Edition 4

October 29,2018

Weekly newsletter

Tata Sons writes off entire Rs

28,651 Cr investment in Tata
Teleservices
According to a regulatory filing, Tata Sons
has written off its entire investment of ₹
28,561.69 Crore in loss making telecom arm
Tata Teleservices. Tata Sons is in the process
of transferring the consumer mobile
business of Tata Teleservices to Bharti Airtel
and separating the enterprise segment to
merge with the group’s networking arm Tata
Communications. The effect of this
impairment was reflected on Tata Sons’
consolidated net profit which dropped to ₹
4,379 Cr at the end of 2017-17 from ₹
18,432 Cr in 2016-17. Whereas on a
Eminent Personality standalone basis the net profit of Tata Sons increased by 6%.
Teleservices suffered a jolt after its three licenses were cancelled
by the Supreme Court in 2012 for irregularities in spectrum
allocation to the company and several other new entrants.
Following the development, Tata Teleservices ran into a tussle
with its partner NTT Docomo which decided to withdraw its
investment in the telecom firm. After which Tata Teleservices
Govindram Seksaria became subsidiary of Tata Sons from an associate firm. The
(1888 – 1946) heavy tariff war triggered by the entry of Reliance Jio in 2016 led
-Cotton King of India.
to Tata Sons signing a pact with Bharti Airtel to hive off consumer
-Founder of Indian Stock
mobile business of Tata Teleservices without any debt transfer to
Exchange and member
Airtel. After Chandrasekaran took over as chairman in 2017, he
of following boards:-
has urged group’s chief executives to focus on core businesses in
a)Marwari Chambers of
Commerce
the domestic Indian market and cut down on small, un-scalable
b)The Bombay Bullion businesses and subsidiaries. Tata Sons is talking tough on
Exchange performance and capital allocation, aiming for better returns on
c)The Bombay Seeds capital employed. Tata Sons is the parent of more than 100
Brokers Association group companies that make products ranging from steel to salt,
d)The Indian Merchant with their combined annual revenue exceeding $100 billion. The
Chambers subsidiaries pay dividend to the holding arm.
-Founder of Bank of
Rajasthan
RBI to inject Rs 40,000 cr into banking system via OMO
The Reserve Bank of India has decided to inject ₹ 40,000 Cr into the
system in November through Open Market operations by purchasing
government securities. After injecting ₹ 36,000 Cr for October, RBI has
taken this step to meet the festive season demand for funds. The banking
system has been witnessing deficit for the past three weeks with the daily
deficit moving around from ₹ 87,500 Cr to ₹ 1 lakh Cr as per data from
India Ratings. Various factors like cash withdrawals due to festive season,
monthly outgoes of taxes( Excise, GST), RBI’s currency intervention with
central bank’s dollar sales have led to the varying liquidity in the system.
Apart from this OMO by RBI, as much as ₹1.80 Lakh Cr worth of
CPs(Commercial Paper) are likely to mature in November.
Seed stage funding falls 20%, late Bank Credit Growth Jumps to
stage funding grows 259% 14.35% ,a four year high.
Un-till September 2018, startups High bank credit growth rose to 14.35
have witnessed a fall in seed stage percent for the fortnight ending Oct. 12,
funding by 20.9% to $151 mn and 2018, a 4 year high as strains in the
domestic debt market pushed borrowers
growth in late stage funding by 259% back towards the banking system. Tight
to $3 bn. As per the Nasscom liquidity conditions and risk aversion in
president, Debjani Ghosh, this fall the market has pushed up rates in the
may kill innovation so it is important debt market benefitting the banks. Credit
to think of an alternative. Investors spreads have widened 30-50 basis points
are looking for mature companies over the past one month, according to
with proven track records and Edelweiss Research. One year AAA-rated
corporates are raising funds at close to
consolidation of companies to invest. 8.9% compared to 8.6% earlier.
Big pharma companies set to return Falling Rupee might boost up
to double-digit growth: Crisil Inbound Remittances to Record
After two consecutive years of single- Tempted by the sharp slump in rupee
digit expansion, big Indian drug firms are against the dollar, Indians living overseas
expected to return to double-digit growth might boost remittances to a record,
in the current fiscal aided by recovery in helping reinforce nation's efforts to
US. This would help the homegrown support Asia’s worst-performing major
pharma companies, with turnover of Rs currency. According to EbixCash, India is
1,000 crore or more, to weather a sharp expected to receive remittances of about
rise in input costs. As per Crisil, green $76 billion in 2018, 10 percent more than
shoots are already visible in the first in the previous year. The current-account
quarter for 20 of these listed drug- deficit can be sustained by flows from an
makers, which account for three-fourths estimated 20 million nationals working
of the pharma industry revenue. abroad.