Morning Scan: All the big stories to get you started for the day

A daily round-up of top newspaper stories

#1. Dividends by top 10 payers more than double in 2022-23, TCS at pole position

Tata Consultancy Services overtook Vedanta to become the highest dividend payer among listed companies in India in 2022-23. The IT services firm paid Rs 42,090 crore, up 167.4 percent from Rs 15,738 crore in 2021-22. The 10 biggest payers together shelled out Rs 2.06 lakh crore in 2022-23, more than double the Rs 98,371 crore in the preceding financial year. HDFC Bank and SBI entered the top 10 table in 2022-23.

Why it’s important: The doubling was more due to a rise in the payout ratio rather than faster growth in net profit. A higher ratio means a fall in retained earnings that reduces a firm’s ability to fund capital spending and growth through internal accruals.

#2. Byju’s defaults on $40 million interest payment on $1.2 billion loan, sues lender

Test prep unicorn Byju’s skipped paying quarterly $40 million interest on a $1.2 billion loan that was due on June 5. It has instead sued its lender Redwood, a US investment management firm, and its related entities in the New York Supreme Court for hastening the repayment of the term loan. Offshore lenders were scheduled to receive their interest payments on May 25, with a grace period until June 5.

Why it’s important: Byju’s skipping the quarterly interest payment would trigger a default and prompt lenders to invoke guarantees and initiate insolvency action. The unicorn is headed for choppy waters.

#3. Adani revives investment plan for Mundra PVC plant worth at least Rs 14,000 crore

The Adani Group has revived its investment plan for Mundra Petrochem, India’s largest PVC plant, with an initial funding of Rs 14,000-16,000 crore after a four-month suspension of operations. Mundra Petrochem has secured an in-principle approval for a credit line of up to Rs 14,000 crore from a clutch of large domestic banks. The total project cost is expected to be around Rs 35,000 crore.

Why it’s important: India’s state-run banks continue to repose faith in Adani by approving such a huge credit line despite high levels of group debt and a recent market rout of listed companies. Some private banks are also part of the lenders’ consortium.

#4. Sequoia Capital parts ways with India and China partnerships, signaling retreat from Asia

Silicon Valley start-up funder Sequoia Capital, which financed Apple and Google in their early days, has broken away from its India and China partnerships, signaling a withdrawal from Asia. Sequoia India & Southeast Asia has been rebranded Peak XV Partners. There will be no changes to the India leadership, which will continue to be headed by Shailendra Singh. The decoupling will be completed by March.

Why it’s important: The split comes at a time when many India portfolio companies, including BharatPe, GoMechanic, Zilingo and Trell, are under the scanner for alleged lapses in corporate governance. The move to operate onshore could have implications on raising funds from Indian partners and local taxation.

#5. Securities tribunal sets aside license cancellation of Brickwork Ratings by market regulator

The Securities Appellate Tribunal has set aside a Securities and Exchange Board of India order cancelling the license of Brickwork Ratings India for repeatedly violating norms related to credit ratings. The tribunal said the violation of routine matters was not deliberate. The regulator had cited delayed default recognition and failure to document meetings with management as reasons for cancelation.

Why it’s important: The market regulator will surely challenge the reversal in the Supreme Court. It had in October asked Brickwork to wind down operations and is unlikely to back down from its stance.

#6. Germany to enter into Rs 45,000 crore deal with India to build six submarines

German shipbuilder ThyssenKrupp Marine Systems will sign an agreement with Mazagon Dock, India’s biggest warship yard, to cooperate in building six advanced submarines for the Indian Navy in the presence of German defense minister Boris Pistorius. They will be built via a Rs 45,000 crore program under the strategic partner model of military equipment acquisition.

Why it’s important: The German deal could be followed by another with France to build an additional six submarines. This will significantly augment India’s naval capabilities and also benefit many local firms.

#7. Automakers waiting for clarity on Rs 25,934 crore incentives a year after announcement

More than a year after the Rs 25,938 crore production-linked incentive scheme for the auto sector came into effect, qualified manufacturers await clarity on whether they will receive the sops for the first year of the five-year program. The standard operating procedure was released in April although the scheme came into effect on April 1 last year. Manufacturers are required to get their products certified for the scheme after calculating the domestic value addition.

Why it’s important: The delay in releasing rules means the qualified companies will face hurdles in getting the subsidies although they have priced them in in the vehicles manufactured in the year ended March.

#8. Aditya Birla Group invests Rs 5,000 crore in jewelry business to compete with Tata, Reliance

The Aditya Birla Group has announced its foray into the branded jewelry space with an investment of some Rs 5,000 crore and will compete with Titan’s Tanishq and Reliance Industries’ Reliance Jewel. The business will be housed in a new venture called Novel Jewel. It will open exclusive stores across the country with in-house jewelry brands.

Why it’s important: India’s jewelry market is expected to grow to $90 billion by 2025. The Aditya Birla Group wants a share of the rapidly expanding pie.

#10. Centralized platform of registrars of companies to boost business entry and exit

Plans to centralize decision-making on all regulatory forms filed by companies will be implemented by December, with the task being transferred from registrars of companies to a central facility. Currently, only decisions on applications for voluntary closure are centralized, making exits easier for companies with no assets and liabilities.

Why it’s important: In the shift to the new platform, filings by companies will continue to be done on the same portal as before, but the backend processing will be moved from the registrars to the new facility.