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IDBI, Vodafone India, and Idea reports losses, Ultratech may get Binani, NFRA to regulate auditors, and more

It was a day on which IDBI Bank reported losses of Rs.3602 crore for the second quarter. Over the last one year, IDBI Banks’ gross NPAs have shot up from 24.98% to 31.78%. Despite doubling provisioning for this quarter, the net NPAs are still at above 17% in the current quarter. The bank’s CEO is, however confident about returning to profitability by the first quarter of the next fiscal. The capital adequacy ratio of the bank dropped to 6.22%, which is well below the statutory minimum level of 9%. LIC will be infusing nearly Rs.20,000 crore into IDBI Bank and could be closed by the end of December quarter.


Vodafone India and Idea merger isn't profitable yet

For the merged entity of Vodafone India and Idea, the merger is definitely not bringing good tidings. The entity reported net losses of Rs.4973 crore for the second quarter on total revenues of Rs.7664 crore. While depreciation stood at Rs.3005 crore, the interest cost was at Rs.1951 crore. During the quarter, the merged entity saw its combined ARPUs falling to an all-time low of Rs.88, and that is severely impacting profitability. Interestingly, the British parent, Vodafone PLC, reported a net loss of €7.8 billion in the current quarter of which €3.5 billion was on account of India write-downs.


NCLAT approved the revised tender of Ultratech for Binani Cement

It finally looks like Binani Cement may fall into the lap of Ultratech of the Aditya Birla Group after NCLAT approved the revised bid of Ultratech for Rs.7950 crore. In the original bidding process, Dalmia Cements had emerged as the single largest bidder by bidding at Rs.6932 crore. However, Ultratech subsequently put up a bid for Rs.7950 crore which has also been approved by the Committee of Creditors. Binani had approached the NCLT Appellate Tribunal which ruled in favour of Ultratech. Earlier this year, the Supreme Court had prevented Ultratech from adopting an out-of-court settlement with Binani.


New NFRA to regulate accounting and audit standards

In a move intended to make auditor firms more accountable, the Ministry of Company Affairs (MCA) announced the setting up of a super audit regulator, National Financial Reporting Authority (NFRA). The NFRA will regulate accounting and audit standards and also the quality of service of auditors. These regulations will cover listed and large unlisted companies with the sole aim of protecting the public interest. The role of the ICAI will be limited to making recommendations on new accounting and auditing standards, which will be taken into consideration by the NFRA before real decisions.


OPEC and Russia must get together to curtail supply to prevent further hardening of oil prices

It is interesting the way the fortunes of crude have turned around. A little over a month back, oil was at $86/bbl, and most experts were talking about oil getting closer to $100 this year. In less than 2 months, the price of oil has fallen by $20 to a level of $66.30/bbl. Firstly, the Iran sanctions got diluted after Trump allowed India, China, Japan, Turkey, Korea and 3 other nations to continue importing from Iran. This did away with the worries of the supply shortfall in the oil market. The fears of a trade war between the US and China are slowing down the pace GDP growth, and even the IMF has downgraded global GDP growth by 20-30 basis points. This slowdown fears have also taken the oil lower. Unless the OPEC and Russia again get together to curtail supply, prices are unlikely to harden again.


M&M reports higher than expected net profit in the second quarter

Despite the contraction in operating margins, M&M reported higher than expected net profit in the second quarter at Rs.1779 crore. Net profits were higher by 26% on a YOY basis. Revenues were by 6% at Rs.12,790 crore in the quarter. The company witnessed steady growth in its domestic sales as well as in its international export sales. M&M has also admitted to higher input cost pressures although it plans to pass on these costs to the end users. The shift to the production of the BS-VI vehicle under a revised target set by the Supreme Court could be the big challenge for the company.