Morning Scan: All the big stories to get you started for the day

A round-up of the biggest articles from newspapers.

A round-up of the biggest articles from newspapers.

SEBI panel recommends higher sweat equity for new-age firms

A seven-member committee appointed by the SEBI has proposed relaxations in the quantum of sweat equity that can be issued by firms listed on the Innovators Growth Platform, Business Standard reports.

Why it’s important: It’s a public market platform for firms that extensively employ technology, data analytics, biotechnology or nanotechnology.

The committee proposed that even non-permanent employees be considered to receive share-based employee benefits falling under SBEB Regulations.

Slow monsoon slows down sowing

Southwest monsoon has practically stalled over most parts of the country since June 19, says Business Standard. Why it’s important: This has not only delayed its progress over north India but has also badly impacted the sowing of the kharif crop.

>Till July 8, the southwest monsoon was deficient in around 41 per cent of the 694 districts of the country.

The IMD is hopeful that rainfall will revive in the next few days.

‘Bias is towards large-caps, thanks to a sharp run-up in valuations’

As Tata Consultancy Services kicks off the June quarter earnings season, Gautam Duggad, head of research (institutional equities) at Motilal Oswal Financial Services, tells Business Standard that expectations of a strong financial year 2021-22 are now well-entrenched and the second wave has not done much damage to those expectations yet.

What he says:

>Pockets of mid- and small-cap indices are showing exuberance and are discounting even the 2022-23 valuations.

>It makes sense to be more cautious and await better entry opportunities.

Private financials, consumption, and IT are sectors where earnings, and, in turn, wealth compounding in the long term, is a very strong possibility.

‘IPO may not change how we operate our business’

On the day that Zomato announced its initial public offering, Gaurav Gupta, co-founder, and Akshant Goyal, chief financial officer, spoke to Business Standard about the food delivery major’s plans, and say the firm is trying to fix its relationship with the NRAI.

What they say: The last 18 months have not been easy because of COVID-19.

>The last four or five years have been very interesting, where Zomato transformed from being a search-and-delivery platform to a transaction platform.

>We’re very focused on India, it is a massive opportunity. We don’t think the IPO will change how we operate as a business and grow the business.

On IPO, most of our investors are looking at it as a long-term investment for five-ten years, no one else wanted to sell.

LIC cleans books of bad loans as it gets IPO-ready

The Life Insurance Corporation of India is cleaning up its books ahead of its IPO later this year, says The Times of India report.

What the plans are: As part of its IPO plans, the corporation plans to audit its half-yearly accounts for the period ended September 2021.

>The corporation, which brought down its net non-performing assets to 0.05 percent as of March 2021 from 0.79 percent as of March 2020, is now selling its fully provided NPAs.

>The government is determined to complete the public issue during the current fiscal year.

ICICI Bank shuts the LRS door for crypto traders

India’s largest private sector bank ICICI is telling customers remitting funds to invest abroad to give a declaration that the money will not be used to buy Bitcoin or other cryptocurrencies, report The Economic Times.

Why it’s important: For this, the bank has tweaked its ‘retail outward remittance application form’ that customers have to sign to transfer funds to buy stocks and properties abroad under the RBI’s liberalised remittance scheme (LRS).

>ICICI customers have to also agree that the LRS remittance will not be invested in “units of mutual funds or shares or any other capital instruments of a company dealing in Bitcoin/cryptocurrencies/virtual currencies.”

Retail Rush: Demat accounts with CDSL cross 4-crore mark

Demat accounts at Central Depository Services (CDSL) crossed a record four crore mark in June, The Economic Times reports.

Why it’s important: It underscores the growing influence of retail investors in equities.

>Currently, retail investors command 70 percent of the market share in the average daily turnover.

>The turnover of institutions, including FPIs and DIIs, declined to 30 percent from a high of 89.21 percent in May 2015.

Why the surge: The surge in demat accounts began in March 2020, when the shutdown on account of COVID-19 prompted individual investors to venture directly into the market.

>With fixed deposit interest rates around their lowest levels, the appetite for stocks is high.

From electronics to auto, companies brace for lower output due to chips shortage

The global chip and component shortage has intensified, affecting supplies of smartphones, laptops, smart televisions and internet-connected appliances in India once again after the industry faced the issue last year too, reports The Economic Times.

Who all are affected: Carmakers say the shortage is leading to a production loss of 10-15 percent that could continue for next two quarters.

>Supplies from brands like Apple, HP, Lenovo, Dell, Xiaomi, OnePlus and Realme too are badly affected.

>Several vehicle makers, such as Ford, have either shut the India plant temporarily or adjusted production plans due to shortage.

>This comes at a time when retailers and companies said they are reporting brisk revival in sales across categories after states eased lockdowns last month.

Zomato set to break into India’s top 100 most valued firms

Zomato Ltd’s much-awaited initial share sale could propel the 13-year-old food delivery firm into the ranks of India’s 80 most valuable companies, says a Mint report.

Why it’s important: At Rs 76 per share, the upper end of the price band of Rs 72-76 announced by Zomato, it will have a post-money valuation of Rs 59,623 crore, giving it the 78th position among listed firms in India by market value.

>Post the IPO, Zomato will have about $ 2 billion, or roughly Rs 15,000 crore in cash in the bank, he added.

Oil companies plan InvITs to monetise assets

State-run IOC, HPCL and GAIL (India) Ltd are working on infrastructure investment trusts (InvITs) to monetise stakes in their pipeline networks, a Mint report said.

Why it’s important: InvITs are a good model to monetise and internationally very popular too.

>The three companies have prepared blueprints to float InvITs that will house pipelines totalling 5,000km.

>They may offload 26-49 percent of their stakes in these projects.

>These pipelines are worth lakhs of crores of rupees and, to begin with, a minority stake would be offloaded.

Govt to roll out unorganised sector database by end of Jul

The Union government will roll out the unorganised sector database by the end of July, says Mint.

Why it’s important: The aim is to enrol nearly 380 million workers and provide them benefits during times of distress.

>Every informal sector worker will now be registered in a national database and each account will be linked with the 12-digit Aadhaar number and bank account.

>At least 300,000 common service centres and 100,000 post offices shall be roped in for the exercise.

CBDT notifies new tax rules on goodwill

Businesses that made acquisitions in recent years will need to take note of the new rules the CBDT notified on accounting of goodwill and the tax liability arising from such transactions, Mint reports.

Why it’s important: The purchase price of an asset often includes a premium, which is regarded as goodwill on the books of the buyer.

>In cases where goodwill was the only asset in the block, there is no impact.

>India Inc. has witnessed a record number of mergers and acquisition deals and the emergence of Indian unicorns with intangibles fetching substantial value in these transactions.

>Transactions done in the past five years and start-ups lining for IPO would have to closely evaluate the financial impact of this amendment.