Author: Santosh Nair

Indian Railways to manufacture essential medical items for coronavirus patients

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Indian Railways will use its manufacturing and production facilities to make essential medical items for coronavirus patients.

The Railway Board has asked its general managers to assess feasibility of manufacturing items like simple hospital beds(without mattress), medical trolleys for hospitals and quarantine facilities, IV stands, stretchers, hospital footsteps, hospital bedside lockers, washbasins with stands, ventilators, personal protective equipments like masks, sanitizers, water tanks among others.

Railways has consulted its production units and zonal railways workshops and has decided to use units like Chittaranjan Loco Works, Integral Coach Factory in Chennai, Rail Coach Factory in Kapurthala, Diesel Loco Works in Varanasi and Rail Wheel Factory in Yelehanka to manufacture the essential medical items.

“Railway Board has entrusted the task to the General Managers to explore the feasibility in consultation with Chief Medical Officer of the zone and manufacture it in large quantities,” the Railways spokesperson said.

The exact items will be decided in consultation with the principal chief medical directors in the specific railway or production area.

While railways has suspended passenger trains across the country till March 31, it is running goods trains round the clock to ensure supply of essential commodities.

Commodities like food grain, salt, sugar, milk, edible oil, onions, fruits and vegetables, petroleum products, coal etc are being loaded at railway terminals and railway staff has been deployed at various good sheds, stations and control offices.

On March 23, 891 rakes were loaded by Indian Railways, including 391 rakes of coal, 27 foodgrain rakes, 125 rakes of iron ore, 48 rakes of steel, 25 rakes of cement, 28 rakes of fertilizer, 106 rakes of container etc.

“Close coordination is being maintained with the state governments so that rakes of essential commodities are handled smoothly without any delay, amidst various restriction imposed in the wake of COVID-19,” the Railways said, adding it runs 9,000 freight trains daily.

Indian Railways has also slashed the demurrage and wharfage rates for goods and parcel at half of the prescribed rates till March 31.

“Time for loading/unloading of wagons and time for removal of consignment from railway premises has been increased to double of the prescribed free time till March 31,” the Railways said.

Earlier today, the Railway board had said contractual employees involved in services provided in train, for sanitation, pantry car and other commerical activities will not be removed.

Railways has at least 50,000 contractual and outsourced employees

“Such temporary, outsourced, contractual establishments etc should be paid accordingly till expiry of lockdown. Maximum payment to be limited to 70 percent of contract value for contracts awarded on lumpsum basis,” Railways added.

The payment is limited to 70 percent of contract value as labour component of a contract is considered and not material component.

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Rajiv Bajaj says vehicle makers must compensate dealers for unsold BS-IV stock

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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As India’s auto sector remains divided on the extension of the BS-IV deadline of March 31, Bajaj Auto Managing Director Rajiv Bajaj made it clear that the onus was on vehicle makers to compensate dealers for unsold stock.

Rajiv Bajaj told CNBC -TV18, “We continue to object to any extension for BS-IV stocks as this unjustly penalizes those of us who have complied with the law in letter and spirit. In our view defaulting, OEMs (original equipment manufacturers)  must reimburse their dealers for redundant BS-IV stocks, if any on April 1”.

Bajaj said he was confident of liquidating all BS-IV stock in a week.

“Despite the impact of COVID-19 Bajaj expects to clear all of its BS-IV stock by the end of this week through a combination of strong and timely promotional interventions by the company, supported ably and equally through on ground activation by its dealers,” he said.

Bajaj Auto on Tuesday launched a discount scheme for Haryana, Punjab and Rajasthan. The company is offering discounts between Rs 5000 and Rs 13,000 on BS-IV stock till 31st March. CNBC-TV18 learns from sources that the company’s BS-IV stock is roughly around 25000 units.

Hero MotoCorp which has moved Supreme Court recently, is also offering discounts in the range of Rs 5000 -10,000. Sources at Hero MotoCorp say the company’s BS-IV inventory is roughly 2 lakh units.

Speaking to CNBC-TV18, Nikunj Sanghi, Director International Affairs, FADA said, “It is difficult to give numbers at this point of time but the two wheeler inventory is definitely much higher than what could be liquidated in the current situation. We also expect manufacturers to support the dealers for the unsold inventory in a manner they deem fit so as to ensure that the retail business structure does not collapse. We are confident they will because they are concerned about the financial health and longevity of the dealers”.

Both Hero MotoCorp and HMSI have moved court to seek a grace period to sell BS-IV stock and are urging the auto industry to support dealer partners during this lockdown period. However, other two wheeler majors have opposed the move stating that these companies are solely responsible for not being able to manage a smooth transition to BS-VI.

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SEC clean chit for Infosys in whistle blower allegations of misconduct by top brass

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Infosys on Tuesday informed stock exchanges that the US Securities Exchange Commission has concluded its investigations into the whistle blower allegations of October 2019, and that it did not “anticipate any further action by the SEC on this matter.”

In its statement, the company said: “”As previously disclosed, in connection with the Audit Committee’s investigation into certain whistle blower complaints which concluded in January 2020, the Company cooperated with an investigation by the United States Securities & Exchange Commission (‘SEC’) regarding the same matters. The Company received notification from the SEC that the SEC has concluded its investigation and the Company does not anticipate any further action by the SEC on this matter.”

However, the probe by India’s market regulator Securities and Exchange Board of India into the whistle blower allegations is still on.

On this, Infosys said: “The Company has also responded to all the inquires received from the Indian regulatory authorities and Company will continue to cooperate with the authorities should there be any additional requests for information.”

In October last year, an anonymous group calling itself ‘ethical employees’ had written to the board of Infosys and the US Securities Exchange Commission (SEC) alleging that the company was taking ‘unethical’ steps to boost short term revenue and profits.

The letter accused CEO Salil Parekh of bypassing reviews and approvals for large deals and that he directed employees from the finance team to make wrong assumptions to show margins. It also accused the CFO of being party to such practices.

In January, Infosys Audit Committee gave a clean chit to the management on all counts in the investigation on the allegations made in the whistle blower letter. However, SEC and SEBI began independent probes into the matter.

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COVID-19 fallout: Have a heart for dealers, Hero Motocorp urges peers

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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India’s largest two wheeler company Hero Motocorp has urged other players in the segment to show “compassion” for dealers saddled with unsold BS-IV stock.

The plea comes against the backdrop of a rift among two-wheeler players over the extension of the Supreme Court deadline of March 31 for the sale and registration of BS-IV vehicles.

Recently, when Hero MotoCorp, India’s largest two wheeler manufacturer, moved the Supreme Court to seek extension of the BS-IV deadline by three months, other two-wheeler makers were divided .

Honda Motorcycle and Scooter India (HMSI) too have moved the apex court seeking  an extension.  But sources at Bajaj Auto, TVS and Royal Enfield said they had minimal or no BS-IV inventory and did not want an extension.  Basically, they would be at a disadvantage from cheaper BS-IV stock in the market after March 31.

Now, Hero MotorCorp has urged the industry to show compassion towards dealer partners.

Speaking to CNBC-TV18, Hero MotoCorp spokesperson Bharatendu Kabi said, “In normal course our dealers could have easily sold the remaining BSIV stock during the balance period in March before the BSIV deadline. In fact our retail sales had been at double digits this month before the CoVid-19 disruptions set in.”

He said Hero MotoCorp stopped production of BS-IV models in a phased manner starting with 50 SKUs in December itself and all remaining models of BSIV by Feb 19.

“We stand with the dealer fraternity who have also represented the same matter through FADA. The matter is sub-judice and we do not want to make any further comments at this stage. This is the time that the dealer community which is the backbone of the two wheeler industry needs support and compassion.”

Hero Motocorp’s plea is expected to come up for hearing on March 27.

YS Guleria, Senior Vice President, HMSI , had a similar view as Kabi.

“This (the plea for extension of deadline) is basically on behalf of our dealers.,” he told CNBC-TV18.

“HMSI launched it’s first BSVI product in September last year and we have dispatched over 6.5 lakh BS-VI products already. We were confident of liquidating all BSIV stock by 25th March. However, due to CoVid-19, there have been lockdowns and sealing of borders. Despite our best efforts we will not be able to liquidate BSIV stock by March 31, as almost 90 percent of our dealerships are closed,” he said.

The central government’s move to strictly enforce lockdown measures, especially in 75 districts with CoVid-19 cases has sent dealers into panic mode.

Speaking to CNBC-TV18, Ashish Kale, President, Federation of Automobile Dealers Association told CNBC-TV18 that dealers were saddled with BS-IV inventory worth Rs 6400 crore and that over 12000 dealer outlets were closed because of the lockdown.

FADA has already requested the Supreme Court for an extension of the BS-IV deadline and even sought assurance from vehicle makers body SIAM, requesting them to take back unsold BS-IV stock.

India’s largest car maker Maruti Suzuki has not said anything specific on the impact of the lockdown on its dealerships. “The scenario is evolving and it is difficult to give a number”, said the company.

CNBC-TV18 has learnt that there could be 6-7 lakh BS-IV two wheelers still in stock with various dealerships and liquidating them before March 31 is going to be a major challenge.

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Short selling curbs may not help much; D-Street mood to remain edgy this week

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Indian shares may continue to seesaw this week, in the absence of any clear progress both globally and locally in the fight to contain the Coronavirus pandemic.

The government today announced lockdown of 75 districts, underscoring the seriousness of the problem. This will weigh on sentiment as the resultant toll on economic activity will hurt the earnings of many industries.

The sentiment in global markets too will influence the broader trend. On Friday, major US indices crashed 4 percent, with the Dow Jones Industrial Average suffering its worst weekly loss since October 2008.

Last week, benchmark indices Sensex and Nifty shed 12 percent each, with financial services stocks being among the worst performers. Midcap stocks too were pummeled.

Traders and investors are hoping for a relief rally with the market having posted its fifth straight week of weekly losses. The SEBI measures to curb short selling will kick in from tomorrow, and market players feel it could provide a temporary floor for prices.

Key among the measures is one banning sales in futures and options beyond Rs 500 crore, unless the incremental sale positions are a hedge against shares held in the portfolio.

In addition, margins have been imposed on cash market trades as well. This could cut both ways as buyers too will have to put up margin ahead of purchases.

Players say the curb on short selling will be little help if investors continue to offload shares. If anything, the additional margins and short selling curbs will reduce liquidity in the market and add to volatility.

Most market experts are of the view that valuations are attractive, but nobody is willing to call a bottom yet.

Some players feel a 50-basis point cut in interest rates by the RBI could assuage sentiment temporarily. The RBI has drawn flak from a section of the market for not announcing any cut in interest rates yet.

Developments in the US money markets too will be watched closely as there are clear signs of stress emerging.

On Friday, the US Federal Reserve said it will lend money to banks at low rates, against short-term, highly rated municipal debt as collateral. This will encourage banks to buy local debt from money market mutual funds, in turn creating liquidity in securities that were becoming hard to trade because of the carnage in financial markets.

Also read: Explained: SEBI’s measures to curb short selling through F&O, fresh margins on cash market trades

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To buy or not to buy? Pros say some stocks look incredibly cheap but won’t call bottom

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Benchmark indices Sensex and Nifty closed at their lowest levels in over three years on Thursday as investors dumped stocks, fearing the worst for the economy and companies from the Coronavirus disruption. The most seasoned of fund managers and traders say that they have not seen a selling fury of this magnitude in more than two decades.

Stock prices have come down to levels unimaginable just a month back. And yet few are willing to call a bottom, as authorities across the globe struggle to contain the epidemic.

So what should an investor do in such a market?

CNBC-TV18 spoke to these veteran market experts during the course of the day and this is what they had to say:

Samir Arora, Helios Capital

There is no point in trying to find a bottom. Investors should sit on the sidelines for now. We are not looking at any bargain buying for now. Economic recovery will take longer than the stock market recovery.

Arvind Sanger, Geosphere

There will be more pain in India (Indian market), valuations are not attractive yet. We are buying, but very slowly. One can look at high-quality banks and companies with exposure to the rural economy. I am positive on companies related to healthcare directly and indirectly. Banks’ valuations are getting attractive, but investors seem to be lacking confidence.

Sunil Singhania, Abakkus Asset Management

Even die-hard optimists like me are finding it difficult to invest until stability returns. It is hard to call this a bottom, but valuations certainly are compelling. Have started deploying money in the last 2-3 days. We will buy more once volatility reduces.

Andrew Holland, Avendus Capital

No matter how low interest rates are, there is no cash flow to service the loans. Companies will have a cash flow and payment problem due to CoVid-19 disruption. Even if there is a ban on short selling, it will not work in the present environment.

S Naren, ICICI Prudential Asset Management

Investors must double on their investments at current valuations. This is the time to invest and forget. You will never have markets so cheap without a problem.

Venugopal Garre, Sanford Bernstein

Nifty should bottom out at 14-15 times price earning. One should look at large caps with good free cash flow and low debt. We are positive on stocks like Maruti, Reliance, TCS. Investors should focus on quality of the bank’s loan book, not valuations or growth. We are positive on Kotak Mahindra Bank and Bajaj Finance.

Ajay Srivastava, Dimensions Capital

Can’t say whether this is a bottom, but stocks like HDFC Bank and Nestle are good companies to invest at this point in time.

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Coronavirus impact drags India hotel occupancy 12 percent lower in first week of March

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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The Coronavirus outbreak is slowly beginning to take a toll on India and the hotel business, says a report by Dolat Capital, quoting data by Smith Travel Research.

“The STR data for the first week of March shows that hotels in India witnessed a 12 percent drop in occupancy. Our check with STR reveals that drop in occupancy and RevPAR (revenue per available room) are similar. Business cities Gurugram, Bengaluru, Hyderabad, Mumbai etc have seen a larger drop,” says the report.

Dolat analysts believe the drop in successive weeks would be higher.

“This would be on account of the central and state governments taking stringent measures to curtail the spread of the virus by implementing travel bans, revoking visas & restricting some states to operate at full capacity, the impact on hotels is inevitable,” the Dolat report says.

Hotels in India have seen significant client retrenchment, transient and MICE (Meetings, incentives, conferences and exhibitions) booking cancellations, international corporate travel pullbacks and a general fear amidst domestic travellers to postpone nonessential travel, the report says.

Hospitality and aviation stocks have been the hardest hit during the market meltdown over the last couple of weeks.

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KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

D-Street eyes relief as Wall St rebounds; US corporate debt market getting ugly

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Investors in Indian stock markets are hoping for a continuation of the relief rally on Saturday, following the spectacular rally on Wall Street on Friday. European stocks too rose on Friday, but gave up some of their gains towards the close, reflecting the cautious mood among investors.

Back home, market gurus are advising investors to start accumulating stocks, but nobody is sticking his or her neck out on whether the market is anywhere close to bottoming out.

Given the ferocity of the fall over the last couple of weeks and the general mood of panic globally, markets could swing wildly in the near future with occasional relief rallies.

A key thing to watch out for would be the developments in the $9-trillion US corporate debt market. CNBC.com’s finance editor Jeff Cox writes that interest rates on the lowest-rated companies have spiked and default rates could climb.

Marketwatch.com’s Sunny Oh writes quoting market experts many firms in industries like airlines and energy could go underwater due to travel restrictions and cities and states shut down sporting, cultural and entertainment events. The oil price war started by Saudi Arabia and Russia is further hurting many energy companies.

Some experts are predicting a 2008-like situation in the credit market if investors try to pull out money from bond funds invested in corporate debt.

If that happens, it could have a cascading effect on other segments of the financial markets as well as fund managers incurring losses in bond funds would sell other holdings to raise cash.

Simon Powell of Jefferies is bearish on global equity markets and feels there is still some downside left. He told CNBC-TV18 that the Coronavirus pandemic has hit at a time when global markets were both overvalued and over-leveraged. He expects consumption to take a big hit given weak sentiment world, and that the global economy could be headed for recession.

Morgan Stanley’s Ridham Desai opines that sentiment has gone below the lows of 2008 and valuations are their lows of 2008. He is advising investors with a 12-month view to start buying stocks though it is hard to say if the sell-off in the market is almost done with. He says that price to book is a more reliable valuation parameter in these times as the earnings outlook is highly uncertain.

Mark Mobius of Mobius Capital Partner too feels it is a good time to be accumulating stocks as valuations have become attractive. He told CNBC-TV18 that in times of panic like these, the recovery too is usually very fast.

Despite attractive valuations, investors may not be in a hurry to buy. For one, most of them would have suffered significant losses over the last few weeks, and may lack the confidence to invest meaningful sums.

Positions of many HNIs are said to have been squared up on Friday as they were unable to put up the additional margins resulting from the steep erosion in stock prices.

Already, participation from high net worth individuals and retail investors in equities has been quite tepid of late, brokers say. Much of the retail money coming into the stock market is through the mutual fund route. This is unlike during the times of previous such crashes in 2001 and 2008 when many retail investors were directly investing in the stock market.

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KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Yes Bank founder Rana Kapoor arrested by ED for alleged money laundering

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Co-founder and former CEO of crisis-hit Yes Bank, Rana Kapoor has been arrested by the the Enforcement Directorate (ED) under provisions of the Prevention of Money Laundering Act (PMLA) in the early hours of Sunday, officials said.

The arrest followed almost 20 hours of questioning by the ED officials.

Kapoor has been charged with money laundering, and has not been co-operating in the probe, officials said. His residence had been raided on Friday night, hours after the RBI had placed Yes Bank under moratorium and capped deposit withdrawals at Rs 50,000.

Kapoor will be produced before the Prevention of Money Laundering court around 11 in the morning to obtain custody, the officials said.

The ED is investigating Kapoor’s role in connection with the disbursal of a loan to a corporate and allegedly taking kickbacks in his wife’s accounts. The agency is also probing other irregularities, officials said.

The case against Kapoor is also related to the DHFL probe as Yes Bank had loaned money to the Kapil Wadhwan-promoted non-banking finance company.

Yes Bank’s exposure to DHFL through short term debentures between April-July 2018 was Rs 3700 crore. DHFL had sanctioned a loan of Rs 600 crore to Doit Urban Ventures, which was reportedly controlled by the Rana Kapoor family.

Earlier on Friday, the State Bank of India (SBI) said it will pick up a 49% stake in Yes Bank under a government-approved bailout plan, with Finance Minister Nirmala Sitharaman assuring depositors that their money is safe.

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KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow