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Paytm Doubles Losses, Apple to Unveil New Devices et al.

Professor of Financial Economics and Part-time Value Investor, Transfin.
Sep 12, 2018 1:19 PM 2 min read
Editorial

Good evening readers, 

 

We're all familiar with the Life Insurance Corporation of India (LIC). Besides being responsible for the friendly neighborhood Bima agent (80's nostalgia playing in background), LIC has been undertaking another interesting role in the Indian financial system i.e. saving troubled public sector companies. 

 

Popularly labelled as "market support", LIC's interventions in a Western setting would easily qualify as Bail-outs and thereby warrant a more vigorous outcry.

 

NTPC, SBI, Hindustan Aeronautics, GIC, New India Assurance, NBCC, UTI Bank etc. (not an exhaustive list) have all benefited at various stages thanks to the good graces of the state life insurer. Year 2018 has already seen IDBI Bank and now IL&FS join the ranks.

 

The government needs to go through some resemblance of due process before deploying policyholder funds (in this case of the general public courtesy LIC's monopoly in life insurance) towards distressed assets. Being PSUs, they're as much capable of becoming "Non-performing" as a private company. Why shouldn't they go to the NCLT? Food for thought. 

 

That being said, its time to recap today's top 6 business stories through our End Of Day Wrap Up:

 

INDIA

 

RBI initiates special audit of defaulting infrastructure finance firm IL&FS. Expect more delinquencies.

Reports suggest IL&FS may default on more borrowings going forward. Another INR150cr inter-corporate deposit payment due on September 14. Lender SIDBI asks the infrastructure finance company to submit plan detailing repayment of INR300cr already due and the INR150cr due next.

 

Cabinet approves new procurement policy to ensure MSP and to bring in private procurement players.

State governments to choose from multiple schemes to protect farmers when prices fall below MSP. Madhya Pradesh's ongoing 'Price Deficiency Scheme' used as precedent to protect oilseed farmers. Second option comprises engaging private players for procurement. Third option based on 'Price Support Scheme', where the central agencies themselves procure commodities under MSP.

 

One97 Communications, owner of Paytm, reports 80% higher losses at INR1,600cr in 2017-18.

Company's expansion plans, including the payments bank, Paytm Mall, and a new mutual fund business Paytm Money cited as principal drivers.

 

Supreme Courts holds IBC process under RBI mandate, grants temporary relief to defaulters.

Power-sector stressed assets gain more time to present resolution plans to lenders outside the bankruptcy court, considering Supreme Court's direction asking RBI and lenders to hold insolvency process till further notice.

 

US / INTERNATIONAL


Apple to hold its annual product showcase at its HQ today, unveiling its new devices.
 
Flagship event creates buzz from commentators, industry and customers who await new variants of the company's iPhones, Apple Watch, AirPods etc. Apple plans to 'supersize' its iPhone lineup, announcing larger screens, newer colours, and dual SIM capabilities.
 
 
Workers at two of the biggest US steelmakers demand higher compensation as tariffs push profits.
 
US Steel and ArcelorMittal, accounting for 40% of US production capacity for flat-rolled steel, demand higher wages post 25% tariffs on steel imports imposed by the Trump administration earlier this year, enabling the firms to raise prices. 
 
 
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