Exports drop in August; Imports decline too, narrowing trade deficit to $13.45bn. Altico Capital downgraded; investors seek cover fearing IL&FS repeat. Zomato to stream original content on its app. Traders' body seeks ban on Amazon, Flipkart's festive season sale. Ambani family receives Income Tax notices under Black Money Act. OkCredit raises another $67mn.
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Give and Take: India's exports dropped 6.05% to $26.13bn in August, primarily on back of significant dip in shipments from key sectors such as petroleum, engineering, leather, and gems & jewellery.
Also This: Imports too declined 13.45% to $39.58bn, narrowing trade deficit to $13.45bn vs $17.92bn last year.
Kickstart: Finance Minister Nirmala Sitharaman is set to announce more relief measures today in an attempt to provide a fillip to the slowing economy. The measures are expected to provide a boost to the real estate and automobile sectors, aside from generating more liquidity and demand in the economy.
Bad Omen: Rating agency CARE Ratings yesterday downgraded Altico Capital, a non-banking finance company that focuses on lending to the real-estate sector after it defaulted on interest payments worth INR19.9cr due to Mashreq Bank of Dubai. The company also added that this may lead to further defaults down the line.
“Care has revised credit rating for proposed long-term bank facilities from CARE AA-; Outlook: stable to CARE B; Outlook: negative," Altico said in a filing.
Can Keep No Calm: The default brings to limelight the rising stress in India’s retail sector which has been facing severe cash crunch following the NBFC crisis.
According to its latest filing, Altico Capital has INR43.62bn of loans outstanding from banks and financial institutions as of Sept. 12.
IL&FS Scare: As news of the default spread, mutual funds fearing a repeat of last year’s IL&FS crisis, were quick to take advantage of ‘sidepocketing’ rules, which allow funds to segregate illiquid securities from defaulting companies till the fund houses are able to realise some value from these papers.
Breaking it Down: The process creates two schemes - one that contains the illiquid paper and the other holding the good ones. As and when fund houses are able to recover money from Altico Capital, it will be distributed to investors in proportion to their holdings in the segregated portfolio.
UTI Credit Risk Fund, with assets of INR3,536cr has an exposure of INR202.82cr to Altico (5.85% of AUM). Reliance Ultra Short Duration Fund, with assets of INR3,258cr, has an exposure of INR150cr (4.61% of AUM).
Zomato Pulls Off a Netflix?: Food-delivery platform Zomato has announced its foray into web streaming with 18 original shows over the next three months, beginning 16 September.
The videos will be available under the new ‘Videos’ tab on the app and will be three to 15 minutes long. They will be under different categories such as shows, recipes and Sneak Peek restaurant stories.
No More Sale!: The Confederation of All India Traders (CAIT) in a letter to the Federal Trade Minister requested the government to ban the upcoming festive sales on Amazon's local unit and its rival Flipkart, alleging that their deep discounts violate the country's foreign investment rules for online retail.
Walmart-owned Flipkart's six-day sale begins Sept 29, while Amazon is yet to announce dates. During the sale, the ecommerce platforms offer deep discounts ranging from 10%-80% on a wide range of products, including fashion, smartphones and home appliances.
In Other News: As per this Indian Express report, the Mumbai unit of the Income Tax Department has served notices in the names of Mukesh Ambani’s wife Nita Ambani and their three children under provisions of the 2015 Black Money Act for their alleged “undisclosed foreign income and assets”.
A Reliance spokesperson however, denied all allegations, stating “We deny all the contents of your email including receipt of any such notice”.
Coming Soon: Minister for Communications, Electronics and Information Technology, Ravi Shankar Prasad has announced that spectrum auctions will take place at the end of this year or early next year.
The government plans to hold the largest spectrum auction with some 8,293.95 MHz of airwaves at an estimated total base price of INR5.86L cr. The auctions will see the debut of 5G spectrum, besides sale of 4G spectrum.
We No See You: As per this report, India’s leading telecom operators Reliance Jio and Bharti Airtel have decided to partner with non-Chinese equipment manufacturers for their 5G trials, at least for the meanwhile.
The move comes against the backdrop of the US and some of its allies banning the purchase of Chinese telecom equipment over threat to national security.
While Jio has tied up with Samsung, Airtel has finalised agreements with European telecom majors Ericsson and Nokia.
The What: Softbank, the biggest investor in WeWork’s parent, is planning to buy at least $750mn worth of shares in WeWork’s upcoming IPO.
The move is likely to allow WeWork shore up an offering that has been plagued by tepid investor demand.
The plan, if it goes through, could see SoftBank end up with 25% or more of the shares sold in an offering that’s expected to raise at least $3bn and value the startup at between $15bn and $20bn. However, this is significantly lower than the $47bn valuation SoftBank bought in at earlier this year.
Keep it Coming: Cloud-based digital application provider for small and medium-sized merchants, OkCredit has raised another $67mn from existing investors Lightspeed Venture Partners India and US, and Tiger Global.
The news comes barely three months after it mopped up one of the largest Series A rounds. This takes OkCredit’s total fundraise over the past few months to $83mn.
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