QBiz: Govt to Compensate States for GST Losses till 2025 & More

1. Govt to Compensate States for GST Losses till 2025

The Union government plans to create a backstop facility for states to receive compensation for three additional years to implement the nationwide goods and services tax (GST) after the expiry of the first five years as mandated by the Constitution.

This is aimed at ensuring that states grappling with a revenue shortfall after the implementation of the GST regime do not face a sudden fiscal shock when the five-year transition period ends in 2022.

The backstop facility would help continue compensation through an annual transfer of the centre’s tax revenue to the states, for which the 15th Finance Commission would prepare a blueprint, two officials said. The recommendation will help states get the compensation till 2025, when this finance commission’s term ends.

(Source: Hindustan Times)

2. Nine Bank Unions Call for One-Day Strike on 26 Dec

Close to one million employees of various banks, including private lenders, have called for a one-day strike on 26 December to protest against the proposed amalgamation of Vijaya Bank and Dena Bank with Bank of Baroda.

The strike call comes on the heels of an officers union of State-run banks observing a day-long strike on 21 December, on similar grounds along with demand for immediate settlement of their wage negotiations.

In September, government had announced merger of state -owned Vijaya Bank and Dena Bank, both under the prompt corrective action (PCA) framework of the RBI, with larger peer Bank of Baroda, creating the third largest lender.

"This amalgamation is not in the interest of banks or bank customers. It is rather detrimental to both," the United Forum of Bank Unions (UFBU) said.

(Source: PTI)

3. Six Of Top-10 Companies Lose Rs 89,531 Crore In Market-Cap

Six of the 10 most-valued Indian companies suffered a combined erosion of Rs 89,531.31 crore from their market valuation last week, with Tata Consultancy Services Ltd alone accounting for over Rs 34,000 crore.

Reliance Industries Ltd, HUL, Infosys, Kotak Mahindra Bank Ltd and Maruti Suzuki were also among the losers, while HDFC Bank, ITC, HDFC and State Bank of India finished the week ended on 21 December with gains.

The market capitalisation of TCS slumped Rs 34,521.9 crore to Rs 7,11,921.2 crore and that of Infosys plunged Rs 26,143.3 crore to Rs 2,82,105.4 crore. Valuation of Hindustan Unilever Ltd dived Rs 11,515.9 crore to Rs 3,90,416.1 crore and RIL tanked Rs 8,493.7 crore to Rs 6,96,195.9 crore.

Also, Kotak Mahindra Bank's market cap declined Rs 5,311.5 crore to Rs 2,34,088 crore, while Maruti Suzuki stood at Rs 2,27,670.2 crore with a loss of Rs 3,545 crore.

(Source: PTI)

4. Infosys Likely to Buy Back Shares Again, for $1.6 Bn

The Infosys board is likely to consider a proposal for a second share buyback of $1.6 billion very soon to boost investor sentiment. Some founding family members could tender their shares in the exercise. Infosys is coming off a one-year moratorium for the previous share buyback that ends in December.

Sources haves revealed that the buyback announcement could be part of the board resolution when it meets on 11 January to consider the audited quarterly financial results.

The company’s successive buyback, subject to shareholder approval, could be executed much faster this time around as the IT services giant voluntarily delisted its American depository shares from the Euronext Paris and Euronext London exchanges in March.

Recurring buybacks help reinforce investor confidence, according to Wedbush Securities managing director (equity research) Moshe Katri. “But given the uncertain times which historically impacted IT spending patterns, investors are likely to approach this segment more cautiously,” he said.

(Source: The Times of India)

5. Indian Companies Raised Rs 6 Lakh Cr from Markets in 2018

Indian companies have raised nearly Rs 6 lakh crore from equity and debt instruments in 2018, but volatile market conditions brought down the kitty by 30 percent. Additionally, political uncertainties ahead of the 2019 general elections may again cast a shadow on fundraising activities in the first half of the new year.

Experts, however, are hopeful the fund-raising will gather steam in the second half of 2019 with a pickup in the overall investment climate. The data shows the debt market remains the most preferred route for raising funds to support business needs of the corporate world.

In 2017, firms had raised Rs 8.6 lakh crore, nearly Rs 7 lakh crore through debt markets and Rs 1.6 lakh crore from equities.

In the equity market, funds mostly came from initial public offers (IPOs) and issuance of shares to institutional investors. The final figures may go up to end the year at around Rs 6 lakh crore for debt and equities, experts said.

(Source: The Times of India)

6. Patanjali Keen On Buying Ruchi Soya, Offers to Match Bid

Patanjali Ayurved is keen to acquire Ruchi Soya even as successful bidder Adani Wilmar is withdrawing its offer to buy the stressed edible oil maker, citing “delays” in closing the resolution process.

Patanjali Ayurved, the second-highest bidder for the asset, has written to resolution professional Shailendra Ajmera from EY and the lenders to Ruchi Soya that it is still interested in the asset and is willing to match Adani’s offer if allowed to, a person aware of the development said.

This comes after Adani Wilmar, in a letter to the resolution professional and the lenders, said it is withdrawing its Rs 5,474-crore offer for Ruchi Soya as the delays in closing the process is causing “deterioration of the asset” and is “detrimental to the interest of the stakeholders.”

(Source: The Economic Times)

7. GVK Group in Talks to Refinance up to Rs 1,400 Crore Debt

The GVK group is in talks with JM Financial Ltd to refinance up to Rs 1,400-crore of GVK Airport Holdings Pvt Ltd’s debt through a structured credit transaction, two people aware of the development said on condition of anonymity.

GVK Airport, the holding company of the group’s airport business, is seeking to refinance a part of its debt, which was taken from HDFC Bank and Yes Bank to develop Mumbai International Airport Ltd (MIAL).

GVK Airport owns a 50.5 percent stake in MIAL, while South Africa’s Bidvest Group Ltd and Airports Company South Africa Ltd hold 13.5 percent and percent, respectively. The remaining 26 percent is held by the State-run Airports Authority of India (AAI).

The total debt of GVK Power and Infrastructure Ltd, which runs the airports business through GVK Airport, stood at Rs 12,854 crore as of March 2018.

(Source: Livemint)

8. Vedanta To Challenge Court’s Order on Reopening Copper Plant

Vedanta Ltd said it will move the Supreme Court to implement the National Green Tribunal’s order to restart its copper smelter in Tamil Nadu, which accounts for nearly half of India’s output, after the Madras High Court restrained the company from taking any steps to reopen the unit.

“The honourable Madras High Court also directed the Tamil Nadu state government to make its position clear by 21 January on whether it proposes to file an appeal against the NGT order of 15 December,” P Ramnath, chief executive officer of Sterlite Copper, said in a statement. “Sterlite Copper will move the Supreme Court to help implement the NGT order in early January.”

The Madras High Court on 21 December ordered a status quo as existed before the NGT set aside a Tamil Nadu government order for closure of Sterlite’s copper plant in Tuticorin.

Justices KK Sasindhran and PD Audikesavalu of the Madurai Bench also restrained the Vedanta group from taking any steps to reopen the unit.

(Source: BloombergQuint)

9. WestBridge Capital Leads a Rs 200-cr Round in DesignCafe

Online interior design platform DesignCafe has closed a Rs 200-crore equity-financing round led by homegrown private equity firm WestBridge Capital. The transaction marks a rare venture capital-style investment by West-Bridge which has so far largely preferred to place public market-focused bets.

Proceeds from the investment will be used by DesignCafe to expand its footprints in the country, cofounder Shezaan Bhojani said.

The financing round also saw participation from existing investor Fireside Ventures, the early-stage, consumer-focused venture set up by former Helion Venture Advisors Partners’ managing director Kanwaljit Singh. Boutique investment bank Sprout Capital acted as the exclusive advisor to the deal.

“We are very pleased to have West-Bridge, one of the leading PE investors in India, join the DesignCafe team. We are also excited to strengthen our already close relationship with existing investor Fireside Ventures, who is also participating in this round,” Bhojani said in the statement.

(Source: The Economic Times)

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