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

A round-up of top newspaper stories to keep you ahead of others

October 23, 2023 / 07:29 IST
A round-up of top newspaper stories

#1. European multinationals face tax demands of Rs 11,000 crore after apex court ruling

Many multinational companies headquartered in the Netherlands, Switzerland and France could be staring at retrospective tax demands for around Rs 11,000 crore on dividend income repatriated from India after a Supreme Court ruling. The court said that the lower 5 percent withholding tax on dividend income of firms was not available to all OECD countries merely on the most favored nation status.

Why it’s important: India could have been losing Rs 3,000 crore every year on this account. The verdict may also have implications for withholding tax on royalties and fees for technical services.

#2. Bond investors seek clarity from market regulator on rating actions by Brickworks

Investors have sought clarity from the Securities and Exchange Board of India regarding the status of rating actions by Brickwork Ratings after the firm sharply downgraded outstanding bonds of some companies. There is uncertainty surrounding the matter following the regulator’s decision in October 2022 to cancel the certificate of registration to Brickwork, which was revoked last month.

Why it’s important: Rating downgrades for bonds have major implications on the profitability of financial entities such as banks and mutual funds. The market regulator needs to swiftly act on this.

#3. Early birds report soaring profits in second quarter, revenue growth loses steam

The combined net profit of 213 early bird companies increased by an annualised 21.8 percent to Rs 96,348.5 crore in the three months to September, a rise for the third consecutive quarter but showed a continued slowdown in revenue growth and stagnation in earnings. The combined net sales, or gross interest income for banks and NBFCs of early bird firms increased by 13.6 percent, the slowest growth rate in 11 quarters, to Rs 6.13 lakh crore. It was also the fifth consecutive quarter of declining revenue growth.

Why it’s important: The lagging revenue growth indicates a persistent weakness in aggregate demand in the economy. The slowdown seems severe for manufacturing and non-financial service sectors.

#4. Government to review list of banks to be privatised on improved performance

The central government is planning to review the list of state-run banks slated for privatisation amid improved profitability and a significant drop in bad loans. A new panel with representatives from the finance ministry, NITI Aayog and the Reserve Bank of India is being considered to draw a fresh list of candidates for privatisation.

Why it’s important: The bank privatisation exercise in anyway would take place only after the 2024 parliamentary elections. The improved performance of those facing the axe would merit reconsideration.

#5. India’s Digital lenders bet on festive season demand to expand business

With the festive season setting in, the digital lending industry is betting big on a quick rebound in business as consumers prepare to loosen purse strings and merchants stock up to meet the additional demand. For digital lending platforms, a demand rebound does not automatically convert into an increase in disbursals, but overall disbursals go up on an average of 15-20 percent during the festive period.

Why it’s important: While the December quarter typically sees consumer-facing businesses making hay, this year the fintech lenders are on a firmer footing to meet the heightened credit demand.

#6. Hyundai and vendors line up Rs 10,000 crore to invest in Talegaon factory

Hyundai Motor India is likely to invest Rs 5,000 crore in General Motors India’s Talegaon plant in Maharashtra, and its vendors are lining up investments worth Rs 5,000 crore near the site. Once the factory and vendors’ facilities begin operations, around 4,500 jobs are expected to be created.

Why it’s important: The investments in phases could only begin once the tussle between workers and management of General Motors is sort out. The workers have been protesting against non-absorption by any future buyer.

#7. Probe into Mumbai airport operated by Adani to focus on lapses by GVK

The investigation into the books of the Adani Group’s Mumbai International Airport Ltd and its arm executing the Navi Mumbai airport ordered by the corporate affairs ministry earlier this month will focus on allegations of financial irregularities under the GVK group, its previous owner.

Why it’s important: The Adani Group has disclosed details of the the probe in regulatory filings. GVK has denied any wrongdoing.

#8. Israel’s Tower Semiconductor finds no India takers for joint venture

Israeli company Tower Semiconductor’s initial talks with several Indian companies to build a joint venture fab plant that involves the transfer of chip technology have been less than successful. A top Tower management team led by CEO Russell C Ellwanger was in India last week. In 2022, US chip giant Intel, which signed a deal to buy out Tower for $5.4 billion, cancelled it and paid a $353 million termination fee.

Why it’s important: It is unclear why the overtures by Tower Semiconductor has been tepid in India, given that the government is offering all kinds of incentives for the country to emerge as a fab hub.

#9. India to take standardised road to charging infrastructure for electric vehicles

In response to the expanding electric vehicle sector in India, the central government is preparing to introduce a standardised charging protocol. This move is a reaction to concerns voiced by industry stakeholders about the absence of uniformity in charging infrastructure that has already led to interoperability issues.

Why it’s important: It is desirable to have uniform standards for the entire electric vehicle industry. The charging infrastructure for two- and three-wheelers is highly fragmented at present.

#10. Class of 2024 engineering graduates in India faces cold shoulder from software sector

Infosys and Wipro, which together hired 208,000 engineering graduates in the past three years, have no plans to go to campuses in the year to March. It implies TCS and HCL will be the only ones among the big four to hire from colleges. The number hired in 2023-24 is already at an all-time low. Many are giving the ongoing placement season a miss and may look at visiting campuses only after the March quarter.

Why it’s important: The seriousness of the situation can be gauged from the fact that the last time India’s IT firms shied away from campus hiring was during the 2008 global financial crisis.

Moneycontrol News
first published: Oct 23, 2023 07:29 am

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