TCS starts screening candidates for reorganization of top management

The Supreme Court has upheld a December 2020 Telangana high court order that said a borrower must be given a hearing by the lender before an account is classified as fraud. Since the classification of a fraud account entails serious civil consequences for the borrower, the directions must be construed reasonably and follow the principles of natural justice, the apex court also said.

Why it’s important: The Reserve Bank in 2016 had allowed banks to classify accounts of willful defaulters as fraudulent without hearing them. Bankers would be worried that the latest order will lengthen the process of declaring a fraud account and reopen many older cases.

Domestic mutual funds resume lump-sum contributions to overseas equity plans
Domestic mutual fund houses have resumed accepting lump-sum contributions to their international equity plans after the latest rule change removed tax advantages for debt-oriented saving plans from April 1. At least three asset management companies have opened 16 international equity mutual fund programs for lump-sum investments up to the amounts legally permissible. The new amendments, applicable from 2023-24, will remove indexation benefits for debt-oriented savings plans.

Why it’s important: The new international equity plans may now become the norm in this particular investment option because onshore plans that invest in overseas markets are treated as debt funds locally for taxation purposes.

State-run banks may not pay dividend to government to conserve capital
Public sector banks may ask the government to allow them to not pay it a dividend as they look to conserve capital before the expected loss-based approach for loan loss provisioning kicks in from April 1, 2025. At present, banks make provisions on incurred loss, that is, once an account is overdue for more than 90 days, they set aside capital, known as provision. In January, the Reserve Bank released a discussion paper on the expected loss-based approach for loan loss provisioning.

Why it’s important: The finance ministry had asked state-owned banks to conduct a study on the impact of such a norm on their capital position. The new model may erode their capital position.

Creditors to Reliance Capital to go ahead with second auction on April 4
The lenders of Reliance Capital have decided to go ahead with the second round of auction on April 4 despite the Hinduja group retracting its revised bid. The Hinduja group had submitted a higher bid of Rs 9,000 crore on December 21, a day after the first round of auction in which rival Torrent Group had been declared the highest bidder. Torrent had bid for Rs 8,640 crore, while Hinduja had originally offered Rs 8,110 crore. It has now reverted back to its lower bid.

Why it’s important: The committee of creditors will be disappointed by the surprising reversal that has diminished their chances of maximizing recoveries. It will be interesting to see how this play out.

Supreme Court upholds quashing of allegations against three Adani Group firms
The Supreme Court has dismissed a petition filed by the Directorate of Revenue Intelligence challenging the orders issued last year by the Customs, Excise and Service Tax Appellate Tribunal to quash the cases pertaining to over-invoicing allegations levelled by the agency against three Adani Group subsidiaries. Between November 2022 and January 2023, the central agency had moved the Supreme Court against the relief granted to Adani Power Maharashtra, Adani Power Rajasthan and Maharashtra Eastern Grid Power Transmission Company by the tribunal.

Why it’s important: The Hindenburg report that alleged accounting fraud at Adani Group firms had mentioned this investigation by the Directorate of Revenue Intelligence. Adani had denied wrongdoing.

Government may sell remaining stake in Bharat Aluminium in next financial year
More than two decades since the privatization of Bharat Aluminium Company, the government is preparing to sell its remaining stake in the firm in the next fiscal year. The Department of Investment and Public Asset Management has been asked for a road map for the stake sale. The government may sell the stake in an auction or sell it in tranches. It may also decide to retain some equity, the quantum of which will be decided once the roadmap is finalized. The government had sold 51 per cent stake in Balco to Sterlite Industries, a unit of Vedanta, as part of its privatization in 2001.

Why it’s important: The sale of the remaining 41 per cent stake did not took off due to a lack of clarity over the valuation of shares and the rights of the majority shareholder. Those issues could now be resolved.

Tata Consultancy starts screening candidates for reorganization of top management
Tata Consultancy Services will go for widespread reorganization of its top leadership, including the positions of chief technology officer and chief operating officer, with top two executives set to retire over the next one year. India’s biggest software services exporter will also pick a new head for its banking, financial services and insurance division. Four to five candidates are being evaluated to fill the position vacated by CEO-designate K Krithivasan.

Why it’s important: The company’s chief executive Rajesh Gopinathan resigned abruptly last month. That development and near retirement of other senior executives has prompted the firm to accelerate its succession planning.

State-run oil marketers to get Rs 800 crore to set up fast-charging stations
The central government has sanctioned Rs 800 crore under the Faster Adoption and Manufacturing of (Hybrid &) Electric Vehicles scheme to three public sector oil-marketing companies to set up 7,432 public fast-charging stations across the country. In the first instalment, the heavy industries ministry has released 70 per cent (Rs 560 crore) of the money to Indian Oil, Bharat Petroleum, and Hindustan Petroleum for installation and commissioning of upstream infrastructure and charging equipment of electric vehicle public charging stations at respective retail outlets.

Why it’s important: The subsidy to oil marketers will provide another push for green mobility. As sale of electric vehicles pick up, there would be increasing demand for charging stations.

Coca-Cola bets heavily on rural demand for chilled drinks as infrastructure improves
Coca-Cola Company is investing significantly in India along with its bottling partners as rural electrification and falling poverty open up new markets for its beverages in the country’s hinterland. “The infrastructure development that’s taking place in a systemic way across India is a key driver. A specific point in the case of India is electrification, and how that has transformed the landscape not only in large cities and towns, but (also) in the rural parts of India,” said John Murphy, president and chief financial officer at Coca-Cola. “It’s extraordinary progress that’s underway.”

Why it’s important: India is at an inflection point with its rapidly developing infrastructure. Rural electrification helps Coca-Cola sell chilled drinks by installing chillers in stores.

Viacom18 may earn more than Disney Star from ad revenues from Indian Premier League
Days ahead of the start of the Indian Premier League, Disney Star, which retained the TV rights for the tournament, is locking horns with Viacom18, which won the league’s digital rights, to grab a larger share of the Rs 4,500 crore advertising pie. Disney Star is hoping to garner between Rs 2,000 crore and Rs 2,400 crore in ad revenues. However, Media planners expect Viacom18 to grab nearly a 60 per cent share of the ad pie, which is expected to remain at the same levels as last year.

Why it’s important: If Viacom18 is able to garner higher revenues than Disney Star, it would mean a major shift in advertising earnings from television to digital channels. Moneycontrol