Business Today 25-Aug-19

VG. Siddhartha’s apparent suicide and the purported suicide note sent shock waves through India’s business circles, especially in Bengaluru from where he operated. It also left a surfeit of unanswered questions – about the exact amount of debt he was reeling under, the value of his assets, the pressures from the private equity partner and his relationship with politicians. For a man who was excessively reserved and took great efforts to shun media publicity, his death has created exactly the kind of media spectacle he tried his best to avoid while he lived. Some of the answers will eventually come out – like the amount of money he had borrowed from various sources, which is currently difficult to fully collate because of the maze of private and public companies through…

STAY CONNECTED WITH US ON www.facebook.com/BusinessToday@BT_India NHB Directive on Subvention Schemes May Hit 10-20% Real Estate Sales The situation will get worse for the developers, who are already grappling with the liquidity squeeze caused by the NBFC crisis businesstoday.in/realestate-nhb Are Brands Overlooking the Silver Generation? Demographic projections show that India’s population growth will continue to slow rapidly over the next two decades – less than 1 per cent during 2021-31 and under 0.5 per cent during 2031-41 businesstoday.in/brands-silver.generation Time to Overhaul Mudra Scheme For many bankers, the new recommendation of giving collateral-free loans with a target is nothing but a risky proposition businesstoday.in/mudrascheme-npas NEWS VG Siddhartha’s Debt Pile May Have Peaked at Over ₹11,000 Crore, New Data Unravels The Coffee Day Enterprises stock has fallen 70 per cent from the…

THE PARLIAMENT RECENTLY passed amendments to the Companies Act that aim to strengthen laws that govern corporate social responsibility (CSR). It is now not only mandatory, like tax, there is also a regulator that will arm twist companies in case of non-compliance and penalise them, taking us back to inspector raj. Now, unspent CSR funds of that fiscal have to be transferred to an escrow account to be spent within the next three financial years. Any unutilised amount in the account will be transferred to a government fund. There are penal provisions for non-compliance of CSR provisions. Violation will lead to fines for the company and defaulting officers ranging from ₹50,000 to ₹25 lakh. Officers can also be imprisoned for up to three years. Such an approach will hamper companies…

RBI Governor Shaktikanta Das recently came down heavily on advanced economies for unilateral policies and the risk it poses for the world. Das advised emerging market economies to follow policies that promote macroeconomic and financial stability, while focusing on growth. His words, however, do not reflect ground reality. Are we doing enough for macroeconomic stability? The credibility of India’s GDP numbers is frequently challenged for ‘overestimation’ by economists. There are reports of the CAG putting India’s fiscal deficit at 6.1 per cent of GDP as against 3.4 per cent, in 2018/19. This includes off-balance sheet borrowings that the government is encouraging PSUs to do in order to meet capital expenditure needs. The higher fiscal deficit would create inflationary pressure. Also, a distorted macro picture influences policy in the wrong direction.…

HIGH FREQUENCY PMI data suggests that manufacturing is expanding but at a slower pace. The recent economic survey, too, hinted at subdued demand in textiles, iron and steel and auto sectors. The June quarter results mirror the same story. A total of 109 manufacturing companies have reported a 21 per cent drop in profit in Q1FY20 on mere 7 per cent rise in sales. Labourintensive textile and discretionary sector auto have been worst hit with sales dropping 16 per cent and 7 per cent, respectively. A 27 per cent drop in Maruti Suzuki’s profit for the quarter or flat profit growth by Bajaj Auto speaks volumes about the slowdown. A total of 23 chemical firms have reported a mere 5 per cent rise in sales but flat profit. With electioninduced slowdown…

AMID TALK about recent amendments in the Insolvency and Bankruptcy Code, what got missed was the fight over authority between the judiciary and the government, an issue on which the latter seems to have prevailed. The amendments have overturned two important orders passed by the National Companies Law Appellate Tribunal (NCLAT) in the Essar Steel insolvency case. The position that emerged from the orders was that financial and operational creditors must be given similar treatment, which means both taking similar haircuts, and that the Committee of Creditors (CoC) has no role in distribution of proceeds of the resolution plan among financial and operational creditors. The amendments proposed by the government contradict the NCLAT positions on both counts. It says the CoC has the final say in commercial consideration in the…