RBI Reveals List of Wilful Defaulters, Saudi Aramco IPO Could Be Biggest Ever, India's GDP Growth Could Go Below 5%

India's GDP growth figure for July-September could be below 5%. India Inc reports a combined net loss for the first time in at least 15 years in Q2. Replying to RTI, RBI finally reveals list of wilful defaulters. RBI working on new corporate governance structure for banks. Vodafone Idea and Airtel set to increase tariffs beginning December 1. Government grants telecom companies two years moratorium on spectrum dues payment. Swiggy to invest another INR75cr to expand its cloud kitchens. ByteDance to roll-out music service in India next month. Saudi Aramco sets $1.7tr valuation. At $25.6bn, IPO could be biggest in history. Alibaba's secondary listing in Hong Kong could be 2019's biggest IPO (yet).

 

 

INDIA

As Winter Session of Parliament begins, an agenda jam-packed with economic legislation awaits MPs.

Policy is King: The Winter Session of the Indian Parliament has begun, and the economic legislative agenda is quite heavy-duty. Some of the economic Bills that will be taken up in the coming days include the Companies (Amendment) Bill, the Taxation Laws (Amendment) Bill, the Insolvency and Bankruptcy (Second Amendment) Bill, the Competition (Amendment) Bill and the Multi-State Cooperative Societies (Amendment) Bill. An analysis of these Bills and their provisions can be read here.

 

India's GDP growth figure for July-September could be below 5%.

The Worst is Yet to Come: India's quarterly economic growth of 5% in the April-June quarter dejected and depressed one and all. But GDP growth could get slower still. Economic analysts, renowned for disagreeing on virtually everything, have reached a consensus on one topic - that India's GDP numbers for the current quarter could dive below 5%. 

 

Economists at State Bank of India, Nomura Holdings Inc. and Capital Economics Ltd. lowered their growth forecasts for the quarter ended September to between 4.2% to 4.7%.

 

A 4.2% growth rate would be slowest since authorities adopted a new base year in 2012. It would also mean that measures currently being employed to boost sagging growth - like cutting corporate taxes and the RBI slashing repo rates - have not managed to reverse the slowdown.

 

The government is scheduled to publish the quarterly GDP data on November 29. ET Indicators 

 

India Inc reports a combined net loss for the first time in at least 15 years in Q2.

Unforseen: India Inc has reported a combined net loss for the first time in at least 15 years in Q2 on the back of the record losses posted by telecom operators. 

 

Net sales contracted for the first time in four years during the same period due to demand contraction in the domestic economy. 

 

Listed companies, excluding financials and oil and gas, reported a combined net loss of INR16,000cr in Q2 FY20 vs a net profit of INR73,000cr last year. The combined net sales for companies, excluding financials and oil, were down 0.4% YoY - their worst quarterly showing in at least three years.

 

The listed mobile operators, such as Bharti Airtel and Vodafone Idea, together reported a net loss of INR1.05L cr during the quarter, compared to a net loss of INR4,100cr a year ago. BS

 

BANKING

Replying to RTI, RBI finally reveals list of wilful defaulters.

Right to Revelation: In response to an RTI filed by The Wire, the RBI has disclosed a list of India's wilful defaulters. As per the list, total funded advances outstanding to the 30 companies named, in addition to the amount the banks have written off so far, adds up to over INR50,000cr. The list contains many well-known names, including Gitanjali Gems, Rotomac Global, Ruchi Soya Industries, Zoom Developers, Deccan Chronicle Holdings, Winsome Diamonds, REI Agro, Siddhi Vinayak Logistics and Kudos Chemie.

 

RTIs seeking information of wilful defaulters first reached the Central Information Commission (CIC) in 2011. The CIC directed the RBI to reply to these petitions, but the Central Bank argued that its "fiduaciary relationship" with banks ties its hands from disclosing information on defaulters. The matter soon went to the Delhi High Court and then the Supreme Court, which in 2015 directed the RBI to answer the RTI applicants. The Wire

 

RBI working on new corporate governance structure for banks.

New Rules: In his keynote address at the Business Standard Annual Banking Forum, RBI Deputy Governor NS Vishwanathan said the Central Bank is working on a corporate governance structure for banks in line with Basel norms and that India’s version of the same would likely be tougher in recognising bad loans.

 

“In the past we had a situation where the additional NPA (non-performing asset) assessed by the RBI was not made public. Because of the Basel committee recommendations, lots of disclosures are now required, but we need to go beyond those,” Vishwanathan said.

 

“The effort should be to disclose more rather than less, except what you cannot disclose legally. The default should be to disclose as much as we can as long as we don’t hit a provision of law, or end up disclosing the market strategy of the financial intermediaries.” More details here.

 

SC verdict could be inflection point for banking sector, says Morgan Stanley India.

Crossroads: The Supreme Court’s recent ruling on ArcelorMittal’s purchase of Essar Steel India paved the way for banks to set the terms of the distribution of sale proceeds among creditors. This will empower banks and, according to Morgan Stanley India’s MD Ridham Desai, “has settled several disputes around India’s bankruptcy law...Last week’s judgement may well prove to be an inflection point for the [banking] sector.” ET Markets

 

TELECOM

Vodafone Idea and Airtel set to increase tariffs beginning December 1.

Shelling Out Cash: Telecom operators Vodafone Idea and Bharti Airtel are set to hike prices from December 1. 

 

The move is perhaps an attempt to keep their businesses viable, after the two reported massive losses in the quarter ending September 2019, with combined losses standing at INR74,000cr. Here's a look at  the tariffs both the players are currently offering.

 

Airtel noted that the telecom sector was highly capital intensive with fast changing technology cycles that require continuing investments. It was, therefore, extremely important that the industry remains viable to support the vision of Digital India.

 

Government grants telecom companies two years moratorium on spectrum dues payment.

Sigh of Relief!: The government on Wednesday approved a moratorium of two years on payment of spectrum dues worth INR42,000cr. 

 

However, there was no relief granted on the INR1.47Lcr Adjusted Gross Revenue (AGR) demand following the Supreme Court verdict. ToI

 

For Some Perspective: In the September quarter, Vodafone Idea paid license fee and spectrum usage charges of INR1,114cr constituting as much as 37% of the operating loss - earnings before interest and tax - for the period.

 

The move surprisingly received rather lukewarm response from investors. In early deals on Thursday, shares of Bharti Airtel and Vodafone Idea were down 2-4% a day after the announcement. This is in contrast to the 2-35% rise in shares of Vodafone Idea, Airtel and Reliance Jio after they announced plans to raise tariffs - perhaps suggestive of the fact that the measure was rather "insufficient to alleviate the financial stress completely." Livemint

 

TECH

Swiggy to invest another INR75cr to expand its cloud kitchens.

Dibs on Food: Bangalore-based food-delivery platform Swiggy is set to invest another INR75cr in the next six months to expand its cloud kitchen. 

 

Swiggy at present services around 1.5 million orders a month from over 1000 cloud kitchens in 14 cities through ‘Swiggy Access’ that allows restaurants to host delivery-only kitchens in new geographies where they don’t operate. Launched in November 2017, Swiggy Access aims to create new avenues of supply - restaurants, cuisines, and kitchens - in hyperlocal zones within a city where demand outpaces existing supply of restaurants.

 

Swiggy believes that India could emerge as the second-highest country with the number of cloud kitchens after China in the coming years, said Vishal Bhatia, CEO of New Supply business at Swiggy. TechCrunch

 

RBI Reveals List of Wilful Defaulters, Saudi Aramco IPO Could Be Biggest Ever, India's GDP Growth Could Go Below 5%

 

ByteDance to roll-out music service in India next month.

Let the Music Play: TikTok owner ByteDance is gearing up to roll-out its own subscription-based music service in India next month to take on the likes of Apple Music and Spotify. 

 

As per reports, ByteDance is trying to get licensing deals from Universal Music, Sony Music and Warner Music.

 

ByteDance is said to differ its service from others with the help of short video clips. These clips can be shared with other users in order to create more viral videos. The videos can also be used to find music on the app's library. India Today 

 

IPO

Saudi Aramco sets $1.7tr valuation. At $25.6bn, IPO could be biggest in history.

Aramco Has Arrived: Saudi Aramco has set a $1.6-$1.7tr valuation target. This is below the $2tr valuation sought by the Saudi Crown Prince but still in the running to become history's biggest IPO.

 

Oil Be Buying Aramco Shares: The world's most valuable company plans to sell about 3bn shares at an indicative price range of 30-32 riyals. Selling 1.5% of the oil giant would value the IPO at about $25.6bn, above the $25bn Chinese e-commerce giant Alibaba raised in its record-setting 2014 New York IPO. Moneycontrol

 

Alibaba's secondary listing in Hong Kong could be 2019's biggest IPO (yet).

Two Times Lucky: Alibaba's upcoming Hong Kong IPO is likely to be this year's biggest - so far.

 

The e-commerce giant - which is already listed in New York - will reportedly price its shares at 176 Hong Kong dollars ($22.48). That would be just less than a 3% discount to the US closing price. 

 

Pricing details are expected to be announced soon but the company will issue 500mn new ordinary shares (50mn of them reserved for retail investors) plus 75 million "greenshoe" options.

 

At $22.48, Alibaba's secondary listing would be the largest this year. But it will likely be overtaken in December if that is when oil colossus Saudi Aramco unveils its own IPO, which is expected to be the largest of all time, let alone of 2019.

 

Shares of Alibaba begin trading in Hong Kong on November 26. CNBC

FIN.

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