Discoms: Cutting the losses


What is it? The percentage stake the government has in Coal India.

Why is it important? The government is reportedly considering offloading a stake in world’s single-largest producer of coal, after its plans to sell Air India did not attract any prospective buyers. Failure of Air India disinvestment could impact Rs80,000 crore target set for disinvestment in 2018-19. The government recently rejected Niti Aayog’s proposal to reduce the former’s stake in non-strategic public sector units even as it is reportedly confident of breaching its disinvestment target this fiscal.

Tell me more: The government, which was said to be considering the option of listing Air India, has suffered a setback after the markets regulator denied the national carrier exemption from a rule that mandates that the firm reports net profit for the last three years.

Rs 3-4 lakh crore

What is it? The amount in credit that may face refinancing risks if the current challenges in the financing environment remain, according to a report by India Ratings and Research.

Why is it important? The borrowers that have lower ratings may find it difficult to refinance outstanding loans unless liquidity is at least partially improved in financing channels. The sectors that face increased refinancing risks include power, telecom, infrastructure, and metals and mining and are skewed towards smaller businesses that do not have the capacity to withstand such pressures.

Tell me more: The reasons for these risks include the poor health of public sector banks that may lend to better-rated corporates, leaving little for the weaker ones, and the heavy reliance of non-bank financial companies on banks for credit.


What is it? The number of years for which Sandeep Bakhshi (the head of ICICI’s life insurance unit) has been appointed as the chief operating officer and whole-time director on ICICI Bank’s board, beginning June 19, subject to regulatory approvals.

Why is it important? The bank said on Monday that its managing director and chief executive officer Chanda Kochhar will go on leave until an independent probe into alleged conflict of interest and charges of impropriety is completed against her. Bakhshi will report to Kochhar and during her absence, to the board.

Tell me more: Former Supreme Court judge BN Srikrishna will conduct an investigation into the loans granted by ICICI Bank to Videocon Group, whose chairman Venugopal Dhoot had business links with Kochhar’s husband, Deepak Kochhar.

Rs17,350 crore 

What is it? The annual losses incurred by power distribution companies in India, according to a report by Deutsche Bank Market Research.

Why is it important? This is 70% reduction in losses in two years’, says the report. Power distribution companies, mostly state-run, incurred loss of Rs70,000 crore per year before the UDAY scheme was introduced. The losses narrowed as the power utilities closed the gap between cost of supply of power and tariff rate to Rs0.24 per kWh, a reduction of 57%.

Tell me more: Under the UDAY scheme – where debt of power utilities was converted as sovereign debt – the transmission and distribution losses has to be capped at 15% by January 2019. There is wide variation among states, with 16 states reporting losses increasing by 20% to 56%.


What is it? The percentage of audits done by KPMG on firms listed in FTSE 350 that did not meet the auditing standards set by Financial Reporting Council (FRC), United Kingdom.

Why is it important? FRC has mandated that all at least 90% of all audits done by the ‘Big four’ audit firms should meet the watchdog’s standard by 2018-19. PwC scored the highest with 84% of audits meeting the standard. EY and Deloitte scored 82% and 79%. FRC blamed senior management, ‘extent of challenge of management and exercise of professional scepticism’ as reasons for poor audit standards by KPMG.

Tell me more: In India, auditors have resigned from 30 companies in calendar 2018, as compared to seven resignations in 2017, according to data compiled by Prime Database.

Read More


Coal India Loses Decades-Old Monopoly



What is it? The number of years within which a Tribunal to be set up is expected to settle the Mahanadi Water Dispute. The Union Cabinet on Tuesday approved the proposal for adjudication of this dispute.

Why is it important? This comes less than a month after the Supreme Court had directed the central government to set up a  tribunal to resolve this dispute. Odisha had moved the court in December 2016, seeking an order for Chhattisgarh to stop the construction activities of its projects on the upstream of Mahanadi. The latterdid not want the setting up of a tribunal and pointed to the 1983 agreement between Odisha and Madhya Pradesh (Chhattisgarh was a part of it until 2000) to settle the matter.

Tell me more: According to the Inter-State River Water Disputes Act, 1956, the tribunal would consist of a Chairman and two members nominated by the Chief Justice of India from among the judges of the top court or high court. In addition, two water resources experts will advise the tribunal.


Rs 1.11 trillion

What is it? The total amount outstanding of loans taken by wilful defaulters (with loans of over Rs 25 lakh) in which lawsuits have been filed, as of September 30, 2017.

Why is it important? This figure stood at Rs 28,416.93 crore four years ago. At that time, nationalised banks accounted for nearly a third of the total amount outstanding in the accounts of wilful defaulters, which leaped to 58.7% at the end of September last year. The case of Punjab National Bank (PNB), which is in the eye of a storm over its alleged defrauding by billionaire jeweller Nirav Modi to the tune of Rs 11,400 crore, has raised questions about systemic risks and audit processes at Indian banks, especially with respect to state-lenders.

Tell me more: The compounded annual growth rate of the total amount outstanding in wilful defaulter accounts with PNB is 95.13% between September of 2013 and 2017. The equivalent numbers of nationalised and private banks are 62.92% and 25.67% respectively.



What is it? The maximum margins four hospitals in the Delhi-National Capital Region have made on drugs, consumables (such as surgical masks and hand gloves) and medical devices (include disposable syringes with or without needles and catheters), according to an analysis by the National Pharmaceutical Pricing Authority (NPPA).

Why is it important? The report by the drug pricing authority highlights the practices of these hospitals including them prescribing and dispensing drugs that do not come under the price control regime, exorbitant profit margins made by them in the non-scheduled devices used in three cases (syringes, cannula and catheters) are exorbitant and that the costs of diagnostic services in hospitals were higher than those charged by private centres.

Tell me more: One example of the excessive profiteering by hospital is: a three-way stop cock (bi-valve) purchased by the hospital for Rs 5.77 was sold at Rs 106, giving the hospital a profit of 1,737%. The report concluded that the major beneficiaries of profits in the cases analysed because of inflated MRPs (maximum retail price) were hospitals rather than the manufacturers of drugs and devices.


45 years

What is it? The numbers of years where the state-run Coal India Ltd has monopoly status on commercial production of coal. The union cabinet on Tuesday decided to allow private players to commercially produce coal.

Why is it important? This is expected to increase competition, resulting in higher output and better prices for end users. Thermal power plants could have better fuel availability and less inventory carrying cost. India imported 191 million tonnes of coal for the year ended March 2017.

Tell me more: The coal mines will be auctioned based on ‘ascending forward auction’, where the winner will be determined based on the price per tonne of coal. At present, only end users are allowed to mine coal mines for captive use.



What is it? The projected growth rate for software export revenues for financial year 2018-19 by Nasscom, an industry lobby group.

Why is it important? The information technology sector, which is the biggest exporter, will maintain current growth rate. This will add between $9 billion and $ 11 billion export revenues in 2018-19, and companies are expected to hire 100,000 people to meet the growth.

Tell me more: Domestic software market is expected to grow at a faster rate at 10-12%. The market size ($28 billion) is only a fifth of software export revenues ($135 billion) projected for next financial year.


Read More

Banks’ capital crisis

Rs 95,000 crore

What is it? The external equity capital that 11 state-run/public sector unit (PSU) banks would need by March, 2019 to meet Basel III norms, according Moody’s Investor Services.

Why is it important? It is about four times more than the amount India’s government has pledged (Rs 20,000 crore) to support the PSU banks. The rest has to come from the market. However, with high NPAs and low valuations, it might be a stretch for most PSU banks to raise the amount, and they might need further infusion from the government.

Tell me more: The State Bank of India will be trying to raise Rs 15,000 crore equity capital by itself in FY18.


Rs 16,580 crore

What is it? The estimated amount of loan the Uttar Pradesh government is considering to take to fund developmental projects.

Why is it important? Saddled with a farm-loan waiver of Rs 36,359 crore, the UP government will need financing for roads such as the Purvanchal Expressway and bridges, and also development schemes including affordable houses.

Tell me more: The news coincides with farmer protests in other states such as Madhya Pradesh, Maharashtra and Tamil Nadu for financial aid from governments, primarily in the form of loan waivers. By the time of the 2019 general elections, a Bank of America Merrill Lynch report estimates loan waivers would cost states Rs 2.57 lakh-crore.


$2.8 billion

What is it? The increase in net worth of Alibaba Group Holding’s chief, Jack Ma, overnight.

Why is it important? The richest person in Asia, Ma’s wealth stands at $34 billion in real-time. The surge was triggered by better-than-expected forecast of 45-49% revenue growth of the e-commerce company, China’s largest.

Tell me more: But the growth of the group is not just from online shopping, but also cloud  computing and media streaming.



What is it? The number of underground mines that Coal India reportedly plans to shut by end of this year.

Why is it important? The move is facing resistance from the labour unions, but shutting down the unprofitable mines could help the mining company cut costs. Its profits came down by more than a third to Rs2,716 crore in the quarter ending March 2017.

Tell me more: Coal India is the world’s largest coal miner and operates 413 mines including 207 underground mines. It accounts of 80% of coal produced in India.


22 minutes

What is it? The time taken by an AI machine to finish a two hour Chinese university entrance exam.

Why is it important? While the robot, MATHS AI, finished the exam fast, its score was below average. It got 105 marks out of 150, against the average score of 109. About 9.4 million students took the test this year. The robot, which is about the size of a refrigerator, is aiming for a score of 130+ next year.

Tell me more: The machine was developed by Zhunxingyunxue Technology in 2014 in partnership with Tsinghua University.

Read More

News in numbers, Nov 19, 2015: Ola’s raises $500 mn, Kashmiri migrants’ rehabilitation…



What is it? Share of its total external funding ($1.3 billion) that cab aggregator Ola has raised in the last one year ($1.2 billion).

Why is it important? Ola took three years to reach the $1 billion valuation mark, but just about a year to hit $5 billion. This assumes importance given the concerns in some quarters about the sustainability and profitability of India’s unicorns such as Ola, Flipkart and Zomato.

Tell me more: On Wednesday, Ola raised $500 million in fresh funds from investment management firm Baillie Gifford, China’s largest taxi hailing service Didi Kuaidi and existing investors Falcon Edge Capital, Tiger Global, SoftBank Group and DST Global.


$28.8 billion

What is it? The amount by which the turnover of Apple in Greater China exceeds its turnover in India, according to company filings.

Why is it important? In 2014-15, the maker of iPhones and iPads reportedly crossed $1 billion in revenues in India, with a doubling of revenues in two years. Despite this scorching growth, Apple’s chief executive Tim Cook has, in the past, expressed impediments to business caused by a multi-layer distribution channel.

Tell me more: In 2014, Apple recorded $29.8 billion in revenues from Greater China, $14.9 billion from Japan, $10.3 billion from the rest of Asia-Pacific. Its revenues in the US stood at $65.2 billion and in Europe at $40.9 billion.


Rs 20,000 crore

What is it? The amount the government is seeking to raise from a 10% stake sale in state-run Coal India, which the Cabinet approved on Wednesday

Why is it important? If the government is able to raise this, it would reach at least about 47% of its disinvestment target of Rs 69,500 crore for 2015-16. Finance Minister Arun Jaitley has admitted it is difficult to achieve the disinvestment target this year with low commodity prices impacting share valuations. Coal prices have tumbled to new lows in recent times due to slowing demand.

Tell me more: So far, the government has raised Rs 12,701 crore (18.3% of its target) by selling stakes in Power Finance Corporation, IOC, Rural Electrification Corporation and Dredging Corporation. If the disinvestment target is missed, it would be the sixth year in a row.



What is it? The increase in value of assets held by investors in mutual funds between September 2014 and September 2015, to Rs 12,93,633 crore, according to data from Association of Mutual Funds in India (Amfi).

Why is it important? It is in this backdrop that the mutual fund is seeing its second change of ownership in 2015. On Wednesday, Invesco bought out the 51% stake of its local partner, Religare, in Religare Invesco Asset Management Company. Earlier this year, Reliance Mutual Fund bought Goldman Sachs Mutual Fund.

Tell me more: The growth in the mutual fund industry, in general, has failed to make a satisfactory business case for many mutual fund hopefuls, including prominent foreign names like Deutsche Bank, PineBridge and ING in recent years.


Rs 2,000 crore

What is it? Amount to be used for rehabilitating Kashmiri migrants, a proposal approved by the Cabinet on Wednesday.

Why is it important? An estimated 450,000 Kashmiri migrants, along with some Sikh and Muslim families, fled the Kashmir Valley when militancy reared its ugly head more than a couple of decades ago. But only one Kashmiri Pandit family has returned to the Valley in 25 years. Also, of the 3,000 state government jobs to be provided, only 1,963 posts have been filled. This shows the previous rehabilitation package of Rs 1,618 crore sanctioned in 2008 has not worked, raising questions if additional funding would do anything to improve the situation.

Tell me more: The new package is aimed at providing an additional 3,000 state government jobs with financial assistance and transit accommodation to Kashmiri migrants.

Read More