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This is a roundup of the day’s stories in brief
HDFC Bank Veteran Paresh Sukthankar Quits
Paresh Sukthankar, deputy managing director and a member of the founding team at HDFC Bank Ltd., has resigned.
- Sukthankar’s resignation will be effective 90 days from today, according to the bank’s exchange filing.
- The resignation comes as a surprise to many who saw him as a natural successor to Aditya Puri, who is set to retire in October 2020.
- Deepak Parekh, chairman of HDFC Ltd. told BloombergQuint that Sukthankar had cited ‘personal reasons’ for stepping down.
Read more on how the “sober, down-to-earth” Sukthankar became Aditya Puri’s wing man.
Why NCLAT Found Vedanta, Tata Steel Eligible To Bid For Insolvent Assets
In an order that combined appeals against insolvency proceedings of Bhushan Steel Ltd. and Electrosteel Steels Ltd., the NCLAT found the respective successful resolution applicants Tata Steel Ltd. and Vedanta Ltd. eligible to submit bids.
- In both the cases, the Tribunal found that the offences, cited by appellants, were not severe and didn’t attract the disqualification criteria laid down under Section 29A (d) of the insolvency code.
- The offences of both Vedanta Resources-owned Konkola Copper Mines and Tata Steel U.K. were found to be less severe than those deemed ineligible.
- The order clears the way for Vedanta to take over Electrosteel and for Tata Steel to take over Bhushan Steel, unless the appellants move the Supreme Court.
Here’s more on the appellants’ claims and why they failed to convince the tribunal
Nifty Snaps Five-Day Gaining Streak; U.S. Equities Drop
India’s NSE Nifty 50 Index snapped its five-day winning streak dragged by the country’s largest lender, State Bank of India, after it reported third consecutive quarterly loss.
- The S&P BSE Sensex Index fell 0.4 percent or 155 points to 37,869.
- The NSE Nifty 50 Index declined 0.4 percent or 41 points to 11,429.
- Eight out of 11 sector gauges ended lower dragged by Nifty PSU Bank Index's 3.8 percent drop.
- On the flipside, Nifty IT Index was the top gainer, up 0.5 percent.
Follow the day’s trading action here
Global stocks declined and the lira weakened as Turkey’s economic crisis threatened to spread.
- The S&P 500 Index erased a weekly advance after U.S. President Donald Trump doubled tariffs on Turkish steel and aluminum imports, escalating a diplomatic row that tipped the nation’s economy deeper into crisis.
- The Stoxx Europe 600 Index sank 1.1 percent.
- The Bloomberg Dollar Spot Index jumped 0.7 percent to the highest in more than six weeks on the largest climb in a month.
- The Turkish lira decreased 16 percent to 6.6 per dollar, the weakest on record with the largest tumble in more than 17 years.
Get your fix of global markets here
Earnings Update: SBI, Hindalco, GAIL
State Bank of India reported a surprise loss for the third straight quarter due to high provisions and significant mark-to-market losses.
- The bank’s net loss stood at Rs 4,875.8 crore in the quarter-ended June, compared with Rs 2,006 crore profit last year.
- Net interest income rose 24 percent to Rs 21,798 crore.
- Gross bad loans ratio stood at 10.69 percent as of June versus 10.9 percent in the March quarter.
- Net NPAs declined marginally to 5.29 percent from 5.73 percent.
Here’s how the state-owned lender fared in the April-June period
Hindalco Industries Ltd.’s profit more than doubled in the first quarter.
- Net profit jumped to Rs 734 crore during the three months ended June, from Rs 364 crore in the year-ago period.
- Revenue rose 2 percent to Rs 10,670 crore.
- The earnings include numbers from its Utkal Alumina unit.
- Operating income rose 17 percent to Rs 1,951 crore.
- Margin expanded 240 basis points to 18.3 percent.
Click here to get Hindalco Industries’ first quarter fineprint
GAIL Ltd.’s profit for the quarter ended June beat estimates.
- Net profit rose 23.3 percent sequentially to Rs 1,259 crore.
- Revenue jumped 12 percent to Rs 17,298.6 crore.
- Earnings, before interest tax, depreciation and amortisation rose 32.4 percent to Rs 2,243.6 crore.
- The operating margin expanded 200 basis points to 13 percent.
Here’s a snapshot of GAIL’s quarterly performance
Stock Exchanges Not On Board With Jet Airways
Stock exchanges have sought details from Jet Airways Ltd. after India’s second-largest airline deferred releasing its earnings.
Among the details sought by exchanges are:
- The reasons for which the audit committee hasn't approved the financial result; details of “certain matters which has been not closed”, as stated in the Aug. 9 filing.
- Any other matters discussed in the board meeting apart from financial results.
- A report said the decision to defer result was taken an hour after the meeting ended, while most executive and board members had already left the venue. Under the said circumstances, “confirm who has taken the decision to defer the financial result?”
- When will the adjourned meeting be conducted to consider the financial result?
Read more on why stock exchanges are miffed with the carrier
India’s 27 ARCs Make A Small Dent In Bad Loan Clean-Up
Data sourced from the Reserve Bank of India via an RTI shows that the book value of loans purchased by the country’s 27 asset reconstruction companies as of March 2018 was at Rs 3.23 lakh crore. However, at the same time, gross bad loans still held by banks stood at over Rs 10 lakh crore.
While the two numbers are not comparable, they provide a view of the scale of the problem and the role played by ARCs in resolving it.
- Between March 2017 and March 2018, the book value of loans held by ARCs increased by Rs 66,778 crore, showed the RBI data. Over this period, gross non performing loans rose by Rs 2.6 lakh crore.
- The reasons for ARCs staying on sideline, as stated by ARC officials are that banks are unwilling to take adequate haircuts and are unable to come together and sell 100 percent of the outstanding loans of a company.
- Bankers, however argue the reverse.
Read more on the discord between ARCs and banks on bad loan clean-up
A Default Bares Troubles Of Mumbai’s First Metro Operator
A debt default by Anil Ambani’s Reliance Infrastructure Ltd. brought into focus the poor financial health of at least two group companies: the operator of Mumbai’s first metro line and a naval shipbuilder.
- Reliance Infrastructure had defaulted on principal and interest payments on non-convertible debentures due on July 27. That prompted rating agencies to downgrade it to default.
- The company’s subsidiaries—Mumbai Metro One Pvt. Ltd. and Reliance Naval and Engineering Ltd. have been reporting losses for at least four years. The naval shipbuilder has even sought a debt resolution from lenders.
- Auditors to Reliance Infrastructure, in a note with the June quarter earnings, had said that the companies—along with three other firms—can’t survive as “going concerns” without its financial support.
- Mumbai Metro One has been in the red since it began operations in 2014.
Read more on Reliance Infrastructure’s woes
Jaypee Infra Verdict: Have The Homebuyers Really Won?
The yearlong battle of Jaypee Infratech Ltd.’s homebuyers has come to an end. The Supreme Court has directed the insolvency process to start afresh, which means the homebuyers will be able to participate in the resolution process as financial creditors.
But experts that BloombergQuint spoke to said this end is the beginning of a new battle for homebuyers. Here are some of the challenges cited by them:
- Evidence for claims.
- Representation on Committee of Creditors and voting process.
- The mortgage lender-homebuyer conflict.
Find out why homebuyers are unlikely to benefit from SC’s verdict on Jaypee Infra
Crypto-Trading, Gujarat Style
Accusations of tax evasion and police corruption, a kidnapper who was kidnapped, a fugitive politician, and billions in bitcoin lost. This is crypto-trading Gujarat-style.
- Gujarat is home to a bitcoin-based Ponzi scheme that could exceed India’s largest banking fraud that was uncovered at Punjab National Bank.
- The developments involve a Gujarat-based cryptocurrency firm BitConnect founded by Satish Kumbhani which has been charged with a federal lawsuit in Texas, U.S.
- With Bitcoin prices soaring last year and investors looking for alternatives to launder money after the government’s cash purge, BitConnect saw over $3.2 billion worth Bitcoin being poured into it.
- Then Bitcoin crashed. And complaints about crypto-fraud started emerging across Gujarat.
Find out more about the chaos that ensued
Strong-Arm Governments Are Taking Over the Global Economy
Surveying the end of the Cold War in 1989, political scientist Francis Fukuyama famously argued in an essay titled The End of History? that Western liberal democracy was the culminating form of government. That’s not quite how things have played out. History, you might say, has returned.
- The most striking trend in countries has been the rise of populism.
- Populist parties have been gaining strength since the global financial crisis a decade ago, and Donald Trump’s election win in U.S. is a prominent example.
- The rise of China also means that authoritarian regimes with strong central power and limited political freedom are playing an expanded role in the world economy.
- The G-20 countries including Spain have a combined GDP of $64 trillion. And populist governments control 41 percent of that. The figure was only 4 percent back in 2007, before the crisis.
Here’s more on how the mainstream political parties are losing influence.
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