QBiz:Yuan’s Devaluation, Posco’s 1st Steel Plant, Maggi Ban & More
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1.Posco to Set up 1st Steel Plant in India - TOI
The $2-billion Uttam Galva Group has roped in Korean giant Posco to set up an integrated 3 million tonne per annum steel manufacturing facility in Sindhudurg district of Maharashtra at a cost of $3 billion (Rs 19,000 crore). This will be Posco’s first steel plant in the country, with its plan to set up own greenfield unit in Odisha being delayed by almost 10 years due to environmental and land clearances.
It is also the fourth big investment announcement in Maharashtra in a week, and will be the Korean giant’s second facility in the state. Earlier this year, the company had inaugurated a state-of-the-art $709-million cold-rolling mill in Mangaon with a capacity of 1.8 mtpa.
Interestingly, another global steel major, Arcelor Mittal, has already acquired a stake in Uttam Galva Steels, the flagship of the Uttam Galva Group.
2.Devaluation of Yuan by China to Hit India’s Exports - Indian Express
The nearly 2 per cent devaluation of yuan, announced by China’s central bank on Tuesday — to support the country’s falling exports that fell 8.3 per cent in July — could not have come at a worse time for India, given that its overseas shipments had contracted for the seventh consecutive month in June its industries like steel and tyres are reeling under cheaper Chinese imports.
China devalued the yuan on Tuesday after a run of poor economic data, guiding the currency to its lowest point in almost three years. The central bank described the move as a ‘one-off depreciation’ of nearly 2 per cent. On Tuesday the yuan closed at 6.32 against the dollar, compared with Monday’s closing of 6.21.
The devaluation rocked the Indian currency market with the rupee plunging by 32 paise to close at nearly 2-month low of 64.19 per dollar amidst fears that the Chinese move will affect India’s export earnings and Indian firms operating in China.
3.Worst Over in Terms of Bad Loans: SBI Chief
State Bank of India reported a net profit to Rs 3,349 crore for the first quarter of FY16, a 10.3 per cent increase over the corresponding period last year. Announcing the results, bank’s chairman Arundhati Bhattacharya indicated that the worst was behind in terms of large bad loans and slippages are largely in small businesses.
The bank’s share price fell nearly 5 per cent to Rs 269 as it reported a contraction in margins following reduction in the Base Rate. SBI’s bad loans fell when compared to the corresponding quarter last year but were higher than the preceding quarter. According to Bhattacharya, there is a seasonal rise in bad loans in the first quarter every fiscal and a sequential comparison of number is not accurate.
“The fact that the economy is recovering is absolutely clear from the numbers,” said Bhattacharya. She added the recovery was not fully reflected in credit growth because the borrowing requirement for corporates, including oil companies, has come down because of the sharp fall in global commodity prices.
4.Maggi Ban: BJP-led Government Sues Nestle for Rs 640 cr - ET
The government has claimed damages of Rs 640 crore from Nestle India in the country’s top consumer court for alleged malpractices by the company in the sale and marketing of Maggi noodles, which were banned in India after some tests indicated the presence of harmful ingredients.
This is the first class action suit filed with the National Consumer Disputes Redressal Commission (NCDRC), consumer affairs ministry officials said. “Government can file a case on behalf of consumers. So we have filed a class action suit today in the NCDRC,” a senior official said.
Officials said the action was in the interest of Indian consumers, as Nestle had allegedly indulged in unfair trade practices, false labelling and misleading advertisements about the noodles.
5.Aion Cap, Apollo Global to Exit Avantha With Bumper Returns - ET
With money in the bank after selling his flagship CromptonBSE 0.03 % Greaves (CG) consumer electricals business, Gautam Thapar is taking out existing investors, offering a big payday.
Within a span of 19 months, marque private equity investors, Aion Capital Partners and Apollo Global Management, are set to exit their investments in Avantha Holdings, booking about Rs 550 crore in profits, said multiple sources aware of the matter.
With an eye to help Thapar deleverage his balance sheet and release pledged promoter shares, in December 2013, Aion and Apollo together had invested Rs 960 crore (about $150 million) in Avantha Holdings Ltd—holding company of the diversified Avantha Group, spearheaded by Thapar. The two had subscribed to a 5-year non-convertible debentures (NCD) issued by Avantha Holdings, returns of which were linked to CG equity performance.
6.India Inc’s Confidence in Modi Govt Waning: NCAER - BS
India Inc’s confidence of the Narendra Modi government might be waning, according to a survey by the National Council of Applied Economic Research (NCAER). The 93rd round of the survey, conducted in June 2015, also showed companies as being less optimistic about their business.
The Political Confidence Index (PCI), which tracks how companies view the governance pattern of the current ruling establishment, slid 17.7 per cent in the first quarter of FY16, compared to the previous quarter.
Business confidence came down at an ever faster pace in the first quarter of FY16. While the confidence index fell 11.9 per cent in April-June 2015 on a sequential basis, the same was down 15.1 per cent year-on-year.
The survey, which tracks 500 random firms from all industry segments in six major cities, showed all components of Business Confidence Index (BCI) register negative change between April and July 2015.
7.Drought Vulnerability a Challenge to India Ratings: Moody’s - BS
India may avoid drought this year, but its economy remains vulnerable to fluctuations in annual rainfall, a factor that continues to constrain the country’s sovereign credit, Moody’s Investors Service said on Tuesday.
But India’s vulnerability to drought will come down if the government’s efforts to improve infrastructure, food distribution and non-agricultural employment opportunities were successful.
“These efforts would also benefit India’s overall sovereign credit profile because they would lead to higher incomes, a stable and lower inflation, and a lower fiscal burden related to food subsidies,” it said a report titled ‘Vulnerability to Drought Poses Credit Challenges’.
“Although India may avoid drought this year, its economy remains vulnerable to future drought or fluctuations in rainfall, and its sovereign credit profile is more exposed to the negative effect of drought than those of most Baa-rated sovereigns,” Moody’s said in a report.
It currently rates India at ‘Baa3’, the lowest investment grade — just a notch above ‘junk’ status.
8.Indian Ultra HNHs Numbers Soar 17% to 137,100: Kotak Report - FE
Whatever the state of the economy for the rest of the population, the rich are certainly multiplying massively in India. The number of Indian ultra HNHs (Ultra High Networth Households) has increased by as much as 17 per cent to touch around 137,100 in FY15. The findings are part of the fifth edition of the Kotak Wealth Management ‘Top of the Pyramid’ report titled ‘Gliding on Optimism’.
Key Findings:
· Ultra High Networth Households (ultra HNHs) increase by 17 per cent to 137,100 in FY15 from 117,000 in FY14
· Equity exposure increased to 45 per cent in FY15 from 38 per cent in FY14; banking, infrastructure preferred sectors
· Business, real estate key investment drivers; commercial real estate preferred · Maximum spends seen in jewellery
· Majority of Ultra High Networth Individuals (ultra HNIs) prefer investment portals to track investments
9.Reserve Bank of India Hires ex-Nomura Algorithm Trader Gangadhar Darbha as Consultant - ET
The Reserve Bank of India (RBI), which frowns at algorithm trades and is averse to sophisticated financial products, has hired an algorithmic trader from Nomura Securities to spearhead the development of Indian financial markets with derivatives.
Gangadhar Darbha, a 45-year old executive director at Nomura Securities designing trading models for the Japanese investment bank for trading across markets, is being hired as a consultant to the central bank.
“He would not be on the rolls of the RBI, but will be a full-time consultant for a year,” said a person familiar with the hiring. “This could help him function freely and also avoid the lateral hire issue at the central bank.” An e-mail sent to the RBI late on Monday remained unanswered and Darbha could not be reached on his phone for comments. A friend of Darbha said he has put in his papers at Nomura.
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