Episode 355

Business News at 09:30 am on 23th January 2023

Listen to the latest news on buisness and finance where we talk about possible customs duty hike in the Budget for Financial Year 24, dismal starrt of earnings season of companies, income tax department, rise in public offerings and direct sales. We also talk about the Industry sector.

Today’s Latest Business News at 09:30 am on 23th January 2023.

[Disclaimer: This transcript is auto-generated]

The government has zeroed in on dozens of products across sectors — including aviation, electronics, steel and industry — for possible customs duty hike in the Budget for Financial Year 24 to curb “non-essential imports” and improve local production, official sources told The Financial Express. Products such as private jets and helicopters, select consumer electronics products, plastics, certain iron & steel products, jewellery and leather could witness higher duties. At the same time, the government is also weighing proposals for duty cuts in some cases, especially to ensure smooth imports of raw materials. The commerce ministry has suggested that the import duty on gold and certain other products in the gems and jewellery sector be trimmed to boost exports of finished products. In the last Budget, the government had raised the import duty on gold to 15% from 10.75%. The “rationalisation” of import duties is also being contemplated to correct the inverted duty structure where raw materials are taxed at a higher rate than the finished goods.

Speaking of Industry, Earnings season has got off to a dismal start with most companies reporting weak numbers even as top software players have fared reasonably well. Net profits, for a sample of 165 companies, excluding banks and financials, were down 8% year-on-year in Q3 Financial Year 23 as firms continued to grapple with high costs and only a modest rise in revenues. Demand has clearly tapered off post the festive season and has been hurt by inflation. At the same time, managements are reluctant to cut prices citing the recent spike in commodity prices. Although raw material pressures eased significantly compared with previous quarters, the growth in revenues during the December quarter was far more muted leading to a 186 bps fall year-on-year in operating profit margins. The ratio of raw materials to sales went up by just 33 bps year-on-year in Q3, a much smaller increase than the 470 bps in Q2 and 717 bps in Q1. However, a more muted rise in revenues, at only 16% y-o-y put pressure on margins. In Q2, revenues had increased by 28.5% year-on-year while in Q1, they had grown by 39% year-on-year.

Meanwhile, Faced with a huge backlog of cases and with an aim to cut down litigation, the income tax department may offer a fresh dispute resolution amnesty scheme for taxpayers. According to sources, the finance ministry is contemplating the move that would allow taxpayers to resolve cases stuck in litigation and appeal at various fora. Taxpayers will have the option to pay the disputed tax amount and a penalty of 10-20% to dispose of the case. The move is being thought of at a time when there is a huge backlog of pending cases, especially at the level of Commissioner of Income Tax Appeals due to the pandemic, when many hearings could not take place.

Let us have talk on market, Riding on a rise in public offerings and direct sales, secondary sales by financial sponsors have been steadily rising since 2019 and recorded $4.6 billion in calendar year 202 . However, this is nearly half of the $10.65 billion secondary sales recorded in calendar year 21. The total exits by the financial sponsors, private equity and venture capital firms, stood at $16.4 billion in calendar year 22 while it was $35.5 billion in the previous year. The secondary sales as a percentage of total exits was at 21% in calendar year 18 and calendar year 19 each, 23% in calendar year 20 and 30% in calendrar year 21. However, it fell to 28% in calendar year 22, according to Kotak Investment Banking data. However, the secondary sales nearly halved from $10.65 billion recorded in calendar year 21, while the total exits for the year stood at $35.5 billion.

Lastly, In the absence of tariff hikes and lesser addition of subscribers, Reliance Jio’s revenues and average revenue per user is growing at a slower pace, if the last three quarter’s performance is taken into account. In the October-December quarter, Jio Platforms, Reliance Jio’s parent company, revenue from operations rose 2.5% quarter-on-quarter to Rs 24,892 crore, compared to a 3.4% growth in the July-September quarter, 5.4% growth in the April-June quarter, and 8.1% growth in the January-March quarter last year. Bulk of the revenues of Jio Platforms comes from its telecom services arm, Reliance Jio.The company’s net profit also witnessed a similar trend largely due to a weak growth in the revenues and increase in depreciation due to recently acquired spectrum and increase in network expenses owing to 5G rollout. In the October-December quarter, Jio Platforms net profit rose 3.2% quarter-on-quarter to Rs 4,881 crore, compared to a 4.4% growth in July-September quarter.

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Business News at 09:30 am on 23th January 2023