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News digest: Karnataka results, PNB posts loss, Essar Steel bid, and more

It was clear from initial reactions in Bengaluru and Delhi that the BJP was not interested in tying up with the JD(S) to form a government at any cost

Business Standard 

BS News digest

1. Karnataka fate hangs in balance: BJP or Cong, who will have the last laugh?

Karnataka is headed for a spell of political instability as the Bharatiya Janata Party (BJP) emerged the single-largest party with 104 seats after the just-concluded Assembly elections, but could not reach the halfway mark of 112. The Congress, with 78 seats, acted with swiftness and agility, contacted the H D Deve Gowda-led Janata Dal (Secular), or JD(S), with 38 seats, offered the smaller party chief ministership and stitched up an agreement to forestall an understanding between the JD(S) and the BJP.

At the time of filing this report, Karnataka Governor Vajubhai Vala had remained non-committal on the claims of the parties, asking them to wait until the official tally is declared. Constitutional experts said the Governor was not obligated to call the single-largest party for a first stab at forming a government though the majority must be tested on the floor of the House. Read more...

2. Fraud-hit PNB posts biggest ever quarterly loss of Rs 134.17 billion in Q4

Scam-hit Punjab Bank’s (PNB’s) loss in the fourth quarter of 2017-18 has been the highest quarterly loss reported by any bank in India ever. This was owing to fraudulent loans worth Rs 143 billion issued to jewellery firms belonging to Nirav Modi and Mehul Choksi.

The Reserve Bank of India’s (RBI’s) new provisioning norms added to the bank’s woes as its net loss ballooned to Rs 134 billion in the March-ended quarter, compared to a net profit of Rs 2.6 billion in the year-ago period.

PNB had to make a provisioning of Rs 102 billion in its books on account of the RBI’s new stressed assets resolution norms and a sum of Rs 71.8 billion towards the fraud, which is half the amount involved in the scam. Read more...

3. pays Rs 70 billion to become eligible bidder for Essar Steel

has transferred Rs 70 billion to an escrow account of State Bank of India (SBI) owing to payment of outstanding dues relating to defaulting firms in a bid to become eligible for

Sources close to the development said a significant amount of around Rs 70 billion had been put into the SBI account with a proposal on escrow of the deposited funds. The move is said to be a demonstration of ArcelorMittal’s commitment to even though it believed it was an eligible bidder, they said.

A letter to this effect was sent to the committee of creditors (CoC) for on Tuesday. Lenders, however, said it was a conditional offer and was subject to being declared a successful and eligible bidder. Read more...

4. UPI transactions on a high: to ease e-payments on the cards

A new way to pay is around the corner. The Payments Corporation of India is toying with the idea of introducing sound-based payments as part of the Unified Payments Interface, it is learnt.

NPCI is currently in the process of testing sound-based payments with three companies: PhonePe, ToneTag and UltraCash. In the last six months, the pilots have moved from preliminary tests to proof of concept stage where banks are participating with their independent mobile wallet products to see how sound-based payments can be plugged in. Even as UPI has seen a steep rise in the value of transactions since August 2016, its efficacy as a payment medium for businesses is under test as merchants are still resisting it. Read more...

5. From HUL to Asian Paints, green shoots get stronger for consumer goods

The resurgence in the domestic market appears to be getting stronger by the day. A broader base of companies from Hindustan Unilever (HUL), Dabur, Emami, Bajaj Corp, Nestle, GSK Consumer, Asian Paints, and Godrej Consumer (GCPL) have reported good Q4 numbers, aided by a lower base as well as improvement in rural demand. While green shoots first began to show in Q3 of 2017-18, the base was smaller in number. This has clearly widened now.

HUL, the country's largest firm, beat street estimates Monday on all counts, with net sales and net profit up 11.1 per cent and 14.2 per cent, respectively. The company's volume growth came in at 11 per cent for the second straight quarter, pointing to a more sustained recovery in the market, Abneesh Roy, senior vice-president, institutional equities, Edelweiss, said. Read more...

First Published: Wed, May 16 2018. 03:13 IST