Trai issues draft rules on network testing norms for wireline services

The Telecom Regulatory Authority of India (Trai) on Tuesday issued draft recommendations on ‘network testing before commercial launch of wireline services’ as it mooted a 90-day limit on the test phase involving trial subscribers in such cases.

Trai has sought stakeholders’ views on the draft recommendations that are modelled on the lines similar to norms that it had previously prescribed in the case of mobile services.

“Most of the issues raised during the consultation process for the norms for network testing before commercial launch for mobile services, are equally applicable for wireline access services. However, according to the reference received from the Department of Telecom (DoT), this consultation paper on draft recommendations is issued to solicit the views of the stakeholders for specifying the norms of network testing before commercial launch of services for wireline access services,” Trai said.

According to the draft recommendations, a telecom service provider should be allowed to enrol test subscribers in the trial phase to carry out the network testing before commercial launch of its services.

“The authority recommends that there should be no restriction on the time-limit, if the network testing is conducted using wireline telephone test connections given to employees and business partners for test purpose only,” it said.

The number of test subscribers that can be enrolled by an operator in a circle should be limited to 5 per cent of its installed network capacity for that area.

“The service provider will submit the detailed capacity calculations of the network to DoT and Trai at least 15 days before commencing enrolment of test subscribers,” it added.

The draft recommendations also said that there should be a limit of 90 days on the test phase involving test subscribers.

“However, if the TSP fails to conclude network testing due to valid reasons, it may make a representation to the licensor, seeking additional time for network testing giving detailed justification, which may be decided by the licensor on a case-to-case basis. The requisite norms to be followed for extension of timeline for network testing may be formulated by the licensor," Trai said.

The duration for network testing provided to the operator should not exceed 180 days, according to the draft.

Trai has said that written comments on its latest consultation paper should be submitted by January 30, 2020, and counter-comments by February 13, 2020.

WHAT THE DRAFT NORMS SAY

Telecom service provider should be allowed to enrol test subscribers in the trial phase to carry out the network testing before commercial launch of its services

Number of test subscribers that can be enrolled by an operator in a circle should be limited to 5 per cent of its installed network capacity for that area

The draft recommendations also said that there should be a limit of 90 days on the test phase involving test subscribers

Lodha Group calls for unconventional policies to fight growth woes

India’s top builder is clamoring for unconventional policy measures to get the nation out of the worst economic slump in more than six years.

“When demand is as tepid as it is right now in certain parts of the economy and sentiment is negative, we need a bazooka to come out and change sentiment,” Abhishek Lodha, managing director at Lodha Group, said in an interview.

Calls for authorities to unveil more steps have been gaining steam. India’s central bank has struggled to revive economic growth despite being the most aggressive slasher of rates among Asian peers. Government measures have also failed to spur growth. “We have a lot of liquidity, but it’s trapped liquidity in the banking system,” Lodha said.

New projects surged 37.4% to Rs 4.26 trillion in Dec quarter: Report

There has been an increase of over a trillion rupees in new projects from October to December 2019, compared to the same 3-month period year-ago.

New projects worth Rs 3.1 trillion were seen in December 2018. This has risen by 37.4 per cent on a year-on-year basis to Rs 4.26 trillion, showed data from project-tracker Centre for Monitoring Indian Economy (CMIE). The body releases capex data at the end of every quarter.

It also showed that the proportion of ‘stalled project’ is down 81.8 per cent to Rs 0.58 trillion. Completed projects remain at the same level, with numbers for December 2018 at Rs 1.37 trillion. It is Rs 1.36 trillion in December 2019.

Interestingly, the rise in new projects is despite a fall in capacity utilisation. It was at 68.9 per cent in the September quarter according to the Reserve Bank of India, as noted in its December 19 Monetary Policy Committee Meeting minutes. It was at 73.6 per cent previously. A similar decline is seen on a seasonally adjusted basis as well.

"Seasonally adjusted CU (Capacity Utilisation) also fell to 69.8 per cent from 74.6 per cent during the same period,” it said. This means that companies are increasingly unable to use their existing production capacity, which gives them limited incentive to invest in adding capacity. This has weighed on capital goods companies which benefit when companies invest in new factories.

Marquee capital companies such ABB India and Siemens are seeing lower demand, noted brokerage firm Motilal Oswal Financial Services. Order flow growth fell to 5 per cent for ABB in recent data. Siemen’s order inflow fell 14 per cent. This in turn is said to be because of a slowdown in other markets such as auto, food and beverages, said the 6th December Sector Update report authored by research analysts Nilesh Bhaiya and Pratik Singh.

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The government has sought to push investments of its own. Finance Minister Nirmala Sitharaman chalked out a Rs 102-trillion infrastructure investment plan on Tuesday, some of it already in progress.

Infrastructure projects currently face multiple headwinds, according to the Report of the Task Force on the National Infrastructure Pipeline released on the last day of the year.

“The major constraints faced are availability of funds for financing large projects, lengthy processes in land acquisition and payment of compensation, environmental concerns, time and cost overruns due to delays in project implementation, procedural delays and lesser traffic growth than expected, increasing the riskiness of the projects resulting in stalled or languishing projects and shortfall in funds for maintenance,” it said.

It has sought to address some of these issues through financial sector reforms such as promoting the development of bond and credit markets for easier access to the capital required for completing such projects, better monitoring mechanisms and by creating an enabling environment overall through ironing out of environmental and sustainability issues.

Meanwhile, analysts have been hopeful of a turnaround in order inflow too.

“...the medium-term opex-related opportunities appear promising, given the faster adoption of such products…(and)…services and cost savings led by preventive maintenance for end-market players. Given the short cycle nature of such orders, inflows will bounce back sharply as the economy recovers, in our view,” said the Motilal Oswal report.

Microsoft takes down 50 web domains used by North Korean hacking groups

Microsoft has said that it obtained a court order allowing it to seize web domains used by North Korean hacking groups to launch cyberattacks on human rights activists, researchers and others.

The US technology giant said on Monday that a federal court allowed it to take control of 50 domains operated by a group dubbed Thallium, which tricked online users by fraudulently using Microsoft brands and trademarks.

"This network was used to target victims and then compromise their online accounts, infect their computers, compromise the security of their networks and steal sensitive information," said Tom Burt, Microsoft's vice president for customer security and trust.

"Based on victim information, the targets included government employees, think tanks, university staff members, members of organizations focused on world peace and human rights, and individuals that work on nuclear proliferation issues. Most targets were based in the US, as well as Japan and South Korea."

Microsoft, which had been investigating the group through its Digital Crimes Unit and Threat Intelligence Center, said the hacking group sent spoofed emails that appeared to come from Microsoft which tricked users into revealing their login credentials, a technique known as spear phishing.

"By gathering information about the targeted individuals from social media, public personnel directories from organizations the individual is involved with and other public sources, Thallium is able to craft a personalized spear-phishing email in a way that gives the email credibility to the target," Burt said.

After getting the victim's credentials, the hackers can access emails, contact lists, calendar appointments and other data and often forwards any new emails to the attackers.

The hackers also used malicious software which can access other data on a victim's computer.

An order from a US federal court in Virginia allowed Microsoft to take control of the domains, meaning "the sites can no longer be used to execute attacks," Burt said.

Microsoft said this was the fourth nation-state group it has acted against and follows similar moves against operations from China, Russia and Iran, dubbed Barium, Strontium and Phosphorus, respectively.

BSE Smallcap index up for 5th straight day; Bodal Chemicals gains 13%

Shares of smallcap companies were in limelight on Tuesday with the S&P BSE Smallcap index trading higher for the fifth straight session on the BSE. At 01:26 pm, the smallcap index, up 0.46 per cent at 13,710 points, was the largest gainer among broader indices. In past five trading days, the smallcap index outperformed the market by gaining 2.5 per cent on the back of a strong rally in beaten down sector stocks like chemicals, auto ancillaries, sugar, media and credit rating agencies.

In comparison, the S&P BSE Midcap index was up 1.2 per cent, while the benchmark S&P BSE Sensex was down 0.5 per cent during the same period.

However, despite the benchmark Sensex trading close to its record high level, the smallcap index is still down 10 per cent from its 52-week high level of 15,330 on April 1, 2019. It touched an all-time high of 20,183 on January 15, 2018.

Market analysts are expecting a recovery in earnings in the second half of 2020 on the back of a low base, positive global sentiments, and economic reforms that are being taken by governments. The overall sentiment in the market is likely to improve in 2020 where midcap and smallcap space may start to outperform once the earning visibility is there.

“A modest recovery in growth is expected into H2FY20 on a more favorable base effect, an above normal south west monsoon (10 per cent higher than average), government spending coming back after the national elections and into the busy season, lagged impact of monetary easing,” analysts at JP Morgan said in a note.

A more robust recovery is, however, likely to take time given limited policy levers, particularly in terms of fiscal space, the brokerage firm said.

Bodal Chemicals, Sunflag Iron & Steel, Bhansali Engineering Polymers, Rane (Madras), CARE Ratings, and Rane Brake Lining have rallied more than 30 per cent in the past week.

Dwarikesh Sugar, Dalmia Bharat, Dhampur Sugar, Avadh Sugar, Triveni Engineering & Industries, and Shree Renuka Sugars from the sugar sector were up in the range of 9 per cent to 19 per cent during the week.

“India sugar production is down 35 per cent year on year (YoY) at 4.58 mn tonne as on 15 December. This drop in production is primarily due to a sharp decline in sugar production in Maharashtra and Karnataka,” industry body Indian Sugar Mills Association (ISMA) said in its latest press release.

“Lower cane crushing, and, subsequent decline in sugar production, augers well for the domestic sugar industry. With regards to exports, millers have signed contracts for about 2.0mn tonne of sugar to date and another 3.0mn tonne are likely in the upcoming months. Thus, lower cane production, higher diversion to ethanol and a pickup in exports should lead to lower inventory levels in India by the end of the season,” analysts at Elara Capital said in sugar sector update.

COMPANY LATEST 1-WEEK BEFORE GAIN(%)

BODAL CHEMICALS 74.20 55.25 34.3

SUNFLAG IRON 38.70 29.00 33.5

BHANSALI ENGG. 53.65 40.80 31.5

CARE RATINGS 644.00 490.20 31.4

RANE (MADRAS) 345.00 264.45 30.5

RANE BRAKE LIN. 743.25 571.00 30.2

I G PETROCHEMS 169.10 130.80 29.3

GATEWAY DISTR. 122.50 95.75 27.9

BHAGERIA INDUST. 119.25 96.95 23.0

TEJAS NETWORKS 95.50 78.00 22.4

KRIDHAN INFRA 3.00 2.48 21.0

ZUARI GLOBAL 50.05 41.50 20.6

DEN NETWORKS 48.45 40.20 20.5

CAMLIN FINE 84.10 70.15 19.9

SPICEJET 112.90 94.80 19.1

JP POWER VEN. 1.64 1.38 18.8

ANDHRA PETROCHEM 36.00 30.45 18.2

DWARIKESH SUGAR 32.20 27.25 18.2

ITD CEM 55.30 46.80 18.2

INFIBEAM AVENUES 55.05 46.60 18.1

Chalet Hotels hits record high on inking 5 new contracts with Marriott Int

Shares of Chalet Hotels surged 11.2 per cent to hit an all time-high of Rs 395 during the early morning deals on the BSE on Tuesday after the company announced signing of five new agreements with Marriott International across Hyderabad and Mumbai.

" Under the agreement, Chalet would build hotels & extend contracts across brands such as W, Westin & Marriott Executive Apartment in Hyderabad and Mumbai," the company said in a statement.

As per the agreement, Chalet will develop The Westin Hyderabad Hitec City, an upcoming property expected to be commissioned in 2020; The Westin Hyderabad Mindspace, a new contract continuing with the existing brand; W Mumbai Powai Lake, an upcoming property in Powai Mumbai which is expected to be ready in 2023; The Westin Mumbai Powai Lake, a new contract with ‘brand conversion’ for Renaissance Mumbai Convention Centre and Hotel; and Lakeside Chalet, Mumbai – Marriott Executive Apartments, a new contract continuing with the existing brand.

"This, one of the largest ever deals signed in the Luxury and Upper‐upscale hotel tier in India, leverages historical synergies between Chalet and Marriott International. The 1500+ keys come at a time when the demand and supply arbitrage is favorable for the industry, providing exciting growth opportunities for both companies," the company said.

At 9:39 AM, the stock was trading 6.5 per cent higher at Rs 378.25 apiece on the BSE. In comparison, the benchmark S&P BSE Sensex was at 41,459.46 level, down 98 points or 0.28 per cent. The stock, which debuted at the bourses on February 7 this year, has gained 22 per cent till December 30.

Last week, Chalet Hotels had entered into a Franchise Agreement and other related agreements with Hyatt India Consultancy and its affiliates for the brand 'Hyatt Regency' in respect of its upcoming hotel at Airoli in Mumbai. The company’s upcoming nearly 260 keys hotel at Airoli, Navi Mumbai (Mumbai Metropolitan Region) will be the first Hyatt Regency branded hotel for Chalet.

Jet Airways hits upper circuit on report Hinduja Group may bid for airline

Shares of Jet Airways were locked in the upper circuit limit of 5 per cent at Rs 29.6 on the BSE on Tuesday amid reports that Hinduja Group is preparing a bid to buy the grounded carrier.

The UK-based group, run by brothers Gopichand Hinduja and Ashok Hinduja, plans to submit an expression of interest by the January 15 deadline, signaling its intent to make a formal offer, Bloomberg reported quoting unnamed sources. Hinduja is seeking a partner to bid, the report added. READ MORE

The Group had considered bidding for Jet Airways in partnership with Etihad, but the latter jettisoned the proposal pushing the temporarily de-funct airline into bankruptcy. Jet Airways stopped flying in April after it ran out of money for daily operations.

Last week, Jet Airways had informed the exchanges that the had Committee of Creditors (CoC) passed the resolution to issue fresh invitation of Expression of Interest.

As per reports, Gopichand Hinduja had earlier said that the group was open to buying Jet Airways "if indemnified from the airline’s legal liabilities".

With today’s gain, the market price of Jet Airways surged 61 per cent from level of Rs 18.40 on December 11, as the creditors of the shuttered airline decided to seek fresh initial bids for the airline. The seventh meeting of CoC of Jet Airways (India) is scheduled to be held on January 02, 2020. The stock hit a high of Rs 31.10 on Monday in intra-day trade.

A combined 185,809 equity shares changed hands and there were pending buy orders for 70,866 shares on the NSE and BSE at 10:42 am.

Aavas Financiers gains 3%, hits new high; stock zooms 132% in 2019

Shares of Aavas Financiers gained 3 per cent on the BSE on Tuesday to hit a new high of Rs 1,976, in an otherwise subdued market, on the expectation of good earnings growth going forward. The S&P BSE Sensex was down 0.38 per cent at 41,399 points at 10:29 am.

The stock has been the second-highest value creator among the S&P BSE500 stocks, zooming 132 per cent in calendar year 2019. In comparison, the benchmark S&P BSE Sensex was up 15 per cent during the year.

A sharp rally in the housing finance company has been attributed to strong earnings and foreign portfolio investors' (FPI) interest in the stock. FPIs' stake in Aavas Financiers stood at the highest level at 18.07 per cent at the end of September 30, 2019. Thus far in CY19, they have increased their holdings by 650 basis points (bps) from 11.56 cent as on December 2018.

Aavas Financiers had posted an 85.6 per cent year-on-year (YoY) jump in net profit at Rs 121 crore during the first half (April-September) of the financial year 2019-20. Net interest income (NII) during the period grew 39 per cent at Rs 251 crore on YoY basis. In the past one year, the company’s assets under management (AUM) have risen 42 per cent to Rs 6,753 crore from Rs 4,759 crore.

Earlier this month, the company's board of directors approved fundraising of up to Rs 460 crore though non-convertible debenture (NCDs) on private placement basis. Credit rating agency CARE Ratings assigned CARE double A minus rating for NCDs with stable outlook.

“The rating derives strength from healthy profitability metrics with RoTA (Return on total assets) at 3.64 per cent in FY19, adequate risk management & control systems put in place by the company as well as good growth opportunities in the affordable housing segment,” CARE Ratings said in rating rational.

“Owing to its strong credit appraisal mechanisms, Aavas Financiers has been able to keep its asset quality under control with GNPA and NNPA at 0.62 per cent and 0.49 per cent respectively as on September 30, 2019. Also, the granular nature of the company’s loan book with more than 99 per cent loans to retail individuals mitigates the credit risk to some extent,” it said.

Credit rating agencies in focus; CARE Ratings surges 19%, ICRA 10%

Shares of credit rating agencies were in focus with all three listed companies – CARE Ratings, Crisil and Icra rallying up to 19 per cent on the BSE on Tuesday on the back of heavy volumes. The S&P BSE Sensex was down 0.42 per cent at 41,384 points.

CARE Ratings zoomed 19 per cent to Rs 648 in the intra-day trade. The trading volumes on the counter jumped multiple-fold with a combined 2.4 million equity shares, representing 8 per cent of total equity of the company, changed hands on the NSE and BSE so far. On an average, sub 50,000 shares are being traded daily on the counter, the exchange data shows.

Shares of Icra soared 10 per cent to Rs 3,227 an was trading close to its 52-week high of Rs 3,350 touched on January 30, 2019.

Crisil surged 6 per cent to Rs 1,922 on the BSE. It hit an all-time high of Rs 2,070 on December 23, after acquisition of Greenwich Associates. Greenwich is a leading provider of proprietary benchmarking data, analytics and qualitative, actionable insights that helps financial services firms’ worldwide measure and improve business performance.

Most of the credit rating agencies had reported de-growth in their operational revenue during the first half of financial year 2019-20 (FY20). The de-growth in operating revenue mainly reflects the subdued demand for funding from the industrial sector and the continued risk aversion to fund non-banking housing finance companies (NBFCs)/housing finance companies (HFCs).

However, revenue from structured finance ratings has shown a good traction as the NBFCs/HFCs opted for securitisation/direct assignment of their loan pools as they continued to face lower investor appetite for on balance-sheet funding.

The various measures announced by the government to arrest the slowdown in the economy, festive season and expectation of pick up in the consumer demand especially rural demand post-harvest could bode well for the Indian economy during the second half of the fiscal year 2019-20, according to management of CARE Ratings.

Meanwhile, the Reserve Bank of India’s (RBI’s) Financial Stability Report (FSR) has raised concerns about rating shopping among companies.

This comes against the backdrop of instances of indicative ratings given by agencies, for which there are no written agreements. The indicative ratings are also not disclosed on the company websites, Business Standard reported. 

10-year bond yields rise on RBI's special open market operations

The Reserve Bank of India (RBI) on Monday bought Rs 10,000 crore of 10-year bonds from the secondary market, while selling Rs 8,501 crore of short-term bonds, in the special open market operations (OMO), held for the second time this calendar year.

Interestingly, instead of the 10-year bond yields coming down, it increased about 5 basis points to close at 6.55 per cent after the OMO. The idea of such OMO is to bring down longer term yields, while pushing up short-term yields. The rise in yields is despite the cut-off for the 10-year coming at 6.4874 per cent. The cut-off yields for the shorter maturity papers to between 5.39 per cent and 5.51 per cent for three papers. The RBI decided not to sell a particular paper, perhaps because of lower yields offered by the market.

“After the OMO, state government auction calendar came, which showed states would be borrowing some Rs 25,000 crore extra in the next three months. This spooked the market,” said the head of treasury of a bank.

Last week, the RBI had bought its full quota of 10-year bonds, but sold just Rs 6,825 crore in aggregate of short-term bonds maturing in the next year. According to a senior bond dealer, the yields rose after the OMO was done to reflect the fundamentals and to reflect the fact that yields needed to be higher when there is a clear fear of at least Rs 50,000 crore of extra borrowings coming before the close of the financial.

“The OMO announcements brought down yields from 6.75 per cent to 6.55 per cent. You cannot expect the yields to go down even further considering that the RBI had pause in December,” said the bond dealer.

If there is further OMO announcement, the bond yields will likely fall temporarily. The yields fall as prices rise. The lower yield helps the government to borrow cheaper.

Year in review: History behind, Das-led RBI charts new trails in 2019

When the Narendra Modi government, stumped by the sudden resignation of Urjit Patel, parachuted retired bureaucrat Shaktikanta Das to RBI in December 2018, many expected a great lull in the public acrimony that marred the days of his academically more illustrious predecessors Patel and Raghuram Rajan.

And 'the history graduate', as Das was parodied in his initial days, did not disappoint as the 25th governor of the central bank. He completed one year at the helm on December 12.

But challenges are galore for the nation's chief money man as Das' record-setting rate cuts did not alleviate credit crisis, especially in the shadow banking space, and now turmoil in the cooperative banks sector due to the PMC scam.

Also, falling growth and spiralling inflation are the other critical challenges facing the Reserve Bank of India (RBI) in the New Year.

So far this fiscal, bank credit has grown just 7.8 per cent, against 13.6 per cent a year ago and might plunge to a 58-year low of 6.5-7 per cent by March, if the latest projections are anything to go by.

It was in fiscal 1962 when credit demand was lower than this on record. At that time, it stood at 5.4 per cent.

Ironically, the more the Reserve Bank of India (RBI) slashed rates, the faster the economy turtled, hitting a 25-quarter low of 4.5 per cent in the September quarter.

Even as it eased the rates, the RBI slashed growth estimates by an unprecedented 240 basis points since the rate cutting cycle began in February to a low of 5 per cent.

Similar has been its loss of face on the inflation front, which, after hovering under the glide path for a few years, has suddenly screeched up and is now pegged sharply higher at 5.1-4.7 per cent for 2020.

Das, who as the economic affairs secretary managed the note ban mayhem with elan both for the government and the RBI, could temper the raising tempers between the central bank and the government, was primarily because he gave in a lot of space to North Block.

Be it the historic cash transfers by setting up the Bimal Jalan panel in December 2018 itself or taking some of the crippled state-run banks out of the RBI radar or in getting a new NPA framework in place by June 2019 or in opening a special financing window for MSMEs.

Under his governorship, Das silenced the ever-hungry market and North Block mandarins with 135 basis points reduction in interest rates through five successive rate cuts.

However, the central bank's youngest Deputy Governor ever -- Viral Acharya -- quit six months before his three-year term was to end in June 2019.

But those who know Das, including the RBI staff, fully back his working style and glasnost.

RBI Central Board member Sachin Chaturvedi described Das as a person who brings in pragmatism, commitment, transparency and sincerity to the table.

"Das has succeeded in getting government and other functionaries together and has made the board a cohesive platform," he told PTI.

Das also settled the autonomy issue -- most contentious of all -- and had said that so far as decision-making is concerned or taking a final call on any issue, they are taken by the RBI and is more than 100 per cent autonomous in decision-making.

"Nobody interferes in my decision-making," Das said in September.

The RBI, under Das, has been instrumental in diversifying liquidity management toolkit by launching the dollar-rupee swap auctions -- buying dollars and releasing equivalent amount of rupees into the system to ease liquidity.

And the latest in containing rupee volatility and bond spikes are the open market operations twist under which RBI buys and sells equal quantum of gilts.

Allowing non-residents to participate in rupee interest rate derivatives markets and making NEFT 24x7 and free are among the other decisions this year.

RBI also put its foot down when it declined to raise the retirement age of private sector bank CEOs from 75 years, refused green-signal to Indiabulls' takeover bid for the crippled Lakshmi Vilas Bank and said no to Uday Kotak's convoluted stake dilution move at Kotak Mahindra Bank. The last matter is now before the Bombay High Court.

The apex bank also got regulatory powers of the NHB following the crisis at DHFL, also the first non-banking finance company to be referred for insolvency proceedings.

It also forced banks to link all fresh retail loans to an external benchmark, following which repo rate was made as their benchmark for loan pricing.

While the RBI should be credited for seeing the slowdown coming and cutting rates, the apparent fault was in not anticipating severity of the economic slump.

However, the central bank unexpectedly paused rate cuts in December. It indicates the RBI is waiting for the budget on quality of fiscal deficit and quantum of off-balance-sheet borrowings, among others.

Having worked with three finance ministers, Das also made the long and stormy RBI board meetings into non-events in no time with his consultative process even as he made it clear that the central bank is not a "cheer leader" for anyone.

All said, it is difficult to say now whether it has been a year of floccinaucinihilipilification or that Das maintained a Panglossian countenance, smiling away at every difficulty.

Monetary Policy Committee's Chetan Ghate had used the 29-letter word --floccinaucinihilipilification -- which refers to an action of estimating something as worthless.

The New Year might have a clear if not direct answer to Panglossian ways.

MSE sentiment down for the third quarter in a row: CRISIL-SIDBI survey

Hit by a prolonged economic slump, the business sentiment among micro and small enterprises (MSEs) slid sharply to 106 in the quarter ended September 30, from 120 in the April-June quarter, according to CRISIL-SIDBI survey (CriSidEx).

The reading on the index for January-March 2019 was 122; it was 128 in the October-December 2018 quarter and 124 in the July-September 2018 quarter.

Amish Mehta, chief operating officer, CRISIL, said the findings for the September 2019 quarter need to be viewed in the context of macroeconomic factors, such as production cuts by automobile manufacturers impacting utilisation of components.

There was also a decline in both volume and realisation in commodity-linked sectors, such as steel, and a slowdown in consumption, impacting gems & jewellery industry and hotels, he said.

The survey showed the expectation from the next quarter — October-December — is higher than actual sentiment in the quarter in focus. The difference between reading for the December 2019 quarter (129) and the actual (106) is biggest, so far.

The production and capacity utilisation is likely to remain stable the next quarter as 28 per cent of participants from manufacturing MSEs expected an increase in production, 65 per cent viewed it as unchanged, and 7 per cent expected it to be lower.

Hiring was muted as only 7 per cent of the MSEs reported additions to their employee base in SQ8, compared with 16 per cent in SQ7, while 87 per cent maintained the base and 6 per cent reported reductions.

Lenders have a below-par outlook on the business situation. In the September quarter, only one of 10 lenders surveyed saw an improvement in the overall business situation of MSEs; four of 10 rated it as satisfactory, and 5 of

Reliance announces Jiomart to take on the online grocery shopping business

Well, the website of JioMart with the tagline "India ki nayi dukaan" is a a new grocery shopping experience from Reliance Industries Limited, the country's most valued firm.

This in turn is expected to take on online grocery specialists- Bigbasket and Grofers, as well as global e-commerce giants Amazon and Walmart.

The JioMart app can be soon soon downloaded on apple and android platforms. Currently web services of JioMart are available in the outskirts of Mumbai, in suburbs such as Navi Mumbai, Thane and Kalyan. And this will be scaled up nationally soon.

The app will not only connect consumers, but also enable kiranas to order at wholesale rates from Reliance’s cash-and-carry stores, Reliance Market, to refill their stocks.

At present, the web portal is offering pre- registration discounts of Rs 3000, claims to have 50,000 plus grocery products with free home delivery and no minimum order value, no-questions-asked return policy and an express delivery promise.

Reliance Retail, on Monday began sending invites to Jio telecom users for registering on the new commerce named JioMart.

At RIL’s 42nd Annual General Meeting Ambani had said that Reliance Retail aims to connect as many as 30 million neighbourhood stores through the venture.

He said that the main aim of new commerce is to completely transform the unorganised retail market, which accounts for 90% of India's retail industry.

Reliance Retail, with 10,901 stores across the country, runs India’s largest chain of neighbourhood supermarket stores and consumer electronics stores besides being the top wholesale supplier to nation’s army of small shopkeepers.

The new venture JioMart on which Reliance was working for two years, will connect local grocers through technology, an offline-to-online initiative and they will be equipped with points of sale terminals.

Hamleys, the oldest and largest toy shop in the world and one of the world's best-known retailers of toys was acquired by Reliance Retail in 2019. Reliance Retail valuation is double that of Avenue Supermarts Ltd., which runs India’s biggest supermarket chain.

A 2020 shopping list Masayoshi Son: K-pop band, Aramco for investor?

It was an Uber year for Masayoshi Son and his SoftBank Vision Fund. One in which WeWorked out just how much attention he could Grab by saying Ola to lots of cash while actually being quite Slack on stuff that matters, like corporate governance and profits. Critics Wagged their fingers at the improbable bets, even when he tried to make lemonade from the year’s biggest failure.

The numbers are so bad, you have to laugh. Uber: down 37% since IPO. WeWork: valuation cut by 80%. Wag: sold back to founders at a loss. But Son will bounce back. He has to, because he has another Vision Fund to raise and run. Instead of being cowed into humility, it’s more likely he’ll double down and make even more fantastical bets with other people’s money. To help him out, I did a multivariate* analysis based on past SoftBank deals to come up with a list of investments he ought to consider.

A K-pop band

For all the preppy tunes and perfect cheekbones, Korean Pop bands are really just assets. Money is poured in, data are crunched, and if the algorithm works as planned, money comes back out. There’s buzz and superficial sheen, pure investment-bait for Son. Of course, this is an industry with a dark side. Suicides, assaults, and allegations of prostitution remind us that these impossibly beautiful super idols are vulnerable humans who have “a highly controlled relationship with fans,” as Matthew Campbell and Soohee Kim wrote in Bloomberg Businessweek. Scandal has never kept Son away, though, and given his enthusiasm for AI (a fancy word for number-crunching), a K-Pop band would hit the right note.

Air

Yeah. Really. If a French company can bottle water from a little town on the shores of Lake Geneva (called Evian-les-Bains), then Son could certainly can air from the Himalayas or the Antarctic. More recent thirst-quenching fads have ranged from from La Croix to hydrogen water. So it makes sense that something as bizarre as canned air would make it into the SoftBank portfolio. That stuff would be flying off shelves in Australia or India recently if marketed according to spiking pollution levels. There’s an app? Masa can invest in that, too.

Saudi Aramco

To be frank, Saudi Arabia’s state oil company isn’t really the kind of thing SoftBank should be putting money into because oil is just not futuristic enough. Data is said to be the new oil anyway. But then, taking Saudi money is something many believe Son shouldn’t be doing at all in light of the murder of writer Jamal Khashoggi. Son has pledged not to abandon the Saudis—after all, they gave $45 billion to the Vision Fund—and so that commitment may as well include throwing support behind Crown Prince Mohammed bin Salman and his nation’s largest asset. Riyadh ended up settling for a $1.7 trillion market cap at IPO, after previously assuring everyone that it was worth at least $2 trillion. While it hit that figure within days of listing, the shortfall at IPO is equivalent to three Vision Funds. After WeWork’s $40 billion drop in value, Masa will feel right at home.

Chart

A country

No idea which country, but there are certainly some around that seem up for sale. Just ask China and Taiwan, which have been buying loyalty for decades (the Solomon Islands being the latest transaction). And let’s not forget that U.S. President Donald Trump, whom Son met just a month after the 2016 election, has floated the idea of buying Greenland (which is a self-ruled territory of Denmark). The Danes described the notion as absurd, making it right up Son’s alley. Heck, he could even set up an air-canning plant on the North Atlantic island. But Son needn’t simply acquire a nation. He would rebrand it as his own, replete with passports and a flag. From there, virtual citizenship and a utopian paradise are just a step away. Masastan could be a combination of Cayman Islands and Switzerland, offering anonymity, privacy, and a tax shelter — the perfect place for the newly minted billionaires he’s helped create to park their assets. Sure, founding your own nation isn’t easy, but Son isn’t one to be swayed by practical realities.

Tesla

A dreamy idea. A cult-like status among investors and customers. A megalomaniac for a leader who eschews authority. And chronic losses. It’s got SoftBank written all over it. Rather than tackle big egos, Son has a history of enabling them — “We created a monster,” he’s reported as saying of WeWork founder Adam Neumann. With the SEC and cave-diving heroes trying to cut Elon Musk down to size, Son (and his cash) would be just the kind of cheerleader that the 420-guy needs.

*This analysis, like WeWork's Community-adjusted EBITDA metric, isn't real. The writer made it up.

Bankruptcies, jail and even death: The year was bad for some Indian tycoons

For many Indian tycoons, 2019 turned woeful as lenders—empowered by the nation’s recent bankruptcy law and desperate to clean up soured debt from their books—started seizing assets of delinquent firms or dragged them into insolvency.

Indian banks wrote off a record $39 billion of loans in the 18 months through September in a bid to repair their balance sheets as they battled the world’s worst bad debt pile. Making matters worse, a shadow banking crisis led to a funding squeeze, crushing debt-laden businesses that were critically dependent on rollover financing.

“Life has come a full circle for tycoons that had enjoyed debt-fueled growth,” said Nirmal Gangwal, founder of distress and debt restructuring advisory firm Brescon & Allied Partners LLP. “Many firms collapsed like a house of cards. The downfall was rather unprecedented.”

The government has also been cracking down on economic crime to assuage public anger over absconding businessmen. It’s even barred some from traveling overseas if they were deemed a flight risk.

Here are some of the country’s biggest and most-storied businessmen who saw their fortunes fade. Spokespersons for these tycoons didn’t immediately reply to emails and text messages seeking comments.

Anil Ambani

The chairman of Reliance Group, which makes movies to metro lines, had a close shave with jail time in March before his elder brother and Asia’s richest man, Mukesh Ambani, bailed him out at the last minute. The woes of the ex-billionaire came to the fore when India’s top court asked him to pay Ericsson AB’s India unit about $77 million of past dues or go to jail since Anil Ambani, 60, had given a personal guarantee. His telecom carrier slipped into insolvency this year, while unprofitable Reliance Naval & Engineering Ltd. faced a cash crunch. Reliance Capital Ltd. is selling assets to pare debt. Ambani is also fending off Chinese lenders in a London court.

Malvinder and Shivinder Singh

Karma caught up with ex-billionaires and brothers Malvinder Singh, 47, and Shivinder Singh, 44, and how. Scions of a prominent business family, they once helmed India’s top drug maker and second-largest hospital chain. In October, the two were arrested on charges of fraudulently diverting nearly $337 million from a lender they controlled. India’s market regulator found in 2018 that the brothers had defrauded their hospital company of about $56 million. The collapse of the $2 billion empire turned brother against brother, prompting their mother to broker a peace deal that was short-lived. In February, Malvinder accused Shivinder and their spiritual guru of fraud.

Shashikant and Ravikant Ruia

After a hard-fought battle to keep their flagship steel mill, the first-generation entrepreneurs finally saw the bankrupt Essar Steel India Ltd. pass on to ArcelorMittal last month. The $5.9 billion takeover was almost two years in the making with multiple legal wrangles. The group, controlled by Shashikant Ruia, 76, and Ravikant Ruia, 70, were also reprimanded by a U.K. judge in March this year for concealing documents. Started in 1969 as a construction firm, Essar Group diversified, investing about $18 billion between 2008 and 2012, and piled on debt. In 2017, the group had sold another prized asset, Essar Oil.

V G Siddhartha

Before jumping off a bridge into a river in July in an apparent suicide, the founder of India’s biggest coffee chain Cafe Coffee Day had penned a letter that spoke of pressure from lenders, a private equity firm and harassment by tax officials. He had spent much of the last two years pledging ever more of Coffee Day Enterprises Ltd. shares to refinance loans for ever shorter periods, at ever higher interest rates. “I would like to say I gave it my all,” V.G. Siddhartha, 60, wrote in the letter. “I fought for a long time but today I gave up.”

Naresh Goyal

The former ticketing agent who built India’s largest airline by value, stepped down as chairman of Jet Airways India Ltd. in March, caving in to pressure from banks who took over the company. Cut-throat price wars and surging costs pushed Jet deeper into loss. The airline stopped flying in April and went into bankruptcy two months later as lenders failed to find a buyer. In July, an Indian court barred Naresh Goyal from flying overseas after the government said it was investigating an alleged $2.6 billion fraud involving Jet Airways.

Rana Kapoor

The founder of Yes Bank Ltd., which became India’s fourth-largest non-state lender, tweeted in September 2018 that his shares were invaluable and requested his children never to sell them upon inheritance. But trouble was brewing. The nation’s banking regulator, which found the lender had repeatedly under-reported its bad loans, refused to extend his tenure as chief executive officer. This forced Rana Kapoor, 62, to step down by end-January. Kapoor, who has pledged some of his Yes Bank shares in July, sold almost his entire stake in the lender by October.

Subhash Chandra

The rice trader-turned-media mogul, 69, who brought cable television into Indian homes in the early 1990s with his ZEE TV, resigned as chairman of Zee Entertainment Enterprises Ltd. in November and lost control of his crown jewel. To help pay the debt of Essel Group, Subhash Chandra has been selling stake in Zee Entertainment in the past few months to repay group’s debt.

Gautam Thapar

A default by Gautam Thapar, founder of the paper mill-to-power transmission Avantha Group, on pledged shares made Yes Bank Ltd. the biggest shareholder in CG Power and Industrial Solutions Ltd. In August, the firm was hit by an accounting scandal forcing the board to remove Thapar, 59, from the chairman’s post. A month later, the market regulator ordered a forensic audit of the firm and barred Thapar from accessing securities market.

Year in Review: Top 10 corporate events and crises India Inc faced in 2019

From money-laundering allegations to payment defaults, arrests and a high-profile suicide, India’s corporate houses and their executives witnessed it all in the year 2019. Some corporate honchos were unseated from their perch at the helm of companies, while at least one ousted chairman was reinstated to his position after three years of protracted corporate battle.

Here are the top 10 events and crises that India Inc witnessed in 2019:

The DHFL crisis

The DHFL crisis first came to light on September 21, 2018, when DSP Mutual Fund sold DHFL papers way higher than the traded rates, sparking the speculation that the non-banking financial company (NBFC) could be facing liquidity issues.

In January 2019, Cobrapost claimed that DHFL promoters had lent money to ‘shell companies’, allegedly linked to the promoters, who had used this money to buy assets abroad. By May, the NBFC stopped acceptance and renewal of fixed deposits and also stopped renewals and premature withdrawals from existing fixed deposits. Later that month, it informed the BSE that it would not be able to furnish the audited standalone and consolidated financial statements for FY19 within the time stipulated under Sebi norms. On June 4, the company failed to pay about Rs 900 crore worth of interest, prompting rating agencies to downgrade all of its commercial paper to 'D' (Default) amid liquidity concerns.

On December 2, NCLT admitted the insolvency plea moved by the Reserve Bank of India (RBI) against DHFL for defaulting on interest payments for external commercial borrowings (ECBs) availed of by it from State Bank of India. DHFL’s liabilities as of September 2019 were to the tune of Rs 92,715 crore.

The Karvy fiasco

One of the biggest shocks for India’s corporate houses in 2019 came in the form of the Karvy fiasco. Earlier his year, investors had filed a criminal case against Karvy Group executives, and Abhijit Bhave, chief executive officer of Karvy Private Wealth, a division of Karvy Stock Broking. It was alleged that Karvy Private Wealth transferred funds to builders, causing losses to its clients. Karvy clarified that it did not cheat investors and that the losses happened due to unfavourable market conditions. On November 22, Sebi said Karvy moved clients' pledged shares (against which they receive margin funding from the broker) to its own account via off-market deals and transferred Rs 1,096 crore to Karvy Realty Private Limited between April 1, 2016, and October 19, 2019. Several Karvy clients complained to Sebi about money and securities not coming to their trading accounts. Karvy allegedly misused client accounts without informing them, or reporting to the depository or the stock exchange.

Karvy Stock Broking has around 1.2 million clients, of whom 300,000 are active.

The PMC crisis

On September 24, 2019, customers of Punjab and Maharashtra Cooperative Bank (PMC Bank) woke up to a shocker and learnt their bank had been put under 'directions' by RBI for six months. This meant that the central bank had practically taken over the bank's operations. The RBI said PMC had underreported its non-performing assets (NPAs). It put withdrawal restrictions on the bank’s account holders after finding alleged irregularities to the tune of Rs 4,355 crore due to diversion of money to infrastructure firm HDIL. Several PMC depositors have staged protests in Mumbai. At least 10 depositors have died since the alleged scam came to light.

Gautam Thapar's exit from CG Power

In May, YES Bank invoked the pledge on Gautam Thapar’s shares in CG Power and Industrial Solutions. Three months later, the board of CG Power removed Gautam Thapar as chairman, days after informing the exchanges that the company was hit by an accounting scandal. The liabilities of the group had been understated by over Rs 1,600 crore for 2017-18. The following month, Sebi debarred Thapar from accessing the capital market for a number of alleged irregularities, including diversion of money.

The Essar Steel case

Essar Steel owes Rs 54,547 crore to its creditors — financial and operational creditors combined. The National Company Law Tribunal (NCLT) on March 8 approved the bid submitted by steel tycoon Lakshmi Mittal-led ArcelorMittal for a takeover of Essar Steel. However, it faced many hurdles from Essar Steel's Committee of Creditors (CoC).

On December 15, the Supreme Court set aside a National Company Law Appellate Tribunal (NCLAT) order that had put different classes of creditors — financial and operational — on a par. The apex court ruling paved the way for ArcelorMittal to implement the resolution plan. This is considered one of India's most high-profile insolvency cases.

Cyrus Mistry reinstated as Tata Sons chairman

More than three years after the dramatic boardroom sacking of Cyrus Mistry, NCLAT on December 18 restored him as executive chairman of Tata Sons. The tribunal held the appointment of N Chandrasekaran as executive chairman illegal. However, the tribunal said the restoration order would be open after four weeks, the time allowed to Tatas to file an appeal. Mistry was sacked for alleged 'non-performance' and for group’s dismal financial performance during the time he was at the helm of affirs.

CCD owner VG Siddhartha's suicide

The death of Cafe Coffee Day promoter VG Siddhartha sent shock waves across the business community in India. Two days after he went missing, Siddhartha's body was recovered by the police from a river on July 29, 2019. In a letter Siddhartha mailed the senior management of CCD, he laid out in clear words his struggles with a “serious liquidity crunch” that in turn had led to extreme pressure from lenders and a private-equity investor.

Jet Airways chairman Naresh Goyal's resignation

Naresh Goyal, a former ticketing agent who went on to build one of India’s biggest airlines, stepped down as chairman of Jet Airways India Ltd on March 25, after caving in to pressure from creditors. Goyal, once one of India’s 100 richest people, quit after Jet Airways fell victim to the emergence of budget carriers offering rock-bottom base fares. Adding to Jet Airways’ woes were a depreciating Indian rupee and surging oil prices. The harsher competitive environment forced Jet Airways to seek multiple taxpayer-funded bailouts.

Subhash Chandra’s exit as Zee chairman

Media baron Subhash Chandra stepped down as the chairman of the board at the company he founded three decades ago. On November 5, Chandra’s son, Punit Goenka, was reappointed managing director and CEO of Zee Entertainment. Chandra's resignation came after his family saw its stake in the company falling to 5% amid a series of mistimed and expensive infrastructure bets.

Chandra’s investment companies had borrowed heavily from mutual funds and NBFCs to fund road and renewable energy projects. The family had pledged Zee shares to obtain these loans but was forced to sell and repay after lenders threatened to offload them in the market in case of a default.

Singh brothers' arrest

Embroiled in multiple legal cases, former promoters of pharma major Ranbaxy, Malvinder Mohan Singh and Shivinder Mohan Singh, were arrested in October for allegedly causing Rs 2,397 crore worth of loss to Religare Finvest. In the past few years, the Singh brothers had been in the news for all the wrong reasons. They had been accused of siphoning money (around Rs 472 crore) from Fortis Healthcare, and for their legal tussle with Japanese drug major Daiichi in recent times. Fortis had also written to Sebi earlier this year seeking the initiation of legal proceedings against the brothers, including arrest, to recover dues of Rs 472 crore.

IFIN reports net loss of Rs 13,272 cr in FY19, net revenue down by 87.22%

The financial services arm of the beleaguered Infrastructure Leasing & Financial Services — IL&FS Financial Services (IFIN) — reported a staggering net loss of Rs 13,272 crore in 2018-19 (FY19), compared to a net profit of Rs 9.5 crore in the preceding financial year (2017-18, or FY18), revealed the annual report of IFIN for FY19.

The net revenue of the company also nosedived 87.22 per cent in FY19 to Rs 288.88 crore, from Rs 2261.93 crore in FY18. Furthermore, the company’s exposure to loans — marked non-performing — is to the tune of Rs12,429 crore.

As of March 2019, IFIN has a loan book of Rs 12,945 crore, of which 96 per cent of the loans are non-performing. The under-performing loans are Rs 35.12 crore, and standard loans are Rs 480.44 crore.

The company’s liabilities as of end-March 2019 are Rs 16,635.72 crore. IFIN has been classified ‘red’ by the board of IL&FS; it is not in a position to meet its debt obligations —secured or unsecured.

The company’s total borrowings as of March 2019 from various avenues, such as debt securities, bank loans, commercial papers, and intercorporate deposits, stood at Rs 14,916 crore.

Furthermore for FY19, the board of IFIN factored in losses vis-à-vis balance of loans, receivables, investments, and other financial assets aggregating to Rs 4,798 crore, Rs 79.8 crore, Rs 252.8 crore, and Rs 405.1 crore, respectively, and also recorded a net loss on fair value change of Rs 283.7 crore on financial assets.

The audit report by the statutory auditors of IFIN — Mukund M Chitale & Co. — said with huge losses and liabilities, along with consistent rating downgrades, the company’s ability to raise funds has been substantially impaired, with normal business operations being curtailed.

Also, the company has breached its conditions for holding a certificate of registration as a non-banking financial company (NBFC), issued by the Reserve Bank of India (RBI).

IFIN has breached the minimum capital ratio of Tier 1 and Tier 2 capital. The company’s capital adequacy ratio is -520.29 per cent. According to the RBI norms for NBFCs, the company is required to maintain regulated capital adequacy ratio of minimum 15 per cent, with minimum Tier 1 capital of 10 per cent. Tier 1 capital is also referred to as the ‘net-owned fund’ and IFIN has reported negative net-owned funds for FY19, although according to a RBI mandate, a company is required to have a net-owned fund of Rs 2 crore to hold an NBFC licence.

Hence, the statutory auditors were of the opinion that given the existence of a material uncertainty that may cast significant doubt on the company’s ability to continue as a going concern, they are unable to comment on whether the company will be able to continue as a ‘going concern’.

In FY19, the Serious Fraud Investigation Office (SFIO) conducted investigations on the affairs of the company and found that the erstwhile auditors of IFIN — Deloitte Haskins & Sells, BSR & Associates — were aware that IFIN was lending to defaulting borrowers through group companies, so that they could suppress their non-performing assets and not provide for bad debt. It alleged that the auditors failed to verify the end-use of bank finances and money raised through non-convertible debentures, despite it being a regulatory mandate.

The SFIO complaint also said that the auditors falsified books of accounts from 2013-14 to FY18 and did not report the negative net-owned fund, as well as its negative capital to risk (weighted) assets ratio. After the report, the National Company Law Tribunal permitted reopening of books of accounts and recasting of the financial statements of IFIN.

Vodafone Idea mobile customer base drops by 36.3 mn to 336.3 mn in Nov

Vodafone Idea's mobile consumer base declined by around 3.63 crore to 33.63 crore in November, according to a source.

The telecom operator had reported an increase of 1.89 lakh mobile customers on its network in October.

"Vodafone Idea HLR (home location register) subscriber in October were 37,26,76,689. In November, it has come down to 33,63,57,324. There is a difference of 3,63,19,365 as per the company report submitted to Trai," the source told PTI.

However, Vodafone Idea declined to comment on this information.

The source said the company keeps deleting inactive subscribers and the reduction is the result of the same.

"The company has reduced time period of recording active subscriber from 120 days to 90 days. Had it been the same period, the reduced number would have come at the end of December," the source said.

Vodafone Idea and Bharti Airtel had raised call and data charges by up to 50 per cent from December 3 onwards.

EESL inks pact with HPCL to set up EV battery charging infrastructure

State-owned Energy Efficiency Services on Monday said it has signed memorandum of understanding with Hindustan Petroleum Corporation for setting up charging infrastructure to boost electric mobility.

As a part of the national electric mobility programme, Energy Efficiency Services (EESL), a joint venture of four national public sector enterprises under the Ministry of Power, and HPCL have entered into a two-year MoU to set up public charging infrastructure across the country, the company said in a statement.

The MoU covers collaboration for planning, development and installation of charging facilities at suitable locations for two, three, and four-wheeler vehicles.

"With the installation of public charging stations, the range anxiety of EV owners is expected to reduce, which will increase the adoption of electric mobility. This will also bring down automobiles emissions, enabling cleaner and greener environment, in turn, safeguarding public from health risks," the company said.

Commenting on the partnership, EESL Managing Director Saurabh Kumar said that this tie-up will address the range anxiety concerns that EV-adopters may have.

"Increased access to charging infrastructure is vital for the uptake of electric mobility across the entire EV ecosystem of two, three, and four-wheelers. Our partnership with HPCL will also establish more visibility of charging infrastructure, sending a signal to the general public that India's electric mobility vision is being realised in full potential," he added.

Housing Finance Companies growth to remain subdued: Care Ratings

Rating agency Care Ratings has stated that the growth in the housing finance companies (HFC) loan book is expected to remain subdued due to the funding challenges and lowered consumption due to slowing GDP growth. Care Ratings noted that, “Most HFCs are looking to conserve their liquidity and correcting asset and liability management (ALM) through sell downs and slowing down disbursements. Further, moderation in the loan-book growth of the non-banks has curtailed the growth of their interest margins.”

It also added, “Overall, the growth in the HFCs is expected to remain under pressure as the effect of the relief-measures made by the government on the liquidity front, are yet to unfold. The slowdown in the real estate sector coupled with higher risk perception of refinancing developers could impact the asset quality of players in the sector.”

Further, HFC profit margins are likely to remain pressured on account of increasing cost of funds and delinquencies. Transmission of increasing funding costs to the borrowers is a key monitorable in the competitive interest rate scenario. Such a development could lead to high prepayments and compel players to reduce the proportion of prime borrower segment, to compensate for the reduction in margin.

Public deposits of HFCs came at a higher cost as compared to banks and hence do not form a major part of their borrowing profile. In FY19 and FY18, five major deposit-accepting HFCs accounted for deposits amounting to 18% of their total borrowings. Hence a reduction in the public deposits may not majorly affect the borrowing profile of HFCs. Instead, HFCs would need to find cost effective ways of raising debt as they operate with thin spreads especially in the prime segment and compete directly with banks, which have an inherent competitive advantage due to their lower borrowing costs.

The liquidity infusion scheme aims to relieve smaller HFCs, whose disbursements had moderated over the last financial year. However, the scheme may not prove to be a major breather for the HFCs on the liquidity front, as the Rs 500 crore limit on the capital available for each HFC may turn to be inadequate.

Tata group stronger, more resilient and future ready: Chandrasekaran

Tata Sons chairman N Chandrasekaran on Monday said uncertainties will persist in the new year but exuded confidence that the diversified conglomerate is better placed to take on challenges.

He said the salt-to-software USD 110-billion group is "stronger, more resilient and future ready" now and is moving "decisively" on financial fitness and operational efficiencies.

The comments from the group chairman, whose appointment was recently termed as illegal by the NCLAT on a petition by his predecessor Cyrus Mistry, comes at a time when growth has slowed to a six-year low domestically and there are clouds of uncertainties globally as well.

In an email to employees, Chandrasekaran said there is a steady improvement at the group level performance but also pointed out that there is more work to be done in case of some companies, which are facing headwinds due to the economic conditions.

"Macro uncertainties will persist in 2020, but they will also be accompanied by new opportunities across different businesses and markets," Chandrasekaran said.

Billionaire Hinduja brothers set to bid for Jet Airways by Jan 15: Report

The Hinduja Group is preparing a bid to buy grounded carrier Jet Airways India Ltd., according to people familiar with the matter.

The U.K.-based group, run by brothers Gopichand Hinduja and Ashok Hinduja, plans to submit an expression of interest by the Jan. 15 deadline, signaling its intent to make a formal offer, the people said, asking not to be identified as the deliberations are private. Hinduja is seeking a partner to bid, one of the people said.

Creditors are seeking fresh bids for Jet Airways after earlier getting interest from only a single company, Synergy Group Corp. The Mumbai-based airline, which was once the country’s largest by market value, fell victim to a cut-throat price war initiated by a slew of budget carriers and eventually defaulted to banks, staff and lessors.

State Bank of India and Punjab National Bank have claimed 82.3 billion rupees ($1.2 billion), while other creditors, like employees and lessors, are seeking 64 billion rupees from the airline, which is 24% owned by Abu Dhabi’s Etihad Airways PJSC.

Hinduja Group had earlier this year considered bidding for Jet Airways in partnership with Etihad, but Etihad jettisoned the proposal and Jet Airways was tipped into bankruptcy. Gopichand Hinduja told the Mint newspaper this month that the group was open to buying Jet Airways if indemnified from the airline’s legal liabilities.

Deliberations are at early stage and Hinduja Group may decide against bidding, or other bidders may emerge, the people said. The Hinduja Group didn’t respond to questions sent by email.

While preparing a bid, the Hinduja Group will grapple with the complexities that have sapped Jet’s value, including lapsed landing rights at Heathrow airport, and the validity of the carrier’s now defunct flying slots.

Rattan India Amravati finds saviour in Goldman Sachs, Varde Partners

Rattan India’s Amravati power project (1,350 Mw) has concluded its debt restructuring with new lenders coming on board.

Goldman Sachs and Varde Partners will take over Rs 4,050 crore of the total debt from existing lenders.

This also includes 15 per cent equity each in the project. The new lenders have used the Aditya Birla Asset Reconstruction Company platform for the deal.

The total debt exposure of the consortium of lenders was Rs 6,575 crore. This would entail 38 per cent haircut by the consortium led by state-owned Power Finance Corporation. There were 12 lenders to the projects, including State Bank of India, Bank of India, Punjab National Bank and Axis Bank, among others.

Speaking with Business Standard, Rajiv Rattan, chairman, Rattan India group, said there was immense interest from foreign lenders for Indian assets. “This is the first-of-its-kind deal where fresh capital is being infused. The consortium of new lenders also has foreign firms which is also a first for the sector,” he said. He further said that there are many lenders which are sitting on the fence. They want to infuse capital in Indian assets and resolve the non-performing assets situation.

Amravati is part of the list of 40 stressed assets in the power sector.

The project has undergone two debt-restructurings in the past, of which the second one could not be concluded due a circular of the Reserve Bank of India (RBI) issued in February 2018.

The circular directed banks to resolve all stressed assets in 180 days or initiate insolvency proceedings at the National Company Law Tribunal. A Supreme Court order in September 2019 quashed the circular.

Under the RBI’s new prudential framework for resolution of stressed assets, lenders to Amravati invited bids for the project. Company executives said there will not be any change in the rate at which power is sold from the project. The power purchase agreement does not have any provision for change in tariff.

The levellised power tariff of Amravati is Rs 3.26 per unit and the project cost was Rs 7,493 crore (along with cost overruns). The project faced delays due to shortage of coal from Coal India (CIL) and cost overruns delayed payments from states it was selling power to.

The project is also under litigation of pass through of cost overruns on the final power rate.

Rattan said the company will not be making any fresh investment in the thermal power sector. “We don’t have any plan for a greenfield investment in the thermal sector. However, as we have land, connectivity and water at Amravati, we may expand the project and construct the second phase. However, that will depend on when legal issues of the existing unit are resolved,” he said.

Rattan is hopeful the variables that landed the project in trouble won’t repeat. “The sector is improving consistently. The letter of credit system has improved the payment mechanism,” he said. Given the current coal supply, the company plans to run the project at 60 per cent plant load factor or operating ratio. It is 40 per cent right now. Amravtai has a fuel supply agreement with South Eastern Coalfields of CIL for 5.5 million tonne supply.

Rattan India’s another thermal power unit in Nashik is also under stress. “For the Nashik project, we are working with the lenders. With the success of Amravati, we are hopeful that there will be similar interest in other assets,” said Rattan.

POWER PLAY

Rattan India Power Amravati's thermal power project details:

Capacity: 1,350 Mw

Additional capacity envisaged: 1,000 Mw

Total project cost with overruns: Rs 7,493 crore

Debt: Rs 6,575 crore

Debt taken over by Goldman Sachs and Varda Partners: Rs 4,050 crore

Levellised tariff: Rs 3.6 per unit

Tariff with cost overruns: Rs 4 per unit

Will give 5G spectrum for trials to all players, including Huawei: Prasad

The government has decided to give 5G spectrum for trials to all players, including Huawei.

"We have taken a decision to give 5G spectrum for trials to all players," Telecom Minister Ravi Shankar Prasad said. An in-principle decision has been taken in this regard, Prasad said at an event here.

"5G is future, it is speed. We will encourage new innovation in 5G," he added. Sources said all operators and vendors, including Huawei, will be included

Govt may breach fiscal deficit target; need for stimulus rises: Report

The government might breach the fiscal deficit target this financial year amid drop in the revenue mobilisation and expected additional expenditure by the government, says a report.

According to Dun & Bradstreet's Economy Forecast, the need for fiscal stimulus has increased even as the government finances remain "strained".

"We expect that the drop in the revenue mobilisation of the government and likelihood of additional expenditure by the government might breach the fiscal deficit target in FY20," Dun & Bradstreet India Chief Economist Arun Singh said.

The government has set a 3.3 per cent fiscal deficit target for the current fiscal.

Singh further added that given the resources constraints, increase in fiscal deficit might lead to crowding out of private investments.

According to the report, corporate liabilities are already higher. The balance-sheets of corporates, government, banks and households remain constrained or weak and revenue collection will play an important role.

"Revenue collection will thus be important for the government to implement a fiscal stimulus. To do that, tax reforms are needed. GST should be simplified further, and direct tax collections should increase," Singh said.

As per the report, the index of industrial production is likely to remain subdued in the short to medium term amid slowdown in demand, lackluster investment and weak exports.

Moreover, optimism of India Inc remains clouded and cautiousness amongst investors have increased over the various graft and compliance related issues in the financial sector, it noted.

D&B expects Index of Industrial Production (IIP) to remain subdued by 0-1 per cent during November this year.

On the prices front, the report said food inflation is expected to remain higher, given the supply disruptions as crops have been damaged in many states, exerting upward pressure to the CPI inflation.

D&B expects the CPI inflation to remain in the range of 6.3-6.5 per cent and WPI inflation to be in the range of 2.1-2.4 per cent during December 2019, respectively.

PE, venture capital deals in healthcare, health tech firms grew 16% in 2019

Private equity and venture capital investments in healthcare and healthcare technology companies grew by 16.3 per cent in 2019 to $3.62 billion, from $3.11 billion, a year ago. Almost 58 per cent of the investments were in the healthtech segment. The industry continues to attract investors despite the economic slowdown, and the trend is likely to continue even in 2020, say experts.

Health tech has attracted a major share of these investments, with 55 deals worth $2.12 billion. This was twice the $1.06 billion raised in 81 deals during the same period last year. Forty-nine of the 55 deals, were venture capital, or seed to Series-F investments in companies less than ten years old, with a combined value of $616 million, according to data from Venture Intelligence.

In 2019, as per data collated by Venture Intelligence till December 24, there were 95 deals of which 66 were venture capital investments. In comparison, year 2018 had 120 deals of which 90 were VC.

The surge is despite the economic slowdown, and a number of issues related to the pricing and health insurance in the sector. The impact of these issues to the investors would be only known over time, as the industry is in the middle of an investment cycle.

Vishal Bali, executive chairman, Asia Healthcare Holdings (AHH), a healthcare operating platform founded by TPG Growth, said, "While there are issues related to the economy right now, somehow healthcare gets insulated from a lot of these things. From a healthcare consumption perspective, one is not seeing any slowdown because it is a necessity".

"PE and VC investors will continue to see opportunities in start-ups and new technologies, as this is a 1.3 billion-people consumption story. This could also be a good time to find the right assets," Bali said.

There are some 3,000 healthtech companies in the country and in the quarter ended September, there were about 16 large deals with more than $100 million investments done. There were also exits across 11 deals with $690 million, which shows some kind of activity both in terms of investments and exits, Bali added.

In May 2019, AHH reportedly signed agreements to acquire Nova IVI Fertility for an undisclosed sum.

However, the next financial year is expected to be critical, particularly in the light of rupee devaluation, and how the overall investing scenario and current investments plays out. Some of the major deals, including Seattle-based Columbia Asia's hospitals in India, are expected to take place in 2020.

According to Venture Intelligence, the top PE invsetments in healthcare and healthtech companies included Baring Asia's $880 million investment into Citius Tech in July, 2019, $496 million into AGS Health in May, 2019, Advent International's $250 million investment into Bharat Serums and Vaccines in November, 2019, General Atlantic's $212 million investment into Rubicon Research in Marcy 2019, among others

Monnet Ispat & Energy to start integrated steel operations next month

Monnet Ispat & Energy - acquired by AION and JSW Steel through the insolvency process - is looking to start integrated steel operations, in the wake of a pick-up in steel demand.

JSW Steel's joint managing director and group chief financial officer, Seshagiri Rao, said, "We have completed expansion of pellet plant to 2.4 million tonnes and we are also starting the integrated steel operations next month. So things should look better for Monnet."

Currently, integrated operations is completely shut. Monnet, which owed banks Rs 11,000 crore, was one of the 12 non-performing assets (NPAs) mandated for resolution under the Insolvency and Bankruptcy Code (IBC). A Rs 2,875 crore resolution plan, submitted by AION and JSW Steel (minority partner), was approved by the National Company Law Tribunal (NCLT) towards the end of July 2018.

JSW's second quarter results presentation mentioned that steel making operations were impacted by earlier announced maintenance shutdown and repairs.

In October, Monnet informed the stock exchanges that it would undertake modification of plant and machinery for manufacturing special steel products. The period of shutdown of the plant, other than pellet plant and DRI, with effect from June 21, had been further extended and it would restart its integrated operations on completion of the modification which was expected to be in Q4 of financial year 2019-2020, it had said then.

Post-acquisition of management control, operations of the Raigarh pellet plant was started in October and production was ramped up to around 90 per cent of the installed capacity.

Then in February, Monnet started integrated steel production through a blast furnace (for iron making), an electric arc furnace (steel making), ladle refining, continuous casting and bar mill rolling.

Consequently, revenues moved up from Rs 493.82 crore in December 2018 to Rs 660.44 crore in September 2019. In June 2019, it was even higher at Rs 777.09 crore.

However, towards the end of last year, the steel market started showing signs of weakness.

Steel prices had peaked in November 2018 at Rs 46,000 a tonne but then started moving downwards with realisations at around Rs 32,500 till recently.

The growth in finished steel consumption has moderated significantly; from 10.3 per cent in Q2FY2019 to 3.1 per cent in Q2FY2020 on a year-on-year basis.

However, the last two months, prices have moved up The recovery is fuelled by the infrastructure and construction sectors as well as retail. In October and November, companies hiked prices by about Rs 1,000 a tonne.

Monnet has a capacity of 1.2-1.3 million tonnes. There is however land available for expansion up to 3 million tonnes.

Monnet is eyeing a turnaround next year. That would also be about two years since it got acquired.

Without buyer, Air India might be forced to shut down by Jun 2020: official

Struggling Air India might be forced to shut down by June next year unless it finds a buyer as "piecemeal" arrangements cannot be sustained for long, according to a senior airline official.

Amid continuing uncertainty over the fate of the national carrier, the official said there is also need for funds to restart operations of 12 grounded narrow-body planes.

The airline has a debt burden of around Rs 60,000 crore and the government is still working on the modalities for the disinvestment.

Sounding alarm bells, the official said Air India might well go Jet Airways way if a prospective buyer does not come on board by June next year.

With government leaving the debt-ridden airline to fend for itself by refusing to inject funds any more amid its privatisation plans, the airline is "some how" keeping it afloat with peace meal arrangements, which are unlikely to sustain for long, the official said.

As per the government, it has infused funds to the tune of Rs 30,520.21 crore in the flag carrier from financial year 2011-12 till December this year.

Under the turnaround plan approved by the UPA regime in 2012, the airline was to get financial assistance of Rs 30,000 crore over a 10-year period.

"We had sought Rs 2,400 crore sovereign guarantee to mop up funds for meeting operational requirement. But the government has provided guarantee only for Rs 500 crore.

"We are some how managing the operations at present and at best we can sustain this situation till June. If a buyer does not come by that time, we will have to shut shop," said the official on condition of anonymity.

After more than 25 years of flying, full service carrier Jet Airways shuttered operations in April due to cash crunch.

In 2018-19, Air India's net loss is provisionally estimated to be Rs 8,556.35 crore.

Besides, it has a total debt of Rs 60,000 crore, half of which has already taken out of the books and parked in the special purpose vehicle, Air India Asset Holding Ltd.

Air India spokesperson was not available for comments.

The Air India Specific Alternative Mechanism (AISAM) has approved re-initiation of process for the the government's 100 per cent stake sale in Air India along with Air India Express and the carrier's stake in joint venture AISATS.

The government is likely to issue Expression of Interest (EoI) for the stake sale in the fourth quarter of the fiscal.

According to the official, it would take "at least" six months to complete the transaction in the eventuality of an investor coming on board, provided the sale process kick starts early next month.

At the same time, the official did not sound very hopeful of the government getting an investor in such an "economic situation," which has also affected the domestic aviation industry.

Domestic air traffic, which is one of the parameters for gauging the health of the industry, grew only 3.86 per cent in the January-November period of the year as against an impressive 18.60 per cent growth in 2018.

Response to the recent road shows in Singapore and London for Air India disinvestment was reportedly "tepid".

The official said that currently 12 narrow-body Airbus A320 planes are on the ground for want of engine replacement and are unlikely to be back in operations in the immediate future.

"We need at least USD 150 million (about Rs 1,100 crore) to get new engines for these 12 planes. With adequate funds not available even for normal operations, it looks difficult we will get funds for engine replacement and make these planes operational any soon," the official said.

However, the official said that seven of the eight wide-body planes, which were grounded for engine and other engineering related issues, are back in operations. The eighth one is expected to start flying soon.

"We plan to deploy this to cater to to the new Mumbai-Stansted (London region) route, which we are looking to launch from February next year,' he said.

The new route would have three times per week services and bookings would open soon.

With mandatory pre-trade allocation, Sebi to plug IPO-arbitrage in MFs

The Securities and Exchange Board of India (Sebi) wants to plug the arbitrage play that mutual fund (MF) houses deploy during initial public offering (IPO) to benefit one scheme over another. To meet this end, the market watchdog wants to make pre-trade allocations mandatory for all institutional investors.

“By not informing in advance, which scheme would get what allocation, there is a gap in the system that can be easily misused. Post-allocation, some fund managers can take their own call on which scheme should get the allotted shares, depending upon their view of the company,” said a senior executive of a fund house.

“Such a practice benefits one scheme over another. Some of the arbitrage schemes also take advantage of this. If the investor appetite is strong, the fund house post-allocation might decide to transfer the shares to these schemes, which can make strong short-term gains in the IPO investment,” another executive added.

Apart from IPOs, similar issues have cropped during qualified institutional placements and also bulk deals.

To be sure, some fund houses are following the practice of pre-informing which scheme would get how much allocation, but the regulator wants uniformity in practices across the industry.

According to sources, the regulator also wants to include foreign portfolio investors (FPIs) into this regulation, but the latter may find it difficult to reconcile these norms with their own fiduciary framework.

Industry sources say that there have been cases of MFs misusing this lacuna to the advantage of their flagship schemes.

“A flagship scheme is important for a fund house as it accounts for the largest chunk of assets and lot of investor money is riding onto it. However, still it means that a fund house is giving preference to one scheme over another, which is not fair to the other investors,” said a fund manager, requesting anonymity.

In the case of FPIs, the problem is likely to arise from the regulations that they are already required to adhere to. “The proposal would mean placing orders directly in the name of each account. This would lead to different execution prices as orders get filled at different time. Fund manager would then be forced to allocated at different prices into different funds, which would again be in breach of the fiduciary duty of equitable pricing,” said an official of an industry body.

The proposal on pre-trade allocation was also being mulled over by Sebi in the past, but the regulator was unable to implement it back then.