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Episode 379

Business News at 09:30 am on 7th February 2023

Listen to the latest news on business and finance where we talk about the selling of its indirectly held stake in ITC, LIC Housing Finance’s net profit falling, Railways infrastructure, new small savings scheme for women. We also talk about the rise of Indian startup ecosystem.

Today’s Latest Business News at 09:30 am on 7th February 2023.

[Disclaimer: This transcript is auto-generated]
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The Centre has revived a plan to sell part of its indirectly held stake in ITC and the transaction could even be completed in the current financial year, according to an official source. The FMCG-to-hotel company’s share price touched a 52-week high on Monday, after markets figured out that the tax increase proposed in the recent Budget on specified cigarettes won’t dent the company’s profits much. If the transaction happens before March, the government could easily meet its revised disinvestment target of Rs 50,000 crore for FY23, given that it has already netted Rs 31,106 crore, and a sale is also being planned of a part of its residual stake in Vedanta-controlled Hindustan Zinc. The government holds a prized 7.86% in ITC via the Specified Undertaking of the Unit Trust of India . At current market prices, this stake is worth about Rs 37,390 crore, but the proposed transaction could be only a fraction of this. The ITC share price, which used to languish around Rs 200 a year ago, touched Rs 388.2 on the BSE on Monday, before closing at Rs 383.3, up 0.74% from the previous close.

Speaking of Insurance, LIC Housing Finance’s net profit fell 37% year-on-year in the December quarter due to a rise in provisions. The lender posted a bottom-line of Rs 480.3 crore in October-December, up 57.5% on quarter. The bank’s provisions rose to Rs 7,285 crore in the December quarter from Rs 355 crore a year ago. The housing financier’s stage 3 exposure fell to 4.75% as on December 31 from 5.04% a year ago. Managing director and chief executive Y Viswanatha Gowd said, quote, “We are expecting the gross non-performing asset to less than 4% by the end of January-March. Good recovery is taking place across ticket sizes. The trend is improving in the retail segment and project finance,” unquote. Cost of funds rose by 71 basis points year-on-year to 7.4% in the December quarter. The housing financier’s bottom-line was also aided by a rise in its outstanding loan portfolio. Outstanding loan portfolio rose 10% year-on-year to Rs 2.9 trillion as on December 31.

Let us have talk on infrastrucutre, Despite a sharp rise in capital expenditure by the railways over the last few years, the national transporter’s operating ratio still hovers around 100, meaning it makes little operational surplus. This is mainly because efficiency gains and new revenue streams from the assets created come with a lag. Another aspects of the aggressive capex drive is that it relies largely on Budget outlays and borrowings via IRFC and other sources, and private participation in projects at best have begun to look up. For the third year in a row, the government extended robust budgetary capex support for the railways to aid its capacity creation. The budget outlay is Rs 2.4 trillion for financial year 24, up 50% on year and accounted for nearly a fourth of the Centre’s Rs 10 trillion overall capex outlay for next year.

Meanwhile, The new small savings scheme for women – Mahila Samman Savings Certificate– that was announced in the Union Budget 2023-24 may not offer any tax benefits, like some other schemes do. According to sources, the new scheme will offer a guaranteed rate of interest but will be taxed on the lines of fixed deposits. Hence, the interest income will be taxable. Other small savings schemes such as the Public Provident Fund, Sukanya Samriddhi account and five-year post office deposits and national savings certificates offer tax benefits, with the former two under the exempt-exempt-exempt regime, where deposit, interest income and withdrawal are all exempt from income tax. The government is however, banking on the high interest rate to make the new scheme attractive to subscrbers. Finance minister Nirmala Sitharaman had in the Union Budget proposed the one-time new small savings scheme for women to commemorate the Azadi ka Amrit Mahotsav.

Lastly, Funding in the Indian startup ecosystem rose 3% from $935 million in December 2022 to $962 million in January 2023, thanks to a small increase in late-stage funding. The number of funding rounds, however, dropped by 22% during the same period. According to Tracxn’s India Tech Monthly Funding report, late-stage funding accounted for the increase in funding with a total of $688 million being raised in January 2023, an increase of 16% compared with December 2022.Seed-stage funding saw a decrease of 9% from $61 million in December 2022 to $56 million in January 2023, while early-stage funding saw a decline of 30% from $283 million to $199 million. January saw at least two $100 million rounds from fintech apps PhonePe and KreditBee. PhonePe had raised $350 million in a Series D round led by General Atlantic at a pre-money valuation of $12 billion.

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Business News at 09:30 am on 7th February 2023