Top 10 biz headlines: RBI helps govt on fiscal deficit, IndiGo AGM & more

From RBI's surplus transfer helping the govt contain fiscal deficit at 3% of GDP in 2019-20 to India's leading PSUs facing financial headwinds, here are the top business headlines for Tuesday

1) RBI approves a record Rs 1.76 trillion surplus transfer to government

The Reserve Bank of India (RBI) on Monday decided to transfer a record Rs 1,23,414 crore of its surplus to the central government for the fiscal year 2018-19 or FY19 (July to June), and an additional Rs 52,637 crore of excess provisions as recommended by the Bimal Jalan committee on Economic Capital Framework (ECF).

The surplus transfer, commonly called “dividend”, is almost double the previous record of Rs 65,896 crore. In the previous year, the RBI transferred Rs 50,000 crore, while in 2016-17, the dividend was only Rs 30,659 crore because of demonetisation. (Read more here)

2) Govt may contain fiscal deficit at 3% in FY20 after RBI's surplus transfer

The government may be able to contain its fiscal deficit at 3 per cent of gross domestic product (GDP) in 2019-20 (FY20) following the Reserve Bank of India (RBI)’s surplus transfer, a top government official said on Monday.

“The government will be able to reduce the fiscal deficit by 0.3 percentage point this fiscal year thanks to the RBI’s transfer of Rs 1.76 trillion,” the official said, requesting anonymity.

Alternatively, the government may use the surplus funds to provide a stimulus package to revive economic activity — a step it resisted from taking when Finance Minister Nirmala Sitharaman announced a slew of measures to boost the slowing economy on Friday. (Read more here) 

3) Govt starts process to cut stake in state-run firms

The government has commenced the process of diluting its stake in state-run firms below 51 per cent and has identified close to a dozen companies for implementing its Budget announcement, the Times of India reported on Tuesday.  

The report said that the department of public investment and asset management (Dipam) is working to float a discussion paper that will consider the pros and cons of the move and chalk out a strategy for rolling out the plan, which is expected to account for a significant share of this year's target from asset sales -- estimated at Rs 1.05 trillion. 

4) India's leading PSUs stare at weak balance sheet and rising debt

India’s leading public sector undertakings (PSUs), which form the backbone of the country’s infrastructure, are facing financial headwinds themselves.

Most of the large non-financial PSUs are in stress either because of poor demand in their industry or because of the financial burden imposed on them by the government’s disinvestment programme. While the former is causing financial grief to PSUs in the capital goods and metals space such as Bharat Heavy Electricals (BHEL) and Steel Authority of India (SAIL), companies such as Oil and Natural Gas Corporation (ONGC) made fresh borrowings to acquire another PSU, Hindustan Petroleum Corporation. (Read more here) 

5) Cookie demand grows while biscuit sales slow

If biscuits are a proxy for consumption in the country, the trend would diverge depending on who buys them -- city dwellers are eating more cookies these days, while rural India has gone easy on them, the Economic Times reported on Tuesday, citing a report. 

According to the financial daily, Nielsen said in a recent report that the overall fast-moving consumer goods slowdown was largely led by rural markets and smaller firms with annual sales of less than Rs 100 crore. "While value categories or small packs are seeing a decline, there has been no issue in consumer demand for premium sub-segments and bigger packs in biscuits, which are still growing," said Mayank Shah, category head at Parle Products. 

6) Rahul Bhatia may show strength at IndiGo AGM today; Rakesh Gangwal to skip

Rahul Bhatia, promoter of IndiGo, is expected to use Tuesday’s annual general meeting (AGM) as a show of strength to assure minority shareholders that all was well with the country’s largest airline. This follows recent allegations of poor governance standards by co-promoter Rakesh Gangwal, who had compared IndiGo with a paan ki dukaan (betel shop). Gangwal, who lives in the US, will not be present at the meeting being held in New Delhi. At the AGM, IndiGo, through an ordinary resolution, will seek reappointment of M Damodaran as chairman of the company’s board for another five years. (Read more here) 

7) Jet Airways crisis: Lenders extend expression of interest deadline again

Jet Airways lenders on Monday decided to extend the deadline for submission of the expression of interest (EoI) to August 31.

South America-based Synergy Group Corp had expressed interest in Jet last week and now the deadline has been extended to give another opportunity to a potential investor. The airline’s resolution professional is in talks with the new suitor, which has shown genuine interest in the defunct airline, said people in the know. (Read more here)

8) Reversing revenue fall top priority for new Voda Idea CEO Ravinder Takkar

Ravinder Takkar, an old hand at Vodafone Group who has served across the globe, has taken charge of operations of the beleaguered telecom major at a time when it is struggling to arrest its revenue fall, loss of customers and allay investor concerns as its stock continues to be bearish. Vodafone Idea’s stock has fallen over 82 per cent since the merger in August last year.

Sources indicate that there is no major plan to move away from the 'five pillar' strategy the company had adopted around the time of the merger. Instead, it would focus on executing it better. (Read more here) 

9) Embassy Group forays into co-living space, plans to build 20,000 beds

Real estate major Embassy Group on Monday announced its foray into co-living space under EPDPL Co-Living brand and said it would operate more than 100,000 beds in the next five years.

To begin with, the company will build 20,000 beds on its existing land portfolio. It will target students and working professionals in organised Grade A business parks across major cities. The official brand launch is planned by the end of 2019 with a flagship project in Bengaluru, followed by Pune. (Read more here) 

10) Spectrum auction: Govt sets 5G ball rolling, calls bids for auctioneer

The Union government set the ball rolling for the upcoming spectrum auctions on Monday by inviting bids for selection of agency to conduct the airwave sale in various bands, including 5G, by the end of the year.

Issuing notice for request for proposal (RFP) or tender document, the Department of Telecommunications (DoT) said the deadline for submission of bids would be September 25. “Usually from the date of selection of the auctioneer, it takes about 60-90 days for the auctions to commence,” Rajan S Mathews, Director General, Cellular Operators Association of India, said. (Read more here)