Episode 457

Weekly Business Roundup at 10:00 am on 26th March 2023

In the weekly round-up of news related to business, finance, and the economy, we talk about possible ends to price wars after airline mergers, big shareholders seeking to cash in as volatility weighs, RIL cable firms removing Star channels, Canara Bank selling a stake in Russian joint venture to SBI, Swiss National Bank hiking interest rates by 50 basis points, and MSMEs.

Weekly business roundup at 10:00 am on 26th March 2023.

[Disclaimer: This transcript is auto-generated]

Let’s begin. Fare wars between airlines will soon become a thing of the past and travellers should brace for higher ticket prices. Tata Group’s move to merge its four airlines will give the industry better control of capacity, which will lead to improved yields through higher airfares, Campbell Wilson, MD and CEO, of Air India, said on Monday. Two players – IndiGo and Air India – will then control about 85% of the domestic market, thereby controlling prices. The two are looking to make timely additions to their fleets, currently at 960 aircraft. Speaking at the CAPA India Aviation Summit 2023, Wilson said that Pricing is a function of many factors, supply and demand, economic and demographic growth. There will be two significantly sized private airlines that have a responsibility to their shareholders to improve their financial returns.

Meanwhile, large shareholders in companies are increasingly looking at the block/bulk deal route to sell stakes, at a time when share prices are in troubled waters. Promoters and significant shareholders usually pick up stakes during market volatility to strengthen their holdings and shore up confidence among investors. However, market analysts say that large shareholders are now cashing in owing to the prolonged uncertainty. According to data, some big shareholders who have taken the exit route in recent weeks have been Dynasty, which shed its holding in Shriram Finance for over Rs 1000 crore and Hulst, which sold its stake in Coforge for close to Rs 2,500 crore.

Moving on. At a time when the Indian Premier League is round the corner, around 20 million television viewers may have to spend extra to watch the cricket league as three major multi-system cable operators –DEN Networks, Hathway Cable & Datacom and GTPL Hathway – have intimated subscribers about removing Star Sports and other channels of Star from their basic plans effective April 1. The development can also lead to a regulatory intervention if the consumers choose to approach the sector regulator, TRAI. Under broadcasting regulations consumers have the right to demand from their cable or DTH operators the channels they want to view. If the consumers as a group move to Trai complaining that the cable operators concerned have removed some channels from their base pack, the regulator is likely to direct them to restore the channels.

Next up, the MSMEs. Contrary to former MSME Minister Nitin Gadkari’s call for creating a rating system for MSMEs, the MSME ministry currently doesn’t have any proposal to implement a rating system for monitoring MSMEs. In a written reply to a question on whether the government has any proposal for the MSME rating system, the minister of state in the MSME ministry Bhanu Pratap Singh Verma informed Lok Sabha on Thursday that there is no proposal as such for the same. Importantly, Gadkari in November 2019 had announced that the government is in the process of launching ‘Digital data-based credit ratings’ for MSMEs to enable them to raise bank credit based on the ratings.

On to banking. Canara Bank on Thursday said it has sold its stake in Russian joint venture Commercial Indo Bank LLC to the other venture partner State Bank of India for about Rs 121.29 crore.CIBL, incorporated in 2003, is a joint venture in Russia between SBI (60 per cent) and Canara Bank (40 per cent). Canara Bank, in a regulatory filing, said it has received the entire consideration amount equivalent to Rs 121.29 crore on Thursday for the sale of its stake. The Bengaluru-based state-owned bank agreed to sale on November 11, 2022.

In some more banking news, the Swiss National Bank raised its interest rate by 50 basis points and signalled more to come as it resumed its inflation fight just days after the downfall of the country’s second-biggest bank became the epicentre of global financial turmoil, reported Bloomberg. Officials lifted the benchmark to 1.5%, an outcome predicted by most economists before Credit Suisse Group AG’s forced takeover by larger rival UBS Group AG clouded the outlook with worsened market turbulence earlier this week. Thomas Jordan in a statement said, quote, “It cannot be ruled out that additional rises in the SNB policy rate will be necessary to ensure price stability over the medium term,” unquote.

Lastly, taxpayers earning just a little above the Rs 7 lakh income tax rebate limit in the new concessional regime could be in for relief. The income tax authorities are understood to be looking at whether such taxpayers whose taxable income is just a tad over the Rs 7 lakh limit can also get the tax benefit. According to sources, a marginal relief to such individual taxpayers could be in the works in the amendments to the Finance Bill, 2023 by proposing a small deduction so that they can also avail of the income tax rebate and remain below the taxable limit.

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Weekly Business Roundup at 10:00 am on 26th March 2023