Top 10 business headlines: GDP estimates for Q1FY20, CG Power fiasco & more

From a probe at CG Power finding fraudulent related-party transactions to the IL&FS board seeking NCLT approval to sell 7 wind assets to Orix Corp, here are the top business headlines for Wednesday

1) Economists estimate GDP growth of 5.5-5.6% in Q1 FY20 amid slowdown 

Amid slowdown in various sectors, experts believe the Indian economy grew by 5.5-6 per cent in the first quarter (Q1) of the current financial year (2019-20 or FY20). The lower range of these projections means the economy has slowed further. In the fourth quarter (Q4) of 2018-19 (FY19), it grew 5.8 per cent. The higher range points to a slight recovery.

Growth was at a 20-quarter low in Q4FY19. GDP numbers for Q1FY20 are scheduled to be released on August 30. (Read more here) 

2) CG Power stock crashes 20% after probe reveals fraudulent transactions; MCA orders probe 

An internal probe initiated at CG Power and Industrial Solutions (CG Power), a company promoted by Gautam Thapar’s Avantha group, has unearthed multiple fraudulent related-party transactions, the company informed the exchanges. CG Power said it would start a detailed forensic investigation into the matter. The company’s stock crashed close to 20 per cent to Rs 14.80 soon after the revelations. 

At a 12-hour-long board meeting, which started on Monday afternoon and ended in the early hours of Tuesday morning, members of the company’s board discussed a risk and audit committee (RAC) report, which listed various irregularities. These included understated liabilities and advances at both the company and the group level. The report also said the net worth of the company had also been understated owing to unauthorised write-offs. (Read more here) 

CG Power and Industrial Solutions is under the lens of the Ministry of Corporate Affairs (MCA), which has ordered an inspection into the affairs of the company, said a senior government official. (Read more here)  

3) RoC told to put Airtel-Tata Tele merger on hold

The Department of Telecom (DoT) has asked the Registrar of Companies (RoC) in Delhi and Mumbai to "withhold any further action" with regard to the Bharti Airtel and Tata Tele merger because the department has "not given written approval yet" to the transaction, in a move that might delay the passage of the high-profile deal, the Times of India reported on Wednesday. 

4) DHFL resolution: Banks may convert debt into equity, says Union Bank

Resolving the crippled mortgage lender DHFL’s over Rs 90,000 crore debt is "not so easy" and banks are considering converting their outstanding into equity, Union Bank of India said Tuesday.

Rajkiran Rai, the managing director and chief executive for the state-run UBI, which is the lead-lender to the crippled housing financier, Tuesday clarified that if the banks take equity stake in the company, it will be for a short-term, which is till they get a suitor.

DHFL owes over Rs 45,000 to banks, and the rest to other financiers including mutual funds, pension funds and insurers, which are not regulated by RBI. (Read more here) 

5) Bharti Airtel may not buy 5G spectrum and 'expensive' 700 MHz airwaves

In the upcoming spectrum auctions, Bharti Airtel may not buy the coveted 5G spectrum and the “expensive” 700 MHz premium airwaves. It plans to bid for airwaves in the 800, 900, and 1800 MHz bands for which its licences have either expired or are about to expire. “Airtel’s spectrum licences in the 800, 900 and 1800 MHz bands have either expired or are expiring. The company would require more airwaves in those bands. It has informed the Union government (the Department of Telecommunications) about the same,” said a person in the know. (Read more here) 

6) Tata Group sets sights on five growth engines

Tata Sons, the holding company of the $110-billion group, has resolved the high leverage at its flagship companies and is now turning its focus towards funding growth across businesses, Chairman N Chandrasekaran told the Economic Times. According to the report, it has set a target of ensuring that at least five of the group's 10 verticals contribute 10-15 per cent each to the Tata Group's profits, while TCS contributes the bulk of the profits at present. 

7) IL&FS board seeks NCLT nod to sell wind assets to Orix Corp for Rs 4,800 cr

The IL&FS Board on Tuesday sought the approval of the National Company Law Tribunal (NCLT) to sell seven wind assets to Japan's Orix Corporation for Rs 4,800 crore, which will help reduce its debt burden of Rs 94,000 crore. Orix Corporation of Japan is already an equity partner in the group and owns 49 per cent stake in each of these seven operating wind power plants.

The seven wind power SPVs are Lalpur Wind Energy, Etesian Urja, Khandke Wind Energy, Retadi Wind Power, Wind Urja Indiae, Tadas Wind Energy and Kaze Energy. (Read more here)  

8) Eateries may quit Zomato, Swiggy over steep ad costs, deep discounts

Restaurants and food catering companies might soon quit platforms such as Zomato and Swiggy to save themselves from high advertisement costs as well as being an unwilling partner of deep discounting initiatives.

According to several restaurateurs, steep advertisement costs and deep discounting schemes run by several restaurants, including portals such as Zomato, Swiggy, are the main reasons for some of them to completely quit these platforms. (Read more here) 

9) One year on, Flipkart acquisition proves to be a mixed bag for Walmart

As Walmart completes one year of its acquisition of homegrown e-commerce major Flipkart, it has been a mixed bag for the world’s largest retailer.

Experts tracking both the firms say that while the Bentonville-headquartered company has brought in greater synergies leveraging the expertise of Flipkart group companies, the duo may not have been able to exploit the India potential fully. This is mainly due to regulatory hurdles and fierce competition from global rival Amazon. (Read more here) 

10) Temasek, TrueNorth-CPPIB seek to invest in Biocon arm  

Singapore's investment company, Temasek, and homegrown private equity fund, True-North, along with Canadian Pension Plan Investment Board (CPPIB), are in separate discussions to invest $300 million in Biocon Biologics India Ltd (BBIL) for a minority stake, the Economic Times reported on Wednesday, while citing people aware of the matter. The company is a wholly-owned subsidiary of Biocon Ltd.