Top News Today: MCA Raises Cap on Shares Issued with Differential Voting Rights, Cathay Pacific CEO Rupert Hogg Resigns

Tata Motors, Hero MotoCorp, TVS Group companies and others join Mahindra, Suzuki, Toyota and Ashok Leyland to halt production temporarily. NCLT orders liquidation of Amtek Auto. MCA raises cap on shares issued with differential voting rights. Claims by creditors of Jet Airways rise from INR24,000cr a month ago to INR30,558cr now, making hope of revival dimmer. ED uncovers fund diversion worth $400m at Religare Enterprises. Cathay Pacific CEO Rupert Hogg resigns amid Hong Kong protest row. PSBs to adopt “bottom-up consultative process” to enhance efficiency. CEA suggests setting up of an independent entity to screen and monitor loan seekers. US President Donald Trump expresses interest in acquiring Greenland.

 

Moving on to the top Business news stories of the day:

  

 AUTO 
 
Tata Motors, Hero MotoCorp, TVS Group companies and others join Mahindra, Suzuki, Toyota and Ashok Leyland to halt production temporarily. NCLT orders liquidation of Amtek Auto. 
 

Shutting Down: Multiple auto-makers including Tata Motors, Hero MotoCorp, TVS Group companies Sundaram-Clayton Limited (SCL) and Lucas TVS, among others have joined the likes of Mahindra, Suzuki, Toyota and Ashok Leyland to halt production temporarily on back of the current slowdown in the auto sector. 
 

Within this background, the Federation of Automobile Dealers Associations has noted that around 200,000 jobs have been cut across automobile dealerships in the country in the last three months.
 

And Some More: The National Company Law Appellate Tribunal (NCLAT) has ordered the liquidation of Amtek Auto due to lack of an approved resolution plan for the company despite the passage of the statutory period of 270 days.
 

A consortium of banks led by Corporation Bank had initiated insolvency proceedings against Amtek in July 2017.
 

The liquidation value for Amtek Auto, which owes lenders INR12,603cr, is INR4,119cr.
 
 
 STARTUPS 
  
MCA raises cap on shares issued with differential voting rights.

 
Joy to the World:  In a fillip to startups, the Ministry of Corporate Affairs has revised the cap on differential voting rights (DVR) shares upwards to 74% of the total voting power from the existing 26%. 
 

This will enable companies to retain control while raising equity capital.
 

Another key change is the removal of the earlier requirement of distributable profits for three years for a company to be eligible to issue shares with DVR. 
 

Narrow Road Ahead: The number of IPOs more than halved in the first six months of 2019 to eight from 18 during the same period last year — touching its lowest in the last three years, and as per Mukund Ranganathan, Executive Director at Motilal Oswal Investment Banking, “The current market conditions are quite challenging and it is difficult to see a significant recovery in the IPO markets in this calendar year".
 

More on this here.
 
 
 
 
 COMPANIES  

Claims by creditors of Jet Airways rise from INR24,000cr a month ago to INR30,558cr now, making hope of revival dimmer. ED uncovers fund diversion worth $400m at Religare Enterprises. Cathay Pacific CEO Rupert Hogg resigns amid Hong Kong protest row.
 
Uh Oh: Claims submitted by creditors against Jet Airways have shot up from INR24,000cr a month ago to INR30,558 crore now, making hopes of any revival of the defunct airline dimmer.
 
The news comes shortly after Etihad Airways, which holds 24% in Jet, said on Monday that it did not submit an expression of interest (EoI) for the airline due to unresolved issues pertaining to its liabilities. Additionally, Anil Agarwal’s Volcan Investments had submitted an EoI last Saturday, but pulled out shortly.
 
 
In Other News: The Enforcement Directorate, which is probing the money-laundering charges against Religare Enterprises former promoters Malvinder Mohan Singh and Shivinder Mohan Singh, has established a diversion of funds worth $400m to a subsidiary in Mauritius and then to a Jersey-based entity. 
 
More on this here
 

It's Time to Go: The CEO of Cathay Pacific Airways has resigned following pressure by Beijing on the Hong Kong carrier over participation by some of its employees in anti-government protests.
 

Hogg will be replaced by Augustus Tang, CEO of Hong Kong Aircraft Engineering Company Limited (HAECO), which is also under the Swire Group.
 
 
 REFORMS 

PSBs to adopt “bottom-up consultative process” to enhance efficiency. CEA suggests setting up of an independent entity to screen and monitor loan seekers. 
 

What's the Plan: In an attempt to bring reforms in public sector banks (PSBs), the Ministry of Finance has asked lenders to hold month-long consultations to review their performance and achieve various economic objectives.
 

Beginning today, branch or regional-level officials will hold intra-bank meetings and map performance of branches which will be followed up by inter-bank meetings (chaired by PSB chiefs) and ultimately a national-level two-day brainstorming in Delhi.
 

As part of the discussions, the PSBs have been asked to capture a set of 42 questions on credit, non-performing assets, Mudra loans and agriculture credit, among others. 
  

And This: PSBs could establish a single-solution interface, the PSB Network (PSBN) akin to the Goods and Services Tax Network (GSTN) to use technology for screening borrowers and monitoring them carefully, opined K Subramanian, Chief Economic Adviser (CEA). 
 

PSBN can utilise data from all PSBs, government sources, and service providers to develop ratings models for rating corporates, especially those that are repeated defaulters. The ratings models would not only be employed when screening the borrower for a fresh loan, but also for constantly monitoring the borrower.
 
 
 GREENLAND  

US President Donald Trump expresses interest in acquiring Greenland.

Are You For Real?: As per a WSJ report, US President Donald Trump has privately expressed interest in acquiring Greenland.
 
Now while Greenland’s Ministry of Foreign Affairs admonished the rumor in a tweet explaining that “#Greenland is rich in valuable resources such as minerals, the purest water and ice, fish stocks, seafood, renewable energy and is a new frontier for adventure tourism. We’re open for business, not for sale”, the idea may not be completely unfounded. The US has in fact bought land from foreign governments before and it has apparently considered acquiring Greenland in the past, too.
 
More on this here.
 
 
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