BQuick On Dec. 21: Top 10 Stories In Under 10 Minutes

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December 21, 2018

Here Are The Actual News Headlines Of The Day

1. Will You Get More GST Rate Cuts Tomorrow?

Commonly used items such as air conditioners, digital cameras and cement may be removed from the 28-percent bracket of the goods and services tax when the GST Council meets on Dec. 22 to rationalise the indirect tax further, according to two people with direct knowledge of the matter.

• About 12-14 items that are currently taxed at 28 percent will be brought to the 18 percent tax slab in phases, the people said on condition of anonymity as they aren't authorised to talk to the media.
• The reduction is expected to be done in two to three phases once revenue from GST stabilises as the rate cut would result in the government taking a hit of over Rs 20,000 crore a year, the people cited earlier said.

Read the full story here - The council is also expected to reduce GST on items like computer monitors and video cameras.

2. Indian Markets Slump, So Does Oil

Indian equity benchmarks plunged along with global markets overshadowing gains from the decline in oil prices and expectation of easier monetary policy domestically.

• The S&P BSE Sensex fell 1.89 percent or 690 points to 35,742.
• The NSE Nifty 50 Index dropped 1.81 percent or 198 points to 10,754.
• Indian markets fell in line with global markets and the disconnect earlier this week with global markets was largely on account of expectation of easier monetary policy domestically and liquidity, market expert Anand Tandon told BloombergQuint.
• All the 19 sector gauges compiled by BSE ended lower led by the S&P BSE Information Technology Index's 2.6 percent drop.

Follow the day's trading action here.

Oil was poised for a weekly loss on concerns that weakening economic growth and surging U.S. supply will lead to a surplus next year, overwhelming OPEC's efforts to stabilize the market.

• Futures fell 0.6 percent in New York, headed for the biggest quarterly drop in four years.
• Crude joined a sell-off in wider financial markets after an interest rate increase by the Federal Reserve and the threat of a U.S. government shutdown added to economic uncertainty.

Crude is heading for its worst quarterly loss in four years.

3. Top Fund Manager Kenneth Andrade Thinks Next Year Has A Lot To Offer

This year didn't live up to expectations but top fund manager Kenneth Andrade sees a better 2019. “Things are not looking so bad. 2019 has a lot more to offer,” Andrade said in an interview to BloombergQuint.

• His optimism stems from what he called a solid foundation for earnings recovery.
• “While there might be a hiccup in Q3, but if things settle down after that and elections don't cause any major market disruptions, then things would materialise quite differently for the remainder of the year 2019,” he said.
• Profits moving up with leverage (debt) moving down would mean that corporate balance sheets have space to expand if there is a growth opportunity, according to Andrade. He expects a 9-10 percent sales growth in the current context to results in 15-20 percent profit growth.

4. Furore, Then Clarity On Centre's ‘Snoopy' Order

A late-night order by India's Home Ministry that authorised 10 central agencies to intercept, monitor and decrypt all data contained in any computer triggered fears of state surveillance.

• That led to a furore with activists and opposition leaders across social media calling it “unconstitutional” and “Orwellian”.
• The government later clarified that the law wasn't new and that it only had identified which agencies needed such powers.
• Moreover, they needed approval from a competent authority to do it. That will be the Union home secretary for the central government and the chief secretary for the state government, the clarification issued today said.

Here's more on the story.

5. Three Of The Big 4 Under Scrutiny Alongwith IL&FS Accounts

The Indian government has sought to reopen the books of Infrastructure Leasing & Financial Services group, alleging evidence of auditing lapses was uncovered while looking into allegations that funds were siphoned from the beleaguered financier.

A probe by the Serious Fraud Investigation Office indicated the lender's accounts were fraudulent and mismanaged, Sanjay Shorey, a lawyer for the government told the National Company Law Tribunal today.

The initial findings of the Institute of Chartered Accountants found that IL&FS's statutory auditors were responsible for mismanagement, Shorey told the court.

The government's petition included copies of the ICAI's initial opinion of audits of some companies conducted by affiliates of Deloitte Haskins & Sells, EY and KPMG.

The court told the government to notify those involved, including regulators and tax authorities, of its petition and set Jan. 1 as the next hearing date.

6. A Not-So-Good Holiday Season For Airlines

The number of passengers flying in domestic airlines fell to its lowest in at least four years in November due to a rise in airfares in the world's fastest-growing aviation market.

• Passenger growth stood at 11 percent during the month, the slowest pace at least since January 2015, according to data compiled by BloombergQuint.
• Indian airlines' fuel consumption had indicated passenger growth had slowed. In November, oil demand from carriers grew at its slowest in 11 months despite a lower base since Diwali holiday travel fell in October last year, BloombergQuint reported earlier.
• The Diwali month usually sees a spike in air travel. A decline in air traffic during the holiday season this year would be a concern when airlines are expected to benefit from falling oil prices.

Read the full story here - Higher fares also hurt passenger growth.

7. The Tax Department's Case For #AngelTax

Startups receiving tax demand notices has almost become an annual exercise now. Several founders have taken to social media over the last few days to express their anguish over what's come to be known as Angel Tax.

But some of these notices are not entirely without merit and unless the tax department makes inquiries via such notices, there's no way of determining genuine startups from the scrupulous ones, PK Prasad, former income tax commissioner in Bengaluru, said.

There are several businesses which are not genuine and they tend to evade taxes in the garb of startups, Prasad said.

A tax officer never starts by giving the benefit of doubt to an assessee and so to argue that no inquiry notices should be sent just because some angel investors are well-known names, has very little meaning for the department, a Karnataka-based joint commissioner in the income tax department told BloombergQuint on the condition of anonymity.

For more on the tax department's arguments read this.

8. Royal Enfield Wagers On More Thump

Eicher Motors Ltd. is betting on bigger engines for Royal Enfield, a category that has not worked for India's largest leisure motorcycle maker yet, as it faces first competition in its bestselling 350cc market.

• “The premiumisation trend in India continues,” Managing Director and Chief Executive Officer Siddhartha Lal told BloombergQuint in an interview.

People still want to go from commuter bikes to leisure motorcycles which also offer them good commuting opportunities. So, our general aim is that we want to continue to grow at double the industry's pace.

Siddhartha Lal, MD and CEO, Eicher Motors

• Its 350-cc models, especially Classic 350, has been the bestseller for more than a decade after Lal revived the World War-era iconic British brand. Traditionally a truckmaker, Royal Enfield powered Eicher Motors into the league of India's largest automakers.
• But it finally has competition in India. Mahindra & Mahindra Ltd. revived the Jawa brand after 22 years by launching two bikes targeted at the 350cc segment.

Watch the full interview here.

9. Cryptocurrencies Are Falling. But Facebook Wants To Join The Party

Facebook Inc. is working on making a cryptocurrency that will let users transfer money on its WhatsApp messaging app, focusing first on the remittances market in India, according to people familiar with the matter speaking to Bloomberg.

• The company is developing a stablecoin -- a type of digital currency pegged to the U.S. dollar -- to minimize volatility, said the people, who asked not to be identified discussing internal plans.
• Facebook is far from releasing the coin, because it's still working on the strategy, including a plan for custody assets, or regular currencies that would be held to protect the value of the stablecoin, they said.
• Facebook has long been expected to make a move in financial services, after hiring former PayPal president David Marcus to run its Messenger app in 2014.

The idea of stablecoins has proven tough to carry out in real life.

10. If Winter Comes... By M Damodaran

No longer must it be said that when the going got tough, the tough got going from boardrooms, and stakeholders got burnt at the stake, writes former SEBI chief M Damodaran.

- 2018 will be remembered in India as the year corporate governance came of age.

- The myth of a direct relationship between the size of a company and governance standards exploded.

- Those that lived in denial came up short, and the transgressors found that no longer could excuses masquerade as explanations.

The lessons have hopefully been learnt. The solutions are in sight. What is needed is clarity, courage and conviction, writes Damodaran.

Read his insightful and witty column here.

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