OF 11 LAKH FIRMS, ONLY
4 LAKH COMPLY WITH KYC NORMS
About
4 lakh out of a total of the country's over 11 lakh 'active' companies have so
far complied with the new know-your-company (KYC) norms mandated by the
Ministry of Corporate Affairs (MCA). Meanwhile, the deadline for complying the
new disclosure norms has been extended till June 15 from April 25 earlier. There
may be companies which will need more time to complete all the filings mandated
under the new disclosure norms. We have given them more time. If they don't do
it within the stipulated time, such firms will be labelled as non-compliant by
the government, said a senior government official. Compliance has picked up
during the last couple of days with about 50,000-60,000 companies coming
forward to comply on the last day. We understand the companies need time
because it is not a question of merely filing one form. You have to be 100%
compliant with all other mandatory filings such as financial statement, annual
returns as well as information on Board of Directors, auditors and companies
secretaries. The government expects that about 7-7.5 lakh companies will come
forward to comply out of a total of around 11.35 lakh.
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FINMIN AGAINST CURBS ON
ROYALTY PAID BY LISTED COMPANIES
The
finance ministry opposes the Securities and Exchange Board of India’s move to
impose curbs on royalty payments by listed companies, such as those made by
them to overseas parents for the use of brands and technologies, said people
with knowledge of the matter. The market regulator has delayed implementation
of the rule to July from April on account of this, pending consultations, they
said. Sebi wants to make the approval of minority shareholders mandatory for
royalty payments by listed companies that exceed 2% of annual turnover to raise
corporate governance standards. The ministry is of the view that such limits
may discourage companies from investing in India, said the people cited above.
Companies are also against the measure. The minutes of the Sebi board meeting
on March 27 alluded to the differences. In addition to public consultation,
meetings were also held with Ministry of Finance (MoF) and MCA (Ministry of
Corporate Affairs) since many of the recommendations involved various aspects
of the Companies Act, 2013, and both the ministries had flagged issues,
including the issue pertaining to royalty payments which required deliberation,
according to the minutes. It’s not clear if the MCA opposes the move. Sebi
wants minority shareholders to have a say on what it regards as exorbitant
royalty payments in order to safeguard their interests. The ministry feels this
may hamper ease of doing business and disrupt initiatives such as Make in India
aimed at boosting the manufacturing sector, said one of the persons cited
above. These reservations along with negative feedback from industry prompted
Sebi to defer implementation of the royalty payment norms at the March meeting.
The Sebi proposal was based on recommendations made by the Uday Kotak committee
on corporate governance, which submitted its report to the market regulator
last year. Sebi is conducting a fresh round of consultations with finance
ministry, ministry of corporate affairs and other corporate stakeholders to
review the proposal, said one of the people cited above. Several industry
participants are of the view that the law could be implemented but the
threshold for obtaining shareholder approval should be increased from proposed
2% to 5-6% of the company’s annual turnover.
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RUCHI SOYA INSOLVENCY:
LENDERS TO VOTE ON PATANJALI'S RS 4,350-CR OFFER NEXT WEEK
Lenders
of debt-ridden Ruchi Soya will vote on April 30 to decide on Baba Ramdev-led
Patanjali Ayurved's revised Rs 4,350 crore bid for the edible oil firm, sources
said. Patanjali, the lone player left in contention after the exit of Adani
Wilmar, had last month increased its bid value by around Rs 200 crore to Rs
4,350 crore for the Madhya Pradesh-based Ruchi Soya. This excludes capital
infusion of Rs 1,700 crore into the company. Sources said the Committee of
Creditors (CoC) met on Friday to discuss the revised bid of Patanjali and
decided to conduct the voting process on April 30.
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RBI’S FEB 12 CIRCULAR:
SC RULING DOESN’T UNDERMINE IBC
The
circular dated February 12, 2018 (Circular) was issued by RBI for
(i)
overhauling all the earlier restructuring frameworks issued by it in the
context of debt resolution such as CDR/JLF/S4A/5:25; and
(ii)
mandating banks/financial institutions pursue action under the Insolvency and
Bankruptcy Code, 2016 (IBC) with respect to accounts in which lenders had an
exposure of more than Rs 20 billion and where no resolution plan for such an
account was implemented within 180 days from the occurrence of default.
Prior
to the Circular, RBI had come up with a first list, comprising of twelve
defaulters and a second list, comprising of twenty-five defaulters, against
whom banks were mandated to commence proceedings under the IBC. By way of the
Circular, RBI, rather than getting into a case- or sector-specific default, set
out conditions under which banks were mandatorily required to initiate
proceedings under IBC against a corporate debtor. RBI’s rationale for issuance
of the Circular was public interest, interest of the national economy and to
drive a behavioural change in the credit system. However, there were practical
challenges being faced by the various stakeholders where in certain sectors
like power, power producers were reeling under a default situation for reasons
beyond their control. The power sector had made representations to the Central
government in this regard and the 37th Parliamentary Standing Committee Report,
on stressed assets in the electricity sector, was finalised in March 2018. The
said report observed the need for synchronisation between the guidelines issued
by RBI and resolution of systemic issues faced by the power sector. The success
of the IBC process is determined on the basis of value preservation of the
corporate debtor on a going concern basis during the insolvency process and
value maximisation for stakeholders at the end of the process. If the Circular
were to be implemented, a lot of companies in sectors such as power, shipyard
and sugar would be pushed into insolvency under the IBC, resulting in a ‘garage
sale’ scenario. Post the Circular, the prescribed period of 180 days to arrive
at a resolution plan with consensus amongst all lenders under a contractual
framework was becoming difficult to adhere to, and the resultant initiation of
IBC proceedings was looming large in a number of cases. The Circular was thus
challenged by corporate debtors across various sectors on the grounds that they
were being pushed into the IBC process because of the time bomb set out in the
Circular. The Supreme Court tagged all matters on this subject in Dharani Sugar
and Chemicals Limited vs Union of India & Ors. In the Dharani matter, the
Supreme Court struck down the Circular as being ultra vires Section 35AA of the
Banking Regulation Act, 1949 (BRA) , which empowers RBI to issue directions to
banks to initiate IBC proceedings in specific matters basis authorisation from
the Central government. However, the two conditions:
(i)
Central government authorisation; and
(ii)
the circular being in relation to a specific default, were not adhered to by
RBI with relation to the Circular.
By
striking down the Circular, the Supreme Court has removed the mandatory
requirement of banks/financial institutions to commence IBC proceedings at the
end of 180 days from default if no resolution qua a corporate debtor is found.
However, banks/financial institutions at their discretion can invoke IBC
proceedings against any corporate debtor, with it being a statutory right. There
has been a lot of hue and cry raised in different quarters as to whether the
IBC process gets undermined on account of the Dharani matter and whether
currently admitted matters to IBC may be ousted. In this regard, it is worth
noting that the IBC process has not been undermined, and all cases which were
admitted to IBC, including List 1 and List 2 cases, shall continue uninterrupted.
Only IBC proceedings which commenced only because of the operation of the
Circular shall be halted, and for this to happen, banks/financial institutions
will have to confirm that a particular proceeding was initiated only because of
the Circular for that proceeding to stop. The framework with respect to
CDR/JLF/S4A/5:25 does not automatically get reinstated on account of the
Circular being struck down. Nothing prevents RBI from coming up with other
circulars to address stress situations or another list of defaulters against
whom IBC proceedings may be commenced, provided that such a list is issued in
compliance with Section 35AA of the Banking Regulation Act.
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MCA TRAINS LENS ON
AUDIT LAPSES IN IL&FS CASE
Troubles
for auditors of beleaguered Infrastructure Leasing & Financial Services Ltd
(IL&FS) are likely to increase, as the Ministry of Corporate Affairs has
taken serious note of irregularities in the company’s account books, which are
being probed by the Serious Frauds Investigation Office (SFIO). The agency on
Wednesday questioned Udayan Sen, former top executive of Deliotte, after a
whistle-blower had early this month flagged the role of auditors. Other top
accountants may also be called for questioning, say sources. IL&FS had
three auditors — Deloitte, Ernst & Young affiliate SRBC and KPMG affiliate
BSR. Even Institute of Chartered Accountants of India, which was assisting SFIO
in the probe, had also flagged the role of auditors. ICAI, in its interim
report had stated that statutory auditors of IL&FS acted in a negligent and
fraudulent manner and prepared incorrect financial statements of the debt-laden
group. It was then that the Centre sought NCLT nod to reopen books of accounts
of IL&FS, IL&FS Transportation Network Ltd (ITNL) and IL&FS
Financial Services (IFIN) on the recommendation of the Institution of Chartered
Accountants of India, and sought permission to initiate proceedings against the
three auditors. Sanjay Shorey, said in a petition that the ministry was looking
to reopen the accounts for last five years. He had said that the reopening will
take about 30 days and the ministry has sought three months to perform the
required tasks. Notices were already sent to the SEBI, IT department and other
statutory bodies. While Deloitte Haskin and Sells LLP was involved in the audit
of IL&FS and ITNL, BSR and Associates LLP was responsible for audit of
IFIN, and SRBC & Co LLP was responsible for audit of ITNL and IL&FS.
Deloitte Haskins was statutory auditor of IL&FS till FY2017 and of IFIN
from FY2016 to 2018. SRBC was statutory auditor of IL&FS for FY17-18 and
for ITNL from FY2016 to 2018. BSR was statutory auditor for IFIN from FY2016 to
2018. BSR also audited accounts of ITNL from FY2016 to 2018.
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IL&FS BOARD MOVE TO
SUSPEND DEBT PAYMENTS AFFECTS QUALITY OF ASSETS
The
Infrastructure Leasing and Financial Services Ltd (IL&FS) board’s decision
to temporarily suspend debt repayments and conserve cash has triggered defaults
and worsened the quality of its assets, three investment advisors said, adding
this has led to prospective buyers offering far less than what IL&FS wants.
The decision of the Uday Kotak-led IL&FS board to prevent a full-fledged
bankruptcy and stabilize its subsidiaries had the approval of the National
Company Law Appellate Tribunal (NCLAT) as well. Saving cash instead of
servicing debt and maintaining assets has affected the quality of assets on
sale, said one of the three people cited above, all of whom spoke under the
condition of anonymity. The industry doesn’t expect the resolution to progress
very much while the elections are on, the person added. So, it will take at
least till June for the new government to settle in and for investors to decide
how comfortable they are making large infrastructure commitments. If IL&FS
does not maintain the quality of assets until then, the valuation the company
hopes to receive will keep falling. It might even become hard for them to repay
the principal secured lenders in full, let alone others. The NCLAT diktat that
cash generated by the asset-holding special purpose vehicles (SPVs) will remain
with the SPV and will not be used to pay stakeholders or creditors implies
credit downgrading will keep happening. For bidders, this leads to ambiguity in
how one should price their bid, said Sandeep Upadhyay, managing director and
chief executive officer, Centrum Infrastructure Advisory. There’s a vast
difference in the cost of financing for an asset that’s rated AAA or AA and one
that has fallen to below B or is already in default. For an under-construction
asset, it’s difficult for bidders to assign a cost-to-complete on an asset that
is half-finished. I believe bidders are treading cautiously with the IL&FS
assets. Bidders are also worried about disrepair and asset deterioration.
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LENDERS MAY TAKE NCLT
ROUTE FOR RATTANINDIA’S AMRAVATI PLANT
RattanIndia’s
1,350 MW Amravati power plant are weighing the option of taking the company to
NCLT if the one-time settlement (OTS) offer by the promoters hits a roadblock.
Davidson Kempner, a US-based investment firm, walked out of the consortium of
investors on the settlement plan at the last minute, even as Varde Partners,
Aditya Birla’s joint venture partner and Goldman Sachs agreed to the plan. Bankers
close to the development told that they may look at the option of taking the
company to the National Company Law Tribunal (NCLT) once the new RBI circular
on stressed assets is framed. We are not comfortable with the option of haircut
that the promoters are negotiating, and will wait for the new RBI circular on
stressed assets to take our next step, one of the bankers said. When contacted
RattanIndia’s compliance officer said: The company is in discussion with its
lenders for appropriate resolution post honourable SC’s judgment on RBI
circular. Another company official said: The matter of taking the company to
NCLT has not been communicated to us. Company officials believe they will reach
a resolution for the Amravati plant with the lenders in a couple of months.
Varde Partners, Aditya Birla’s joint venture partner, and Goldman Sachs are
already there. They will sort out investors among themselves, an official said
on conditions of anonymity. The Reserve Bank of India (RBI) is preparing a new
set of rules for stressed assets after the February 12 circular was declared
ultra vires by the Supreme Court.
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HOTEL LEELAVENTURE GETS
SHAREHOLDERS' NOD TO SELL HOTELS; TO ABIDE BY SEBI DIRECTIVE
Hotel
Leelaventure Friday said its shareholders have approved the resolutions to sell
its four hotels, hotel operations, and its shares in the company's arm Leela
Palaces and Resorts Ltd by postal ballot. The company, however, said it will
abide by the directions of Sebi that none of the transactions proposed in the
its postal ballot notice will be acted upon till further directions from the
markets regulator. The hotels the sale of which shareholders have approved are
in Delhi, Bengaluru, Chennai and Udaipur, Hotel Leelaventure said in a filing
to the BSE. The shareholders also gave their nod to the sale of the company's
hotel operations undertaking and to the sale of the company's shareholding in
Leela Palaces and Resorts Ltd, its wholly-owned subsidiary, it added. All the
special resolutions were approved by 86.60 per cent of the votes that were
polled, while 13.39 per cent opposed the resolutions, it added. As directed by
Sebi vide its letter dated April 23, 2019, read with its e-mail dated 25th
April, 2019, the company will ensure that none of the transactions proposed in
the company's postal ballot notice dated March 18, 2019, will be acted upon till
further directions from Sebi, Hotel Leelaventure said.
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FOIJ SEEKS FISCAL
INCENTIVES FOR MSMES IN THE STATE
The
Federation of Industries Jammu (FOIJ) has presented a memorandum to the
Advisors to the Governor of the State for grant of state fiscal incentives to
Micro, Small and Medium Enterprises (MSMEs) for the rapid industrial growth in
Jammu & Kashmir (J&K). Mahajan highlighted the industries issues in the
state and said that the present State fiscal incentives are not adequate as
compared to pre GST regime for micro & small scale sector of the state. In
this regard, he demanded more incentives for the existing micro & small
scale units of the state for their survival for intra-state sale. He requested
for the 100 percent of CGST refund to micro & small units covered under SRO
63 at par with the same incentive granted to industrial units covered under
Central Excise prior to GST, reimbursement of freight for the incoming of raw
materials, transport subsidy for interstate sale by road up to destination
instead of beyond 1000 km. Besides this, delegation demanded extension of all
the state fiscal incentives to new units and units under substantial expansion;
budgetary support to industrial units engaged in the roasting of groundnuts/
cashew & decortications of walnut/almond /pistachio; removal of toll tax on
raw materials of exportable items to outside the country from J&K State. In
addition, their list of demands includes ease of doing business concept to be
adopted by the Power Development Department for the sanction of power
connections and simplification of procedure for the surrender of power
connections by industrial units with the grant of Powers to concerned Executive
Engineers on Divisional level.
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YES BANK REPORTS
SURPRISE Q4 LOSS OF RS 1,507 CRORE AS PROVISIONS JUMP 9 TIMES YOY
Private
lender YES Bank on Friday reported a surprise loss of Rs 1,506.64 crore for the
quarter ended March 31 on spike in provisions and contingencies. The bank had
posted a net of Rs 1,179.44 crore in the corresponding quarter last year. Provisions
jumped to Rs 3,661.70 crore in Q4 over Rs 399.64 crore reported in the same
quarter last year.
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AXIS BANK HAS FIXED ITS
BIG BAD LOANS BUT SMALL LOAN RISKS ARE RISING
Private
lender Axis Bank has fixed its big bad loan problems that had dragged it down
to a loss making lender a year back. Its gross bad loan ratio has dropped to
5.26% in March quarter from the peak of 6.77% a year ago. The share of loans
rated ‘BB’ and below in the lender’s overall corporate loan book has reduced to
just 1.3%, from 7.3% a year back. But the share of the non-corporate book in
fresh slippages is rising and more than 45% of slippages are outside of
corporate loans. The management said that most of the slippages are from loans
to agriculture and small and medium enterprises (SME). Concerns over the stress
among small borrowers had been raised by the regulator a year ago. A report by
TransUnion and SIDBI on such borrowers showed that bad loan ratios are highest
among SME borrowers. For the lender, the share of riskier unsecured loans in
the retail book is growing. Besides, the share of safe mortgage loans has
dropped. To be sure, retail bad loan ratios have been ultra low for the lender
and for the industry as a whole. In its post earnings call with the media, the
management didn’t indicate any worry on its retail portfolio. Overall
performance of the retail portfolio continues to be very strong, said Jairam
Sridharan. For the bank now, it is imperative to monitor its non-corporate book
and Sridharan said that the lender intends to have a close eye on the portfolio.
Meanwhile, the bank has shown investors in each of last four quarters that
incremental corporate loans are going to strong borrowers with better credit
ratings. The bank has upped the ante on insurance against risk too. Its
provisions towards bad loans has risen every quarter and the coverage ratio has
reached 77% in the fourth quarter. The lender has chosen to make higher
provisions over and above regulatory requirement against standard assets too.
In a nutshell, Axis Bank has not only fixed its bruised corporate loan book but
it has build a provision moat that protects it from potential risk. Investors
have already rewarded the lender for all the work it did on its asset quality.
The stock has gained an impressive 18% this year so far. The bank has a new
leadership and an unshackled balance sheet ready to grow. Ergo, the fast growth
of 17% in its corporate loan book and 18% of overall domestic advances growth
should add to delight.
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NEED TO FORMULATE NEW
VISION FOR INVESTOR PROTECTION: IICA
There
is a need to formulate a new vision statement to safeguard investors and to
take down dubious schemes according to Sameer Sharma. Sharma said, There should
be a macro level strategy which integrates and collaborates. SEBI, PFRDA a lot
of it is redundant and we just don’t know what it is leading to. The IICA has
been tasked with providing policy research and knowledge support to the
Ministry of Corporate Affairs in understanding the changing business
environment and needs/expectations of the regulated entities and stakeholders. For
this a larger, over arching strategy where all these actors initiatives can be
brought together and then they cohere in a way that it leads to best outcomes,
he added. Sharma said the earlier vision for investor protection has lapsed in
2017. There is a need to formulate a new vision where the powers of regulators
should be clearly defined. There must also be an approach where multiple
regulators such as the Securities and Exchange Board of India (SEBI) and the
Pension Fund Regulatory and Development Authority (PFRDA) as well as the
Investor Education and Protection Fund (IEPF) Authority can work together, he
said.
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NSE HIKES F&O
MARGIN BY UP TO 300% FOR STOCKS WITH RISING OPEN INTEREST
The
NSE has increased margin in its futures and options (F&O) segment for
stocks, mainly depending on their open interest (OI), by up to 300 per cent.
This could hurt traders as they may require extra money for trading in stocks,
experts say. A stock in the F&O segment where the OI has reached 90 per
cent, will attract nearly 300 per cent additional margin over and above its
normal applicable base. For stocks where the OI is less than 70 per cent, the
margin will be as per normal applicable limits but will keep increasing with
further rise in OI, the exchange has said. Open interest is the number of
contracts outstanding in the F&O segment at the end of the day. Every stock
has a certain amount of OI allowed, which is decided as per its floating stock
or total number of equity stocks available in the market. When OI in a
particular scrip reaches above 90 per cent it enters a ban period wherein
trading in F&O can be done only to unwind positions. Getting a particular
stock under ban to see that trading is curbed by the exchange and hence
volatility dies down has been a favourite tactic of market operators to manage
the stock price, sources say. It is a menace when a stock enters the F&O
ban period repeatedly and players cannot trade actively in it. Such operator
activity is one of the key reasons for the exchange to have increased the
margin limits and linked it to increase in OI to curb dubious operator
activity. But it would also severely hurt traders as those wanting to trade in
the counter will require more money and hence, face higher risk. For the small
investors, the F&O segment has gone out of reach as the regulator had
increased the lot size and kept a minimum threshold of ₹5 lakh.
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KERALA GOVERNMENT’S
INFRASTRUCTURE FUND TO RAISE UP TO RS 2000 CR IN PE
Kerala
Infrastructure Fund Management Ltd (KIFM), an alternative investment fund
sponsored by the state’s financing arm, is seeking to raise up to Rs 2,000
crore in a private equity fund, becoming India’s first provincial government to
launch such an investment vehicle that would raise money even overseas for
private projects. The fund, which intends to raise capital from both offshore
and domestic sources, will invest in revenue earning and commercially viable
projects in the state, its executive director and Kerala finance secretary
Sanjeev Kaushik told. The fund would tap pension funds and sovereign wealth
funds starting from North America to Europe, Middle East and South East Asia,
besides high-networth family offices and university endowments. We have
received Sebi approval to set up alternate investment fund. We are raising an
AIF category II fund and will invest in projects and companies that are
commercially viable, Kaushik said. Kerala Infrastructure Investment Board
(KIIFB), the investment arm of the state, will have a 26% stake in the proposed
fund, while financial institutions from the state would hold the rest. Geojit
Financial Services, South Indian Bank, Dhanalaxmi Bank and Cochin International
Airport Ltd (CIAL) are the other shareholders of the proposed fund. We are also
talking to State Bank of India (SBI) and Life Insurance Corp (LIC) to become
equity partners in the project. This will be the first such investment vehicle
with government backing and will invest in private projects, Kaushik said.
Given the limitations on state fiscal and budget constraints, states will need
to explore newer and diverse sources of funding infrastructure. The private
equity route is one such area Kaushik said. The challenge is to find
commercially viable infrastructure projects that are able to meet the high
return expectations of investors. Banker-turned bureaucrat Kaushik was the
former managing director of India Infrastructure Finance Co and he headed
capital markets in the ministry of finance from 2011-2015. He started his
career at the M&A unit of ING. He later joined Bank of America and became a
MD at Lehman Brothers and HSBC before joining the government. The fund’s
principle sponsor KIIFB has recently raised Rs 2,150 crore through a masala
bond, the first of such successful issues in recent times, which saw
participation from pension funds and sovereign funds and long-only
institutional investors from North America, Europe, Middle East and south east
Asia. India received a record $35.8 billion in private equity and venture
capital investments in 2018, 37% higher than the previous high of 2017,
according to data compiled by EY. Fund raising by PE/VCs increased nearly 40%
to $8.1 billion in 2018. Exits in 2018 almost doubled in value to $26 billion.
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BANK CREDIT GROWS BY
14.19%; DEPOSITS BY 10.60%: RBI DATA
Bank
credit rose by 14.19 percent to Rs 96.45 lakh crore while deposits grew 10.60
percent to Rs 125.30 lakh crore in the first fortnight ended on April 12,
according to recent RBI data. In the year ago fortnight, deposits were at Rs
113.29 lakh crore and advances stood at Rs 84.46 lakh crore. In the fiscal
ended March 2019, bank credit had risen by 13.24 percent and deposits grew by
10.03 percent. This was the second consecutive double-digits credit growth
after the same had declined to 4.54 percent in FY17 at Rs 78.41 lakh crore,
which was the lowest since 1963, the RBI data said. On a year-on-year basis,
non-food bank credit increased by 13.2 percent in February 2019 as compared
with an increase of 9.8 percent in the year-ago period. Loans to the services
sector almost doubled with a 23.7 percent growth in February compared to 14.2
percent in the same month last year. Advances to agriculture and allied
activities increased by 7.5 percent in February compared to an increase of 9
percent in February 2018. Credit to the industry rose by 5.6 percent in
February, up from an increase of 1 percent in February 2018. Credit to the
infrastructure, chemical and chemical products, and all engineering sectors
accelerated. However, credit growth to basic metal & metal products,
textiles, and food processing decelerated/contracted. Personal loans rose 16.7
percent in February down from 20.4 percent in February 2018, the RBI said.
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B30 CITIES CONTRIBUTE
15% TO TOTAL MF ASSETS; AUM UP 13% YOY
Beyond
30, or the next 30 locations beyond the top 30 cities, contributed nearly 15
percent to total mutual fund industry assets of Rs 24.58 lakh crore as of
March-end. The balance was contributed by T30 cities, or to the top 30
geographical locations in India, according to data from the Association of
Mutual Funds in India (AMFI). A month-on-month comparison shows that the AUM
from B30 cities rose to Rs 3.80 lakh crore in March from Rs 3.66 lakh crore in
the preceding month. Similarly, AUM from T30 cities in March stood at Rs 20.78
lakh crore, marginally up from 20.58 lakh crore a month ago. In FY19, assets
from B30 cities grew 13 percent year-on-year to Rs 42,368 crore. The same for
T30 is not available on AMFI's website. The asset mix for B30 cities continue
to be largely inclined towards equities, with the latter contributing 65 percent
last month as against 64 percent month-on-month. In comparison, equity-oriented
schemes accounted for 38 percent of the asset mix in T30 locations in March
versus 37 percent MoM. An investor-wise analysis in March indicates that 23
percent of assets held by individual investors is from B30 locations. However,
the latter accounts for only six percent of institutional assets. Institutional
assets are concentrated in T30 locations, accounting for 94 percent of the
total. Around 12 percent of retail investors chose to invest directly, while 21
percent of HNI assets were invested directly. A total 41 percent of assets of
the mutual fund industry came directly. A large proportion of direct
investments were in non-equity oriented schemes where institutional investors
dominate. Overall, 40 percent of the industry assets came through the direct
route in September. Majority of these assets were in non-equity schemes, which
see maximum investments from corporates.
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RUPEE RISES 23 PAISE TO
70.02 VS USD AS CRUDE OIL RECEDES FROM 6-MONTH HIGH
The
rupee rebounded by 23 paise to close at 70.02 against the US dollar Friday
after Brent crude oil prices receded from a six-month high of USD 75.60/barrel.
Forex traders said the greenback's weakness against key rivals overseas,
sustained foreign fund inflows and heavy buying in domestic equities also
supported the rupee upmove. At the interbank foreign exchange market, the
domestic unit opened at 70.12 and advanced to a high of 69.97 during the day.
It finally settled at 70.02, registering a rise of 23 paise against the dollar
over its previous close. The rupee Thursday had slumped 39 paise to close at
more than six-week low of 70.25 against the US dollar. Indian rupee recovered
Thursday's loss after Brent crude oil prices recedes from a six-month high of
USD 75.60/barrel, V K Sharma, Head PCG & Capital Markets Strategy, HDFC
Securities said adding that since start of the April the correlation between
Brent crude oil and USD/INR steadily rising. On a weekly basis, the domestic
currency saw a 67 paise decline. Sharma further said that along with overseas
fund inflows, profit booking in broad dollar supported rupee to strength in
today's session. The dollar index, which gauges the greenback's strength
against a basket of six currencies, slipped 0.08 per cent to 98.12. Foreign
institutional investors (FIIs) were net buyers in the capital markets on
Thursday, putting in Rs 3,785 crore. Brent crude futures, the global oil
benchmark, fell 2 per cent to trade at USD 72.86 per barrel. The BSE Sensex
rallied 336 points to reclaim the 39,000 mark Friday. The Sensex settled 0.87
per cent higher at 39,067.33. The NSE Nifty too ended 112.85 points, or 0.97
per cent, up at 11,754.65. Meanwhile, Financial Benchmark India Private Ltd
(FBIL) set the reference rate for the rupee/dollar at 70.1445 and for
rupee/euro at 78.1283. The reference rate for rupee/British pound was fixed at
90.5322 and for rupee/100 Japanese yen at 62.80.
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TATA STEEL TO MERGE
BHUSHAN STEEL
Tata
Steel Board on Thursday decided to merge Tata Steel BSL (formerly Bhushan Steel
Limited) with itself as it reported a 84.37% year-on-year drop in consolidated
net profit for the fourth quarter at Rs 2,295.25 crore. However, total
consolidated income of the company rose to Rs 42,913.73 crore in January-March
2019, from Rs 33,983.74 crore a year ago. Net profit in Q4 of FY18 was higher
was on account of one-time exceptional gain of Rs 11,376.14 crore in the March
quarter in FY2018. The company had also received non-cash gain of Rs 14,077
crore on account of restructuring of UK pension scheme. The company said
consolidated net profit figure for Q419 was not comparable to Q418 as it does
not include NATSteel Holding and Tata Steel Thailand as it is classified as
asset held for sales. The merger (of Tata Steel BSL) will drive operational
synergies and efficiencies, reduce the regulatory burden and simplify the group
structure, announced T V Narendran, chief executive officer and managing
director of Tata Steel, after the Board meeting. He said that the recommended
merger ratio is of 15 shares of Tata Steel BSL for every share of Tata Steel. Bamnipal
Steel, completed the acquisition of Tata Steel BSL on May 18, 2018, through
corporate insolvency resolution process under the Insolvency and Bankruptcy
Code. Post Bhushan Steel's, or Tata Steel BSL's, acquisition and ramp-up of
production, the steel production for the company grew by 35% to 16.81 million
tonne in FY2019. The Indian market accounts for over 62% of consolidated
volumes for Tata Steel with the steel deliveries in India increasing by 33%. India
operations continued to gain market share in chosen segments. Industrial
products and projects segment sales grew by 42% Year-on-Year. Branded products,
retail & solutions segment sales grew by 30% Year-on-Year; automotive
segment sales increased by 21% Year-on-Year, shared Narendran. Meanwhile, the
company would continue to deleverage, Koushik Chatterjee, executive director
and chief financial officer said, In the fourth quarter, we reduced our
consolidated gross debt further by Rs 8,781 crores. Despite the liquidity
issues in the domestic markets, we were able to extend our debt maturity
profile by successfully raising Rs 4,315 crore through 15 years non-convertible
debentures and completing the long-term financing for Tata Steel BSL.
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MARKET PARTICIPANTS UP
IN ARMS AGAINST EXCLUSION OF STOCKS FROM DERIVATIVES
In
the largest such exclusion drive in the recent past, the National Stock
Exchange, late on Monday, said derivatives trading will not be allowed in 34
stocks after their existing monthly contracts expire on Jun 28. Out of a
universe of 1900 stocks only 159 will trade in derivatives. This will reduce
liquidity and volumes. What will be left to trade if this continues, said a
mid-sized proprietary trader. NSE’s move came as the stocks have failed to meet
the Securities and Exchange Board of India’s enhanced eligibility criteria for
stock derivatives. In a bid to dissuade retail investors from the derivatives
market, SEBI has brought about a slew of regulatory changes, including physical
delivery of futures contracts of a stock and tighter norms on net worth. SEBI
has been trying hard to regulate the Indian derivatives market, which accounts
for most if not all the trading volume on Indian exchanges. As part of the
regulation, SEBI last April issued revised guidelines to determine whether a
stock was eligible for trading in the derivatives segment. Under the new,
stringent guidelines, F&O securities will need to have a market-wide
position limit of ₹500 crore, up from ₹300 crore earlier, and a median quarter
sigma order size of ₹25 lakh. The new
guidelines will ensure that F&O stocks with very low liquidity, and in some
cases no liquidity, are driven out of the futures & options segment to keep
speculators and price manipulators at bay. Brokers through Association of
National Exchange Members of India (ANMI) will send representation to SEBI
saying the new guidelines will have an adverse impact on liquidity and volumes,
said an ANMI member. Instead of fostering growth in the markets and integrating
cash and F&O segments, SEBI has enhanced the eligibility criteria. This
under the new physical settlement regime is becoming a self-fulfilling prophecy
of lower volumes and higher spreads, thereby making stocks ineligible for
derivatives, said an ANMI member who did not wish to be named as they are yet
to send their representations to the regulator. SEBI had also mandated physical
delivery of stocks in a phased manner. The first 50 stocks with smaller market
capitalisation were to move towarda physical settlement by April this year, the
next 50 in July, and the next 50 by October. It is not just ANMI and brokers
who believe that the enhanced criteria for F&O are hampering the segment. NSE
in the past one year has made several representations to the regulator on
relaxing the criteria and permitting higher number of stocks to trade in
derivatives. According to NSE’s representations, a copy of which has been
reviewed by Mint, single stock derivatives should be introduced on top 500
securities.
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LOOK WHO IS SITTING ON A CASH PILE TO BUY STOCKS AFTER
ELECTION RESULT
The domestic equity market
is likely to trade in a narrow range until the election results, with foreign
fund flows slowing down and mutual funds opting to sit on cash ahead of the
crucial event. While corporate earnings may influence individual stock prices
selectively, the market is largely likely to remain lacklustre. BSE’s 30-share
Sensex scaled a record high of 39,487 last week, but is down 1.5 per cent ever
since to trade at 38,836. Year to date, it is up just over 7 per cent. The
market may remain rangebound until the election results, unless it gets a
clearer view of the election outcome. If there are clearer indications that the
NDA is set to win, the market may see a rally. If there are indications that
the UPA may come back, the market may see a correction, said Gautam
Chhaochharia. The world’s largest democracy is currently going through over a
monthlong election since April 11. The vote count will take place on May 23.
Most Dalal Street honchos are openly rooting for a return of the Modi-led
National Democratic Alliance, simply because they expect such an outcome to
ensure policy continuity, which they feel could get disrupted should the
Congress get to govern through consensus among a large number of constituent
partners. Foreign institutional investors (FIIs) have invested a net of $986
million so far this month, sharply lower from the large inflows seen in
February and March. The market rallied too fast. We saw strong FII inflows post
the India-Pakistan border faceoff. Currently, EM flows are no longer as strong
as before. Investors’ willingness to put in money into the market after this
strong rally has gone down, Chhaocharia said. Other analysts say a large chunk
of the FII money that came in over the past two months had been ETF flows into
emerging market funds. FII flows into India off late have largely been ETF
money into EMs, and India received its share out of it. There is not much of
direct investments into India-focused funds, said Kaustubh Belapurkar, director
of fund research at Morningstar Investment Adviser, India. Domestic
institutional investors (DIIs), who comprise mainly mutual funds and insurance
companies, sold a net of Rs 1,341.67 crore so far in April, albeit much lower
than their total sales in March, when they offloaded shares worth Rs 13,930
crore. Mutual funds are probably sitting on cash, and staying on the side
lines. Insurance companies seem to be selling at this point, Chhaocharia said.
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REALTOR WILL BE AUDITED
OVER CLAIMS OF FUNDS DIVERSION
After
recommending a police case against three housing finance companies and a real
estate developer for allegedly diverting funds collected from homebuyers, the
Haryana Real Estate Regulatory Authority (H-Rera), on Thursday, decided to
conduct a forensic audit of the accounts of four realty projects belonging to a
single developer in Gurugram to find out how funds were diverted. As per the
law, a developer has to create a master bank account, a project account, also
called Rera account, along with a third account. All the receivables from
homebuyers are supposed to go to the master account and 70% of the amount
collected from homebuyers has to be deposited to the Rera account. This money
needs to be used only for construction and to meeting the land costs. This
money can also be withdrawn only after completing certain formalities, such as
obtaining a certificate from an architect, engineer or a chartered accountant
giving the reason for its use. Thirty per cent of the money has to be kept in
the third account. K K Khandelwal, said, We have to know what happened to the
money so that this does not happen in the future. Financial institutions and
banks have to realise that homebuyers’ money is sacrosanct and can be used only
for developing the projects. The money does not belong to the promoter and he
is only the custodian of it. He has no right to create a charge or a lien on
that and if it is created, it is illegal. Furthermore, no authority has the
right to withdraw the funds from this account. As per H-Rera authorities, it
was observed that real estate companies, in particular, those developing the
three projects against whom police action was recommended on Wednesday, had not
created a Rera account. The H-Rera also observed that banks had withdrawn 100%
of the receivables from the accounts after the promoters failed to return the
loans. In no case, the money of homebuyers can be withdrawn as per the rules,
said Khandelwal.
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JAYPEE INFRA BIDS:
LENDERS OFFERED LAND WORTH RS 5,000 CRORE
The
state-owned NBCC has sweetened its bid to acquire the debt-ridden Jaypee
Infratech, and has now offered to give lenders land parcels worth Rs 5,000
crore, sources said. The public sector enterprise, which is also completing
some projects of the Amrapali group upon the Supreme Court’s direction, had
offered lenders land worth Rs 3,000 crore in its earlier resolution plan
submitted a couple of months back. It had also offered the Yamuna Expressway,
which connects Noida to Agra in Uttar Pradesh. NBCC and Suraksha Realty
group-led consortium, which are in the race to acquire Jaypee Infratech, were
asked by the lenders to sweeten their offers. Both have submitted their revised
offers under the Insolvency and Bankruptcy Code (IBC). According to sources,
NBCC has offered to pay Rs 500 crore upfront to lenders and will invest around
Rs 2,000-2,500 crore as funding gap to complete delayed housing projects of
Jaypee Infratech comprising over 20,000 flats in Noida. The revised resolution
plans by NBCC and Suraksha Realty will be considered by lenders on April 26 and
April 30. Revised resolution plans have been received from NBCC and the
Suraksha Realty-led consortium, and will be placed for discussion among the
members of the CoC (committee of creditors) on resolution plans received from
resolution applicants in the meetings to be held on April 26 and April 30,
respectively, Jaypee Infratech Interim Resolution Professional (IRP) Anuj Jain
said in a regulatory filing.
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RERA PAPERWORK SLOWED
DOWN NEW PROJECTS: BUILDERS
A
long list of compliances that require detailed information about a project a
builder wants to launch, land records and allied permits might have slowed down
the application process for registration with UP-Rera, Credai has said. The
builder body has claimed that many developers who have secured land and are
constructing residential or commercial projects in Noida, Greater Noida and
Ghaziabad are now taking at least four to five months to put together the
paperwork needed to register with UP-Rera. It said a single-window system might
help smoothen the process. There’s a long list of compliances a builder needs
to secure to get registered with Rera and as the builder needs to put
everything together before applying, there’s a slow down in the process. Nevertheless,
new projects are being launched and soon they will get UP-Rera permission, said
Subodh Goel. Some of the documents needed for application include, photographs,
IDs and contact details of promoters, details of the promoter’s enterprise,
authenticated copy of approvals, development plans, audited profit and loss
statement along with income tax returns of the enterprise for last three
fiscal. Authenticated copy of legal title deed and proforma of allotment letter
are also required. As per a UP-Rera document, 53 projects in UP are pending
with it for approval, although 2,610 projects have come under its ambit since
September 2018 when it came into force. At least 488 projects are yet to be
registered. We’ve cleared all projects that came to us with necessary
compliances. As a rule, we clear a project within a month. Projects that do not
have adequate documentation are sent back and builders are asked to return with
full documentation. So, some get restricted, said Balwinder Kumar. Goel said:
What the builders now need is an easy way to secure compliance so that Rera
registration becomes easy.
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BARING PE'S PLAN TO BUY
30% STAKE IN NIIT FOR RS 2627-CR GETS CCI APPROVAL
The
Competition Commission said Friday it has cleared Baring Private Equity Asia's
30 per cent stake purchase in mid-sized IT services firm NIIT Technologies in a
Rs 2,627-crore deal. The acquisition will trigger an open offer under which
Baring Private Equity Asia (BPEA) will make an offer to public shareholders of
NIIT Technologies for purchasing up to 26 per cent additional shareholding,
taking the total deal value to up to Rs 4,890 crore. In a tweet, the
Competition Commission of India (CCI) said it approves acquisition of share
capital of the NIIT Technologies Limited by Hulst B.V. Hulst B V is a company
registered in the Netherlands. It is indirectly owned and controlled by funds
affiliated with BPEA, according to the notice submitted to the CCI. NIIT Ltd
holds about 23 per cent stake, while Pawar and Singh with their families hold
around 7 per cent shares in NIIT Technologies. Deals beyond a certain threshold
require clearance from the fair trade regulator.
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GOLDMAN SACHS SAYS
DRAGGED-OUT BREXIT IS DOING DEEPER DAMAGE TO UK ECONOMY
Britain’s
protracted divorce from the European Union is hurting the world’s fifth largest
economy as dwindling company investment, signs of a looming labour market shock
and poor productivity hinder growth, Goldman Sachs said. The United Kingdom was
due to have left the EU on March 29, though Prime Minister Theresa May has been
unable to get her divorce deal approved by parliament. Now the new deadline is
Oct. 31, more than three years since the 2016 referendum. It is now unclear
when, how and even if Brexit will happen. Goldman Sachs said in a note to
clients that its base scenario was the divorce deal would be ratified by May 22
but that there was a risk of Britain’s exit being delayed until much closer to
the new Oct. 31 deadline. The politics of Brexit have become more protracted
and, as a result, the side-effects of Brexit on the UK economy have
intensified, Goldman said in a note entitled Brexit — Withdrawal Symptoms. From
both a top-down and a bottom-up perspective, Brexit has taken a toll on the UK
economy — even though it has not yet happened, Goldman said. It said Britain’s
economy has underperformed other advanced economies since mid-2016, losing
nearly 2.5 percent of Gross Domestic Product relative to its pre-referendum
growth path, in large part due to weaker investment. Bank of England Governor
Mark Carney said in February that Britain had lost around 1.5 percent of GDP
compared with the central bank’s expectations before the referendum. Carney
said this month that uncertainty facing British businesses has gone through the
roof due to Brexit. Capital expenditure by businesses has been particularly
subdued, Goldman said, and strong employment data masks a deepening
misallocation of resources to labour rather than capital which will ultimately
make the economy less efficient. Since the referendum, firms have hired workers
rather than invest in capital, Goldman economists said. Business investment has
grown by just 0.3 percent in cumulative terms since June 2016, and 2018 was the
first year in at least half a century during which business investment
contracted in every quarter without a recession, Goldman said. An increasingly
tight labour market – with unemployment at its lowest since early 1975 and pay
growing at its joint fastest pace in over a decade – could also be a sign of
strain rather than resilience. The balance between weaker demand for workers
and a shorter supply of workers bears the hallmarks of a Brexit-induced labour
market shock, Goldman economists said. Low investment combined with a tight
labour market are likely to hurt the economy’s overall efficiency and thus
accentuate the chronic underperformance of UK productivity, they added. Britain’s
productivity has lagged that of the U.S., Germany, and France, for the past
decade. Business leaders have already triggered contingency plans to cope with
additional checks on the post-Brexit UK-EU border they fear will clog ports,
silt up the arteries of trade and dislocate supply chains in Europe and beyond.
Opponents fear Brexit will make Britain poorer and divide the West as it
grapples with both the unconventional US presidency of Donald Trump and growing
assertiveness from Russia and China. Brexit supporters say there would be
short-term disruption but in the long-term the UK would thrive if cut free from
what they cast as a doomed experiment in German-dominated unity and excessive
debt-funded welfare spending. Until the UK’s departure from the EU is resolved,
it is difficult to have conviction in a strong rebound in growth, Goldman said.
In 2020, with Brexit resolved, we do expect a pick-up in activity as
uncertainty abates.
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1,758-CARAT, 352 GRAMS:
SECOND-LARGEST DIAMOND IN HISTORY FOUND
Lucara
Diamond Corp has unearthed the largest uncut diamond in recent history in its
Karowe mine in Botswana, the Canadian company said on Thursday, beating its own
record discovery from November 2015 that it struggled to sell for nearly two
years. The 1,758-carat diamond is larger than a tennis ball and weighs close to
352 grams (12.42 ounces), it said in a statement. The stone is second in size
only to the 3,106-carat Cullinan Diamond, recovered in South Africa in 1905.
The stone is the latest in a series of high-value recoveries for the
Vancouver-based company at Karowe. Since introducing its XRT diamond recovery
technology, Lucara has recovered 12 diamonds over 300 carats, the company said,
including a 472-carat and a 327-carat diamond in April 2018. The 1,109-carat
Lesedi La Rona, which Lucara recovered in November 2015, failed to meet its
undisclosed reserve price at a June 2016 auction, putting pressure on the
company's shares. British diamond dealer Graff Diamonds finally bought it for
$53 million in September 2017. Forbes reported late last year that Graff had
created 67 finished gems from the stone.
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A BILLION INTERNET
USERS TO DRIVE DEMAND; INDIA STARING AT $6 TRILLION CONSUMPTION OPPORTUNITY
India
is staring at a massive consumer demand arising from a clutch of favourable
factors, with the domestic consumption opportunity alone in 2030 set to grow as
big as more than twice the entire present GDP. Increased incomes, a billion
diverse internet users and a very young population will drive the consumer
demand in the future, increasing it tremendously by 2030, according to a World
Economic Forum report. India’s domestic consumption, which powers 60 percent of
GDP today, is expected to grow into a $6 trillion opportunity by 2030,
according to the World Economic Forum. Growth in income will convert the Indian
economy from a bottom-of-the-pyramid economy to a middle-class led one, with
consumer expenditure growing from $1.5 trillion today to nearly $6 trillion by
2030, said the WEF report. At the same time, India will also uplift around 25
million households out of poverty and reduce the share of households below the
poverty line from 15 percent today to 5 percent, the report added. While metros
and emerging boom towns would continue to drive economic growth, rural per
capita consumption will rise faster than in urban areas mimicking consumption
patterns of urban counterparts, it said. Further, the consumption growth will
be supported by the young working age population in the country. Unlike many
ageing nations in the West and East, India will remain a nation with a young
population with a median age of 31, said the report. Moreover, with internet access
expected to democratise by 2030, more than 1 billion people — both rural and
urban — will come online gaining knowledge about the offers and varieties of
goods, the report added. The recent short-term trends have pointed out to
falling consumption demand in the economy, posing a threat to India’s fastest
growing economy status. However, with the World Economic Forum report, there
seems to be no cause of worry, looking at how the domestic consumption is set
to grow in the long term.
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GOOGLE’S LABOUR ETHICS
ROLL DOWNHILL IN NEW CASE
A
complaint has been filed with the National Labor Relations Board accusing
Alphabet Inc.’s Google of violating federal law by retaliating against an
employee. The filing was made this week by an unidentified individual and the
case has been assigned to the agency’s New York office, according to the
agency’s website. It involved an alleged violation of a New Deal-era ban on
punishing employees for involvement in collective action related to working
conditions, according to a case summary posted online. An attorney listed as
representing the complainant didn’t immediately comment in response to an
inquiry. It’s unclear who the complainant is. Over the past year, staff have
protested over workers’ rights, a divisive military contract and the company’s
handling of sexual misconduct. Tens of thousands of Google employees around the
world participated in a November walkout, demanding changes. The company’s
since addressed some of the organizers’ demands, announcing it would let
employees pursue claims as class actions in court rather than forcing them into
arbitration. This week, the internet giant came under fire from two leaders of
the walkout, who alleged in a message posted internally that the company has
been retaliating against them — a claim Google has denied. The activists, whose
message was first reported by Wired, announced a planned town-hall meeting on
the issue Friday. Those employees could not be reached for comment. A Google
representative declined to comment on the new filing but pointed to a previous
statement about the walkout organizers’ claims: We prohibit retaliation in the
workplace, and investigate all allegations. Employees and teams are regularly
and commonly given new assignments, or reorganized, to keep pace with evolving
business needs. There has been no retaliation here.
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MICROSOFT BECOMES A
TRILLION DOLLAR COMPANY AFTER IMPRESSIVE EARNINGS
Microsoft
Corp on Wednesday briefly topped $1 trillion in value for the first time after
executives predicted continued growth for its cloud computing business. The
Redmond, Washington-based company beat Wall Street estimates for quarterly
profit and revenue, powered by an unexpected boost in Windows revenue and brisk
growth in its cloud business which has reached tens of billions of dollars in
sales. Microsoft shares rose 4.4% to $130.54 in late trading after the forecast
issued on a conference call with investors, pushing the company ahead of Apple
Inc's $980 billion market capitalisation. The companies and Amazon.com Inc have
taken turns in recent months to rank as the world's most valuable US-listed
company. Microsoft's stock has gained about 23% gain so far this year, after
hitting a record high of $125.85 during regular trading hours. Satya Nadella,
the company has spent the past five years shifting from reliance on its
once-dominant Windows operating system to selling cloud-based services. Azure,
Microsoft's flagship cloud product, competes with market leader Amazon Web
Services (AWS) to provide computing power to businesses. Amy Hood told
investors that Microsoft expects to see growth in the fiscal fourth quarter in
the business divisions in charge of Azure and Office 365, an online version of
its longtime productivity software. For the third quarter ended March 31,
Azure's growth slowed slightly to 73%, down from 76% in the second quarter.
Mike Spencer, Microsoft's head of investor relations, said the decline was
roughly in line with the company's estimate. Christopher Eberle, a senior
equity analyst with Nomura, said that with Azure, one should assume a slower
rate of growth as we move forward, simply due to the law of large numbers.
Still, Azure will bring in $13.5 billion in sales in fiscal 2019 with an
overall growth rate of 75%, he estimated. I can't name another company of that
scale growing at these rates. Microsoft tops tech rivals such as Amazon in
market capitalisation on some days despite having less revenue, partly because
most of its sales go to businesses, which tend to be steadier customers than
consumers. A growing proportion of Microsoft's software sales are billed as
recurring subscription purchases, which are more reliable than one-time
purchases. Microsoft's earnings per share of $1.14 beat expectations of $1,
according to IBES data from Refinitiv. Windows licensing revenue from computer
makers grew 9% year over year, beating expectations after a 5% decline in the
previous quarter. Spencer said a shortage of Intel Corp processor chips for PCs
that many analysts expected to last into this summer had been resolved earlier
than expected, allowing PC makers to ship more machines. Microsoft's commercial
cloud revenue - which includes business use of Azure, Office 365 and LinkedIn -
was $9.6 billion this quarter, up 41% from the previous year but down slightly
from the 48% growth rate the previous quarter. Microsoft's so-called
intelligent cloud unit, which contains its Azure services, posted revenue of
$9.65 billion, above Wall Street estimates of $9.28 billion, according to IBES
data from Refinitiv. Microsoft's Hood said that unit could reach $11.05 billion
in revenue in the fiscal fourth quarter. The productivity and business process
unit that includes both Office as well as social network LinkedIn had $10.2
billion revenue versus expectations of $10.05 billion. Hood forecast up to
$10.75 billion in revenue for the unit for the fourth quarter. Its gaming
revenue was up only 5% versus 8% the quarter before, which Spencer attributed to
less revenue from third-party game developers and the fact that many gamers are
delaying purchases of Microsoft's Xbox console because a new model is expected
soon. Sales of the company's Surface hardware grew 21% versus 39% the quarter
before, also because customers waited for updated hardware they expected to be
released soon. Total revenue rose 14% to $30.57 billion, beating analysts'
average estimate of $29.84 billion, according to IBES data from Refinitiv. Net
income rose to $8.81 billion, or $1.15 per share, from $7.42 billion, or 96
cents per share, a year earlier.
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Thanks & Regards,
CS Meetesh Shiroya
Thanks & Regards,
CS Meetesh Shiroya
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