News digest: Karnataka trust vote, oil prices, stressed firms, and more

1. Karnataka verdict fallout: Supreme Court order a triple blow to the BJP

The Supreme Court on Friday overruled Karnataka Governor Vajubhai Vala and asked Karnataka Chief Minister B S Yeddyurappa to prove his majority in the assembly at 4 pm on Saturday. The Governor had given 15 days to Yeddyurappa to prove his majority.

The court said the Yeddyurappa government should not take any major decision till its majority is proven. After being sworn in as CM on Thursday, Yeddyurappa had announced waiver of all farm loans of up to Rs 100,000.

The SC order is seen as a triple blow to the BJP as it has been given 48 hours to prove its claim of majority, the voting will be by show of hands, and it cannot choose the Anglo-Indian member in the thin minority government. Read more...

2. As crude hits $80 a barrel, oil import bill may cost govt up to $50 bn

A day after crude oil prices hit $80 a barrel, the government said it expected an increase of $25-50 billion in the import bill for 2018-19. That could lead to an oil import bill of $130-155 billion.

India’s crude oil import bill for 2018-19 was estimated at $105 billion, according to the Ministry of Petroleum’s Petroleum Planning and Analysis Cell.

“Under different scenarios, we see the impact of higher crude prices ranging from $25 billion to a maximum of $50 billion on the oil import bill. The increase in the oil import bill will also affect the current account deficit,” Economic Affairs Secretary S C Garg said in a conference on Friday. Read more...

3. Fire sale by MFs spells trouble for portfolio management services

The Securities and Exchange Board of India’s (Sebi’s) reclassification of equity mutual funds seems to have led to a sharp fall in many mid- and small-cap stocks. This, in turn, is hurting many fund managers in the portfolio management services (PMS) space who placed bets on them. “Many schemes have started selling certain stocks in block deals. And many PMS players who were invested in these stocks are feeling the pinch,” said the chief executive officer (CEO) of a fund house.

South India-based Equity Intelligence founder Porinju Veliyath, who, according to sources, runs a Rs 10 billion PMS, wrote to investors this week confessing it had been underperforming the market since January. He was baffled by the extent of value erosion in such a short period. Read more...

4. With NCLT, NCLAT closing for vacations, insolvency resolutions face delays

With the National Company Law Tribunal (NCLT) and the National Company Appellate Law Tribunal (NCLAT) closing for vacations, the resolution process for firms undergoing bankruptcy proceedings are staring at further delays.

The Bengaluru, Chennai and Ahmedabad Benches of the NCLT are already on a two-week vacation, while the vacations for Mumbai, Kolkata and Hyderabad Benches will begin May 21 and end on June 1.

Though it is for the committee of creditors (CoC) and resolution professionals (RPs) to decide on a resolution plan, consultations with the tribunals will not be possible during their holidays. Read more...

5. Binani Cement's CoC asks Dalmia Bharat to match offer of UltraTech

The Committee of Creditors (CoC) of Binani Cement on Friday asked Dalmia Bharat Cement led consortium to match the Rs 79.60 billion offer from UltraTech Cement for acquisition of the stressed assets of Binani Cement.

After conclusion of the much-awaited CoC meeting, where the proposal from UltraTech was discussed in details, the lenders equivocally termed its proposal as monetarily superior but agreed to ask Dalmia Bharat Cement led consortium – Rajputana Properties Pvt Ltd (RPPL) – to match the offer from UltraTech, as per the order from the Kolkata bench of NCLT. Read more...