It will now become a lot easier for start-up promoters to retain control of the company through DVR shares. Government has scrapped profit track record requirement for issue of DVR shares, with a view to helping first-generation entrepreneurs retain control. Now, promoters with even 10% holding can have up to 74% of the voting rights in a company. Also, the 3-year profitability track record requirement for DVRs has been scrapped. Also, such shares can be allotted to promoters as part of ESOP for 10 years instead of 5 years. This was being demanded after the promoters lost control of Mindtree.
The tanker wars in the Middle East may have just got a little murkier. A day before the UK was to release the Iranian tanker from the Strait of Gibraltar; the US has issued a warrant to seize the Iranian tanker, which had been seized by the UK near the Strait of Gibraltar. Iran has already responded by seizing two British flag tankers near the Strait of Hormuz. The Iranian tanker was allegedly transporting oil to Syria, in contravention of EU sanctions on Iran. Oil traders expect this move to exert upward pressure on Brent Crude prices. Oil prices have been down on global slowdown worries.
The problems of the auto industry may be getting more acute as now Hyundai has halted production at its car plant in Chennai. India’s second-largest passenger car manufacturer, Hyundai, has shut down its Chennai plant for a few days citing weak demand. Hyundai joins an increasing list of companies like Maruti, M&M, Tata Motors, Ashok Leyland and TVS who have resorted to shutting operations to reduce supply. Auto companies are already laying-off temporary workers and car sales were lower by 31% in July. Auto sales have been hit by volatile fuel prices and higher funding costs.
Despite all UNSC members, except China, supporting India, the UN Security Council has left its decision on the Kashmir issue open to interpretation. While India celebrated the UNSC decision to stay out of the Kashmir issue, China gave a different interpretation of the entire episode. China was one of the key UNSC members that favored Pakistan. According to China, the UNSC statement should be interpreted as a call to both India and Pakistan to avoid taking any unilateral decisions in Kashmir. India has held that Kashmir is an internal matter and that the UN resolution only applies to POK.
In the stock markets last week, most of the damage happened on Tuesday when the Sensex corrected by 624 points. Nine of Top-10 firms on Nifty lose Rs.84,354 crore in market capitalization. Despite the bounce in the latter half of the week, Nifty and Sensex closed the week in the red. Selling was heavy across banks, autos, FMCG and metal stocks with on RIL managing to hold in the positive. Meanwhile, the FPIs pulled out Rs.8319 crore from Indian equities on growth worries in August. This is a continuation of a trend that began post the Budget on July 05th. Even as FPIs have been worried about FPI tax, the selling continued during the week on global risk-off sentiments. However, high real rates in India and the 500 bps yield differential with the US ensured that Rs.2100 crore was infused into debt.
Torrential rains now create a major farm inflation headache in North India. Even as the state of Andhra Pradesh has been suffering from flooding of Krishna River, North India has been reeling under torrential rains across Punjab, Haryana, Rajasthan and even Western UP. This is likely to hit not only the agri output in many centres but also impact the flow of agricultural products to the mandis. Food inflation could be the item to watch out for. In the last few months, food inflation has continued to remain higher but the real picture will be known only when the Kharif output numbers are announced.
