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QBiz: SBI to See 50% Recovery of NPAs; Asian Paints’ Profit Up

1. SBI Sees 50% Recovery from RBI’s First NPA List

The State Bank of India (SBI) expects to recover half of the assets that turned sour in the initial 12 large bad loan accounts identified for bankruptcy resolution, Chairman Rajnish Kumar said.

“The recoveries will be around 50 percent and most banks are holding provisions in excess of 50 percent. It may differ from bank to bank, but at SBI, our estimate is that we will be able to write back part of the provisions if everything goes well,” Kumar said in an interview on 24 July to Mint.

For the 28 bad accounts that were subsequently identified by the Reserve Bank of India for resolution, Kumar expects the recoveries to be less – in the range of 30-35 percent. Even then, SBI will be able to write back some provisions as it has already set aside money to cover 76 percent of these NPAs. This will, in turn, add to its profit.

(Source: Livemint)

2. India To Mull Selling $2.6-Billion NHPC Stake to NTPC

India’s ministries of finance and power are discussing a plan to sell the government’s stake in hydro-power producer NHPC Ltd. to its state-run peer NTPC Ltd. – the nation’s biggest electricity generator by capacity – according to people familiar with the matter.

The government’s 73.67 percent stake in NHPC is worth about 182 billion rupees ($2.6 billion) as per current prices, according to Bloomberg’s calculations. The discussions point to the government’s plans to consolidate state-run energy companies to give them global size and scale, apart from helping it to boost revenue collections and stick to its budget gap target. The sale, if approved, will be the second such consolidation after state-run Oil and Natural Gas Corp. acquired the government’s stake in oil refiner Hindustan Petroleum Corp. for 369 billion rupees.

(Source: BloombergQuint)

3. Asian Paints’ Q1 Profit Beats Estimates

Asian Paints Ltd.’s profit rose for the fourth straight quarter, surpassing street estimates. The paintmaker’s net profit increased 31 percent year-on-year to Rs 558 crore in the quarter ended June, it said in an exchange filing. That’s higher than Rs 517 crore estimated by analysts tracked by Bloomberg.

Revenue rose 15 percent on a yearly basis to Rs 4,391 crore compared to the Rs 4,433-crore estimate. Revenue from the paints business rose 15 percent year-on-year to Rs 4,307.6 crore, while home improvement business sales jumped 44.4 percent to Rs 90.9 crore.

(Source: BloombergQuint)

4. Rupee Pinch Prompts Cos to Evaluate Price Hikes

Rupee’s fall may dampen positive sentiments flowing in from the latest round of GST rate cut as TV manufacturers and car makers are evaluating price hikes.

Rising interest rates in the US along with global uncertainty over the trade war has seen strengthening of the dollar over the past few months as the rupee plunged to an all-time low of Rs 69.1 against the greenback on July 19. It is among the worst performing Asian currencies. Indications are that the situation may continue for some more time. A weaker rupee makes imports more expensive and raises costs for domestic manufacturers.

(Source: The Times of India)

5. Non-Life Co Digit Raises Rs 300 crore

New age non-life startup Digit Insurance has raised $44 million (over Rs 300 crore) in a second round of funding. Canadian billionaire Prem Watsa’s Fairfax Holdings has invested $45 million in Digit Infoworks, the startup’s parent company, of which the $44 million has been pumped into the insurance arm. Digit Infoworks has also entered into a deal to buy ITI Reinsurance, which has a paid-up capital of Rs 269 crore.

The second round of funding is the largest for a startup general insurer and brings the total funding into Digit to about Rs 650 crore. The company had launched operations with a paid up capital of Rs 350 crore. Digit Insurance Founder and Chairman Kamesh Goyal said, “We are launching new lines of business. In three months, we will be expanding to 28 cities.”

(Source: The Times of India)

6. BBQ Nation Raises Pre-IPO funding from Jhunjhunwala-Backed Firm

Private equity firm CX Partners-backed casual dining restaurant chain Barbeque Nation Hospitality Ltd has raised ₹80-90 crore in a pre-IPO placement from Alchemy Capital Management, an investment firm co-founded by ace stock market investor Rakesh Jhunjhunwala, said two people aware of the development.

Bengaluru-based Barbeque Nation had filed its draft IPO (initial public offering) papers with the Securities and Exchange Board of India (Sebi) in August 2017. The company is expected to raise ₹700 crore through the public offer. The proposed IPO received Sebi’s approval in January.

“Alchemy Capital has picked up a minority stake in Barbeque Nation through Alchemy India Fund for a consideration of around ₹80-90 crore. The pre-IPO placement valued the company at ₹2,300-2,400 crore,” said one of the people cited above, requesting anonymity. The capital will be used to build new restaurants and for repayment of debt, he added.

(Source: Livemint)

7. Indian Money in Swiss Banks Down 80% Since 2014: FM Piyush Goyal

Under fire for reports of a spurt in black money held by Indians in Swiss banks, Finance Minister Piyush Goyal said on Tuesday, 24 July, that such money decreased by around 35 per cent in 2017 year-on-year, and by 80 per cent since the Narendra Modi government took over in 2014.

“After the NDA came to power in 2014, deposits in Swiss banks have been reduced by 80 per cent till the end of 2017,” Goyal said in the Rajya Sabha.

Citing data from the global body of central banks, the Bank for International Settlements (BIS), Goyal refuted reports of a 50 percent rise in deposits of Indians, quoting the Swiss National Bank (SNB). The Central Board of Direct Taxes (CBDT) under the Ministry of Finance clarified that the Swiss National Bank’s data was usually misinterpreted because it included non-deposit liabilities, businesses of Swiss branches located in India, inter-bank transactions and fiduciary liabilities.

(Source: Business Standard)

8. IMF Wants India to Focus on FDI, Cautions Against Relying on Global Markets

The International Monetary Fund (IMF) has cautioned India it should not rely on global financial markets to finance its current account deficit (CAD) when it goes above 3 percent of gross domestic product (GDP). The Fund basically advised India to rely more on stable sources of foreign inflow – foreign direct investment (FDI).

The advice came amid expectations that India's CAD will rise to 2.5 percent of GDP in the first quarter of 2018-19.

On the contentious issue of the rupee’s value, the Fund in its latest external report has noted the real effective exchange rate (REER) is in line with the fundamentals with the range of -7 to +5 per cent for 2017-18.

(Source: Business Standard)

9. DRI Arrests Two Over Rs 19-cr Duty Evasion

The Directorate of Revenue Intelligence (DRI) on Tuesday, 24 July, said it had detected customs duty evasion of Rs 19 crore in the import of e-rickshaws by a city-based company and arrested its two directors.

"The DRI detected the import of e-rickshaws worth Rs 150 crore by Zeniak Innovation India Ltd through the Kolkata Port through mis-declaration so as to evade duty of Rs 19 crore," a DRI statement said. Company Directors Golam Moinuddin and Mazibur Biswas were arrested on Monday on charges of duty evasion.

The agency said the three-wheelers in completely knocked-down condition were imported by mis-declaring these as "spare parts of electric tricycles" and thus paying only 10 per cent customs duty.

(Source: Business Standard)

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