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Bankers told to back stalled realty projects

Giving a fillip to the realty sector, Union Finance Minister Piyush Goyal on Thursday asked the bankers to meet realtors and loosen their purse strings to ease the sector’s funding problems.

“There is a real problem (being faced by the realty sector),” Piyush Goyal said in his address at a CREDAI event.

The minister asked state-run banks to meet realty sector representatives to discuss stalled projects in two weeks. On the other hand, he asked the realtors not to over-leverage loans and drive away the banks from lending to them.

Goyal said the government is considering giving relief to the real estate sector and the next GST Council meeting could take some steps to address their issues. SBI chairman Rajnish Kumar was also present at the event.

The minister also advised the realty sector to sell off inventory even in the current pricing about which the realtors complain as being low. He had been asking banks to step up lending to the housing sectors.

Goyal also assured that Goods and Services Tax (GST) rates would be brought down soon for the sector, which has been pending since a long time.

“I hope you will like the final consensus of the GoM. In the next meeting of the GST Council, it would be discussed,” he said.

A state ministerial panel last week favoured lowering GST on under-construction residential properties to 5 percent from 12 percent currently. It also favoured slashing GST on affordable housing from 8 percent to 3 percent. However, he hinted that it might be without input tax credit.

Jet Airways okays banks’ proposal for debt resolution

Private carrier Jet Airways, struggling to find a way out of its huge debt, on Thursday said its board has approved a bank-led debt resolution proposal, which would see lenders becoming the largest shareholders in the company. The company had already called for shareholders’ meeting on February 21, to seek approval for conversion of debt to equity and increase in equity base.

Allotment of shares to the banks/lenders would be done at a consideration of Rs 1, and banks’ appointment of nominees on the board of Jet Airways would be done as per the Reserve Bank of India, it said in a press release. “Such allotment/ conversion of Lenders’ debt to equity shares of the Company will be made at an aggregate consideration of INR 1, in accordance with the RBI Circular, whereby Lenders can convert debt to equity at INR 1, when the book value per share of a company is negative,” the airline said.

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The Bank-led Provisional Resolution Plan (BLPRP) under RBI’s February 12 circular proposes restructuring to meet a funding gap of nearly Rs 8,500 crore, including the proposed repayment of aircraft debt of Rs 1,700 crore by an appropriate mix of equity infusion, debt restructuring sale/ sale and lease back/ refinancing of aircraft, among other things, Jet said.

Leading lender State Bank of India could swap its loans for equity stake of at least 15 percent in Jet Airways and Eithad could take its equity up to 40 percent, bringing in additional funds, it is reported earlier. The restructuring, it had said, could take promoter Naresh Goyal’s stake down to 20 percent from 51 percent at present.

Jet Airways missed interest and principal instalments due on December 31, 2018, due to cash flow mismatches, leading to ratings downgrade and quick rush by the bankers and promoters to find a debt resolution. Ratings firms ICRA said Jet has large debt repayments due. A due of Rs 1,700 crore is scheduled over the December 2018 to March 2019 period; Rs 2,444.5 crore is due in FY20 and Rs 2,167 crore in FY21.

Meanwhile, Jet posted a net loss of Rs 732 crore for the third quarter of FY19 compared to a net profit of Rs 186 crore a year ago, on higher fuel and other expenses. Total revenue was flat at Rs 6,411 crore.

ONGC profit jumps 65 percent in Dec quarter

State-run Oil and Natural Gas Corporation (ONGC) on Thursday reported a nearly 65 percent jump in net profit for the quarter ended December 31 compared to the same period of the previous year, with higher oil prices offsetting a fall in production. The company recorded a net profit of Rs 8,262.70 crore against Rs 5,014.67 crore the previous year.

According to the oil and gas major, it realised $66.38 for every barrel of crude oil it sold in the quarter, 13.6 percent higher than $58.42 per barrel realised during the same period of the previous year. Gas prices, meanwhile, were a whopping 163 percent higher during the quarter compared to the previous year.

Revenue from operations rose to Rs 27,694.09 crore from Rs 22,995.88 crore, but crude oil production dropped 4.8 percent while gas output rose 6.6 percent.

HSBC tells large cash usage in informal economy, SBI research differs

India’s Currency is Circulation (CIC) is showing disparate trends of late. While a recent note by HSBC narrated the large cash usage in informal economy, SBI Research on Thursday argued otherwise. It further suggested that money isn’t effectively being circulated in the economy.

According to SBI, going by the trend growth, currency is short by at least Rs 1.5 lakh crore, negating arguments of cash aggressively financing informal activities.

Even though CIC expanded, income velocity of money, or the rate at which we spend money, plunged, indicating that it isn’t getting adequately circulated.

For instance, in FY18, circulation of Rs 200 and other smaller denominations increased manifold, altering their demand to possibly substitute larger notes, particularly with Rs 2,000 note printed put on hold for now. In other words, to sustain a transaction of same amount, volume of currency notes goes up and by default, the value of CIC.

More smaller denomination currencies are printed to ensure we don’t renege on economic activity.

“This paradox is often missed out by many, leading to erroneous conclusions of using CIC as a leading indicator of heightened economic activity, specifically the narrative of large cash usage in informal economy,” Dr Soumya Kanti Ghosh, Chief Economic Advisor, SBI Research, noted.

Sans demonetisation, CIC by March 2019 would have been Rs 22.45 lakh crore or 11.9 percent of GDP, against Rs 20.4 lakh crore as on January 2019. It is likely touch Rs 20.9 lakh crore or 11.1 percent of GDP by March 2019. Consequently, there will be at least Rs 1.5 lakh crore lower CIC compared to the trend.

After a spike during demonetisation, income velocity of money fell to 9.5x (x=nominal GDP/average CIC) in FY18 from 12.1x in FY17 and may reduce further to 9x in FY19.

The decline indicates that increasing currency with public failed to spur nominal GDP, clearly suggesting that economic uptick remains elusive.

Interestingly, though the state-wise income velocity is hard to determine, our internal estimates suggest that in the advanced and larger states such as Maharashtra, Uttar Pradesh and Karnataka, income velocity is far less than the national average. In other states like Chhattisgarh, Madhya Pradesh, Andhra Pradesh and Jammu and Kashmir, the velocity is much higher than the national average.

This is intriguing. But a lower income velocity of money in larger and developed states indicates economic activity is indeed slowing down.

 

Bharat-22 ETF offer oversubscribed

Bharat-22 ETF’s (Exchange-Traded Fund) third tranche of public offer, which was open for a day on Thursday snapped up Rs 46,000 crore in overall collections against the base offer of Rs 3,500 crore, making ETFs yet again an attractive disinvestment vehicle for the government.

The open-ended ETF consisting of 22 stocks of Central Public Sector Enterprises and private companies held under the SUUTI (Specified Undertaking of the Unit Trust of India), also saw retail investors making 91,000 applications worth Rs 1,500 crore, according to a tweet by Department of Investment and Public Asset Management.

“The Government has decided to retain approximately Rs 10,000 crore as its divestment proceeds,” Finance Ministry said in a release.

The issue was made at 5 percent discount to retail, HNI and institutional investors. Bharat-22’s two offerings — in November 2017 and in June 2018 — were highly sought after, raising Rs 14,500 crore and Rs 8,400 crore respectively.

The ETF, which tracks the S&P BSE Bharat-22 index, has been a hit with investors for the mix of private and public sector firms in the index. Apart from the major public sector units, three private firms have a significant weightage with Axis Bank having 12.23 percent, ITC 16.45 percent and L&T 15.91 percent.

Minister asks banks to meet realty cos within a fortnight

Finance Minister Piyush Goyal Thursday asked banks to meet real estate sector representatives within the next fortnight to discuss the issues being faced by them.

The minister also assured that goods and services tax (GST) rates would be brought down soon for the sector, which has been facing a demand slack.

“There is a real problem (being faced by the realty sector),” Goyal said at a Credai event, adding that banks should take some initiatives to assess the projects and fast track them. He suggested that within the next 7-15 days the Indian Banks’ Association (IBA) has a meeting with the real estate players to help increase funding to the sector.

He said the group of ministers (GoM) under GST Council has worked out a mechanism for taxing real estate sector under GST. “I hope you will like the final consensus of the GoM. In the next meeting of the GST Council soon, it would be discussed,” Goyal said.

A state ministerial panel last week favoured lowering GST on under-construction residential properties to 5 percent, from 12 percent currently. It also favoured slashing GST on affordable housing from 8 percent to 3 percent.

Currently, GST is levied at 12 percent with an input tax credit (ITC) on payments made for under-construction property or ready-to-move-in flats where completion certificate has not been issued at the time of sale.

Mahindra’s XUV 300 set to take on SUV rivals

After back to back launches in the utility vehicle (UV) segment, home grown auto major Mahindra & Mahindra (M&M) on Thursday launched the much anticipated XUV 300 at a starting price of Rs 7.90 lakh for petrol and Rs 8.49 lakh for diesel version.

The vehicle also marks M&M’s another attempt to gain significant market share in the high volume generating compact SUV segment, after its previous offering TUV 300 couldn’t match the sales number churned by the UVs of rival carmakers.

Anand Mahindra, chairman, Mahindra & Mahindra believes that new vehicle will certainly sell more than XUV 300’s bigger variant and one of the company’s best selling model the XUV 500. Reports say M&M is aiming to sell around 6,000 units of the vehicle per month and combined with its two other recent launches — Marazzo and Alturas — the auto major is confident of attaining the 9,000 units per month mark

If M&M achieves the desired sales figure from XUV 300, it will gain a significant share in the compact UV segment which generates monthly domestic volumes of 23,000-28,000 units and is currently dominated by Maruti Suzuki Vitara Brezza. Other notable players in the segment are Ford EcoSport and Tata Nexon.

What also makes M&M confident is because of the platform XUV300 is based on— the X-100 platform — the same platform that was used in the popular SsangYong Tivoli. The company also noted that since its launch in 2015, SsangYong has sold 2.6 lakh units so far and it continues to enjoy 35 percent market share in South Korea.

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Triumph motorcycles launches new street twin, street scrambler

Iconic British superbike maker Triumph Motorcycles India on Thursday launched new Street Twin and the new Street Scrambler at Rs 7,45,000 and Rs 8,55,000 respectively. The company claims that the new bikes come with a whole new set of equipment, enhanced rider comfort and features which includes 18 percent increase in maximum power to 65 PS.

“The new Street Twin and Street Scrambler are packed with enhanced performance, improved ergonomics and come with a wide array of customization options allowing owners to have a machine unique to their personality. Both these motorcycles are fun to ride and remain true to the Triumph DNA with motorcycling at its core,” Shoeb Farooq, General Manager, Triumph Motorcycles India said.

He added that modern classics continue to be the most loved Triumph motorcycles in India and contribute to 55 percent of total volume.

Launched in 2016, the new Street Twin is the most contemporary model in Triumph’s Bonneville line-up and has become the single biggest selling modern classic. The new Street Twin now comes with two riding modes — rain and road along with switchable traction control with a torque assist clutch.

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