#1. Tribunal admits Go First insolvency petition, provides bankruptcy protection
The Delhi bench of the National Company Law Tribunal has accepted Go First’s request for insolvency. The tribunal’s acceptance of Go First’s insolvency plea triggers a moratorium on the airline’s assets and liabilities. It stops any legal proceedings related to asset recovery, sale, or transfer of assets, as well as the termination of crucial contracts by vendors.
Why it’s important: Some lessors of Go First have asked for deregistration, but the insolvency proceedings will stop them from reclaiming their planes. They are likely to approach court to challenge the order.
#2. Regulator considers higher investment threshold for alternative investment funds
India’s capital market regulator has floated the idea of raising the minimum ticket size of investment in private equity and venture capital funds. At present, an investor with an income or net worth below a certain threshold has to chip in at least Rs 1 crore to invest in an AIF. The entry level investment has remained unchanged since AIF rules were announced in 2012. Wealthier or accredited investors are permitted to invest less than Rs 1 crore.
Why it’s important: If the investment threshold is raised, only deep-pocketed investors would be able to put money in alternative investment funds.
#3. Tax authorities to investigate shell companies over fake input tax credit claims
Thousands of entities and their beneficiaries that allegedly created multiple shell firms to represent fake transactions without any underlying goods and services for availing of input tax credit are under the scanner of tax authorities. GST officials have prepared a detailed list and will target such entities during a two-month special drive starting May 16.
Why it’s important: Taxmen want to weed out fake input tax credit claims by using forged GST registration. A thorough verification drive could net many such fraudulent entities.
#4. Corporate India’s dividend payouts reach a record Rs 2.3 lakh crore in 2022-23
Indian Inc continues to be generous in rewarding shareholders with big dividend payouts. This is particularly true for shareholders of companies such as TCS, Hindustan Zinc and Coal India, which are seen as cash cows. Boosted by a big payout by these three companies, the combined equity dividend payout by listed companies was up 38 percent on year to a record high of Rs 2.27 lakh crore in 2022-23, compared with Rs 1.65 lakh crore in 2021-22. The analysis is based on a sample of 557 listed companies.
Why it’s important: The huge rise in payouts was driven by just three companies. Excluding them, the aggregate dividend payout by the other 554 firms rose by a much more modest 1.4 percent.
#5. Vanguard slashes Ola’s valuation by 35 percent to $4.8 billion
Funds managed by US investment firm Vanguard has pared the valuation of Ola by 35 percent to $4.8 billion from $7.4 billion, according to regulatory filings. The value of shares of the ride-hailing company held by the group’s funds fell to around $203.78 apiece on February 28 from $311.85 on August 31 last year. The development comes after Ola exited businesses like food and grocery delivery and second-hand car sales over the past year to focus on its mainstay ride-hailing business.
Why it’s important: Several late-stage domestic start-ups have seen significantly slashed valuations by their investors in recent months amid a global rout in public and private technology markets.
#6. MG Motor India to divest majority stake before listing in Indian equities markets
MG Motor India, owned by Shanghai-headquartered SAIC Motor, plans to divest a majority stake to Indian entities ahead of a future stock exchange listing as it works to Indianize its operations. The company is expecting a major investment from an Indian partner this year, according to Rajeev Chaba, chief of MG Motor India. It intends to create a roadmap to list on Indian stock exchanges in the next five years.
Why it’s important: MG India’s plan to Indianize the shareholding, along with the board, management, and supply chain, is in sync with SAIC Motor’s strategy of partnering with original equipment makers in China.
#7. Larsen & Toubro reports a 10 percent rise in fourth-quarter net profit and revenues
Larsen & Toubro has reported a 10 percent rise in consolidated net profit to Rs 3,987 crore for the March quarter compared to a profit of Rs 3,621 crore a year ago. It reported a 10 percent year-on-year rise in revenues of Rs 58,335 crore. The growth in profit was supported by a 43.7 percent annualized surge in other income to Rs 741 crore in the fiscal fourth quarter. The numbers were marginally short of expectations.
Why it’s important: L&T seems to have benefitted from the government’s increased spending on infrastructure. Business is expected to remain brisk for India’s largest infrastructure firm.
#8. Retail investors accuse Muthoot of mis-selling bonds of Srei Equipment Finance
A clutch of retail investors has alleged that employees of Kerala-based Muthoot Group mis-sold them non-convertible debentures of Srei Equipment Finance, passing them off as bonds from a sister company. About 49 people, several of them pensioners who have transacted with Muthoot for a decade, have come forward so far, some of them approaching local police.
Why it’s important: Since Srei Equipment is under insolvency resolution, the investor funds are stuck. The allegations, if proven, could invite penal action.
#9. E-commerce sales growth slows considerably as buyers pare purchases
Shopping across e-commerce platforms is growing slower than anticipated, according to industry executives, multiple brands and third-party platforms tracking shipment and sales data. Data from Unicommerce, an e-commerce-focused warehouse solutions provider, showed a 16 percent on-year volume growth in the March quarter. Third quarter volumes climbed approximately 19 percent. The relatively slower growth mirrors industry discussions in the previous weeks on sales trends.
Why it’s important: E-commerce sales in the past three years have been growing much faster than traditional retail channels. Even with the slowdown, it is still expanding in double digits.
#10. FMCG volumes were driven by the sale of packaged goods in the March quarter
Higher demand for food products in the three months to March led to the first sales volume growth for FMCG after six quarters, even as sales volumes in the home and personal care segment remained flat, according to NielsenIQ data. FMCG sales volumes increased 4.3 percent on-year during the quarter. Companies said there was significantly higher growth in sales of branded packaged foods than their unbranded counterparts because of their lower share compared to other household products.
Why it’s important: Consumers have been buying more packaged foods because they are more convenient to use. The trend is expected to sustain although the health benefits of fresh food are higher.
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