Top 10 biz headlines: Setback for Tata Motors, ArcelorMittal & more

From Tata Motors' Q1 loss nearly doubling to TPG Capital and Advent International being in talks to infuse funds in YES Bank, Business Standard brings you the top 10 business news of the day

1) Tata Motors Q1 loss nearly doubles to Rs 3,680 cr on lower JLR sales

Tata Motors did far worse than expected in the June quarter, with a consolidated loss of Rs 3,680 crore.

Most brokerages had expected a loss of around Rs 2,000 crore. This is its fourth loss in five quarters, with sales volume down 21 per cent over the year-ago period.

A high cost base and negative operating leverage, coupled with rising levels of competitive intensity across markets, led to the disappointment. The volume decline was led by the China unit of Jaguar Land Rover (JLR, the Britain-based subsidiary of Tata Motors), where it fell 29 per cent. China is one of the biggest and most profitable markets for JLR; it accounted for 19 per cent of volume in the quarter. (Read more here)  

2) NCLT approves Patanjali's revised Rs 4,350-cr bid to take over Ruchi Soya

After a protracted battle, the NCLT Thursday finally cleared the Rs 4,350-crore bid by yoga- exponent Ram Dev-run Patanjali Ayurved to take over edible oil player Ruchi Soya, which owes over Rs 9,345 crore to the lenders and around Rs 2,800 crore to other creditors.

The NCLT approval comes after it dismissed the petitions filed by Standard Chartered Bank and Singaporean lender DBS, which had both challenged the low bid by Patanjali and the resultant lower payout. (Read more here)  

3) Bank lending to NBFCs set to gather pace: RBI Governor Shaktikanta Das

The fund crunch at non-banking financial companies (NBFC) must come to an end now with the government’s reassurance in the Union Budget and the Reserve Bank of India’s (RBI’s) massive liquidity infusion into the banking system, says RBI Governor Shaktikanta Das.

Though banks will still need to carry out their own risk assessment of such borrowers, the central bank has extended a helping hand by sharing the requisite information about large NBFCs, he adds. (Read more here) 

4) Monsoon delay hits sales of agri input companies in June quarter

Sales of seeds and agrochemicals were muted in the April-June quarter for agricultural input companies, due to the delay in rainfall.

Bayer CropScience reported a 20 per cent decline in revenue to Rs 663.6 crore from the corresponding period last year. Profit before exceptional items and tax fell 49 per cent to Rs 117.4 crore.

“The late onset of monsoon and delayed kharif sowing resulted in deferment of product placement in the market, which impacted our Q1 (financial year’s first quarter) results. While the rain deficit has reduced in July and would support improved sales growth in Q2, significant delays continue in some areas of western and southern India, which could impact our results,” said D Narain, vice-chairman. (Read more here) 

5) Setback for ArcelorMittal: Caymans court denies freeze on Essar Global Fund 

In a setback to ArcelorMittal, the Grand Court of Cayman Island has declined its plea for a 'Garnishee Order' and a 'Freezing Injunction' against Essar Global Fund Ltd, the parent firm of Essar Group of companies, for recovering a $1.5 billion arbitration award.

ArcelorMittal has mounted legal battles against the Ruia family in multiple countries in an effort to enforce a $1.5 billion US arbitration award it had won in December 2017 on an Essar Steel Minnesota's terminated iron-ore pellets supply contract to ArcelorMittal USA LLC (AMUSA).

But Essar Steel Ltd, which had assumed the liabilities of the US contract, has said it could not pay. It now has less than $2.5 million in assets. (Read more here) 

6) Blackstone stitches up $250-mn investment in Biyani's Future Lifestyle Fashions 

World's largest private equity firm, Blackstone, has stitched up a $250-million investment in Kishore Biyani's Future Lifestyle Fashions (FLFL), which owns retail chains Central and Brand Factory, along with several clothing brands, the Economic Times on Friday reported, while citing sources aware of the transaction. 

According to the report, the primary infusion of capital would be done through a combination of equity and structured debt, which would fund the capital expansion of Biyani's deep-discount retail format Brand Factory and improve his promoter-level leverage. The report added that the company's board was meeting on Friday to finalise the terms, following which an announcement was expected.  

7) VC funds set to pocket $2.5 bn from part-exits

Venture capital funds are set to pocket returns of more than $2.5 billion by selling a portion of their stake in a number of India's hottest start-ups, the Economic Times on Friday reported, while citing sources aware of the transactions. 

According to the report, Accel Partners, Chiratae Ventures, SAIF Partners, Tiger Global, Lightspeed Venture Partners and Nexus Venture Partners are among those earning handsome returns by selling their stakes in firms like Oyo, Byju's, PolicyBazaar, Book-MyShow, Freshworks, Lenskart, Delhivery and Swiggy.  

8) TPG Capital, Advent International in talks to infuse funds in Yes Bank

Advent International Corp and TPG Capital's Indian private equity arm are among institutional investors that will infuse fresh capital into Yes Bank, LiveMint on Friday reported, while citing two people aware of the ongoing discussions. 

The people told the financial daily on condition of anonymity that the amounts to be invested were being negotiated at present. "TPG and Advent International are the front runners. They will most likely invest around $350 million each," said one of the two people, according to the report. 

9) Bond yields surge on buzz that PMO is opposed to sovereign bonds

Bond yields spiked up to 10 basis points (bps) on Thursday on news that the government could be dropping the idea of a sovereign bond issued in foreign currency. Subhash Chandra Garg’s transfer to the power ministry, from being economic affairs secretary, also fuelled the speculation, even as there was no official announcement on this.

Now the plan could be to raise rupee-denominated bonds. According to a report by news agency Cogencis, the Prime Minister’s Office (PMO) has asked the finance ministry to issue rupee-denominated bonds, instead of foreign currency bonds. The agency quoted an anonymous source saying the decision was taken after stakeholder feedback following the Budget. This would eventually mean that the dynamics of the borrowing would be very similar to what the local bond yields determine. (Read more here)

10) New residential real estate likely to come with cheaper price tags

New launches in the residential real estate segment could be cheaper and unit areas, too, could be smaller, keeping ticket sizes low, experts say.

The recent diktat from National Housing Bank (NHB) — asking housing finance firms to desist from offering loans products that involve servicing of the dues by builders on behalf of borrowers — is going to make financing for developers more expensive (interest rates for homebuyers is less than that for developers), and, in turn, have an impact on launches. (Read more here)