Business News at 10:00 am on 15th July, 2024

Let’s begin, India and Korea will hold the next round of talks this week to review and upgrade the bilateral Comprehensive Economic Partnership Agreement, a senior official stated. The talks are scheduled in Seoul from July 17-19. The review of CEPA which was signed in 2009 and came into force in 2010 – was agreed to in 2016. Since then ten rounds of talks have been held but pace had picked up in recent months. Some Korean officials also have been on record saying that talks may finally conclude in 2024. Both sides have exchanged the list of requests where they are seeking further opening up of trade partnership. Korea attempts to increase the level of openness of the Indian market.
Now from Industry section, the Big Five audit firms in India are facing a talent crunch. A regulatory clampdown and a higher number of “relatively safer” career opportunities elsewhere are pulling chartered accountants away from the audit profession. A senior partner at a Big Five firm told FE that the auditing verticals in top firms are operating with 20% lower staff than the required strength. At present, the top five firms have around 12,500 people in their audit function. Quote The amount of work is increasing every year but the staff strength is not growing as fast. Although we need to increase the capacity to handle the additional work and deal with the regulatory oversight unquote said audit vertical head at a Big Five firm.
Moving to Express Mobility, heatwaves followed by poor rainfall resulted in a disappointing start for the tractor segment in the new financial year, with retail sales falling 12% in the June quarter. Inventory levels also rose during the three months as dispatches from manufacturers were much higher than actual registrations, data from the Federation of Automobile Dealers Association showed. While the high base of the last year must be taken into account, the growth in dispatches Q1FY25 was just 0.48% year-on-year. This was much below the 5% growth predicted for the year by market leader Mahindra & Mahindra. As per Tractor and Mechanisation Association, manufacturers of 261,874 tractors domestically during Q1. Retails stood at 197,719 units in the quarter, according to FADA.
One more from Industry section, despite India being one of the biggest producers of paddy, wheat, oilseeds, milk, fish, fruits and vegetables, post-harvest losses of these produce remain high over the global standard which impacts the yield and farmers face losses. According to a Nabard study, in 2022, the losses after harvesting of the vegetables till it reaches consumers are estimated in the range of 4.87%-11.61% and that of fruits is in the range of 6.02%-15.05%. Although there are several measures being taken to reduce losses at the farm level, introduction of advanced cooling technology by an Israeli startup in the climate and agri-tech space, Natural Offset Farming , could change the scenario in coming years. NOF’s patented technology utilises liquid C02.
Next from city gas companies, City gas distribution companies Indraprastha Gas and Mahanagar Gas might have seen flat to marginal volume growth sequentially in the June quarter, and a fall in earnings on year. As per Elara Capital, IGL and MGL’s EBITDA earnings before interest, taxes, depreciation, and amortization is set to decline 16% and 31% on year, respectively, led by a 26-38% decline in EBITDA per scm margin partly offset by 7-11% volume growth. Quote Gross margin should decline sequentially for IGL as well. However, with normalization in opex (operational expenses) which was elevated in 4QFY24, unit EBITDA would likely be flat sequentially at Rs 6.6/scm against Rs 8.6/scm in the corresponding quarter last year unquote said Kotak Institutional Equities.
Over to Banking section, the asset reconstruction sector’s growth moderated to 15% in the previous financial year, down from nearly 32% in 2022-23, impacted by the continuous decline in gross non-performing assets in the banking system and the absence of major bad loan sale deals. The value of NPAs acquired by Asset Reconstruction Companies reached Rs 9.7 trillion as of March this year from Rs 8.48 trillion as of March 2023, according to Association of ARCs data. However, aided by strong economic growth, the redemption of security receipts by ARCs has risen by 30% in the previous fiscal. Lenders sell stressed loans to ARCs at a discount, in exchange for either cash or a mix of cash and security receipts.
Lastly, let’s have a look at todays Stocks which are in focus. These are HCLTech, Avenue Supermarts, Godrej Consumer Products, IREDA, Lupin. HCLTech on Friday posted a near 2% sequential decline in its topline at Rs 28,057 crore in the April-June quarter whereas Avenue Supermarts which owns and operates the retail chain D-Mart, on Saturday, reported its fiscal first quarter earnings with profit at Rs 773.82 crore up 17.5 per cent.