Top 10 business headlines: Core sector growth slump, CSR fears & more

From govt softening stance on time frame for transition to EVs to CCD board probing V G Siddhartha's transactions, here are the top business headlines on Thursday

Illustration: Ajay Mohanty

1) Core sector growth at 50-month low in June; 4 out of 8 sectors contract

Growth in the eight core sectors of the economy collapsed to 0.2 per cent in June — a staggering 50-month low — dragged down by major contraction in the energy segment and weak performance across industries.

The data released by the commerce and industry ministry on Monday showed that coal, crude oil, natural gas, refinery products, fertiliser, steel, cement, and electricity industries saw the rate of growth take a sudden hit in June after a slight dip in May when it was 4.3 per cent. Four of the eight industries making up the core sectors, which contribute almost 40 per cent to the country’s total industrial production, registered a contraction in the month. (Read more here)   

2) US Fed cuts interest rate by 25 basis points; first cut since December 2008

The Federal Reserve cut interest rates on Wednesday for the first time since 2008, citing concerns about the global economy and muted US inflation, and signaled a readiness to lower borrowing costs further if needed.

Financial markets had widely expected the quarter-percentage-point rate cut, which lowered the US central bank's benchmark overnight lending rate to a target range of 2.00% to 2.25%. (Read more here

3) Govt softens stance on time frame for transition to electric vehicles

The government seems to have softened its stance on the time frame for transition to electric vehicles (EVs).

The Ministry of Heavy Industries, the Ministry of Road Transport and Highways, the power ministry, and the NITI Aayog — tasked with the policymaking and implementation of the government’s e-mobility plan — have extended an olive branch to the beleaguered automobile industry by agreeing to a “softer, pragmatic, phase-wise approach”. Under the revised plan, highly-polluted urban cities will be targeted first. (Read more here)

4) India Inc worried over three-year jail provision for violation of CSR norms

Corporate India is worried over mandatory spending on corporate social responsibility (CSR) under the new amendments to the Companies Act, which now provides for a three-year jail term if the new CSR norms are not followed.

“We had not anticipated penal provisions. Equating unspent amount to a criminal offence is a harsh step. This is an indication that we are focusing on spending rather than the outcome,” Rumjhum Chatterjee, chairperson-national committee of CSR, Confederation of Indian Industry, told Business Standard. (Read more here

5) CCD board to probe Siddhartha's transactions, plans to monetise assets

The board of Coffee Day Enterprises on Wednesday decided to probe the past financial transactions allegedly made by V G Siddhartha, apart from evaluating various options to deleverage the balance sheet.

A letter purportedly written by the founder chairman days before his death had said his team, auditors, and senior management were “totally unaware” of his personal financial transactions. Siddhartha’s body was found on Wednesday on the banks of the Netravathi river in Karnataka, with police saying it appeared to be a case of suicide. (Read more here

6) Siddhartha's family may accelerate CCD sale process; Coke already in talks

The family of V G Siddhartha, the founder of Café Coffee Day (CCD) who was found dead on Wednesday after going missing on Monday in Mangaluru, may accelerate the process of finding buyers for the retail chain. Coca-Cola, the world’s largest beverage maker, is already in the fray, persons in the know said. Some names of interested players doing the rounds include Tata Global Beverages and Jubilant FoodWorks.

Mails sent to the two companies elicited no response till the time of going to press. Coca-Cola declined comment. (Read more here

7) Invesco Oppenheimer buys 11% of Essel group's stake in ZEEL for Rs 4,224 cr

Putting all speculation to rest, the Subhash Chandra-led Essel group on Wednesday said it had offloaded 11 per cent of the nearly 36 per cent promoter stake in Zee Entertainment Enterprises to existing investor Invesco Oppenheimer for Rs 4,224 crore.

The deal, at Rs 400 per share, values Zee at a premium of 10.6 per cent over the current market price and will be used to pay off part of the promoter-level debt, which stands at Rs 11,000 crore. On Wednesday, Zee closed trade at Rs 361.45 per share, down 5.18 per cent over the previous day’s close on the BSE. (Read more here)

8) Tale of 2 PSUs: It's at least an 18-month wait before BSNL, MTNL are merged

Mahanagar Telephone Nigam (MTNL) will have to wait for at least 18 months to become a part of Bharat Sanchar Nigam (BSNL) as a joint panel will decide the fate of the two PSUs, post merger.

The joint committee will have representatives from both the companies and the department of telecommunications (DoT). It will deliberate on the outstanding human resource issues of the two sick public sector units, it is learnt. (Read more here)

9) Banks go slow on lending to auto dealers

A number of banks are concerned over a build-up of stress in their loans to automobile dealers and might proceed cautiously, even slowing down on disbursements, as the automobile sector faces its worst sales slowdown in more than a decade, the Economic Times reported on Thursday. 

According to the report, experts estimate that the total outstanding loans to automobile dealers are in the range of Rs 70,000-80,000 crore. 


10) NBFC top execs move out to join banks, fintech

As the non-banking finance sector reels under a liquidity crunch, several senior professionals in the space have quit over the past year, while hundreds more are on the lookout for job openings elsewhere, reported the Economic Times on Thursday. 

The report said that the departures have halted the trend of banking talent moving to non-banking financial companies (NBFCs). Many top-tier executives, including CXOs, have already moved back to or are searching for safer avenues in fintech, banking, financial services and insurance, entrepreneurship and consulting or bigger, better-capitalised NBFCs, the report added, citing at least half-a-dozen hiring firms.