M&A in tech space to come under Competition Commission purview
An additional condition in mergers and acquisitions may require digital businesses to secure approval from the Competition Commission of India. The government is set to introduce a minimum threshold transaction value of Rs 2,000 crore for any deal for anti-trust scrutiny if the entity being acquired has substantial operations in India. It is part of proposed amendments to the competition law to be tabled in parliament.
Why it’s important: If a minimum transaction value threshold is introduced, it would cover deals in the tech and digital space, which have been typically exempt till now due to low assets and turnover even if the deal size was large.
Government may reduce or remove duty on steel exports as prices decline
The central government may reduce or entirely do away with the export duty on steel products amid falling prices and rising domestic supply after a similar fall prompted a duty cut on petroleum products. The steel ministry has taken up the matter with the finance ministry after receiving industry representations.
Why it’s important: A duty reduction or removal will help steelmakers to tap the export market at a time when local demand has weakened, and companies are seeing inventory pileup.
Bids for bad loans come in too low, may make exercise pointless
The first two offers to banks from the state-backed bad loan aggregator National Asset Reconstruction Co has stunned bankers because of its low value. The offers for Rainbow Papers and Consolidated Construction Consortium are between 2 and 8 percent of the outstanding loans. CCC made an offer of Rs 60 crore for a total of Rs 2,623 crore outstanding dues, less than 3 percent recovery. Rainbow Papers bid Rs 80 crore for outstanding dues of Rs 1,136 crore, a recovery of 7 percent.
Why it’s important: The stunningly low bids make it difficult for bankers to even consider them, raising questions about the viability of selling bad loans through the government-backed firm.
Automakers anticipate bumper sales during festive season
About 1. 3 million people are likely to drive home cars during the festive season between August and November, generating a turnover of more than Rs 1 lakh crore for automakers, according to industry estimates. It would be 20 percent higher than a year earlier and about 13 percent more than the previous peak in the festive season peak in 2017.
Why it’s important: As semiconductor chip supplies have improved, car production has been ramped up. Combines with robust bookings, the outlook for the festive season looks healthy.
New draft on data protection law in the works, will be soon tabled in parliament
The timeline for public consultations on the new data bill may be announced by the end of August as the electronics and IT ministry is at an advanced stage with the draft of the comprehensive framework. Some officials said it might be tabled in Parliament in the winter session while others said the budget session would be a more realistic target.
Why it’s important: After withdrawing the proposed data protection bill this week, the stakes are higher for the government to get the updated version right. It should consider that consultations and meetings take time and set timelines accordingly.
Indian keeps renewables target flexible in commitments to United Nations
India has stopped from mentioning its target of establishing 500 GW of renewable energy capacity by 2030 in the updated commitments made at the United Nations climate convention, giving itself the flexibility of 50 percent power from non-fossil fuel sources by then. It keeps the country’s options open for new coal-based plants in the projected 820 GW total capacity.
Why it’s important: The addition of renewables capacity in India has slowed down in recent years and stands at 114 GW. It would have been difficult for it to reach 500 GW by the end of this decade. India also wants to keep its options open to build coal-fired power plants.
CBI seeks daily hearing against acquittals in 2G spectrum scandal
The Central Bureau of Investigation has sought day-to-day hearing of its appeals in the Delhi High Court against the acquittal of former telecom minister A Raja and other accused in the 2G spectrum case. It said the central government was in a vulnerable position on account of claims being made by entities and individuals on the basis of the acquittals.
Why it’s important: It was alleged that selling 2G spectrum at a low price in 2007 resulted in Rs 1.76 lakh crore to the national exchequer. The courts acquitted the accused. The case drags on even as 5G spectrum was sold last week at Rs 1.5 lakh crore.
Domestic firms leave downgrades behind as performance improves in first quarter
Indian companies have put out an impressive performance in the June quarter despite rising interest rates and inflationary pressures, prompting analysts to conclude that the worst of earnings downgrades is over. So far, there have been no significant disappointments in quarterly earnings, and many firms have reported better-than-expected numbers.
Why it’s important: If there are no further negative surprises, a rise in consumption is expected to gather momentum in the second half of the financial year, further boosting corporate performance.
Market regulator orders forensic audit of Future Retail’s books
The Securities and Exchange Board of India has ordered a forensic audit of the financial statements of Future Retail. The regulator said it has grounds to believe that the disclosure of financial information and business transactions have been dealt with in a manner detrimental to the interest of investors and the securities markets, and also violated provisions of the Sebi Act.
Why it’s important: The forensic audit assumes importance in the back of the Future group owing 26 lenders over Rs 15,000 crore. Insolvency proceedings have been invoked against Future Retail last month.
Tiger Global joins Uber and others in selling stake in Zomato
Tiger Global nearly halved its stake in Zomato, joining investors such as Uber and Moore Strategic Ventures, who have either exited or pared their stakes. Based on Zomato’s average closing stock price of Rs 46.8 between July 25 and August 2, Tiger Global is likely to have sold shares worth Rs 863.2 crore.Why it’s important: The food delivery company has seen a wave of selling by pre-IPO investors after a 12-month lock-in period ended last month. The bulk sales could put further pressure on Zomato’s stock that has significant correction in recent months.