#1. Loan repayment ability of India Inc improves despite rising interest rates
The ability of Indian companies to repay debt is improving despite rising interest rates, according to a Mint analysis of 382 companies on the BSE 500 index. The interest coverage ratio of these listed firms stood at 7.02 times in the June quarter, better than 6.73 times in the preceding three months. The ratio, derived by dividing earnings before interest, taxes, depreciation and amortization by interest cost, is still lower than 7.22 times in the year-ago period.
Why it’s important: Corporations have improved operating performance on cheaper inputs. They were helped by lower working capital requirements and significant debt reduction over the past few years, thus avoiding a crisis in a tighter monetary regime.
#2. Brookfield to grow $25 billion asset portfolio in India on increased opportunity
Global asset manager Brookfield is looking to grow its $25 billion portfolio in India, said former British central banker Mark Carney, who is also the UN special envoy for climate action and finance. Brookfield is upbeat on India’s data infrastructure and energy transition space although it might not set up an India-specific fund, which is its policy for any other nation, Carney said.
Why it’s important: India is seeing rapid expansion in energy transition, a sector that interests Brookfield significantly. It is already one of the biggest investors in India set to grow bigger.
#3. After Chandrayaan-3 success, L&T to bet big on commercial satellite launch business
After playing a crucial role in the Chandrayaan-3 mission, Larsen & Toubro is looking to make a mark in the commercial satellite launch business and bid for the transfer of technology of the small satellite launch vehicle developed by the Indian Space Research Organization, company executives said. These rockets are capable of carrying a payload of up to 500 kg to low Earth orbit.
Why it’s important: India has emerged as a low-cost destination to launch satellites. The technology transfer will be the first time when a space agency provides launch vehicle tech to a private party.
#4. E-commerce, FMCG firms drive demand for electric vehicles in India
Demand for electric vehicles by e-commerce firms and consumer goods makers of daily essentials has doubled from last year, executives said. Amazon, Hindustan Unilever, Swiggy, Coca-Cola, Zomato, Amul, Flipkart, BigBasket and Bisleri are among the larger firms switching to electric vehicles EVs to service consumers and retailers.
Why it’s important: Companies are rushing to meet carbon emission reduction targets and also looking to cut cost by half by switching to electric vehicles. The demand would only grow in the medium term.
#5. New framework to ensure banks will not covertly auction stressed loans
Private deals that some banks enter with acquirers of stressed loans will soon come to an end. Under a new framework that banks agreed on last week, lenders will have to ensure the decision to auction loans is notified to all key players in the market. This will end the practice of pushing through a sale by putting out the auction advertisement in an innocuous newspaper while keeping many potential bidders in the dark.
Why it’s important: Increased transparency in disposing off bad loans is a welcome move since all high street lenders have agreed on the framework. A code of conduct to enable wider participation in loan sale deals was much needed.
#6. Adani Group unlikely to face serious penal action as regulator found no major lapses
The Securities and Exchange Board of India, directed by the Supreme Court to investigate whether the Adani Group violated laws, has not unearthed any major lapses and the conglomerate is unlikely to face serious regulator action. The regulator has been able to establish only one key allegation on non-disclosure of related-party transactions, which could make the group liable for a penalty of up to Rs 1 crore.
Why it’s important: The capital market regulator is expected to submit its report to the Supreme Court on August 29. Any lack of unfavorable findings would come as a major relief to the Adani Group, which faced a market rout earlier in the year but steadfastly denied wrongdoing.
#7. Unknown entity took Rs 600 crore position on Adani Enterprises ahead of status report
A single market participant took a derivatives position worth an estimated Rs 600 crore in Adani Enterprises, flagship firm of the Adani Group and a Nifty constituent, just days before the market regulator submitted its status report on the conglomerate to the Supreme Court on August 25. It’s unknown whether the position is a hedge or a punt. Such positions are usually taken in anticipation of a sharp price move based on any event.
Why it’s important: The names of the investors or traders holding a major part of open positions on an underlying stock’s derivatives contracts should be disclosed in the interest of transparency, just as rules mandate identifying investors holding a percentage or more of the equity capital of a listed firm.
#8. SoftBank India made over $5.5 billion from exits in past five years
SoftBank Investment Advisors has earned more than $5.5 billion in exits from its India portfolio since it began operations in November 2018 in Mumbai, according to managing partner Sumer Juneja. Of the total, about $1.5 billion was booked in the last 12-18 months. Another $1.5 billion is liquid and in tradable equities.
Why it’s important: SoftBank in recent has made partial exits in startups such as Lenskart and FirstCry and booked profits from listed startups such as Paytm, Zomato, Delhivery and PolicyBazaar, while still holding stake in them. It seems to have weathered the sharp correction in the tech sector.
#9. Financial reporting authority to list frequent lapses for auditors and company managements
The National Financial Reporting Authority will soon issue a circular outlining the frequently observed deviations in the preparation of financial statements and statutory audits to give guidance to managements and auditors on practices they should strictly avoid. These deviations have been noticed in specific cases during investigations and audit quality reviews done by authority in the past few years.
Why it’s important: India has in recent years tightened oversight on corporate governance. Companies and auditors would do well to note the deviations and make efforts to avoid them.
#10. Top Microsoft executive says India has got data protect legislation right
The Indian government has got the new data bill right, applying strong protection for personal data while allowing cross-border data flow, said Brad Smith, Microsoft’s vice chairman and president and the second-ranking executive after CEO Satya Nadella. It's a sound and strong framework, and consistent with global standards, Smith said.
Why it’s important: The endorsement to the proposed data protection law by a Big Tech firm underscores the government’s successful stakeholder outreach. Cross-border data flow was a big concern for multinational companies.
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