Business Today 25-Feb-2018

A pre-Budget panel discussion held by Business Today had most panellists express the view that this Budget would be dictated more by political compulsions than economic logic. With the General elections a year away, and several states scheduled to hold elections in the current calendar year, the consensus was that the government would focus a lot on its agricultural and rural constituents, try to do something for SMEs, and was unlikely to keep to the fiscal deficit target given the revenue collection problems because of the roll-out of the GST. There was talk about whether the government could do anything about employment generation, with most panellists feeling that at best the Budget could give a little incentive to companies that were creating new jobs. Opinion was divided as to whether…

STAY CONNECTED WITH US ON www.facebook.com/BusinessToday@BT_India PERSPECTIVES Is Low Recovery Rate in Early Insolvency Cases a Cause of Worry? Many cases relating to non-performing assets of major companies are a kind of litmus test for the IBC. And the way they are resolved would reveal the effectiveness of the insolvency law. businesstoday.in/npa-insolvency.law Can Tatas Buyout Mistrys from Tata Sons? Mistry's SP Group, which is the single largest shareholder in Tata Sons, seeks board representation proportionate to its holdings. businesstoday.in/tatasons-mistry NEWS Selling IPL Ad Inventory Will Not be Easy for Star India Star India needs to earn ₹54 crore per match to breakeven its IPL spends and this revenue will certainly be a far-cry in the first season businesstoday.in/ad.inventory-starindia I-T Rule on Treating Discounts as Capital Expense Will Hit Small e-tailers…

For the first time in seven years, the central government will achieve its disinvestment target of ₹72,500 crore, thanks to a deal where public sector enterprise ONGC will pay it ₹36,915 crore to acquire 51.11 per cent equity stake in another public sector entity HPCL. Since both the companies are from the oil and gas sector, one focusing on exploration & generation and the other on refining and marketing, the deal could be a win-win for the companies and the government. Using public sector enterprises to generate revenues for the government – through higher demands for dividends, making them foot the bill for programmes that are of government’s (read political) interest, asking them to take up projects which no profit oriented private enterprises would dare to touch, etc – is…

MUKESH AMBANI has invested close to ₹2.35 lakh crore in building assets to make Reliance Jio’s digital business vertical on a par with refining or petrochemicals. The question, however, is whether Jio can deliver the sizeable cash flow that its sister businesses do? In the quarter ended December 2017, the refining business posted a profit before interest and tax of ₹6,165 crore and the petrochemical vertical ₹5,753 crore. Despite building up a subscriber base of 160 million and posting a whopping 38.2 per cent EBITDA margin, Jio showed a PBIT of merely ₹1,440 crore. Experts say even with double this subscriber figure, Jio won’t be able to generate a PBIT exceeding ₹3,000 crore. Jio posted its first quarterly net profit of ₹504 crore in the third quarter. Because of the…

WITH RBI HOLDING rates due to inflation concerns, promoters have been turning to share pledging to raise money. Data compiled for 2,400 companies shows that promoters of 630 companies pledged shares in Q3FY18. Of these, promoters of 71 companies pledged more than 95 per cent of their holdings. Though an effective source of finance, promoter pledging can lead to volatility in stock pricing when markets are down.Markets seem to be favouring companies whose promoters have reduced their pledging. Ninety companies whose promoter pledging (as a percentage of their total holdings) halved between Q3FY17 and Q3FY18 delivered an average return of 63.5 per cent (between Dec 30, 2016 and Jan 30, 2018). Average returns were more significant in companies whose promoters eliminated pledging in Q3FY18 compared to Q3FY17. The group includes…

The central government is sending mixed signals to the private healthcare industry. On one hand, it wants private hospitals and other stakeholders to play a major role in fulfilling the ambitious plans it has outlined in the National Health Policy (NHP) 2017. On the other, it is increasingly taking a tough stance against the prevalent pricing systems, since it can’t ignore the affordability factor. In fact, NHP rightly observes that the regulatory environment around pricing requires a balance between patients' concern for affordability and industry’s concern for adequate returns on investment for growth and sustainability. Several of the current interventions like capping of prices of certain medical devices and hinting at expanding the list to others, however, are more an irritant than a fruitful intervention to make healthcare affordable to…