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

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

The central government is expected to press ahead with legislative reforms in the winter session of Parliament, changing the insolvency and bankruptcy code and the company law. Separately, an expert committee of the corporate affairs ministry will finalize recommendations for a digital competition law, which will be circulated for interministerial discussions and consideration by the cabinet.

Why it’s important: The bankruptcy code needs to be tweaked to cut down on delays in recusing insolvent businesses. Modifications in the law governing companies would strengthen the statutory audit regime.

India Inc is planning to hasten capital expenditure in the coming months to capitalize on rising consumption demand. A dipstick survey of 22 CEOs showed that over 86 percent of the respondents have invested in the past one year and plan to do more in the coming months. The government’s plan to invest Rs 10 lakh crore in infrastructure will result in new orders, prompting firms to expand capacities, they said.

Why it’s important: Private investment has failed to keep pace with the massive capital spending by the government in recent years. That gap might narrow if demand picks up.

Shares of Jio Financial Services, which has been carved out of Reliance Industries, hit its 5 percent lower circuit limit after a widely watched trading debut. The stock ended at Rs 248.9 on the National Stock Exchange compared with the discovered price of Rs 261.85 as passive mutual funds sold heavily. It settled at Rs 251.75 on the BSE against the discovered price of Rs 265. About 78 million shares were traded.

Why it’s important: Passive funds are expected to sell 150 million shares ahead of the company’s imminent exit from benchmark indices. The stock may turn attractive once near-term selling pressure abates.

A disagreement among shareholders on the quantum of cut in Dunzo’s valuation is blocking new financing plans for the troubled quick commerce startup. Reliance Retail, the largest investor with 26 percent stake, does not want to cut the valuation by nearly half in a potential fresh funding deal because it would mean a significant value erosion of its $200 million investment made in January last year.

Why it’s important: Dunzo needs money to pay pending salaries and to clear vendor dues. Its efforts to raise funds quickly will depend on all its investors agreeing to a reduced valuation.

Dutch pension fund APG Asset Management, the World Bank’s investment arm International Finance Corp and Asian Infrastructure Investment Bank are in a race to invest up to $250 million (about Rs 2,080 crore) in Mahindra Susten’s renewable infrastructure investment trust. The InvIT’s portfolio has an enterprise value of about $1 billion. The potential investors are conducting due diligence.

Why it’s important: The primary asset of the infra-investment trust comprises an engineering, procurement, and construction unit focused on renewables, which has seen keen investor interest as the energy transition picks up pace in India.

Onion traders have asked the government to introduce a floor price for calculating export duty to ensure a level-playing field even as bans and restrictions on wheat and rice exports have started hurting businesses. The central government has slapped an export duty of 40 percent on onions to rein in local retail prices that have jumped fourfold in the past two months.

Why it’s important: There is strong resistance by onion growers and traders to the export duty. Although the government is unlikely to relent, it could consider setting a floor price.

The central government wants states to implement reforms before they can avail of interest-free capital expenditure loans. Out of the Rs 80,000 crore earmarked in the current financial year for the Special Assistance to States for Capital Investment scheme, Rs 40,000 crore has been disbursed without conditions. Of the rest, Rs 30,000 crore will be disbursed if states can show progress on reforms or present detailed project proposals.

Why it’s important: The disbursal of funds with strings attached would hopefully nudge the states to implement reforms. These interest-free loans could play a crucial role in stimulating local economies.

The civil aviation ministry is expected to begin an evaluation of routes awarded under the government’s regional connectivity initiative, also known as the Ude Desh ka Aam Naagrik (UDAN) scheme, which offers flight subsidies to underserved or unserved destinations. The assessment would look at reasons behind the failure of carriers to launch flights or continue flying them despite the subsidy offer.

Why it’s important: UDAN has failed to fly since about half of the flights operating under the regional connectivity scheme have been discontinued due to low demand and infrastructure constraints.

India’s electricity demand rose to an all-time high last week due to sultry weather and an increase in the requirement for irrigation, as some regions saw lower-than-expected rainfall. The maximum demand met on August 17 was 234 GW, the highest on record. Demand was higher than 229 GW predicted by the planning cell of the power ministry for the summer.

Why it’s important: There is an underlying increase due to heightened economic activity that was added to by higher demand from farms as rains have been scanty in many parts of the country.

Capital goods firms like L&T are facing challenges in sourcing skilled labor for projects, attributing it to a widened demand-supply gap due to increased infrastructure spending and changing labor aspirations. India’s consumption of cement and steel in the previous financial year rose by more than 8 percent, signaling increased building activity. However, industry executives say the growth in the supply of skilled labor has not kept pace.

Why it’s important: Aided by a heavy government push to build infrastructure, demand for skilled labor has seen a spike. Ample opportunities for skilled labor could increase the wage costs of firms.