QBiz: Rupee at 72; Jet Airways to Pay Salary in Instalments

Here are the top business stories of the day.

Reserve Bank of India (RBI). 

(File Photo: IANS)

1. Rupee Breaches 72 Mark Against Dollar for the First Time; RBI Intervenes

The rupee crossed the 72-a-dollar mark on Thursday, 6 September, but retreated on intervention by the Reserve Bank of India (RBI).

The currency fell to 72.07 a dollar in intra-day trade, but closed just below the 72-mark. Many economists who were critical of the RBI not intervening were coming out in support of the central bank’s hands-off approach, in view of the volatility in other emerging markets (EMs).

Currency dealers said the RBI had been intervening since Wednesday, 5 September, as rupee depreciation continued unabated.

“There is heavy dollar demand, but the RBI has started intervening,” said a senior currency dealer with a foreign bank.

Finance Minister Arun Jaitley said on Wednesday, 5 September, there was no need for a knee-jerk reaction because of the rupee movement.

(Source: Business Standard)

2. From 2019, Bengaluru International Airport to Launch Facial Recognition Facility for Passengers

Bengaluru International Airport said it plans to roll out facial recognition facility for the passengers of some select airlines from early next year as it seeks to make the boarding process paperless.

The private airport operator has inked a pact with the Lisbon-based digital and biometric solutions services provider Vision-Box to implement the technology, Bangalore International Airport (BIAL) said in a release.

The introduction of biometric self-boarding technology is aimed at transforming passenger experience and creating future-ready airport, it said, adding the move will also bolster government’s proposed DigiYatra project.

Biometric technology will identify passengers by their face as they move across the airport, avoiding stops and the repeated presentation of boarding passes, passports or other physical identity documents, the release said.

(Source: Financial Express)

3. Aurobindo Agrees to Acquire Novartis’ US Generics Business for $1 Billion

Aurobindo Pharma Ltd has agreed to buy the dermatology business and three manufacturing units of Sandoz, the generics unit of Swiss drug maker Novartis, for as much as $1 billion, the Indian company said, in a deal that makes it the second-largest maker of generic prescription drugs in the US.

An initial $900 million cash payment to the Basel-based Novartis could be followed by $100 million in performance-based payments. Aurobindo will finance the deal through a fully committed debt facility. The acquired business had sales of $1.2 billion in 2017.

The transaction, the largest outbound pharma deal by an Indian company, includes a portfolio of oral solid products, along with its commercial and manufacturing infrastructure, Aurobindo Pharma said in a statement on Thursday, 6 September.

The transaction will catapult Aurobindo to the second position in the dermatological drugs segment as well as the second-largest generics company in the US by prescriptions, said N. Govindarajan, managing director of Aurobindo Pharma.

(Source: Livemint)

4. IDBI Bank Drags Reliance Naval To NCLT For Insolvency Resolution

IDBI Bank Ltd has moved the National Company Law Tribunal against Reliance Naval and Engineering Ltd seeking debt resolution under the Insolvency and Bankruptcy Code.

The State-run lender filed an appeal with the Ahmedabad bench of the NCLT to seek debt arbitration against the shipbuilder, according to a stock exchange filing. A similar application was filed by another lender, IFCI Ltd, in November, which is pending admission.

The company’s debt stood at Rs 5,300 crore as of March, according to filings. Bankers, however, say that total dues are at about Rs 9,000 crore including principal and interest.

IDBI Bank has chosen EY as the interim resolution professional for Reliance Naval's insolvency process, a person close to the development told BloombergQuint.

Reliance Naval had offered a one-time settlement scheme to lenders as part of a resolution plan to be cleared before 27 August, according to a banker who is part of the 18-member lending consortium.

(Source: BloombergQuint)

5. India Sets a Goal of 15% Electric Vehicles by 2023 to Cut Fossil Fuel Use

India aims to have at least 15 percent of the vehicles on its roads to be electric in five years, an official said, signalling the government's wish to join a long list of countries around the world that are already seeking to cut fossil fuels aggressively.

“If at least 15 percent comes in the next five years, it will be useful for the country,” Transport Minister Nitin Gadkari said Thursday, 6 September, at a conference organised by the Society of Indian Automobile Manufacturers in New Delhi.

“This is a time for the country to think seriously about pollution.”

India has been a laggard in the global race toward electrification of automobiles, with no clear guiding policy unlike China, which has offered hefty subsidies and incentives to promote battery-powered cars in its efforts to reduce dependence on oil imports.

Prime Minister Narendra Modi’s administration had earlier expressed ambitions of achieving a target of 30 percent EVs by 2030.

(Source: Business Standard)

6. Digital Payment: Surprising Trends Emerge from Rural India

Digital payments in India have evolved into a multi-modal experience. In 2017, we had foreseen a shift of digital payments from physical cards and wallets to newer forms of payments such as Unified Payments Interface (UPI), BharatQR, Aadhaar Enabled Payment System, among others.

Of these, UPI has seen a dramatic rise as both new entrants (including technology giants) and incumbents alike have brought UPI offerings to the market. The biggest enabler of this being the implementation of Aadhaar, and that it is the common KYC document between telcos and bank accounts.

Trends notwithstanding, the current payment landscape is still evolving in the sense that there are multiple ways of payments, all seeking large-scale adoption.

The Indian economy has been dominated by cash. But the increased smartphone adoption and favourable regulatory policies have created the baseline infrastructure required for a leapfrog growth in digital payments—these have grown at a CAGR of 53 percent over the last five years, and expected to reach $1 trillion in value by 2023.

(Source: Financial Express)

7. Tata Housing Struggles to Put House in Order Amid Spate of Employee Exits

Tata Housing and Development Co Ltd is beset by employee exits as it attempts to consolidate and streamline its businesses and trim its residential portfolio, six months after Tata Sons announced its planned merger with Tata Realty and Infrastructure Ltd.

Over 100 employees have left the Mumbai-based Tata Housing since the 1 March merger announcement by Tata Sons’ chairman N Chandrasekaran. Others have been asked to leave on grounds of cost cutting and consolidation.

The Tata Group firm is undergoing an internal restructuring as part of a larger consolidation exercise, where real estate businesses of Tata Housing and Tata Realty were to be merged into a combined entity.

Six months after the company announced the merger, the merger process is yet to be completed.

Key management changes were made following the exit of Tata Housing’s former chief executive Brotin Banerjee in February this year.

(Source: Livemint)

8. Moody’s Unit Sees Caution in India Money Market on IL&FS Default

Investors may grow more cautious of buying money market funds after IL&FS Financial Services Ltd defaulted on its short-term borrowings, according to the Indian unit of Moody’s Investors Service.

IL&FS Financial Services couldn’t repay some of its commercial papers on due date, though the company later settled the debt on 31 August, an exchange filing showed on Thursday, 6 September. The default is likely to drive risk aversion among investors who have been piling into the commercial paper market as rising bond yields make long-term debt unattractive.

“In the near term, expect investors to look at the mutual fund scheme fact sheet more closely before taking investment decisions,” said Karthik Srinivasan, the Mumbai-based group head of financial sector ratings at ICRA Ltd, the local unit of Moody’s.

“While there would be more caution, we are not expecting commercial paper rates to rise or markets to dry up.”

(Source: BloombergQuint)

9. Jet Airways to Pay Salaries to Engineers, Pilots in Two Installments

Jet Airways will pay its pilots, engineers, and senior executives 50 percent of their salary by 11 September and the remainder by 26 August.

The airline's senior management has taken 5-25 percent pay cut but salary cuts for pilots and engineers were put on hold because of protests. The airline posted Rs 13 billion first-quarter loss amid increasing costs and pressure on revenue.

"The salary for general managers and above, cockpit crew and aircraft maintenance engineers shall be disbursed in two instalments... For the month of September and October the same disbursement schedule shall be followed,” the airline's chief people officer Rahul Taneja wrote in an email to employees today.

Salaries to all other employees were paid at the start of the month.

Jet Airways had a wage bill of over Rs 31 billion in FY 18. Pilots make up little more than 10 per cent of airline's 16,000 employee force but account for about half of its salary bill.

(Source: Business Standard)