based Monto Motors for launching cheap motorcycles in India, was partly responsible for eroding the brand image of Chinese products. Their 100cc and 125cc bikes had several quality issues leading to their eventual exit from India.
But to beat this poor brand recall, Chinese companies devised new ways. SAIC, China’s largest car maker, decided to invoke MG Motors, a 90-year old British brand that laid in slumber for most part of the last few decades. MG (Morris Garages) recently launched its first SUV Hector (Rs 12.18 lakh) in India, which is based on the Baojun 530: an SUV sold in China.
Goldstone Infratech, an Indo-China joint venture company comprising BYD of China, changed its name to Olectra Greentech last year. Goldstone was accused by India truck and bus makers of offering buses at very low prices, backed by subsidy from the Chinese government. Goldstone emerged as one of the largest bidders for supplying electric buses to Indian cities.
It remains to be seen if the latest entrants are more successful than their predecessors.
It has been three weeks of trading since the Lok Sabha elections results were announced. BJP returned to power with a bigger mandate than 2014, adding more stability to the political scenario in the country, much to the delight of the foreign investors.
The foreign investors took this very positively especially when domestic investors were waiting for correction even before the elections. The week from May 24, 2019, till June 13, 2019, Nifty saw a return of 1.4 percent that was supported by inflows in FIIs via ETFs primarily.
Within the ETF segment, the two largest funds tracking MSCI EM did not receive any inflows as India weight is reduced in the index due to the addition of new countries.
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But the two largest funds (I Share India & Wisdom Tree) tracking MSCI/FTSE India received inflows worth $264 million on AUM of $5.45 billion, which is almost 4.84 percent of AUM, the largest in recent times.
This is in line with the historical trend that witnesses an influx of 1.3-2 times of FIIs post-election as compared to pre-election. Six months prior to Lok Sabha 2019 election FIIs bought in a total of Rs 38,800 crore. Keeping this in mind, we expect post elections six months inflows around Rs 60,000-70,000 crore, which would increase the Nifty return in a short duration.
These inflows are based on the mandate that the new government will bring in more radical measures to push the economy out of its current slump and the issues faced by the financial sector will be addressed in a much better fashion. The inflows might spread unevenly through this period as the ground data movement will also be integral to the pace at which these inflows are attracted.
We believe that as the inflows from FIIs push the Nifty returns higher, the DIIs will start adding to MF inflows, in later stages, as it takes only three to five months for retail investors to gather faith in the movement of economy and markets. Thus, DIIs participation would only come at a later stage.
Overall we believe, as of now, FIIs would continue to take Nifty at higher levels only via select stocks and there might be some inflows in select midcaps by HNIs.
(The author is Founder at Target Investing.)
Disclaimer: The views and investment tips expressed by investment expert on moneycontrol.com are his own and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.
ITC Chairman YC Deveshwar died early on May 11 after prolonged illness, CNBC TV 18 reported. He is survived by his wife and son. He was 72.
Born in Lahore on February 4, 1947, Deveshwar is an alumnus of the Indian Institute of Technology (IIT) Delhi and Harvard Business School.
He joined ITC in 1968.
He was appointed as a director on the board of the company on April 11, 1984, and became the chief executive and chairman of the board on January 1, 1996.
He was one of India's longest-serving corporate chiefs with over two decades at the helm as the executive chairman and chief executive officer at ITC until February 4, 2017.
After the company split the role of the executive chairman between chairman and chief executive officer on February 5, 2017, Deveshwar agreed to continue as chairman in a non-executive capacity at the request of the nomination and compensation committee and the board. He also played the role of a mentor to the
Between 1991 and 1994, he led Air India as Chairman and Managing Director.
United States President Donald Trump has ordered his top officials to begin the process to raise tariffs on almost all the imports from China, US Trade Representative Robert Lighthizer said on May 10.
This amounts to about $300 billion. This is in addition to the Chinese imports worth $200 billion on which Trump increased the import duty from 10 percent to 25 percent, beginning Friday.
"Earlier today, at the direction of the President, the United States increased the level of tariffs from 10 percent to 25 percent on approximately $200 billion worth of Chinese imports," Lighthizer said.
"The President also ordered us to begin the process of raising tariffs on essentially all remaining imports from China, which are valued at approximately $300 billion," he said.
The process for public notice and comment will be published shortly in the Federal Register. "The details will be on the USTR website on Monday as we begin the process prior to a final decision on these tariffs," Lighthizer said.
Expected to escalate trade war between US and China, the latest Trump move came as the Chinese Vice Premier concluded his two days of trade talks with the US team led by Lighthizer.
In a series of tweets, Trump described the talks as candid and constructive, but indicated taking a tough approach against massive imbalance of trade with China.
"Over the course of the past two days, the United States and China have held candid and constructive conversations on the status of the trade relationship between both countries," he said.
"The relationship between President Xi and myself remains a very strong one, and conversations into the future will continue," he added.
"In the meantime, the United States has imposed Tariffs on China, which may or may not be removed depending on what happens with respect to future negotiations!" Trump said.
Tariffs will bring in "far more" wealth to the United States than even a phenomenal deal of the traditional kind. "Also, much easier & quicker to do. Our Farmers will do better, faster, and starving nations can now be helped. Waivers on some products will be granted, or go to new source!" he said in another tweet.
"If we bought 15 Billion Dollars of Agriculture from our Farmers, far more than China buys now, we would have more than 85 Billion Dollars left over for new Infrastructure, Healthcare, or anything else. China would greatly slow down, and we would automatically speed up!" Trump said.
Referring to his latest direction, Trump said that the process has begun to place additional Tariffs at 25 percent on the remaining 325 Billion Dollars. "The US only sells China approximately 100 Billion Dollars of goods and products, a very big imbalance," he said.
"With the over 100 Billion Dollars in Tariffs that we take in, we will buy agricultural products from our Great Farmers, in larger amounts than China ever did, and ship it to poor & starving countries in the form of humanitarian assistance. In the meantime, we will continue to negotiate with China in the hopes that they do not again try to redo deal!" said the US President.
Trump said he is in no rush to conclude trade talks with China.
"Talks with China continue in a very congenial manner - there is absolutely no need to rush - as Tariffs are NOW being paid to the United States by China of 25 percent on 250 Billion Dollars worth of goods & products. These massive payments go directly to the Treasury of the U.S....," he said.
"We have lost 500 Billion Dollars a year, for many years, on Crazy Trade with China. NO MORE!" Trump said.
row become India's top crude oil supplier, meeting more than a fifth of the country's oil needs in 2018-19 fiscal year.
According to data sourced from the Directorate General of Commercial Intelligence and Statistics, Iraq sold 46.61 million tonne of crude oil to India during April 2018 and March 2019, 2 percent more than 45.74 million tonne it had supplied in 2017-18 fiscal.
hares of Essel Propack added 2.4 percent in the early trade on Tuesday after Private equity player Blackstone announced the acquisition of majority stake in company.
Blackstone is going to buy 51 percent from promoters of Essel Propack for Rs 134 per share and to make an open offer for 26 percent stake for Rs 139.19 per share, company said in BSE filing.
The value of the total transaction will come anywhere between Rs 2,157-3,211 crore.
Ashok Goel Trust and its affiliates currently hold around 57 percent of company.
Axis Bank posted profit of Rs 1,505 crore for the quarter ended March 2019, as provisions fell sharply and asset quality improved with a decline in slippages.
The bank had posted a loss of Rs 2,188.74 crore in the corresponding period last year. Higher NII, other income and operating income also supported profitability during the quarter.
Net interest income in Q4 grew by 21 percent year-on-year to Rs 5,705.6 crore with credit growth at 18 percent.
Other income or non-interest income increased 26 percent to Rs 3,526.3 crore and operating income shot up 37 percent to Rs 5,014.4 crore compared to year-ago.
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Asset quality of the bank improved considerably during March quarter. Gross non-performing assets as a percentage of gross advances dipped to 5.26 percent against 5.75 percent in the previous quarter and net NPA declined to 2.06 percent against 2.36 percent in Q3, which were on expected lines.
In absolute term, gross NPAs were lower by 13 percent at Rs 29,789.44 crore and net NPAs by 32 percent to Rs 11,275.6 crore compared to the previous quarter.
Slippages for the quarter at Rs 3,012 crore were lower than Rs 3,746 crore reported in the previous quarter and significantly lower than Rs 16,535 crore reported in March quarter 2018.
Reliance Industries, India's number one company by market capitalisation, reported a 9.8 percent growth in fourth quarter consolidated net profit to Rs 10,362 crore. This was driven by a 19.4 percent increase in quarterly revenue to Rs 1.54 lakh crore.
The company attributed the robust revenue performance to strong growth in its retail and digital services businesses which grew by 51.6 percent and 61.6 percent, respectively. Higher petrochemical volumes also contributed to growth in revenue, the company said.
Quarterly EBITDA was at Rs 20,832 crore, up 12.7 percent YoY, and operating margin stood at 15.02 percent. The company said the growth in operating profit was led by strong performance in the petrochemicals, retail and digital businesses.
The company's board has recommended a dividend of Rs 6.50 per equity share of Rs 10 each for the financial year ended March 31, 2019.
Q4 revenue from the petrochemicals segment increased 11.3% YoY to Rs 42,414 crore ($6.1 billion) mainly due to the increase in price realizations and volumes in PTA, PP, and Paraxylene.
Petrochemicals segment EBIT came in at Rs 7,975 crore, up 23.9% YoY as compared to Rs 6,435 crore in the corresponding quarter last year.
Petrochemical segment recorded EBIT margin of 18.8% as against 16.9% in Q4FY18 aided by strength in PX margins.
The company's Q4 gross refining margin (GRM) came in at $8.2/bbl against $8.8 a barrel reported in the December quarter of FY19, and $11/bbl in Q4FY18.
Retail segment revenue for Q4 grew by 51.6 percent to Rs 36,663 crore as against Rs 24,183 crore in the corresponding period of the previous year.
Retail business PBDIT for Q4 FY19 grew by 77.1 percent to Rs 1,923 crore as against Rs 1,086 crore in the corresponding period of the previous year.
Reliance Jio's fourth-quarter net profit increased 64.7 percent year-on-year to Rs 840 from Rs 510 in the same quarter last year on standalone revenue of Rs 11,106 crore as compared to Rs 7,128 crore in Q4FY18, a jump of 55.8%.
For the full year, Reliance Jio's FY19 net profit was up 309 percent YoY to Rs 2,964 crore from Rs 723 crore.
Reliance Jio’s subscriber base has crossed 300 million, which is the fastest operator globally to reach this milestone.
Mukesh D. Ambani, Chairman and Managing Director, Reliance Industries said, “During FY 2018-19, we achieved several milestones and made significant strides in building Reliance of the future. Reliance Retail crossed Rs 100,000 crore revenue milestone, Jio now serves over 300 million consumers and our petrochemicals business delivered its highest ever earnings."
India's growth trajectory holds immense potential for global stakeholders to establish energy, infrastructure and technology collaboration with the country, a UN forum here has been told.
Counsellor in India's Permanent Mission to the UN Ashish Sinha stressed on Wednesday at the ECOSOC Forum on Financing for Development Follow Up that India wanted to use growth as a mechanism to pull the maximum number of people out of poverty and improve quality of life in an inclusive manner.
"India has retained its position as the world's fastest growing major economy. Indian economy has been growing over 7 percent for several years and the forecast for the future is equally robust," he said.
Sinha noted that India improved its ranking by 23 positions in the World Bank's Ease of Doing Business rankings last year.
India's services exports rose 5.5 per cent to USD 16.58 billion in February 2018-19 from USD 15.71 billion in the same month a year ago, data from the Reserve Bank showed Monday.
However, the exports during February 2019 were lower than January's USD 17.75 billion.
Services imports in February 2018-19 declined by 3.3 per cent to USD 9.81 billion, compared to USD 10.14 billion in the year-ago month, as per the RBI data on 'India's International Trade in Services: February 2019'.
The imports stood at USD 11.3 billion during January this year.
Retail inflation inched up to 2.9 percent in Mar'19, the second successive month of hardening. Food inflation turned positive after 5 months. Core inflation, however, is at the lowest since Oct'17.
Tata Consultancy Services (TCS) reported healthy net profit growth for March quarter on April 12 which was higher than analyst estimates. The company reported a beat on net profit and revenues while it missed estimates in terms of EBIT as well as margins.
TCS closed 0.26 percent lower at Rs 2,013 on Friday on the BSE.
The Reserve Bank of India, in consultation with the government, constituted a committee led by the central bank's former Governor Bimal Jalan to look into its Economic Capital Framework.
The committee also comprises former RBI Deputy Governor Rakesh Mohan, central board members Bharat Doshi and Sudhir Mankad, Economic Affairs Secretary Subhash Chandra Garg and RBI Deputy Governor NS Vishwanathan, according to a statement on the RBI's website. It is expected to submit its report within 90 days of its first meeting.
The panel would review the status, need and justification of various provisions, reserves and buffers held by the RBI. It would suggest an adequate level of provisioning that the RBI needs to maintain. It would also determine whether the RBI is holding provisions, reserves and buffers in surplus or deficit of said levels, and would propose a suitable profit distribution policy taking into account all the likely situations.(Source : Bloomberg)
State-owned Oil and Natural Gas Corporation Ltd. will buy back shares worth Rs 4,022 crore as the government seeks payouts from cash-rich public sector units to bridge fiscal deficit.
India's largest oil and gas explorer will repurchase up to 25 crore shares, representing 2.35 percent stake, at Rs 159 apiece, according to its exchange filing. It set Jan.4 as the record or cut-off date to ascertain which shareholders will be eligible.
The government, which owns 67.48 percent in ONGC, may get Rs 2,714 crore from the buyback, according to BloombergQuint's calculations. It has identified at least 11 state-run entities to raise funds through buyback to bridge the budget gap. In all, it has a target to mop up Rs 80,000 crore this financial year through divestments.
Shares of ONGC briefly fell after the announcement but recovered to trade 0.3 percent higher at 3:15 p.m. compared with a 0.1 percent decline in the benchmark Nifty 50 Index.(Source : Bloomberg).
The Bombay High Court denied interim relief to Kotak Mahindra Bank Ltd. regarding the Reserve Bank of India's direction to dilute its promoter shareholding.
The case has been adjourned till Jan. 17 and the RBI will have to respond with its submission before that. As per RBI's timeline, Uday Kotak needs to bring down his stake in the bank to 20 percent from 29.73 percent by Dec. 31.
Kotak's counsel urged the court to prevent the RBI from taking any coercive regulatory action till the next hearing. The banking regulator had changed its stance in an Aug. 13 letter to the lender and asked it to reduce promoter holding as percentage of "paid-up equity voting capital" from an earlier communication that mentioned "paid up capital", he said. The new RBI governor should be allowed to consider the matter and respond to the bank's September letters which explained its position, the counsel said.
The Bombay High Court bench, led by Justice BP Dharmadhikari, held that the RBI is a "responsible regulatory body" and the decision will be left to it on whether a regulatory action should be taken if the bank doesn't comply with its direction to reduce promoter holding to 20 percent by Dec. 31.(Source : Bloomberg)
Reserve Bank of India Governor Urjit Patel has resigned from his post, making him the first governor since 1990 to step down before his term ends. Patel's three-year term was to end in September 2019.
"On account of personal reasons, I have decided to step down from my current position effective immediately. It has been my privilege and honour to serve in the Reserve Bank of India in various capacities over the years. The support and hard work of RBI staff, officers and management has been the proximate driver of the Bank's considerable accomplishments in recent years. I take this opportunity to express gratitude to my colleagues and Directors of the RBI Central Board, and wish them all the best for the future."
Speculation of Patel's exit had picked up after differences between the RBI and the government spilled out in the open. This first happened when RBI Deputy Governor Viral Acharya delivered a hard hitting speech on the need to ensure the independence of the central bank. The speech was delivered with the backing of Patel, suggested the footnotes in Acharya's speech.(Source : Bloomberg)
RBI's monetary policy committee keeps the repo rate unchanged at 6.50% in line with market expectations, and retained its 'calibrated tightening' stance. Here are the latest updates on the RBI monetary policy review meeting
The Reserve Bank of India (RBI) at its monetary policy review meeting on Wednesday kept its repo rate unchanged, citing benign inflation outlook and improved investment activity. The six-member monetary policy committee (MPC) voted unanimously to keep the repo rate at 6.5%, but voted 5-1 in favour of maintaining the policy stance as "calibrated tightening". The MPC also lowered its inflation projection sharply to 2.7-3.2% from 3.9-4.5% for the second half of 2018-19.(Source : Mint)
In its biggest step in the deals space yet, Hindustan Unilever Ltd on Monday said that it will merge with GSK's healthcare business in India. The transaction values the total business at Rs.31,700 crore. The merger includes the totality of operations within GSK Consumer Healthcare India Ltd, including a consignment selling contract to distribute GSK Consumer's over-the-counter and oral health products in India, the company said in a statement.
GSK Consumer Healthcare India is the market leader in the health food category, with iconic brands such as Horlicks and Boost, and a product portfolio supported by strong nutritional claims. This portfolio has a long history in India with Horlicks having originally been introduced in the 1930s.
The merger of GSK Consumer with HUL will be on a basis of a share swap ratio of 4.39 HUL shares for each GSK Consumer share, implying a total equity value of ?31,700 crore for 100% of the latter. Following the issue of new HUL shares, Unilever's holding in HUL will be diluted from 67.2% to 61.9%, the company said.(Source : Mint).
After peaking in the first quarter of the current year, growth in the Indian economy moderated in the July-September period, as agriculture and industry slowed.
Gross domestic product grew by 7.1 percent in the second quarter of the financial year compared to 6.3 percent in the same quarter last year, showed data released by the Central Statistics Office on Friday. GDP grew at a stronger clip of 8.2 percent in the first quarter of the year, helped partly by a strong base effect.
In gross value added terms, the economy grew at 6.9 percent in the July-September period. This, too, was a moderation compared to the 8 percent GVA growth reported in the first quarter.
For the full year, the Reserve Bank of India expects GDP growth at 7.4 percent. The data released today may lend itself to a downside bias to those growth expectations.(Source : Bloomberg).
The Supreme Court on Monday agreed to hear the Centre's plea for Rs 2,940 crore bank guarantee from Reliance Communication arising from outstanding spectrum dues. The case was brought before a bench headed by Justice A.K. Sikri who said it would be heard tomorrow.
Seeking that the bank guarantee be furnished, Additional Solicitor General P. S. Narasimha appearing for the Centre told the court that it was looking for some kind of securement. Reliance Communication Ltd, on the other hand, through its counsel Kapil Sibal, said the company was not in a position to make the payment.
"I can't give a bank guarantee. Banks are secured creditors. They will be in jeopardy and the deal will fall through," Sibal said.
On 1 October, the telecom tribunal had permitted the debt laden RCom to go ahead with its spectrum sale to Reliance Jio Infocomm (Jio). The Anil Ambani-led RCom had challenged the "unjustly sought security for the alleged demands" by the telecom department with regard to spectrum usage charges.
Thereafter, RCom was given time by the apex court till 15 December to clear the pending payment of Rs.550 crore towards telecom equipment manufacturer Ericsson India Pvt. Ltd. Delayed payment was to attract an interest of 12% per annum.
The apex court's ruling had come on a contempt plea by Ericsson for non-payment of ?550 crore by RCom by the 30 September deadline.(Source : Mint).
Dewan Housing Finance Corporation Ltd (DHFL) on Wednesday posted a net profit of Rs 439 crore during the July-September quarter against a net profit of Rs 288 crore in the same quarter last year.
Revenue from operations stood at Rs 3,516 crore, compared with Rs 2,628 crore last year.
The company also approved issue of non-convertible secured/unsecured redeemable debentures for up to Rs 10,000 crore, and non-convertible perpetual unsecured debentures, up to Rs 1000 crore.
DHFL recently repaid commercial paper worth Rs 1,775 crore.
The company is in the process of raising much more resources to increase the liquidity level so that the company continues to remain well-equipped to meet all the financial obligations. DHFL's borrowings are diversified with a banking consortium of 31 banks, NCDs, CPs, ECB, masala bonds and retail public deposits.(Source : Mint)
The Dalmia Group moved the Supreme Court challenging the National Company Law Appellate Tribunal's approval for the sale of Binani Cement Ltd. to UltraTech Cement Ltd.
A three-judge bench headed by Chief Justice Ranjan Gogoi agreed to Dalmia's plea for an early hearing, and listed the case for Nov. 19, Bloomberg reported. The group is confident of getting a favourable verdict from the apex court, Dalmia Bharat's Group Chief Executive Officer Mahendra Singhi told BloombergQuint in an interview. Singhi, however, refused to share details of the grounds on which the group challenged the NCLAT's order, saying that that matter was sub judice.
On Wednesday, the appellate tribunal approved UltraTech Cement's plan to acquire debt-laden Binani Cement, holding that the rival bid by Dalmia Group was "discriminatory" to creditors of the stressed cement maker.Dalmia Bharat-led Rajputana Properties had initially emerged as the top bidder for acquisition of assets of Binani Cement. Later, UltraTech, the second highest bidder, came back with a higher offer, backed by the original promoters of Binani Cement. (Source : bloomberg)
Sun Pharmaceutical Industries Ltd. reported an unexpected loss for the quarter ended September due to a one-off anti-trust litigation provision.
The company posted a net loss of Rs 219 crore against the Rs 912 crore profit reported in the year-ago period, the country's largest drugmaker said in an exchange filing. The company posted a one-time loss of Rs 1,217 crore for the estimated settlement amount payable to all the remaining plaintiffs an antitrust litigation related to sleep apnea drug Modafinil in the U.S.
Revenue in the July-September period rose 4 percent to Rs 6,938 crore year-on-year lower than the Rs 7,600 crore estimated by analysts.Operating income or the earnings before interest, tax, depreciation and amortisation rose 11 percent to Rs 1,531 crore. The operating margin expanded 180 basis points to 22.5 percent. (Source : Bloomberg)
Net profit came in at Rs 460 crore in the quarter ended 30 September, compared with Rs 334 crore a year earlier. Dheeraj Hinduja to step in as executive chairman
Ashok Leyland Ltd posted a lower-than-expected 37.5% rise in second-quarter profit on Tuesday due to higher raw material costs.
Profit was Rs 460 crore in the quarter ended 30 September, compared with Rs 334 crore a year earlier, the company said.
Analysts on average had expected a profit of Rs 513 crore, according to IBES data from Refinitiv.
Revenue from operations grew 25.2% to Rs 7,608 crore. However, cost of materials jumped 52.5%, pushing total expenses 23.2% higher to Rs 6,960 crore.
Chief executive officer Vinod K. Dasari resigned after nearly 14 years with the company, the truckmaker said in a separate statement. Dheeraj Hinduja will step in as executive chairman with immediate effect. (Source : Mint)
The Reserve Bank of India has called for the next meeting of the central board on Nov. 19, three people familiar with the matter told BloombergQuint on condition of anonymity. The suggestion of the next date of the board meet went out on Wednesday, people cited above confirmed. This, even as government officials maintained that the issues between the RBI and the government must be seen in 'larger public interest.'
Earlier in the day, the government had issued a statement in light of the public spat that has broken out between the RBI and the Finance Ministry. 'The autonomy for the Central Bank, within the framework of the RBI Act, is an essential and accepted governance requirement," said the government in its statement. "Both the Government and the Central Bank, in their functioning, have to be guided by public interest and the requirements of the Indian economy," the statement said.
The RBI's board meeting call came within hours of that statement being put out and could be seen as a sign of easing tensions between the two sides, although there is no formal indicator of a consensus emerging on any of the contentious issues.(Source : Bloomberg)
ICICI Bank Ltd. returned to profitability in the July-September quarter due to lower provisioning for bad loans and higher interest income.
The private lender reported a Rs 909-crore profit, about 56 percent lower than in the same quarter last year, according to its stock exchange filing. Analysts tracked by Bloomberg had expected a profit of Rs 950 crore. In previous quarter ended June, ICICI Bank had reported its first loss at least since 2001 as it set aside more money to cover for bad loans.
Net interest income, or the core income of the bank, rose 12.4 percent to Rs 6,418 crore in the three months to September. That was higher than the estimated Rs 6,163 crore.
ICICI Bank's asset quality also improved during the quarter. Gross non performing loans as a ratio to the total advances fell 35 basis points sequentially to 9.3 percent. Net NPA ratio also fell to 4.05 percent from the previous quarter's 4.67 percent . Provisions stood at Rs 3,994 crore, nearly 33 percent lower than the April-June period.
> Net interest margin stood at 3.33 percent compared with 3.24 percent last quarter.
> Loan book grew 13 percent, an 11-quarter high, over the last year.
> Retail loans grew 20 percent year-on-year and formed about 57 percent of its total loan portfolio.
> Provision coverage ratio rose 330 basis points 69.4 percent.
(Source : Bloomberg)
The Reserve Bank of India (RBI) has asked Chennai-headquartered Equitas Holdings Ltd and Bengaluru-headquartered Ujjivan Financial Services Ltd to comply with its small bank licence norms that require them to list banking subsidiaries within three years of start of operations.
At the same time, the promoter companies need to maintain the promoter shareholding in the banks at least 40 per cent, for a period of five years from the date of commencement of business of their SFBs. Both the small finance banks (SFBs) have been advised to comply with all the requirements of the RBI Guidelines for Licensing of Small Finance Banks dated November 27, 2014.
As per the RBI guidelines, Equitas SFB has to be listed by September 4, 2019 and the promoter has to maintain their shareholding in the bank at least 40 per cent, for a period of five years from its date of commencement of business, i.e., by September 4, 2021.
Ujjivan SFB has to list by January 31, 2020 and the promoter has to maintain its shareholding in the bank at least 40 per cent, for a period of five years from the bank's date of commencement of business, i.e., until January 31, 2022. Equitas Holdings Ltd and Ujjivan Financial Services were trading down 19.5 per cent and 15.5 per cent, respectively, at the time of writing this story. Market players say these companies are attracting holding company discount. Equitas Holdings said it will approach the RBI for an approval to merge with the bank at appropriate time, post the lock-in period of five-years.
Ujjivan Financial Services said subsequent to the listing of its bank and closer to January 2022, the company will approach RBI to consider its merger with the bank.(Source : The Hindu).
RBI allows banks to use government securities equal to their incremental outstanding credit to NBFCs, over and above their outstanding credit to them as on October 19, to be used to meet liquidity coverage ratio requirements
The Reserve Bank Friday announced more measures to increase liquidity flows to the non-banking financial companies. The RBI permitted banks to use government securities equal to their incremental outstanding credit to NBFCs, over and above their outstanding credit to them as on October 19, to be used to meet liquidity coverage ratio requirements.
The move will help provide liquidity to housing finance companies (HFCs) and non-banking finance companies (NBFCs) which have come under pressure following series of default by IL&FS group companies." banks will be permitted to also reckon Government securities held by them up to an amount equal to their incremental outstanding credit to NBFCs and HFCs, over and above the amount of credit to NBFCs and HFCs outstanding on their books as on October 19, 2018, as Level 1 HQLA under FALLCR within the mandatory SLR requirement," RBI said in a notification.
This will be in addition to the existing FALLCR of 13 per cent of total deposits, and limited to 0.5 per cent of the bank's total deposits. Liquidity coverage ratio refers to highly liquid assets that financial institutions need to hold in order to meet short-term obligations.
TCS net profit rose 3.4% to $1.1 bn in the Sept quarter from $1.08 bn in the preceding three months, while operating margin jumped 150 basis points to 26.5% from 25% in the April-June period
Tata Consultancy Services Ltd (TCS) kicked off the fiscal second-quarter earnings season by reporting its fastest sequential growth in over four years.
In constant currency terms, TCS's September quarter revenue rose 3.7% from the preceding three months. It grew 10% from a year earlier. Currency fluctuations, however, took some sheen off the company's growth as dollar revenue increased at a slower 3.2% pace to $5.21 billion in the quarter ended 30 September from the preceding three months.
Net profit rose 3.4% to $1.1 billion in the September quarter from $1.08 billion in the preceding three months, while operating margin jumped 150 basis points to 26.5% from 25% in the April-June period.
The six-member monetary policy committee led by Governor Urjit Patel voted 5-1 to keep the repo rate at 6.50%.
India's monetary policy committee surprised markets by keeping interest rates unchanged, as it awaits for greater clarity on the evolving growth-inflation scenario in the economy. The six-member panel, however, changed its stance from 'neutral' to 'calibrated tightening', suggesting more rate hikes lie ahead.
Separately and importantly, in a measure which seemed to be aimed at curbing currency volatility, the Reserve Bank of India proposed a 'voluntary retention scheme' for foreign portfolio investors. The scheme offers increased investment flexibility to investors who choose to retain a portion of their investments in India for a time period of their choosing.(Source : Bloomberg)
Chanda Kochhar has quit as CEO of ICICI Bank with immediate effect. The private lender has appointed Sandeep Bakhshi as managing director & chief executive officer for five years
Facing enquiry over charges of conflict of interest, ICICI Bank managing director and CEO Chanda Kochhar today quit the bank. India's third largest lender by assets, ICICI Bank Ltd, has appointed Sandeep Bakhshi as chief executive for a term of five years, replacing Chanda Kochhar, who sought early retirement, the bank said today. The former head of the bank's life insurance arm, Bakhshi took the helm on an interim basis in June, when Kochhar went on leave during an inquiry into an alleged conflict of interest that triggered months of controversy.
"The enquiry instituted by the board will remain unaffected by this and certain benefits will be subject to the outcome." the bank said in a statement after a board meeting. Kochhar, 56, who had headed ICICI Bank since May 2009, is also stepping down from the board of directors of its units, the bank added. Bakhshi will lead ICICI for five years, subject to regulatory approval, while other conditions of his appointment remain unchanged, the bank said. (Source : Mint)
The central bank placed some restrictions on Bandhan Bank Ltd's operations as one of India's youngest lenders failed to lower promoter holding within the cap prescribed by the regulator.
The Reserve Bank of India stopped Bandhan Bank from opening new branches unless it takes its approval each time, the microlender-turned-universal bank informed exchanges. The RBI also froze the remuneration to Managing Director and Chief Executive Officer Chandra Shekhar Ghosh at the current level till further notice.
Bandhan Bank was unable to bring down the shareholding of the non-operative financial holding company to 40 percent within three years of starting operations. The condition was mentioned in the RBI's February 2013 licensing guidelines. The bank was granted in-principle approval in April 2014 and began operations a few months later.
Moreover, it has to lower the holding company's stake to 20 percent within 10 years of starting the business and to 15 percent within 12 years.
Bandhan Bank is the second lender to face RBI action over promoter holding. The regulator last month rejected the tool used by the Kotak Mahindra Bank to reduce promoter Uday Kotak's stake within the RBI-mandated limits. The bank decided to issue perpetual non-cumulative preference shares to bring down his holding to 20 percent of the paid-up equity capital. Yet, the stake would have stayed at 30 percent of post-equity issue capital. The RBI has mandated Kotak to pare holding to 20 percent by December this year and 15 percent by March 2020.(Source : Bloomberg)
The Reserve Bank of India on Thursday allowed banks to dip further into statutory cash reserves in a bid to ease a liquidity squeeze afflicting the nation's money markets.
RBI in a statement said banks could 'carve out' up to 15 per cent of holdings under the statutory liquidity reserves to meet their liquidity coverage ratio (LCR) requirements as compared to 13 per cent now.
This resulted from a rise in the facility to avail funds for LCR to 13 per cent from 11 per cent, effective October 1, RBI said in a statement.
The move by the central bank follows concerns over tight liquidity conditions and banks' unwillingness to lend to NBFCs.
RBI said it "stands ready to meet the durable liquidity requirements of the system through various available instruments depending on its dynamic assessment of the evolving liquidity and market conditions." (Source : Business Today)
India's largest state-run insurer, Life Insurance Corporation (LIC), will not allow the country's beleaguered Infrastructure Leasing & Financial Services (IL&FS) to collapse, LIC Chairman V.K. Sharma told reporters on Tuesday.
All options, including increasing LIC's stake in IL&FS, are open, Sharma said.
IL&FS has revealed a series of delays and defaults on its debt obligations and inter-corporate deposits in recent days. For the third time in a month, crippled infrastructure conglomerate IL&FS Financial Services Monday defaulted on interest payments on commercial papers, PTI reported on Monday.
The interest payment on the papers were due Monday, the company informed the exchanges. The company said it will not be able to access commercial papers market for up to six months from the date of repayment of this obligation. The company did not quantify the default amount.
Meanwhile, a finance ministry official said that cutting bank's cash reserve ratio (CRR), or the amount of funds they set aside with the central bank, are among options that the Reserve Bank of India (RBI) could look at to improve liquidity in the system.
The central bank could also consider buying more bonds from the open market and open a special window for mutual funds to inject liquidity, the official told reporters, declining to be identified as the discussions are not public. Presently, the CRR is at 4 percent of bank's total deposits.(Source : Mint)
Finance minister Arun Jaitley on Friday night announced a series of measures to boost market confidence, curb the widening current account deficit and stabilize the rupee after a marathon meeting with Prime Minister Narendra Modi to discuss the nation's economy.
Jaitley said five decisions have been taken to address the issue of the current account deficit, which touched 2.4% of gross domestic product in the June quarter. Mandatory hedging conditions for infrastructure loans through the external commercial borrowing (ECB) route will be reviewed and a 20% exposure limit on investments by foreign portfolio investors in debt to a single corporate group will be removed.
Government will permit the manufacturing sector to access ECBs up to $50 million with residual maturity of one year instead of three years. Masala bonds will be exempted from withholding tax this financial year and Indian banks will be allowed to become market makers in masala bonds including by underwriting.
In addition, "government will take efforts to reduce non-essential imports," Jaitley said against the backdrop of India's rising trade deficit which stood at $17.4 billion in August.(Source : Mint)
India's economy accelerated to 8.2% in the April-June quarter of 2018-19 due to a pick up in manufacturing activity, helped by a lower base during the same period a year ago. Economic growth had dipped to 5.6% in the June 2017 quarter due to destocking by companies ahead of the implementation of the Goods and Services Tax from July that year.
In an update to its World Economic Outlook (WEO), IMF trimmed India's growth projection for 2018-19 by 10 basis points to 7.3%, citing negative effects of higher crude oil prices on domestic demand and faster-than-anticipated monetary policy tightening due to higher-than expected inflation.
The Bank also said India's $2.6 trillion economy surpassed France's in 2017 to be the world's sixth largest, and it was not far before the UK.
GDP growth for the year ended 31 March at 6.7% was a tad higher than previously estimated by the Central Statistics Office but still slower than the 7.1% growth recorded in the previous year.
On Wednesday, the Reserve Bank of India said economic growth was expected to accelerate to 7.4% in the current fiscal, from 6.7% the previous one, despite risks posed by higher oil prices and global trade tensions.(Source : Mint).
India's largest insurer Life Insurance Corporation (LIC) of India Ltd will purchase 14.9 percent equity stake in IDBI Bank, as a first step towards taking majority ownership in the lender.
LIC has given "in principle approval for subscription of the equity shares on preferential basis subject to their total exposure not exceeding 14.90 percent of post issue capital of IDBI Bank at any point of time...", the bank said in a stock exchange notification on Tuesday. The state-owned lender will approach its shareholders for an approval on this deal on August 31, the notification said.
According to B Sriram, managing director of IDBI Bank, this is the first tranche of the deal between LIC and IDBI Bank.
The government had earlier approved a transfer of 51 percent majority ownership in IDBI Bank to LIC. However, for LIC to increase stake in the bank beyond 15 percent, approvals are needed from the insurance regulator. Also the Reserve Bank of India's approval is needed for the transfer of majority ownership to LIC. (Source : Bloomberg).
Public sector banks may end up taking a 60-70% haircut on loans given to power companies.
The Allahabad High Court on Monday refused to grant interim relief to power companies, which had filed pleas against the Reserve Bank of India (RBI) regulations on stressed assets, CNBC-TV18 reported. Public sector banks may end up taking a haircut of 60-70% on loans given to power companies.
The Reserve Bank of India (RBI), in its 12 February circular, tightened norms for settling bad debt by setting timelines for resolving non-performing assets (NPAs). It allowed lenders to initiate insolvency proceedings against defaulting companies. Although banks were given several options to arrive at a resolution plan, they had 180 days to do so. The central bank also introduced the concept of a one-day default under which banks have to identify incipient stress even when repayments are overdue by a day.
The Allahabad High Court had earlier ordered lenders to avoid acting against power producers after they sought relief against the RBI's new stress resolution norms. Also, in a relief to power producers, the Supreme Court had refused to stop Allahabad High Court from hearing these petitions.(Source : Mint).
The National Company Law Appellate Tribunal today declined to pass an interim order on Cyrus Mistry's plea against the conversion of Tata Sons Ltd. to a private limited company.
But the two-judge bench headed by NCLAT Chairperson Justice SJ Mukhopadhyay asked Tata Sons not to take steps on the sale of minority shareholders stake until the appellate tribunal decided on Mistry's plea alleging oppression by the group holding company.
The NCLAT will start hearing arguments on Mistry's appeal against the National Company Law Tribunal order that removed him as Chairman of Tata Sons on Sept. 24.
Mistry was represented by Senior Advocate CA Sundaram who had argued that there was no urgent reason for this conversion and it should be stopped until Mistry's plea against his removal is decided by the NCLAT.
Senior Advocate Abhishek Manu Singhvi, who represented Tata Sons, had informed the court that the Registrar of Companies had recognised Tata Sons as a private limited company on Aug. 6.(Source : Bloomberg).
Anil Ambani-led Reliance Communications Ltd clinched the approval of its overseas bondholders to ease the carrier's debt burden, putting the company a step closer to averting bankruptcy. The operator, which defaulted last year on a $300-million bond, got 83% of bondholders to approve the plan, the company said in an exchange filing.
"Reliance Communications bondholders approved the tender and exchange offer of $300 million bonds with an overwhelming majority of over 83%, at their meeting held today, 24 August 2018, in London. "RCom said in a statement. Following the offer, bondholders will receive cash proceeds of up to $118 million. "Bondholders will also get $55 million bonds to be issued by Global Cloud Xchange Ltd (holding company of GCX), a foreign subsidiary of RCom." the statement added. The Global Cloud Xchange bonds will be unsecured and will carry a coupon of 0.1% with maturity of four years, it added (Source : Mint)
L&T will buy back up to 60 million shares, at a premium of more than 13% over Tuesday's share price, aggregating up to 4.29% of paid-up equity capital.
Larsen & Toubro Ltd. will buy back as much as Rs 9,000 crore of its shares, in a first for the country's largest construction and engineering company.
The company will repurchase 6 crore shares (or 4.3 percent of equity) at Rs 1,500 a piece, according to its stock exchange notification today. The price is higher than the stock's all-time high of Rs 1,470 it clocked on Feb. 01. (Source : Bloomberg)
Jet Airways India Ltd., the carrier that deferred earnings this month pending endorsement of its books by auditors, said it's unaware of any probe initiated by government authorities after a report said the company is under scrutiny for alleged embezzlement of funds.
The Registrar of Companies, which is under the Ministry of Corporate Affairs, has started an initial inquiry into potential wrongdoings such as diversion of cash, and will also look at the role of auditors, people familiar with the matter said, asking not to be identified citing government rules. The examination is only preliminary, and it may turn into a formal probe upon any evidence, one of them said.
Jet Airways "has not received any communication from the Ministry of Corporate Affairs in this regard," it said in a statement to the stock exchange Tuesday.
In a letter sent to ONGC last week, the government did not state how much of ONGC Videsh stake should be offered to outside investors.
The government has asked its biggest state-owned firm Oil and Natural Gas Corp. Ltd (ONGC) to list its overseas unit ONGC Videsh Ltd, according to a letter seen by Reuters. The move to float the unit which has investments in 11 producing assets in countries including Russia, Brazil and Iran is part of a government push to sell state-assets to raise funds.
A listing would also help unlock value in the unit by improving its corporate governance and efficiency, the letter from the Department of Investment and Public Asset Management to ONGC said. The letter, sent last week, did not state how much of ONGC should be offered to outside investors.The letter said any state-owned firm with a positive net worth and no accumulated loss should be listed to unlock value. The listing would help the government meet its divestment targets and make up for a failed plan earlier this year to sell a stake in Air India.(Source : Mint).
The Securities and Exchange Board of India (Sebi) is planning to limit investor's exposure to shares and equity derivatives in line with their net worth, said three people with knowledge of the development. The move is aimed at preventing individuals from going overboard on equity investments, considered riskier than bonds.
The proposal is similar to the concept of accredited investors in some developed markets. An accredited investor is one who meets requirements regarding income, net worth, asset size, governance status or professional experience. The US regulator has adopted requirements for accredited investors to protect those who may be unable to sustain the economic risk of investing in unregistered securities. The proposal, if implemented, could impact a number of equity investors. (Source : Economic Times)
Paresh Sukthankar, deputy managing director and a member of the founding team at HDFC Bank Ltd, has resigned.
In a notification to stock exchanges, the bank said that Sukthankar has tendered his resignation as Deputy Managing Director, to be effective 90 days from the close of business hours on Friday.
Sukthankar's resignation comes as a surprise as he was considered one of the front-runners to succeed MD and chief executive officer (CEO) Aditya Puri, who is set to retire in October 2020.
The Securities and Exchange Board of India (Sebi) on Friday said its new guidelines do not bar investors from holding shares in the physical form even after December 5. The clarification comes after the market regulator received several calls concerning the applicability of its directive. The regulator had said in July that the transfer of shares of listed companies had to be in the dematerialised mode from December 5.
"The new amendment does not prohibit investors from holding shares in the physical form. Investors have the option of holding shares in the physical form even after December 5, 2018." Sebi said in a statement. The new rule does not apply to transfer of title of shares by way of inheritance or succession and interchanging of the order of the name of shareholders.
Besides, the regulator said any investor desirous of transferring shares held in the physical form after December 5 can do so only after the shares are dematerialised. Shares in the demat form will help in having a transparent record of shareholding at companies amid rising concerns over beneficial ownership of entities.(Source : Mint)
India's biggest IT services company TCS has announced 18 August, 2018, as the record date for buyback of shares. TCS shareholders will be able to participate in the buyback, if they holds shares in their demat accounts as on the record date.
A buyback is a mechanism through which a company repurchases a specific amount of its outstanding shares. Buybacks help to improve the earnings per share and return on equity. "We would like to inform you that the promoter and promoter group of the company have communicated their intention to participate in the proposed buyback" TCS had said in a BSE filing.
The buyback will take place through the tender route, in which TCS will accept shares on a proportionate basis during the buyback period. According to Sebi's mandate, companies have to reserve 15% of any buyback for small shareholders with holdings of less than Rs 2 lakh. This will increase the acceptance ratio for TCS retail investors who want to participate in the buyback offer.(Source : Mint)