RCOM has made an ambitious plan to get out of debt by restructuring its Rs.39,000 crore of debt out of which lenders will make a provision of Rs.6000 crore in the third quarter. RCOM will now exit the SDR mechanism after it promised its creditors to sell its telecom towers business, real estate and other assets. This is the largest debt reduction and banks will not be required to take any haircut. Top lenders to RCOM included SBI, IDBI and Bank of Baroda. Apart from selling its towers, RCOM will also be selling its 4G spectrum and its optical fibre cable network across India.
GST collections for the month of November fell to the lowest level of Rs.80,308 crore, well below the average target level of Rs.91,000 crore per month. This could be largely attributed to the reduction of rates in over 200 items in the peak 28% bracket and that amounted to a genuine reduction of revenue for them. We had already seen a sharp fall in October and November only accentuates that trend. The GST Council is expecting substantial revenue leakages and has also decided to launch its nationwide launch of its e-way bill system from June onwards. December collections are likely to be still lower.
Shortly after the blast in a key oil pipeline in Libya, crude oil prices shot up sharply in the Brent Crude and the WTI market. The pipeline was run by Waha Oil which operates the line that carries oil to Libya’s largest export terminal. This could lead to a drop in oil output by 70,000 to 100,000 barrels per day leading to a huge disruption in global supply chain. The prices also went up after Saudi Arabia projected that it would increase its oil revenues by 80% by the year 2023. Apart from impacting the Libyan economy, the blast could also temporarily disrupt the demand supply equation for oil globally.
In the midst of the entire uncertainty surround Cyrus Mistry, there has been some temporary relief in the defamation suit of Rs.500 crore filed against him by R Venkataraman of Tata Trusts. A Mumbai Sessions Court had set aside the summons issued by a Magistrate’s Court. Venkataraman had filed a criminal defamation suit against Mistry and had sought a compensation of Rs.500 crore. Mistry had accused Venkataraman of being involved in fraudulent transactions by the Tata Group in Air Asia. The issue is currently under probe by the Enforcement Directorate.
For a long time, government investment in roads infrastructure was the driving force for growth in India. However, in the last few months massive road projects are increasingly up against a major hurdle. The 710 KM expressway project connecting Mumbai and Nagpur is now likely to be delayed by at least 2 years as the land acquisition is yet to be completed. With highways being constructed by the state government, land hurdles are being a real issue. The total highways that will be built this fiscal will be 3500 KM, sharply lower than the 10,000 KM built in the previous fiscal. The new law requires nearly 90% of the land to be acquired before the actual construction begins and that has proved to be a hurdle. In many projects like the Mumbai-Nagpur project, farmer resistance has stalled the project.
ONGC Videsh, the international subsidiary of ONGC, will now adopt a more inorganic approach to its expansion strategy. That means, it will rely more on inorganic acquisitions for expanding its output rather than depending on organic expansion. Last year ONGC Videsh spent $2.2 billion acquiring assets of an existing Russian project, which helped it raise production by 44%. It plans to enhance its capacity from 13 million tonnes currently to 20 million tonnes by the year 2020. Currently, Russia accounts for 56% of ONGC Videsh’s oil output with balance from other nations.
