Top 10 biz headlines: Repo rate at 9-yr low, auto cos seek stimulus & more

From Maruti cutting production by 25% for sixth consecutive month in July to Sebi enhancing guidelines for share pledging, here are the top 10 business headlines on Thursday

1) Repo rate at nine-year low after RBI announces 35-bps cut; India Inc says banks should pass on benefit

The Reserve Bank of India (RBI) on Wednesday moved for an unconventional repo rate cut by 35 basis points, the first of such magnitude by the central bank, to arrest falling economic growth while insisting that banks must now pass on the benefits to their customers. 

The central bank has lowered the growth projection for the current financial year to 6.9 per cent from 7 per cent earlier. It kept its inflation projection unchanged at 3.1 per cent. (Read more here) 

With the RBI slashing the benchmark repo rate for a fourth straight time, India Inc on Wednesday said it was time banks passed on the benefits of rate cuts to end-customers, so as to encourage consumer spending and spur investment by companies.

The central bank has lowered the key policy rate by a cumulative 110 bps in the current easing cycle — bringing the rates to a nine-year low. Meanwhile, banks have cut rates by only 29 bps. (Read more here) 

2) NBFCs to receive more liquidity support as RBI raises exposure limit

The Reserve Bank of India (RBI) has allowed banks’ lending to non-banking financial companies (NBFCs) for on-lending to agriculture, micro and small enterprises, and housing to be classified as priority sector lending, up to specified limits. 

The RBI raised any bank’s exposure limit to a single NBFC from the existing 15 per cent to 20 per cent of tier-1 capital. The idea is to ease liquidity pressure in NBFCs.

Banks’ lending to NBFCs for on-lending to agriculture up to Rs 10 lakh a borrower will be treated as priority sector lending. So, too, for loans up to Rs 20 lakh for micro and small enterprises and housing. (Read more here)

3) Auto industry leaders meet FM, seek stimulus package to spur demand

Automakers, who are facing the worst slowdown in a decade, asked for a stimulus package, including GST reduction, more liquidity and relaxation of credit facilities for retailers, in a meeting with Finance Minister Nirmala Sitharaman on Wednesday. The industry warned that the slowdown could lead to immediate job loss if no steps are taken.

This is the first meeting the auto industry had with policymakers after the companies have been witnessing steady decline of sales for more than 18 months now. (Read more here)

4) Maruti cuts production by 25% for the sixth consecutive month in July

Maruti Suzuki India cut its production in July by 25.15 per cent, making it the sixth month in a row that the country's largest car maker reduced its output, according to a regulatory filing.

The company produced a total of 1,33,625 units in July, compared with 1,78,533 units in the year-ago month, Maruti Suzuki India (MSI) said in a BSE filing. (Read more here) 

5) Amid prolonged slowdown, auto sector witnesses massive job losses

A prolonged slowdown in sales has plunged India, which is the world's fourth-largest automobile market, into a labour crisis, with tens of thousands of workers having lost their jobs in the past few months across automakers and auto parts suppliers, reported LiveMint on Thursday. 

At Gurugram and Manesar in Haryana, the country's biggest automotive hub, almost 40,000-50,000 workers have been retrenched as original equipment manufacturers and vendors have reduced their contract labour force, the report said, while citing people aware of the developments. Further, it added that the situation was severe in the automotive hubs of Chakan in Pune and Chennai. 

6) Trust deficit prevails in the board, says IndiGo's independent director

IndiGo’s independent director Anupam Khanna has called upon chairman M Damodaran to come up with “confidence-building measures” to remove the “trust deficit” that has built up in the board of India’s largest airline.

In his mail to the former Securities and Exchange Board of India (Sebi) chairman, Khanna also questioned Damodaran's call for meetings of the board, as well as audit and remuneration committees after IndiGo's annual general meeting (AGM) later this month, to resolve governance issues. (Read more here) 

7) Singtel to raise holding in Bharti Telecom beyond 50%

Singtel is likely to increase its stake in Bharti Telecom, which is the single largest shareholder in Bharti Airtel, to over 50 per cent, reported the Economic Times on Thursday. The move would convert the holding company into a foreign-owned entity and, consequently, take overseas ownership in the mobile operator to more than 85 per cent, added the report.

Currently, Bharti Telecom's 41 per cent equity stake in Bharti Airtel is classified as 'domestic' shareholding since it is majority-owned by the Sunil Mittal family (52 per cent stake), added the report. 

8) Private Equity funds ready war chest to help firms skip IBC route

Private equity (PE) funds estimate that in the next 18-24 months, Indian conglomerates will require over $100 billion in equity infusion because they are already reeling from debt, which is set to become non-performing loans. 

They are scouting around to sell their non-core businesses so that they can avoid turning to the Insolvency and Bankruptcy Code (IBC). PE funds also believe that even if banks write off more than half of the $150 billion non-performing loans currently on their books, someone will need to replace the debt with equity to bring the companies back in the black. (Read more here) 

9) Sebi enhances guidelines for share pledging

Sebi has asked promoters of all listed companies to disclose their reason for pledging of shares if their quantum is 50 per cent or more of their total holding in the firm, reported the Times of India on Thursday. Further, the report said that Sebi has also asked for similar disclosures if the total shares pledged by the promoters are more than 20 per cent of the company's equity capital.

10) Will challenge IBC amendments: Essar Steel operational creditors tell SC

The operational creditors of Essar Steel on Wednesday told the Supreme Court (SC) that they would challenge the latest amendments made to the Insolvency and Bankruptcy Code (IBC), which gave preference to financial creditors over operational creditors. The apex court has agreed to hear the operational creditors on the issue and given them a week to file amended applications challenging the changes brought to the IBC.

The case would be next heard on August 19, when the apex court is also likely to hear other challenges made to the IBC, such as the extension of the corporate insolvency resolution period to 330 days from 270 days and other changes which may apply retrospectively. (Read more here)