Today's top business news: Gold gains as virus spreads, Muthoot Finance raises $550 million, Telcos face 'unprecedented crisis,' and more

Photograph used for representative purposes only

Photograph used for representative purposes only   | Photo Credit: Shanker Chakravarty

News updates from the world of economy, markets, and finance

3:30 PM

Around 100 Uniqlo stores reopened in China this week, 250 still shut

Fast Retailing, which operates casual clothing chain Uniqlo, said it has reopened around 100 stores in China since last week, although approximately 250 of its 750 stores there remained closed on Friday due to the coronavirus outbreak.

Some of its partner factories were also gradually reopening, a Fast Retailing spokeswoman said.

Uniqlo's mix of affordable basics and occasionally trendy items has been a massive hit among China's growing middle class. The country has been a key growth market for the company, which faces a saturated market and weak consumer spending in Japan. Reuters

3:20 PM

RIL move on media assets to create cleaner structure

The move by Reliance Industries Limited (RIL) to aggregate the media assets in Network 18 will create a cleaner structure and is easier to manage with the reduction of listed entities, according to a report by BofA Securities.

RIL announced that it would aggregate the media assets outside the Jio umbrella under one single entity of Network18. The companies to be combined include TV18, Den Networks & Hathway Cable.

From RIL perspective this creates a cleaner structure and is likely easier to manage (as it reduces listed entities), the report said.

Media is small part of RIL’s EV but it helps offer bundled products in future and better analyze customer trends, it added. IANS

3:10 PM

Revenue impact from trade agreements rises: Report

The revenue impact on Centre’s coffers from trade agreements increased by 35 per cent, despite a decline in imports, a research report showed.

According to a report by MVIRDC World Trade Center Mumbai, imports of goods on concessional tariffs under various trade agreements have impacted the central government’s revenue collection to the tune of Rs 65,734 crore in 2019—20, which is 35% higher than the corresponding figure last year.

This revenue impact, the report said, is 3% of the gross tax revenue of the centre in 2019—20, up from 2.3% in the previous year.

Accordingly, in the previous year as well, these trade agreements had impacted the revenue collection to the tune of Rs 48,793 crore, as shown by the “Statement of Revenue Impact of Tax Incentives”, which is part of Union Budget’s documents. IANS

3:00 PM

Moneywise | How to set effective financial goals

Saab kahaan jana hein aapko (Sir, where do you want to go?)” is typically what an autorickshaw driver or a taxiwala would ask us when we flag them down.

Imagine our answer is “Pata nahi hein (I don’t know)”, how do you think the driver would react?

In all probability, after initial awe, he may either request us to alight, or take us on a long ride, to fulfil his goal of making money.

Remember this, those individuals who do not work for their own financial goals, work for someone else’s financial goals.

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2:45 PM

Muthoot Finance raises $550 million from international bond market

Muthoot Finance Ltd on Friday said it has raised $550 million from international bond markets for a 3.5—year tenor at 4.4%.

The funds raised are in its second issue under Rule 144A/Reg S format.

Muthoot Finance Ltd, the largest gold loan company in India, has successfully priced a $550 Million Fixed Rate Senior Secured Note issuance in 144A/Reg S format for a 3.5—year tenor at 4.400%, the company said.

The company had successfully placed $450 Million for a 3—year tenor at 6.125% in October 2019.

The proceeds of the issue will be used for permitted purposes including onward lending in accordance with RBI’s ECB Guidel ines and other applicable laws, the NBFC pointed. IANS

2:30 PM

China says to exempt extra tariffs on 65 US goods from Feb. 28

China's finance ministry said it will begin exempting 65 U.S. goods from retaliatory tariffs implemented amid the bilateral trade dispute with the United States for one year starting Feb. 28.

Goods exempt from the extra tariffs include aircraft parts and medical equipment, according to documents published on the ministrys website.

The finance ministry did not provide details, including how much of the 65 products China imported last year. Reuters

2:15 PM

Eurolife draws up ₹500-crore capex plan

Eurolife Healthcare, a leading player in the production and distribution of intravenous infusions and other pharmaceutical products, plans to invest ₹500 crore over five years in India and Europe to expand capacity and tap Europe and the U.S. in ‘a big way’, a senior executive said.

While ₹100 crore will be invested in capacity expansion at the company’s four units in India this year, about ₹400 crore will be invested in Europe to acquire more companies there and expand its unit in Hungary, which was acquired by Eurolife last year.“We are already a significant player in India but we wanted to have a big presence in the regulated markets which areis Europe and U.S.. Over the next five years, we will invest €Euro 50 million in Europe,” said Sandeep Toshniwal, CEO and director, Eurolife Healthcare Pvt. Ltd., in an interview.

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2:00 PM

Sovereign funds may invest directly in infra projects

Sovereign wealth funds are likely to change their investment strategy for Indian infrastructure projects and are expected to use the direct investment route more in the near future, compared to the current trend of investing through investment platforms, according to recent report.

A JLL report said that in the past few years, sovereign wealth funds (SWF) have mostly invested through investment platforms or joint ventures with developers and funds, which is likely to change in the days ahead.

“The investment strategy of SWFs is expected to change. An increasing trend of SWFs investing through investment platforms/joint ventures with credible developers and funds was being observed in the past few years. A commitment of $2.0 billion through various platforms/joint ventures was made between 2014—19. Now, SWFs would be more inclined to use the direct investment route as compared to investment platforms,” said the report. IANS

1:45 PM

Vehicle registrations sputter, slide 7% on poor sentiment

The automobile sector continued to ply on the slow lane in January 2020 with total vehicles registrations declining 7.17% year-on-year as per FADA data, indicating the persisting contraction in the sector.

Except for three-wheelers and tractors, all other segments witnessed contraction as per the monthly vehicle registration data released by the Federation of Automobile Dealers Associations (FADA).

As per the data, two- wheeler registrations declined by 8.82% year-on- year while passenger vehicles registrations plunged 4.61% and commercial vehicles by 6.89%.

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1:30 PM

Gold gains as virus spreads, set for best week in over 6 months

Gold prices hit their highest in seven years on Friday and were set to post their best week in over six months as demand for the safe-haven asset increased after a spike in coronovirus cases.

South Korea reported 52 new cases of the virus, taking the national total to 156, while Japan reported the first fatalities from aboard a cruise ship that accounts for the biggest cluster of infections outside China.

Spot gold rose 0.7% to $1,630.97 per ounce by 0649 GMT, after hitting its highest since Feb. 15, 2013 at $1,631.63 earlier in the session. For the week, prices have risen 2.9% so far and were set to post their biggest weekly percentage gain since Aug. 9.

U.S. gold futures were up 0.9% at $1,634.30. Reuters

1:15 PM

LTI enters the Nifty Next 50 Index

National Stock Exchange of India Ltd. (NSE) has included technology consulting and digital solutions company Larsen & Toubro Infotech (LTI) in its Nifty Next 50 Index.

LTI got listed in July 2016, and the company has grown rapidly during last the four years, leading to this significant milestone in its growth journey, it said in a release.

The NIFTY Next 50 Index is computed basis free float methodology i.e taking the firm’s equity price and multiplying it by the number of shares readily available in the market, it was noted. PTI

1:00 PM

Telcos facing ‘unprecedented crisis,’ says Airtel's Sunil Mittal

Amid a deepening crisis in the telecom sector, the government is looking to strike a balance between complying with the Supreme Court order on AGR dues, ensuring health of the sector and safeguarding consumer interest, even as Bharti Airtel’s Sunil Mittal continued to seek prompt measures.

Vodafone Idea Ltd, the company that is said to be the most vulnerable following the apex court’s order, paid another ₹1,000 crore on Thursday, while Mr. Mittal’s Bharti Airtel promised to clear all dues, as per its calculations, “expeditiously” and before March 17 deadline.

But Mr. Mittal, who followed up his meeting with Finance Minister Nirmala Sitharaman on Wednesday with another one with Telecom Minister Ravi Shankar Prasad on Thursday, wanted the government to cut taxes for the health of the sector.

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12:40 PM

After Amazon, Flipkart challenges India antitrust probe

Walmart's Flipkart has filed a legal challenge against an antitrust investigation ordered against the company in India, a court filing seen by Reuters showed, following a similar petition by its rival Amazon.com Inc.

The Competition Commission of India (CCI) in January ordered a probe into alleged violations of competition law and certain discounting practices by the two e-commerce giants, but a state court put the investigation on hold last week following a challenge by Amazon.

Flipkart's legal filing was aimed at signalling the company is aggreived by the CCI's probe order, a person familiar with the matter said.

The filing comes days ahead of U.S. President Donald Trump's visit to India, and amid U.S. concerns about India's tightening of foreign investment rules for the ecommerce sector. Reuters

12:30 PM

Panasonic eyes 10% share in AC market

Panasonic is eyeing a 10% market share in air-conditioner segment on the back of a new range of products it launched on Thursday.

The firm wants to reach the target as early as possible from the existing 6%, said Gaurav Sah, business head, air-conditioning group of Panasonic India.

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12:15 PM

Coal supply by CIL to power sector declines 7% to 378 million tonnes

State-owned CIL’s coal supply to the power sector registered a decline of 6.8 per cent to 377.86 million tonnes (MT) in the the April-January period of the ongoing fiscal.

The commodity despatch by Coal India (CIL) to the power sector in the year-ago period was 405.61 MT, according to official data.

However, the coal despatch by CIL to the power sector in January registered an increase of 2.9 per cent to 43.20 MT, over 42 MT in the corresponding month of the previous fiscal, it said.

The supply of dry-fuel by Singareni Collieries Company Limited (SCCL), a state-owned coal miner, in the April-January period also registered a decline of 2.6 per cent to 44.03 MT, over 45.22 MT in the year-ago period. PTI

12:00 PM

Economy needs more monetary stimulus, says Shaktikanta Das

Reserve Bank of India (RBI) Governor Shaktikanta Das, stating he had observed certain ‘green shoots,’ also acknowledged that the economy needed a further monetary stimulus, thus indicating the central bank was open to cutting interest rates. These are the minutes of the monetary policy committee (MPC) meeting held early in February.

The six-member MPC unanimously voted for status quo at the February policy review on the back of an uptick in inflation. The MPC decided to continue with the ‘accommodative’ stance.

“While the macroeconomy needs further monetary stimulus, the inflation outlook continues to be uncertain,” said Mr. Das. The RBI had reduced interest rates by 135 basis points (bps) between February and October of 2019 before pressing the pause button in the next two policy reviews — in December and February 2020.

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11:45 AM

India hitting US “very hard” on trade; will talk business with PM Modi: Trump

India has been hitting the US “very hard” on trade for many years with high tariffs, according to President Donald Trump who said he will “talk business” with Prime Minister Narendra Modi during his first visit to the country.

President Trump and First Lady Melania are scheduled to travel to Ahmedabad, Agra and New Delhi on February 24 and 25.

“I’m going to India next week and we’re talking trade. They’ve been hitting us very hard for many, many years,” Trump said at a ‘Keep America Great’ rally in Colorado on Thursday.

Trump told thousands of his supporters that he “really likes” Prime Minister Modi and they would be talking business.

“We’ve got to talk a little...We’ve got to talk a little business. It’s been hitting us hard. They give us tariffs, one the highest in the world is India,” he said. PTI

11:30 AM

World’s second-biggest control centre for goods trains set to roll

The world’s second-biggest Operation Control Centre for goods trains, built in India by the Dedicated Freight Corridor Corporation of India (DFCCIL) is ready to begin operations, and is likely to be inaugurated by Prime Minister Narendra Modi at the end of this month, a senior company official said on Thursday.

The centre, built at Prayagraj in Uttar Pradesh, will be the ‘nerve-centre’ of the over 1,800 km-long eastern dedicated freight corridor, the corporation’s MD Anurag Sachan said on Thursday.

The control centre has a theater which measures 1560 sq m, with a video wall of more than 90 m and will be used as a one-stop shop for controlling and monitoring rail systems, including train operations and the power supply system.

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11:15 AM

Asian markets fall on fears over spreading virus

A spike in new virus cases outside China spooked Asian markets Friday after Wall Street pulled back from record highs as more companies warned earnings could be hurt by the epidemic.

More than 2,200 people have died from the novel coronavirus, which has infected over 75,000 people, mostly in China, and spread panic around the world.

While Beijing claims its epidemic control efforts are working, the rising death toll and number of new infections abroad have rattled investors.

A batch of warnings from companies over the impact of the virus on bottom lines -- including Danish ship operator Maersk and Air France-KLM -- also fanned anxiety and dented hopes it would have only a short-term impact on earnings and economic growth. PTI

11:00 AM

Axis Bank inks pact with Max Life to raise stake

Private sector lender Axis Bank is exploring the possibility of increasing its stake in Analjit Singh-led Max Life Insurance and has signed an agreement with the insurer and its parent Max Financial Services for the same.

“Axis Bank, Max Financial Services Limited (MFS) and its subsidiary Max Life Insurance Company Limited (Max Life) today signed a confidentiality and exclusivity arrangement to explore the possibility of Axis Bank entering into a long-term strategic partnership with Max Life,” the bank said in a statement.

Max Financial Services now holds a 72.5% stake in Max Life while Mitsui Sumitomo Insurance and Axis Bank hold 25.5% and 2% stake, respectively.

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10:45 AM

US urges Europe to exclude Huawei from 5G networks

A senior US diplomat said here that European nations and telecom operators should exclude Chinese tech giant Huawei from any involvement in the development of 5G networks.

“That 5G toolbox for the European Union (EU) says that a high—risk vendor should not be providing critical or sensitive components to these networks,” Robert Strayer, the US State Department’s Deputy Assistant Secretary for Cyber and International Communications and Information Policy, said at a forum in Madrid.

The EU guidance, he added, likewise says that “what had traditionally been viewed as the edge, the periphery, of the network will now have very important computing functions”, reports Efe news

“Even the edges of the network, where there’s computing going on, are going to be highly sensitive and those parts should not be provided by high—risk vendors,” Strayer said. IANS

10:30 AM

Govt may seek balance between SC order, telcos health

With the telecom sector reeling under severe financial stress and Vodafone Idea staring at bankruptcy in case it is made to pay its adjusted gross revenue (AGR) dues, the government is considering options to stick to the Supreme Court’s directive but with least possible impact on the financials of the stressed operators.

According to people in the know, the government will try to ensure that its action regarding AGR dues takes care of all the perspectives, firstly, compliance with the Supreme Court’s order, then, ensuring minimum impact on the health of the telcos along with making sure that the consumers are not impacted adversely.

The government, among other options, is considering to set up a fund to facilitate operations of telcos post the payment of their AGR dues, sources said.

According to sources in the know, the dues which have to be paid to the Department of Telecommunications (DoT) would have to be put in the telecom fund, and can then be lent to the companies at lower interest. This will allow companies to maintain their going concern status and continue operations without running to banks to raise funds. IANS

10:15 AM

India faces low downside risk, global coronavirus impact is buying opportunity: JP Morgan currency chief

India’s financial market faces low downside risk from coronavirus’ impact on supply chains, will instead continue trading on domestic triggers and the current global health scare represents a “buying opportunity”, according to Luis Oganes, JP Morgan’s head of currencies, commodities, and emerging market research.

“I would say that the things to watch are the turning point in the coronavirus episode, I think that it can lead to a big rebound in emerging market equities,” Luis Oganes told IANS in New York.

Oganes is predicting that the next few months are going to be “very interesting” for markets and recommending investors turn to local currency bonds. Emerging market central banks may cut interest rates further and the dollar will remain strong, he said. IANS

10:00 AM

ICRA revises outlook on Indian pharma industry to ‘negative’

Credit rating agency ICRA has revised the outlook on the Indian pharmaceutical industry from ‘stable’ to ‘negative’ as it does not rule out the possibility of lockouts in parts of China — due to the outbreak of COVID-19 — impacting profitability of drugmakers in India.

ICRA said the industry was highly dependent on imports. Over 60% of its active pharmaceutical ingredients’ requirement are met through imports and in some specific Active Pharmaceutical Ingredients (APIs) like cephalosporins, azithromycin and penicillin, the dependence is as high as 80-90%. Of the total imports of APIs and intermediates into India, China accounted for around 65-70%.

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9:40 AM

Oil falls as coronavirus spread beyond China heightens demand fears

Oil prices fell on Friday amid concerns over fuel demand as the coronavirus epidemic spread further beyond China, while major crude producers stood pat on any early action to cut output to support the market.

Brent crude was down 28 cents, or 0.5%, at $59.03 a barrel by 0332 GMT, while U.S. crude was also off by 28 cents, or 0.5%, at $53.60 a barrel. Reuters

9:30 AM

Financial markets to remain shut for Mahashivratri

Domestic stock, bond and forex markets will remain closed on Friday on account of Mahashivratri. PTI

9:15 AM

Three rating agencies downgrade Vodafone Idea in 2 days

Telecom major Vodafone Idea’s survival is under serious doubt as the company’s ratings have been downgraded by three major rating firms within a span of just two days. Shares of Vodafone Idea (VIL), however, closed 5 per cent higher at Rs 4.40 a share on the BSE.

After India Ratings, Brickwork Ratings and Crisil on Thursday downgraded Vodafone Idea’s rating on non—convertible debentures of Rs 3,500 crore citing lower likelihood of any relief from the government after the Supreme Court did not grant any relief in respect to the modification request filed by the telcos.

According to official sources, VIL paid Rs 1,000 crore to the Department of Telecom on Thursday. The company has dues worth Rs 53,000 crore, which includes up to Rs 24,729 crore of spectrum dues and another Rs 28,309 crore in licence fee. IANS

9:00 AM

Coronavirus impact: Durables, drugs, electronics to run out of steam with 70% import dependence, says Crisil

The coronavirus epidemic that has stalled large parts of China, if not contained quickly will jeopardise many domestic sectors which are heavily dependent on Chinese inputs warn analysts at Crisil. In terms of shipments from China, imports of solar panels stand at 75 per cent, bulk drugs ingredients 69 per cent, electronics 67 per cent and consumer durables 45 per cent being the worst hit.

The epidemic has already killed over 2,110 in China alone and infected close to 75,000 there, as 60 million Chinese are suffering from Beijing-ordered shutdown across more than two dozen cities.

However, though dependence is low in percentage terms, the consumer durables industry will be in trouble as neither it has the inventory nor the legroom to ramp up capacity in short time. PTI

8:45 AM

Economic activity remains weak: RBI rate setting panel minutes

Economic activity remains weak and high frequency indicators do not point to “bottoming out” of the downturn, the RBI Monetary Policy Committee noted while keeping the key interest rate unchanged earlier this month.

According to the minutes of the MPC released by the central bank on Thursday, member and RBI Deputy Governor Michael Debabrata Patra observed that economic activity remains weak.

”... there are indications of the momentum of growth stabilising, with sector-specific upticks underlying this guarded optimism, but they are far from gaining economy-wide traction. In some sectors, the slowdown is deep, and activity is stalled by sizable slack in demand. PTI

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Printable version | Apr 3, 2020 2:20:09 PM | https://www.thehindu.com/business/businesslive-21-feb-2020/article30877698.ece

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