In a bid to close the regulatory arbitrage between banks and NBFCs, the RBI has mandated exposure limits for NBFCs, in line with commercial banks. NBFC exposure in the upper layer would be limited to 20% of the capital base, with a leeway of just about 5%. There will be concessions for infrastructure funding. These norms will be effective from 01st October 2022. The RBI has been constantly trying to fill the gap in regulation between NBFCs and banks after the IL&FS fiasco. Real estate lending norms are also tighter.
Thermal plants, which burn coal to generate power, are grappling with a major shortage of coal. This could trigger a serious power crisis this summer. Most states are not able to meet the surge in demand for power. The CEA reported that coal stocks at 81 out of 150 thermal power stations were critically low. Uttar Pradesh and Rajasthan are the worst affected. Other states like Punjab, Haryana, Maharashtra, Andhra Pradesh and Gujarat too are facing an acute power crisis. Tariff hikes may also be on the cards.
In its latest Outlook for the World Economy put out for April 2022, IMF has downgraded the outlook for the world economy. It has downsized the global GDP growth for 2022 by 80 bps from 4.40% to 3.60%. The key trigger for this downsizing is Russia’s war in Ukraine and the resultant supply chain bottlenecks, global trade disruption, high oil prices and risks to food security. IMF is also worried because the big incremental contributor to global growth, China, is struggling with a resurgence of COVID. Russia may shrink by -8.5%.
In TRAI’s latest release of telecom numbers for Feb-22, Reliance Jio and Vodafone Idea saw wireless subscribers falling while Airtel showed gains in wireless subscribers in Feb-22. Jio lost 36 lakh subscribers which brought down its customer base to 40.27 crore. Vodafone lost 15 lakh subscribers as customer base slipped to 26.35 crore. The sole exception was Bharti Airtel which added 15.9 lakh subscribers taking its customer count to 35.80 crore. The fall was largely due to consolidation of SIM cards after 20% tariff hike.
ACC Ltd reported net profits of Rs.396 crore for Q4 FY22. While yoy profits were down -29.5%, the QOQ profits were up by 41%. The fall in yoy profits can be attributed to the spike in input costs like limestone, power, fuel, transport, freight etc. However, the sequential growth of 41% may be misleading as the company had taken a Rs.55 crore one-time hit in the previous quarter to provide for restructuring. Overall, revenues were up 5% at Rs.4,427 crore. This profit fall was despite cost reduction measures undertaken.
Reliance Brands Limited, a subsidiary of Reliance Retail Ventures, will invest to acquire a 51% stake in Abu Jani Sandeep Khosla (AJSK), India’s leading couturiers. The AJSK fashion house is nearly 35 years old. This will add one more ensemble to the already rich line of fashion labels acquired by Reliance Retail. For AJSK, the deal with Reliance gives them a much bigger platform and also a much bigger balance sheet. It will also help fuel the global ambitions of the fashion brand. RRVL has been lapping up fashion brands in India.
It looks like finally, there will be a new Tata group company to lead the profitability sweepstakes. In the first nine months of FY22, Tata Steel has already reported cumulative net profits of Rs.31,914 crore, while TCS has reported profits of Rs.28,490 crore in 9 months. If Tata Steel has a robust Q4, then it is likely to sustain its position as the highest profit making company in the Tata group for FY22. Just five years ago, Tata Steel was posting losses, so it is a huge turnaround and that is thanks largely to the commodity spike.
Poonawalla Fincorp, formerly known as Magma Fincorp, entered the realm of digital consumption loans via a tie up with KrazyBee. This will enable Poonawalla Fincorp to offer small-ticket personal loans. The thrust of Poonawalla Fincorp is on individuals and small businesses. The customer selection will be based on a scorecard. It intends to scale above Rs.1,000 crore in terms of fund disbursal in FY23. Since both are Fintech ready, the sync is complete. KrazyBee has a 20% market share in Fintech disbursement in India.