Top 10 business headlines: Aramco's RIL stake buy, angel tax relief & more

From Anil Agarwal pulling out of race for acquiring grounded Jet Airways to poorer states scoring big in GST mop-up, here are the top business headlines on Tuesday

1) Saudi Aramco to acquire 20% stake in RIL's oil-to-chemical business

Saudi Aramco and Reliance Industries (RIL) have signed a letter of intent for a proposed investment in RIL’s oil-to-chemical division, the company announced at its annual general meeting (AGM) on Monday. The deal is likely to fetch $15 billion (Rs 1.06 trillion) for a 20 per cent stake.

RIL is also looking to turn debt free in the next 18 months. As part of the debt-reduction plan, RIL looks to find global partners for its retail and telecom businesses. The company also plans to unlock value in real estate and financial investments. (Read more here)

2) Finance, commerce ministries lock horns over fiscal support for exporters

Two ministries — finance, and commerce and industry — are at loggerheads over fiscal support for exporters.

While Revenue Secretary A B Pandey has pressed for withdrawing the Merchandise Exports from India Scheme (MEIS) once an alternative one for all export sectors is implemented, Commerce Secretary Anil Wadhawan has pitched for a phased withdrawal, sources said.

The revenue department has pitched for strict closure dates of any new reward schemes for exporters, or else they will stay valid till the end of the fiscal year in which these are introduced, sources added. (Read more here)

3) Angel tax row: Income Tax department gives a breather to start-ups

The Income Tax (I-T) Department has given an exemption to start-ups from angel tax even on earlier assessment orders, subject to certain riders.

The I-T department and the Department for Promotion of Industry and Internal Trade (DPIIT) had earlier given exemption to start-ups from the much controversial tax on certain conditions. However, these exemptions were not available to these firms, if additional assessment was made prior to February 19 this year.

Now, the Central Board of Direct Taxes (CBDT) extended exemptions to these assessment orders as well. (Read more here)

4) Reliance Capital in talks with 3 firms to sell entire stake in health arm

Reliance Capital, which owns a 100 per cent stake in Reliance Health Insurance (RHI), has approached three companies — the Ajay Piramal group, TVS Capital Funds, and PremjiInvest — to sell its entire stake in the company. A deal could be finalised by next month.

Moelis & Company, a global investment bank, is helping with the transaction. This is part of Reliance Capital’s strategy to monetise some assets and utilise the proceeds to pare debt. (Read more here)

5) Anil Agarwal pulls out of race for acquiring grounded Jet Airways

A day after submitting an expression of interest (EoI) for Jet Airways, billionaire businessman Anil Agarwal on Monday said he did not wish to pursue it any further, thereby pulling out of the race.

“The EoI for Jet Airways by Volcan was exploratory in nature. On further evaluation and considering other priorities, we intend to not pursue this further,” said Anil Agarwal. Agarwal through his family investment arm, Volcan Investments, had submitted an EoI for Jet. (Read more here)

6) Carmakers eye subscription, leasing to offset dwindling dealership sales

Car-makers, struggling with one of the longest slowdowns in decades, are driving an alternative revenue stream to counter falling sales from dealerships: Subscription, leasing and shared mobility solutions. In 2018, Maruti Suzuki, the country’s largest car manufacturer, reported a 71 per cent growth in leasing, and Hyundai’s subscription business grew nearly six times since it launched in March 2019.

Mahindra, Toyota and Skoda have also announced plans for a subscription-based ownership models. (Read more here) 

7) RIL's JioFiber home broadband services to hurt cable and DTH operators

The much-awaited JioFiber home broadband services will roll out in September with a starting price of Rs 700 a month. The fiber-to-home (FTH) offering comes with a lot of bundled services. Analysts feel this could lead to consolidation in the television distributor market, just as the telecom market was after the launch of Jio three years back.

Speaking at the annual general meeting of Reliance Industries (RIL), Chairman Mukesh Ambani said the investment cycle for Jio is now complete. “Unlike other industry players, your company had the foresight to pre-invest in the network assets,” he said. He added that because of early adoption of the ongoing enhancements to LTE technology, its wireless network was already ‘4G plus’ and it could be upgraded to 5G at minimum incremental cost. “Thanks to Jio’s converged network architecture, we can offer even faster fixed-line broadband to homes and business establishments today,” said Ambani. (Read more here)

8) Poorer states score big in GST mop-up

Consuming states like Bihar, Odisha, UP and Madhya Pradesh, which might be poorer but have large populations, have fared better in goods and services tax (GST) collections than their industrialised peers like Maharashtra, Gujarat, Karnataka and Tamil Nadu, the Times of India reported on Tuesday. 

Data accessed by the national daily has revealed that West Bengal is among a handful of non-industrialised consuming states that has not done well during the first four months of the current financial year, when overall GST collections rose nine per cent to Rs 3.56 trillion, said the report. The report added that among the major laggards was Delhi -- which saw a two per cent drop in mop-up, which was estimated to be Rs 12,700 crore during April-July 2019, compared to a little less than Rs 13,000 crore a year ago. 

9) Setback for Lodhas in dispute over control of MP Birla Group

A court-appointed committee has decided it will not support a resolution that seeks Harsh Vardhan Lodha's reappointment as director on the board of MP Birla Group's three listed firms — Birla Corporation, Vindhya Telelinks and Birla Cable, the Economic Times reported on Tuesday. According to the report, Lodha, who heads the group at present, has challenged the move in the Calcutta High Court. 

10) Defaults, idle trucks and job losses as auto slump bites logistics sector

Production cuts at Maruti Suzuki India Ltd, the country's largest passenger vehicle maker, have left many truck drivers without any work as there has been a drop in the demand for trailer trucks, which are used to transport finished vehicles across the country, reported LiveMint on Tuesday. 

In recent months, the Suzuki Motor Corp unit has announced production cuts at its factories in Gurugram and Manesar in Haryana, said the report. Further, Tata Motors Ltd, Mahindra and Mahindra Ltd and Renault have taken similar measures. 

The report said that with the automobile sector gripped by a slowdown for the past 10 months, the logistics sector is also facing the heat. It added that loan defaults by fleet operators, who have bought new trucks, have increased.