Translate

Post Your Self

Hello Dearest Gameforumer.com readers

Its your chance to get your news, articles, reviews on board, just use the link: PYS

Thanks and Regards

Friday, January 17, 2020

economic news of india - world economic news - economics news for students - indian economy news

economic news of india - world economic news - economics news for students - indian economy news


Vodafone Idea banks on part payment and prayer to stay alive

Posted:

MUMBAI | NEW DELHI: Vodafone Idea (VIL) may offer the government a small part of its statutory dues by January 23 to ensure it doesn't get a defaulter's tag or incur the displeasure of the Supreme Court, and then seek some relief, in a bid to bring back the telecom company from the jaws of insolvency, three people familiar with the matter said. Simultaneously, the telco plans to seek an extension of the January 23 deadline from the Supreme Court."The top management have chalked out the next steps after the apex court dismissed the telco's review petition," said one of the people.The government has estimated Vodafone Idea's total dues, which include licence fees, spectrum usage charges (SUC), penalties and interest, at over Rs 53,000 crore but the telco is expected to submit a lower figure in its self-assessment.Vodafone Idea's shares ended 25.21% lower at Rs 4.51 on BSE, having plunged over 39% during the day, as investors exited on fears that telco will collapse in the absence of relief from the judiciary.After offering a small payment, Vodafone Idea may ask the Centre to refund or adjust some of the Rs 9,000 crore pending input tax credit under GST that it believes the government owes it, one of the persons said. He added that the strategy of the company is to show the telecom department that it is not defaulting on its payments and is trying all possible ways to meet statuary obligations. Another person in direct knowledge of the matter said that the loss-making telco may offer under Rs 4,000 crore "as a token amount on January 23". He added the company won't dig into its cash balances since it is a cashflow-negative company."Parting with cash balances would jeopardise its payment obligations and put it at risk of being a financial defaulter with banks," the person said. The company had cash and cash equivalents of Rs 12,800 crore as of September end.An email sent to Vodafone Idea remained unanswered till press time.Recently, the telco's board approved modification in the use of the Rs 25,000 crore right issue proceeds to pay Rs 2,826.1crore towards the AGR dues. In addition, the company can call upon Vodafone UK to cough up Rs 8,000 crore towards payment of AGR dues."The group's potential exposure under this mechanism is capped at Rs 8,400 crore (1.1billion Euro)," Vodafone said last November. 73346074 ASSET MONETISATIONVodafone India has also said it is trying to sell its data centres, optic fibre assets as well as its 11% stake in Indus Towers to raise more funds.Vodafone and Aditya Birla Group, the two promoters of the company, said recently they won't infuse additional equity in the company.A government official said that the only way ahead for the telco to show that it is not defaulting is to make some payments, else all doors of government relief will be shut.Vodafone Idea, along with some 14 telcos, need to pay about Rs1.47 lakh crore to the telecom department by a Supreme Court (SC)- mandated deadline of January23. On Thursday, the top court had rejected pleas by the telco, Bharti Airtel and Tata Teleservices to review its October 24 verdict that had widened the definition of adjusted gross revenue (AGR). Licence fees and SUC are paid on the basis of AGR. Vodafone Idea now plans to file a curative petition at the SC.The government has previously said that it can't offer any relief on the AGR dues, unless directed by the court. But it has also publicly backed a three-player private sector market, which gave market experts some hope that a Cabinetbacked relief may be an option.In a report, brokerage firm IIFL Securities said that the government is likely to spread out the AGR due payments over a long period —10-20 years — to avoid pushing Vodafone Idea into bankruptcy."The consequence of no action by the government would definitely include a major hit to government revenues (Rs 91,000 crore from VIL in old spectrum dues, plus this AGR penalty), a significant hit to the banking system, and a reputation hit for India as an investment destination," IIFL said.

Consumer is the new king in Ambani's business

Posted:

MUMBAI: Reliance Industries (RIL) reported a 13.5% rise in quarterly net profit, buoyed by strong performance of its consumer-facing businesses and robust refining margins, which made up for a fall in income from its petrochemicals business, a major contributor to the conglomerate's income.The company also said it was sticking to its target of being netdebt free by March next year and that talks over Saudi Aramco's proposed acquisition of equity stake in RIL's oil-to-chemicals (OTC) business were progressing although the complex transaction was unlikely to be finalised in the current fiscal year.Consolidated net profit for the December quarter rose to a record Rs 11,640 crore while revenue fell1.4% to Rs 1,68,858 crore because of weaker prices of oil and chemicals. On a standalone basis, net profit rose 7.4% to Rs 9,585 crore while revenue fell 13.1% to Rs 93,741 crore.Telecom venture Reliance Jio Infocomm shone with net profit rising 62.5% to Rs 1,350 crore. Its subscriber base grew 32% annually to 370 million, with each user spending an average of Rs 128.4 a month during the quarter, the company said in a statement. Chairman Mukesh Ambani said he was pleased with the performance of consumer businesses although other segments faced challenges. "The third quarter results for our energy business reflects the weak global economic environment and volatility in energy markets. Within our O2C chain, downstream petrochemicals profitability was impacted by weak margins across products with subdued demand in well-supplied markets," Ambani said in a statement.RIL's outstanding debt on December 31, 2019 had risen to Rs 3,06,851 crore ($43.0 billion) compared with Rs 2,87,505 crore at the end of March last year, the company said. However, cash and cash equivalents rose to Rs 1,53,719 crore from Rs 1,33,027 crore over the same period, implying a fall in net debt.Joint CFO V Srikanth said debt would fall as earnings were rising and capex was declining. "We are earning more than we are investing, so it will lead to reduction in debt. We have a stated target of being net-debt free by FY21, we are sticking to it," he told reporters after the earnings were announced late on Friday.On the deal with Saudi Aramco, he said: "We are making very good progress in engagement across teams. I can't commit on timelines but it is progressing well … It will not be a deal which will get done by March 31; it's a large cross-border, complex transaction. So timelines are something we have to be realistic about."The earnings before interest and taxes(EBIT) of RIL's organised retail business rose 58% to Rs 2,389 crore. The segment's gross sales grew 27.4% to Rs 45,327 crore, helped by consumer electronics, fashion & lifestyle and grocery segments which reported a combined growth of 35.7%.RIL's refining and petrochemicals businesses saw weaker prices. Revenue from refining and marketing fell 7.2% to Rs 1,03,718 crore but segment EBIT rose 12% to Rs 5,657 crore because it processed more crude oil, earning $9.2 for each barrel it refined, up from $8.8 a year ago.The petrochemicals business took a hit. EBIT contracted 28.5% toRs 5,880 crore, while segment revenue fell 19.1% to Rs 36,909 crore. While demand for products remains good, the company said ethylene prices weakened and reached near 10-year low with ample supply after the startup of new export facility in US and new ethane-based crackers in US. However, propylene prices firmed up 2% because of tighter regional availability. Polymer prices also weakened.Srikanth said it would take 12-18 months for petrochemical prices to improve. In its domestic exploration and production business, revenue fell 10% to Rs 542 crore while EBIT fell to Rs 56 crore from Rs 119 crore. The segment has been lacklustre in recent years, but new fields being developed in the KG Basin are expected to turn it around when they start pumping gas later in 2020.

Govt revises GST collection target again

Posted:

NEW DELHI: To augment collections amid growing concerns over missing the budgeted estimates, the government has reset the target for goods and service tax (GST) collections for the second time in two months – to Rs 1.15 lakh crore for February and Rs 1.25 lakh crore for March.The decision to raise the target -- from Rs 1.1 lakh crore in December to at least Rs 1.15 lakh crore for the next two months -- was taken at a high-level meeting of senior officials of the Central Board of Indirect Taxes and Customs (CBIC) and Central Board of Direct Taxes (CBDT), people aware of the matter said."Field formations have been exhorted to put forward special efforts and to initiate actions against wilful tax evaders or those who are using fake invoices or inflated or fake e-way bills…," a government official said."Weekly high-level review of revenue augmentation measures & efforts made or actions taken against these targeted gamers, fraudulent ITC seekers and identified default taxpayers would be done by the revenue secretary," he added.Tax authorities will use data analytics to check mismatch of supply and purchase invoices, mismatch in return filings, over invoicing, excess refunds availed, patching the tax leakages, fake or huge ITC claims, and refunds under inverted duty structure.Text messages and emails will be sent to defaulters after which GST field formations will visits to ensure timely tax payments.NEW RETURNSThe GST Network's trial for new returns has witnessed encouraging response.Over 363,855 new returns by taxpayers under GST have been uploaded as of January 12 using the offline tool in the trial phase that began from January 4, as per data available with ET.The GSTN is conducting the trial run for new return filing for taxpayers to iron out any problems they face and take stakeholder feedback, before implementing it in April.Inputs received on the new forms during the trial page will be used to improve the interface.GSTN received around 750 inputs from industry.

Courier companies seek relief on GST E-way bill rule

Posted:

NEW DELHI: Courier companies such as FedEx, DHL and UPS are in a bind over delivering imported goods to customers because of a goods and services tax rule that bars defaulters from issuing e-waybills. The document is mandatory for transport of goods worth over Rs 50,000.On the other hand, the customs department won't hold such goods in its storage once they're cleared. The companies, including local ones such as DTDC, Safe Express, Gati and Delhivery, have petitioned the government to seek a way out of the dilemma. The government said it's examining the issue.GST Rule 138E, which took effect in November, doesn't allow an entity that hasn't filed returns for two straight months to generate an e-waybill.While the rule won't impact direct deliveries to ecommerce customers, business-to-business (B2B) orders from overseas will likely get hit.73347363 Import consignments of companies, which may have missed filing returns and are unable to generate an e-waybill, cannot be delivered. But the goods cannot be kept inside the customs premises once cleared."As per customs regulations, goods may not be retained in the customs premises post clearance," Vijay Kumar, chief executive officer of the Express Industry Council of India lobby group. "But moving the goods outside the customs premises without e-waybill would result in noncompliance from a GST standpoint."Courier companies have no means of checking whether their customers are GST compliant. "The task itself would be monumental given the volume of transactions and number of clients," Kumar said. "Tracking such compliances would lead to operational challenges… delay in delivery of goods and reduction in operational efficiency."Since courier companies get the goods cleared from customs on behalf of those that place the orders, under the end-to-end logistics model, they face the brunt of the rule, experts said."While GST was intended to simplify supply chains, logistics businesses have been facing a few challenges such as EWBs on import consignments, which need to be discussed, as this is a key ingredient in improving the ease of doing business," said MS Mani, partner at Deloitte India.The government is examining the matter to see how it can be resolved, said a senior government official, adding, "States have some reservations on the issue."The official said one option would be for courier companies to seek a written undertaking from customers to the effect that they're GST compliant. The issue will be taken up again with states, he said.

Vodafone Idea may pay part of AGR dues to stay afloat

Posted:

MUMBAI | NEW DELHI: Vodafone Idea (VIL) may offer the government a small part of its statutory dues by January 23 to ensure it doesn't get a defaulter's tag or incur the displeasure of the Supreme Court, and then seek some relief, in a bid to bring back the telecom company from the jaws of insolvency, three people familiar with the matter said. Simultaneously, the telco plans to seek an extension of the January 23 deadline from the Supreme Court."The top management have chalked out the next steps after the apex court dismissed the telco's review petition," said one of the people.The government has estimated Vodafone Idea's total dues, which include licence fees, spectrum usage charges (SUC), penalties and interest, at over Rs 53,000 crore but the telco is expected to submit a lower figure in its self-assessment.Vodafone Idea's shares ended 25.21% lower at Rs 4.51 on BSE, having plunged over 39% during the day, as investors exited on fears that telco will collapse in the absence of relief from the judiciary.After offering a small payment, Vodafone Idea may ask the Centre to refund or adjust some of the Rs 9,000 crore pending input tax credit under GST that it believes the government owes it, one of the persons said. He added that the strategy of the company is to show the telecom department that it is not defaulting on its payments and is trying all possible ways to meet statuary obligations. Another person in direct knowledge of the matter said that the loss-making telco may offer under Rs 4,000 crore "as a token amount on January 23". He added the company won't dig into its cash balances since it is a cashflow-negative company."Parting with cash balances would jeopardise its payment obligations and put it at risk of being a financial defaulter with banks," the person said. The company had cash and cash equivalents of Rs 12,800 crore as of September end.An email sent to Vodafone Idea remained unanswered till press time.Recently, the telco's board approved modification in the use of the Rs 25,000 crore right issue proceeds to pay Rs 2,826.1crore towards the AGR dues. In addition, the company can call upon Vodafone UK to cough up Rs 8,000 crore towards payment of AGR dues."The group's potential exposure under this mechanism is capped at Rs 8,400 crore (1.1billion Euro)," Vodafone said last November. 73346074 ASSET MONETISATIONVodafone India has also said it is trying to sell its data centres, optic fibre assets as well as its 11% stake in Indus Towers to raise more funds.Vodafone and Aditya Birla Group, the two promoters of the company, said recently they won't infuse additional equity in the company.A government official said that the only way ahead for the telco to show that it is not defaulting is to make some payments, else all doors of government relief will be shut.Vodafone Idea, along with some 14 telcos, need to pay about Rs1.47 lakh crore to the telecom department by a Supreme Court (SC)- mandated deadline of January23. On Thursday, the top court had rejected pleas by the telco, Bharti Airtel and Tata Teleservices to review its October 24 verdict that had widened the definition of adjusted gross revenue (AGR). Licence fees and SUC are paid on the basis of AGR. Vodafone Idea now plans to file a curative petition at the SC.The government has previously said that it can't offer any relief on the AGR dues, unless directed by the court. But it has also publicly backed a three-player private sector market, which gave market experts some hope that a Cabinetbacked relief may be an option.In a report, brokerage firm IIFL Securities said that the government is likely to spread out the AGR due payments over a long period —10-20 years — to avoid pushing Vodafone Idea into bankruptcy."The consequence of no action by the government would definitely include a major hit to government revenues (Rs 91,000 crore from VIL in old spectrum dues, plus this AGR penalty), a significant hit to the banking system, and a reputation hit for India as an investment destination," IIFL said.

TRAI extends deadline for views on floor rates

Posted:

NEW DELHI: The Telecom Regulatory Authority of India (Trai) has extended timeline for receiving comments over its consultation paper, 'Tariff Issues of Telecom Services' which seeks views on fixing a floor price for voice and data services on telecom networks.The deadline for filing comments and counter comments has been extended till February 28 and March 13, respectively.Warning that the exercise (of fixing tariffs) was deemed 'market distorting' by economists, the consultation paper floated by the telecom watchdog on December 17 asks if there is a case for regulatory intervention to fix a floor price in a market that recently saw tariff hikes of up to 50%. It has further sought views from the industry stakeholders on methodology to compute the floor rate. It has even asked in case the regulator fixes a floor price, would it also cap the tariff rate.The regulator had earlier invited industry stakeholders to submit their responses over the matter by January 17, 2020, and counter-comments by January 31, 2020.Trai said that it had extended the time for submission of comments as it received requests from a number of stakeholders.Trai had floated the consultation paper as the sector and the government prodded it to come up with a floor price so that telcos could see improvements in their ARPUs and end what some players called hyper-competition.

HDFC Bank Q3 preview: All eyes on slippages in auto, agri sectors

Posted:

NEW DELHI: Private lender HDFC Bank is likely to report over 20 per cent year-on-year rise in December quarter profit on Saturday. Credit growth is seen at 16-20 per cent, as retail loan growth may moderate a bit. Net interest margin (NIM) is likely to come in 4.2-4.3 per cent. Asset quality may stay strong, but slippages in auto and agriculture sectors will be keenly tracked, said analysts. Motilal Oswal expects the bank to report a 24 per cent YoY jump in profit to Rs 6,950 crore. The brokerage expects asset quality to remain steady with gross non-performing assets (GNPAs) and net NPAs likely at 1.40 per cent and 0.44 per cent, respectively. Edelweiss Securities sees credit growth at 20 per cent on the back of recovery in corporate loans. It expects HDFC Bank's retail business to grow in 16–18 per cent range. "Deposits may register 26 per cent growth due to market share gains, focus will remain on CASA and retail term deposits. Core revenue momentum is likely to be 16–18 per cent with steady NIMs at 4.2–4.3 per cent, though fee income is a key monitorable, it said. Sharekhan expects the bank to report 15.7 per cent rise in net interest income (NII) at Rs 14,548.80 crore and 29.7 per cent rise in profit at Rs 7,244.50 crore. Reliance Securities said operating efficiencies and lower tax rates will boost the bank's profit by 21.7 per cent to Rs 6,799 crore. The brokerage sees NIM at 4.25 per cent compared with 4.2 per cent in the September quarter and 4.3 per cent in the year-ago period. "We expect loan growth to slow down to 17 per cent resulting in slower NII growth at 12 per cent YoY. Retail loan growth slowdown is on account of weak volume growth in auto though the share of unsecured portfolio would remain high. Fee income growth from MFs will be slower due to changes in regulations while asset and payment fees will grow at a slower rate," said Kotak Securities.

Expert who called smallcap peak in 2018 says it’s time to buy them

Posted:

Parag Thakkar of ICICI Prudential – PMS says quality midcaps and smallcaps are likely reward handsomely over the next 3-4 years. Edited excerpts from an interview with ET NOW:Your big call which was very often discussed in the market was when you called out the peak for smallcaps and midcaps. What were those signs that made you say this is time to stop investing? And now have you changed your stance back to lean towards them?We looked at the PE multiple of the smallcap index. The PE of smallcaps in January 2018 was 25, and it was at a premium to largecaps and midcaps both. And if you see from August 2007 to January 2018, all smallcaps were rallying madly. There was a crazy run, and it was complete euphoria with many stories getting sold. So that was what I called a perfect top. Of course, I give this credit to my entire team, my colleagues and other fund managers. It was a collective call to return Rs 700 crore to investors and after that we saw 42 per cent correction in smallcap index. So, PE multiple which was 25 times came to 14 times recently in August-September. Then we said that okay now this is a hatred space of the market, so let us focus here. There are so many good quality companies which have corrected 30 per cent, 40 per cent, 50 per cent while profit decline is hardly 10-15 per cent. So from October onwards, we started looking at companies where business cycles were going wrong, the corporate governance and leverage was under control.What is the core philosophy of your stock picking framework for 2020? What is your outlook? Do you think this polarised nature of the market that has started to normalise will continue? We call our core strategy focussed four, where we focus on corporate governance which is a key criterion. So there should be an alignment ofinterest with the promoter, where a promoter also believes in creating shareholder value for the minority shareholders. The second is return ratios. We look at ROE above 15 per cent, 18 per cent, and clean cash flow generation and do not like companies where working capital leakage is very high. Then third we look at net debt to EBITDA which is our key parameter. So, net debt to EBITDA should not be more than say 3.5x and last is valuations. This is our focussed four strategy on which we actually construct all our portfolio strategies depending upon the theme.The year 2020 has started on a good note for the broader markets. Do you think this will be shortlived or do you think it will continue?We are of the view that smallcaps, metals, and those kinds of sectors where investors were not ready to invest will start doing well over the nextthree to four years. But the recent run up in smallcaps has been very fast, so there can be some consolidation which is okay. Let us talk about your schemes and funds and contra funds. Why the name contra? Is it because you take contra calls only over there and what qualifies as contra calls? Data shows it has quite nicely outperformed the benchmarks. Do you find it fearful to get into places where people are heading to the hills? Contra is a strategy that is very close to our heart as a house and it has worked very well for us. How we structure contra is that we do notnecessarily buy absolutely cheap names, we actually buy quality companies at some reasonable discount to their fair values. So, we buy a quality company that becomes cheap due to some sort of temporary problem either in the markets or in that particular sector. To give an example, when crude oil goes up see paint stocks correcting, auto stocks correcting, even banks correcting. That's because when crude goes up there is a fear of inflation, and rising interest rates. So, banks also go down and that is the time we start buying quality franchises in those sectors.Talk to us about some of the themes which have really worked well for you. How do you choose them and how did you arrive upon those kinds of themes, which led to a sharp outperformance?We cannot discuss stock specific things any good quality, genuine business which undergoes a long period of consolidation or underperformancecatches our eye. And if we see an inflection point in that company or we see some triggers that the company has started to change the strategy and results are visible, then we try to be first in that particular space. So if every parameter is moving in the right direction, then we catch up to that theme.Metals is one area where you had taken a contra call. What is the thesis behind it?Metal is a day to day need and because of the trade war which was continuing from the last one year, the metal stocks were trading at below bookvalues of 7-8 PEs. It was a very attractive valuation and this time in this cycle, unlike in the 2015 cycle, metal companies had a very good balance sheet. So if you see net debt/EBITDA, net debt/equity was very comfortable. It was very easy to take a call on metals this time while during the trade war was going on. For example, during the Demonetisation it was very easy in my view to buy FMCG stocks or paint stocks. During the trade war it was slightly difficult because you do not know where the tunnel ends. But because the valuations were in your favour and the balance sheets were good and cash flows were robust, it made sense to buy metal stocks during the trade war.Talking of your contra call on telecom, it has been handsomely rewarded. What was behind that, because it was a very brave call at that time but now it is working out very well? I would attribute this to our house view. And it was a great call because it is an industry which is of day to day need. One can live without food for one time but without a mobile one cannot. So, mobile is a day to day need; it was the most competitively priced in India than in the world and therewas undue competition and now the survivor has emerged. It was a call to bet on a healthy company in a sector which is of a day to day need, where the balance sheet is not highly leveraged and cash flows are very robust.Moving to the Pipe fund, that is an area where you actually do much deeper stock picking in the smaller areas. The valuation, corporate governance matter over there. What is your strategy for the Pipe fund? In midcaps and smallcaps, corporate governance becomes the most important criteria. Leverage is another very important criteria. We look atcompanies with operating cash flows and where working capital leakage is not there. For instance, in construction space, most of the companies where debtor days are above 100, we have companies where debtor days are less than 60 and the corporate governance is top of the class. I would say that makes a lot of sense. Recently, because of a good rabi crop and water levels in rural India, we have seen very good numbers from agri companies. We have to buy those companies where there is an inflection point.Talking about this agri theme, you have some speciality chemicals names, some agrochemicals. You are quite tilted towards the agri theme. For the last two-three days, fertiliser companies, agrichem are doing very well. Do you think this is a durable kind of a theme? Yes, it appears that at least this rabi crop season, which is Q3 and Q4, these companies are likely to do very well. It is a seasonal business so you cannot say whether next year these things will repeat or not.There are many pharma names in a couple of your schemes. Pharma is also at a five, six-year low, and nobody wants to touch that space. What is your thought on that one?So across the theme, as I told you, we focus on companies. We do not go by how much return they have generated for shareholders in the last fiveyears. We go by genuineness of the business. If the business is generating very good cash flows, very good return on capital employed but say the growth is missing, then there is an inflection point which comes and we start seeing growth also. So those are the companies which we have focussed in the pharma space also, in Pipe funds and in small capsWhat is the outlook for the area where you specialise in, midcaps and smallcaps, for the next two-three years? Do you think companies that are doing well on the earnings front have a runway ahead of them? Can alpha be created versus the space benchmark? Absolutely. We clearly believe that. We are up by around 15 per cent so there can be some retracement, some consolidation but the belief is that over thenext three to four years this is the space which is going to give you higher returns. This is the space where if you buy good quality companies, where earnings traction is there, then you are going to get handsomely rewarded. So some of the stocks in our portfolios are up by 30-35 per cent in the last two months. If earnings come in a good-genuine business where promoters are good, balance is debt-free or less leveraged and return ratios are good, then there is huge liquidity that is going to chase them.

No impact of NCLAT ruling removing Chandrasekaran on TCS: Gopinathan

Posted:

MUMBAI: India's largest software exporter Tata Consultancy Services (TCS) on Friday said it does not see any impact of the National Company Law Appellate Tribunal ruling removing N Chandrasekaran as its chairman.The Supreme Court has given a "blanket stay" on the NCLAT order, the company's Chief Executive and Managing Director Rajesh Gopinathan said."Absolutely not and as your are aware the matter has been referred to the SC. The company has also appealed, and the SC has granted a blanket stay and we don't see any impact to the company from that," he said when asked about the impact of the NCLAT order removing Chandrasekaran.He reiterated again that the company is not worried about the legal battles.It can be noted that the company, which is usually among the first ones to report its numbers, had to delay its board meeting to consider the December quarter performance till it got the SC's relief on the NCLAT order last week.The NCLAT had last month ruled that the meeting in which Cyrus Mistry was removed as the chairman of Tata Sons, the diversified group's holding company, was illegal and ordered his reinstatement.Chandrasekaran had succeeded Mistry as the chairman of Tata Sons after one of the biggest corporate battles.

No comments:

Post a Comment

Gameforumer QR Scan

Gameforumer QR Scan
Gameforumer QR Scan