22 January 2024 : Important Financial News in India


Table of Contents

Lenders, Finance Cos Power India Inc’s Double-digit Profit Growth

The third quarter results season for Indian companies has revealed a significant trend of sustained year-on-year double-digit growth in both aggregate revenue and net profit. This growth has been primarily fueled by the banking and finance sectors. In financial terms, aggregate revenue refers to the total revenue generated by all companies collectively, while net profit is the profit remaining after all expenses have been deducted from the total revenue. The banking and finance sectors, often considered the backbone of an economy, have played a pivotal role in this growth, indicating a robust financial environment in India. This surge in profits and revenues could potentially lead to increased investments and expansions in these sectors, further boosting economic growth and stability.

Social Security Fund for Informal Workers Likely

India is considering the introduction of a social security fund for laborers in the unorganized sector, including gig and platform workers. This initiative, expected to be announced in the interim budget by Finance Minister Nirmala Sitharaman, is a significant move towards providing financial safety and benefits to a large segment of the workforce that often lacks formal employment benefits. The social security fund would address issues like healthcare, retirement, and job security, thereby improving the quality of life for these workers.

Eruditus Joins Queue of Reverse Flips, Weighs IPO

Eruditus, an edtech unicorn backed by SoftBank, is contemplating a reverse flip by changing its domicile from Singapore to India, while also considering an initial public offering (IPO) on domestic stock exchanges. A reverse flip involves shifting a company’s legal base to another country, typically for strategic advantages like better market access, regulatory benefits, or improved investor perception. Eruditus’s decision indicates confidence in India’s economic environment and the potential benefits of being listed on Indian bourses.

Insurers’ Intermediaries Get I-T Notices under Benami Law

Insurers and their agents in India are facing scrutiny under the stringent benami law after previous encounters with income and service tax authorities. The benami law deals with properties held in a name other than the name of the beneficial owner, often used for tax evasion, money laundering, and illegal transactions. This move by tax authorities signals an increased focus on financial accountability and transparency in the insurance sector.

What Indians Want: Roti, Kapda aur Sunroof

There’s a growing trend in India’s automotive market: the demand for sunroofs. Carmakers are responding to this unexpected consumer preference by including sunroofs in about half of the new cars sold in India. This trend is a clear indicator of changing consumer tastes and the increasing importance of luxury features in vehicles, even in a price-sensitive market like India. It reflects a shift in consumer priorities and the evolving nature of the Indian automobile market.

IITs Step Up Efforts to Raise Donations from Alumni

The Indian Institutes of Technology (IITs) are intensifying their fundraising efforts by reaching out to their global alumni network. This move comes at a time when government funding is increasingly perceived as insufficient for these elite engineering institutes, which are facing rising operational costs. The IITs are recognized as premier educational institutions in India, and their decision to seek donations from alumni indicates a strategic shift towards alternative funding sources to maintain their high standards of education and research.

Realtors Seek Higher Sops for Home Buyers

Developers in the real estate sector are advocating for enhanced tax benefits for home buyers. This includes proposals for increased deductions on principal repayment of home loans, expanding the definition of affordable housing, and reducing long-term capital gains tax. These measures aim to stimulate growth in the real estate market by making home ownership more financially attractive and accessible to a broader segment of the population.

Startups Scout for CFOs as IPOs Loom on Horizon

Indian startups preparing for Initial Public Offerings (IPOs) are actively seeking Chief Financial Officers (CFOs). This trend is driven by the need for sophisticated financial management and compliance, particularly as these companies face increasing regulatory scrutiny and board pressure for profitability. The demand for CFOs reflects the maturing landscape of the Indian startup ecosystem and the critical role of financial leadership in navigating the complexities of public listings.

SAIL Suspends Two Directors on Anti-graft Ombudsman Order

The Steel Authority of India (SAIL), a major state-owned enterprise, has suspended two of its board directors following orders from the anti-graft ombudsman. While specific allegations were not disclosed, this action underlines the heightened vigilance and enforcement of anti-corruption measures within major public sector undertakings in India.

UP, Bihar, Raj Send Most Construction Workers to Gulf

A significant portion of India’s labor force in the Gulf Cooperation Council (GCC) countries’ construction sector hails from Uttar Pradesh, Bihar, Rajasthan, and Tamil Nadu. This demographic trend is highlighted in a report from Huntr, a UAE-based marketplace. The migration of these workers plays a vital role in the economies of both India and the GCC countries, underlining the importance of international labor mobility.

ED to File Fresh Chargesheet Against Singh Bros, Others

The Enforcement Directorate (ED) is preparing to file a new charge sheet against former Fortis promoters Malvinder and Shivinder Mohan Singh, among others. This action is under the provisions of the Prevention of Money Laundering Act (PMLA) and is linked to alleged fund diversions from Religare Finvest Ltd (RFL). This development is part of ongoing legal proceedings and reflects the continuing crackdown on financial irregularities in high-profile corporate cases in India.

Ahmedabad-Mumbai Bullet Train Project Progress Satisfactory: JICA India Chief

The Chief Representative of Japan International Cooperation Agency (JICA) in India, Saito Mitsunori, expressed satisfaction with the progress of the Ahmedabad-Mumbai bullet train project. He also noted that the PM Gati Shakti plan is accelerating public works in India, signaling strong international cooperation and the potential transformative impact of such infrastructure projects on the country’s development.

Jindal Stainless MD Calls for Removal of Import Duty on Raw Material

Abhyuday Jindal, Managing Director of Jindal Stainless Ltd (JSL), has advocated for the removal of import duties on raw materials in the upcoming Union Budget. This request aims to level the playing field for domestic players in the industry, potentially reducing production costs and enhancing competitiveness in the global market.

Anarock Sees 30% Rise in FY24 Revenue to ₹575 crore

Anarock, a property consulting firm, is anticipating a 30% increase in its revenue for the fiscal year 2024, expecting to reach around ₹575 crore. This forecast is primarily driven by robust housing sales, indicating a strong recovery and growth momentum in the real estate sector.

175 Big MNCs’ Units Gear Up for New Global Minimum Taxes, Review Rules

Approximately 175 multinational corporations with a consolidated global turnover exceeding ₹750 million are conducting comprehensive reviews of their tax structures. This initiative is in response to impending global minimum tax regulations, underscoring the growing focus on international tax compliance and the implications for large corporations operating in India.

FY23 States’ Loan Guarantees Treble in Six Years to ₹9.4 lakh crore: Icra

A report by ICRA reveals that the total loan guarantees extended by 17 major Indian states have more than tripled in six years, reaching ₹9.4 lakh crore in FY23 from ₹3 lakh crore in FY17. This significant increase reflects the growing reliance on debt financing by state governments for their entities, raising concerns about fiscal sustainability and debt management.

Zero-emission Cars Alone Can Help Lower Air Pollution, Oil Imports: TaMo

Tata Motors Passenger Vehicles managing director Shailesh Chandra asserts that only zero-emission cars can effectively contribute to reducing air pollution, decrease fuel imports, and help achieve net-zero targets. This statement highlights the crucial role of electric and alternative fuel vehicles in addressing environmental and energy security challenges.

Focus on Subscriber Additions could be Hurting Jio’s ARPU

Reliance Jio’s strategy of rapidly adding subscribers is impacting its average revenue per user (ARPU), a critical metric for telecommunications companies. The company’s pursuit of market share, particularly through the introduction of affordable products like the JioBharat phone and unlimited 5G data plans, has led to an influx of low-value customers, affecting its revenue growth.

Markets in a Fairy Tale Scenario; US Tech Space is Close to a Bubble

Vincent Mortier, the Group Chief Investment Officer (CIO) of Amundi, Europe’s largest asset manager, has raised concerns about the US technology sector approaching a ‘bubble’ situation. Mortier, overseeing assets worth over $2 trillion, expressed doubts about the US Federal Reserve’s likelihood of cutting rates in March, contrary to market expectations. A bubble in the tech space implies a scenario where stock prices are inflated beyond their actual value, often leading to a sharp correction when the bubble bursts. His cautionary stance is significant given the influential role of US tech stocks in global markets and could signal a potential shift in investment strategies and risk assessments.

India’s Infra Push to Put UltraTech on Road to Growth

UltraTech Cement, India’s largest cement manufacturer, is set to benefit from the country’s infrastructure push. The company expects an increase in capacity utilization and demand, except in the northern region. Notably, the management anticipates declining fuel costs to enhance profitability, especially as India heads into an election year. Elections often lead to increased infrastructure spending, which can boost the demand for building materials like cement. This scenario presents a favorable growth outlook for UltraTech and the broader cement industry in India.

Atul Mehra Set to Take Charge as MD of Axis Capital

Atul Mehra is poised to become the Managing Director (MD) of Axis Capital after resigning from JM Financial Services. His departure comes after a notable 33-year tenure with the group. This leadership change at Axis Capital, a significant player in investment banking, could signal a strategic shift or new growth direction for the company. Such high-profile executive movements often influence company policies and market perceptions.

IDFC First’s 5-year Plan: Grow Assets at 20%, Deposits at 25%

IDFC First Bank has outlined an ambitious five-year plan, aiming to double its branch network, reduce bad loans, and achieve annual asset growth of 20% and deposit growth of 25%. This strategy indicates a strong focus on expansion and improving financial health, reflecting the bank’s confidence in its future growth prospects. The emphasis on reducing bad loans is particularly crucial for improving the bank’s balance sheet and attractiveness to investors and depositors.

Printing Ink Co Hubergroup in Talks for ₹1,500-cr Loan

Hubergroup India, a specialist in printing inks and chemicals, is negotiating a substantial loan of ₹1,500 crore from various lenders, including major banks and financial institutions. The company aims to use these funds for working capital, amortising funds, and bullet loans (loans that are paid off in a lump sum at the end of the term), with interest rates ranging from 9-14%. This move suggests a strategic initiative for expansion or operational enhancement in Hubergroup’s business.

NARCL Offers ₹270 cr for Pink City E-way, Recovery Likely at 15%

The National Asset Reconstruction Co (NARCL), a government-backed entity for aggregating bad loans, has offered ₹270 crore for Pink City Expressway Private Limited (PCEPL). PCEPL was established to build and maintain a section of the Delhi-Jaipur highway. The projected recovery rate of 15% implies that creditors may only recover a fraction of the owed amounts, highlighting the challenges in resolving non-performing assets in the infrastructure sector.

NPS Scorecard

The National Pension System (NPS) in India, with its ten fund managers, offers tax-saving benefits while providing retirement savings. The provided scorecard compares the performance of these managers, offering insights for potential investors. The NPS’s performance is crucial as it affects the retirement planning of millions of Indians and the scorecard could guide investors in making informed decisions about their pension funds.

Electronics Exports Grow at Record 22% in April-Dec

India’s electronics exports have seen a remarkable growth of 22.24% in the first nine months of FY24, surpassing the $20 billion mark. This growth is largely attributed to a surge in smartphone shipments, notably including Apple’s iPhone. This significant increase in electronics exports reflects India’s strengthening position in the global electronics market, particularly in the manufacturing and export of high-demand consumer electronics like smartphones. It also suggests a successful adoption of policies aimed at boosting local manufacturing and export capabilities in the electronics sector.

FY25 Capex Target for CPSEs may Rise by 12-13%

The Indian government is considering a 12-13% increase in the FY25 capital expenditure (Capex) target for Central Public Sector Enterprises (CPSEs). Capital expenditure refers to funds used by a company to acquire, upgrade, and maintain physical assets such as property, industrial buildings, or equipment. This planned increase indicates the government’s focus on enhancing the operational and production capacities of these enterprises, which could lead to improved efficiency and profitability in the public sector.

Goods & Services Exports Rise Marginally in 2023

Despite global economic uncertainties, India’s exports of goods and services experienced a marginal increase of 0.4% in 2023, totaling USD 765.6 billion, as per the commerce ministry. This slight growth amidst challenging global conditions showcases the resilience and competitiveness of Indian exports. It also reflects the diverse nature of India’s export portfolio, which includes a wide range of goods and services catering to different international markets.

Ram Temple, Tourism Push may Add ₹25k cr to UP’s Tax Revenue

The inauguration of the Ram Temple in Ayodhya, coupled with other state government initiatives to promote tourism, is expected to significantly boost Uttar Pradesh’s tax revenue by ₹20,000-25,000 crore in 2024-25. This projection by SBI researchers underscores the economic impact of religious and cultural tourism, particularly in regions with historical and spiritual significance. The increase in tax revenue can be attributed to the influx of tourists and the consequent rise in consumption and spending in the state.

Budget: Changing Social Spending Mix

The Indian government has increased its outlays for ministries overseeing key social sectors in FY22. However, the pace of these hikes has slowed down to more normal levels as the government reshuffles its spending priorities. This shift in budget allocation reflects the government’s evolving strategy in addressing various social issues, balancing between immediate needs and long-term development goals.

Chances of Consensus ‘Low’ in Next Meet: GTRI

According to a report by the Global Trade Research Initiative (GTRI), it is unlikely that World Trade Organization (WTO) member countries will reach a consensus on reforming the dispute settlement system in the upcoming meeting. The report highlights the significant differences between developed and developing countries on this issue. The inability to reach a consensus reflects the complex nature of global trade negotiations and the varying interests and perspectives of member countries.

Robust Economy Fuels 8% YoY Surge In Power Consumption

India’s power consumption has seen a year-on-year increase of nearly 8% during the April-December period of this fiscal year, reaching 1,221.15 billion units (BU). This surge in power consumption is indicative of a robust economic activity. Power consumption is often used as a proxy for economic activity as it correlates with industrial, commercial, and residential energy usage, signaling overall growth and development in the economy.

MIDC-Thane, Greater Noida, Manesar Top in Land Costs for Warehouses

Manesar, Greater Noida in the National Capital Region (NCR), and the Maharashtra Industrial Development Corporation (MIDC) area in Thane are emerging as the most expensive locations for acquiring land for warehouses. According to CBRE, land prices in these areas range from Rs 15-30 crore per acre, significantly higher than the average Rs 2-5 crore per acre in other top markets in India. This trend reflects the high demand for warehousing space in these strategically important locations, driven by factors like proximity to major cities, connectivity, and the growth of e-commerce and logistics sectors.

Building Beauty & Digital Capacities HUL’s Top Priority

Hindustan Unilever (HUL)’s Managing Director, Rohit Jawa, has emphasized that building beauty and digital capabilities is a top priority for the company in India. This strategic focus indicates HUL’s intent to strengthen its position in the beauty sector while leveraging digital technology to enhance business operations and customer engagement. This approach is indicative of broader trends in the consumer goods industry where digital transformation and specialized product segments are becoming key drivers of growth.

P&G to Recast Ops to Get More Agile, Speed Up Growth

Procter & Gamble (P&G) is undertaking a significant reorganization of its operations. The company, in collaboration with management consultancy McKinsey & Co, aims to become more agile and accelerate growth. India has been selected as one of the first pilot markets for this initiative. This reorganization reflects P&G’s strategy to adapt to rapidly changing market dynamics and consumer preferences, particularly in high-growth markets like India.

Non-veg Food, Booze Go Off Menu in UP, Some Other States

In Uttar Pradesh and some other states, restaurateurs have decided not to serve non-vegetarian dishes and alcoholic beverages on Monday as a mark of respect for the Ram temple consecration ceremony in Ayodhya. This decision illustrates how cultural and religious events can influence business operations in India, reflecting the intertwining of social norms and commercial activities.

India’s Box-office Collections Hit a Blockbuster Rs12,226 cr in 2023

India’s box-office collections in 2023 reached a record high of ₹12,226 crore, surpassing the previous high of ₹10,948 crore in 2019. This 15% growth over 2022, as reported by the Ormax Box Office Report 2023, signifies a robust recovery and growth in the Indian film industry post-pandemic. This milestone indicates the strong appeal and resilience of the film sector in India, even in the face of increasing digital streaming options.

BNY Mellon Inks Lease Deal for Pune Office with Prestige

BNY Mellon, a global financial services company, has signed a major pre-lease agreement with the Prestige Group in Pune. This deal, involving 960,000 sq ft of office space, will enable BNY Mellon to consolidate its multiple offices in Pune into a single location. This is one of the largest such agreements in India, signifying Pune’s growing importance as a hub for financial services and the trend of consolidation in office spaces by multinational corporations.

Demand for Gold and Silver Ram Mandir Coins, Statues Shines

Ahead of the Ram temple consecration in Ayodhya, jewellers across Uttar Pradesh are witnessing a surge in sales of gold and silver coins, Ram Darbar statues, and other related articles. This increased demand highlights the cultural and religious significance of the event and its impact on the gold and silver market. Such events often lead to a spike in sales of commemorative and religious items, reflecting the deep intertwining of culture, religion, and commerce in India.

Ayodhya Puts Spiritual Apps on a Growth Curve

The spiritual and religious event in Ayodhya has significantly boosted the business of spiritual apps, as explained by Manu Jain, co-founder of Vama. Vama is a New Delhi-based startup providing virtual religious services such as pujas, darshans, and astrology. Jain compares this surge in demand to the increased usage of Paytm during India’s demonetization period. This development indicates a growing market for digital religious services, especially during significant cultural events. It showcases how technology is increasingly intertwining with religious practices, offering devotees from across India and the world new ways to engage in spiritual activities.

Kuwait, S’pore Sovereign Funds Place Orders for Zomato Share

Despite the exit of prominent investors like Tiger Global, Ant Financial, and SoftBank, sovereign funds from Kuwait and Singapore have shown increased interest in Zomato, a food-delivery company. The company’s stock price has risen over 160% in the last year. This shift in the investor base from private equity funds to sovereign wealth funds reflects confidence in Zomato’s long-term growth prospects and possibly a strategic move for the food delivery giant to diversify its investor base and stabilize its financial backing.

Tech Up: Several US Govt Contracts Up for Renewal in Next 2 Qtrs

Numerous US government contracts with key departments such as the General Services Administration, US Cyber Command, Department of Energy, NASA, Federal Aviation Administration, and Department of Education are due for renewal in the next two quarters. This presents a significant opportunity for technology companies to secure or renew large federal deals. These contracts can be pivotal in shaping the tech landscape, particularly in sectors like cybersecurity, energy, and aerospace.

With Irdai Opening Doors, Insurtech Cos Look to Transform into General Insurers

Following regulatory openness from the Insurance Regulatory and Development Authority of India (Irdai), insurtech startups like Onsurity and Loop Health are seeking licenses to offer health insurance. This move signifies a trend where tech-driven insurance companies are transitioning into more traditional roles in the insurance sector, leveraging their technological capabilities to innovate and expand in the general insurance domain.

Happiest Minds Focuses on Gen AI Unit

Happiest Minds Technologies, a mid-sized IT services and digital transformation firm, is restructuring its business into industry-specific verticals to expand its client base. This reorganization is part of a broader strategy to invest in artificial intelligence capabilities, with a focus on the Indian market. This move signifies the company’s commitment to leveraging AI for business growth and adapting to the evolving technological landscape.

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