MHA issues lookout notice against promoters of DHFL
The Ministry of Home Affairs (MHA) has issued a lookout notice against DHFL promoters in an investigation pertaining to shell companies, reports ET Now in a newsbreak. 
 
According to the channel this follows a request of the Ministry of Corporate Affairs (MCA), which had earlier found shell companies associated with DHFL, the controversial company, which is facing an acute liquidity crunch in the wake of the IL&FS (Infrastructure Leasing and Financial Services) debacle. 
 
Less than a few days ago, the liquidity crisis at DHFL worsened and it stopped permitting premature withdrawal of deposits. It also stopped accepting new deposits. 
 
On 15th and 17th May, in a two part article by Moneylife had exposed how the crisis at the shadow banking company was unravelling after the delayed downgrade by the rating agencies. The article argued that DHFL’s promoters, driven by and the race to increasing market-capitalisation, “simply lost sight of solvency itself which is now threatening its very survival”.
 
The DHFL stock has lost over 82% of its market value in the past year. 
 
At the end of January, Cobrapost after a sting operation had alleged that the promoters had siphoned off Rs31,000 crore to create private wealth through a network of shell companies.
 
Even earlier, in December 2018, Moneylife wrote how loans to promoters had structured a deal that allowed them to borrow from mutual funds and indirectly inject money into DHFL to boost its networth. 
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    COMMENTS

    Prabhu

    4 months ago

    What about secured NCDs of DHFL?,Ashraya deposits of 14 months maturity?

    lalit

    4 months ago

    What is the status of secured ncds issued by dhfl in wake of the current crisis

    Ramesh Poapt

    4 months ago

    acid test of regulators/govt to tackle DHFL issue, a catch 22!

    Ajay Sharma

    4 months ago

    "...reports ET Now..." Is this credible journalism now? Please improve your standard of journalism. I refuse to believe the editors of Moneylife knowingly let this be published.

    REPLY

    Sucheta Dalal

    In Reply to Ajay Sharma 4 months ago

    What is the problem? The Economic Times and ET NOW are clearly credible news sources with a far wider coverage than us. Why would our readers not get the benefit of breaking news with full credit being given to the original source?? Very curious about your apparent anger -- we are a tiny boutique publication that cannot possibly do everything, everywhere with very limited feet on the ground!!!

    Ajay Sharma

    In Reply to Sucheta Dalal 4 months ago

    Thanks for the reply. (Please note that I am a loyal fan of yours and Mr Basu's, having read several of your books and make it a point to read all of your Moneylife articles.) I beg to differ that ET is a credible news source; they are popular because they are everywhere, not because they are good. The hallmark of good journalism is credibility that comes from having verifiable sources; more often than not this credibility is attributed to journalists and not news companies (that may have vested interests and ET's business model ensures it does). If Moneylife is so tiny that it cannot verify every rumour/fact, then why bother? Stick to what you're good at! Don't get caught up in the race the publish first for the sake of clicks.
    My issue with much of your DHFL coverage, and NBFC reporting of late, is that it has been useless to stakeholders. Moneylife has merely been repackaging mainstream news without any value-add (it has not even added its own credibility to the news!). If you or another author were to come out and say "a source reported to Moneylife..." that would be valuable information. Articles like this just add to the noise. You might as well just syndicate these types of articles.

    Sucheta Dalal

    In Reply to Ajay Sharma 4 months ago

    Thank you Mr Sharma . We appreciate your view. We also have readers who want some important pieces of news included on our page, since they rely only on Moneylife. Please allow us to look at the interest of all readers. One solution to your issue is to skip some of these reports that you are uninterested in. You are also entitled to your views on ET -- but this is a simple newbreak. After 30 years in journalism and long years in Times of India, I can tell you that newsbreaks often go to the publications that have maximum reach. That is how it works. Social media has leveled the field a bit in recent years, since the NDA government often releases information on twitter. Best wishes

    Praveen V

    In Reply to Sucheta Dalal 3 months ago

    Thanks Sucheta .... Aggregation should be part of todays journalism [with due credits given] because by sharing you are appreciating the other work and giving more information, visibility and getting more for your readers ..

    Mohan Krishnan

    4 months ago

    Immigration Officers will go on strike soon due to heavy workload caused by Crony Elites.

    Adani Gas' Q4 consolidated net profit up 91%
    City gas distribution (CGD) company Adani Gas Ltd's consolidated net profit for the January-March quarter of the financial year 2018-19 nearly doubled to Rs 75.75 crore, on a year-on-year basis.
     
    It increased 91.05 per cent from Rs 39.65 crore of net profit reported during the corresponding period of the previous fiscal, a regulatory filing by the the company showed.
     
    The total income of the company during the period under review was Rs 505.81 crore, against Rs 494.44 crore earned during the fourth quarter of FY 2017-18.
     
    Suresh P. Manglani, CEO, Adani Gas, said: "AGL in the fourth quarter of FY19 has performed well, having secured additional 2GAs (geographical areas) in the 10th CGD round."
     
    The company recently won additional geographical areas in the ninth and tenth rounds of CGD bidding. Adani Gas is now authorised for 19 GAs and the joint venture with Indian Oil is now authorized for 19 GAs for natural gas network development and distribution, the company said.
     
    For the financial year 2018-19, it reported a 24.21 per cent rise in its consolidated net profit at Rs 228.70 crore, against Rs 161.97 crore recorded in FY 2017-18.
     
    The total income of the company during FY 2018-19 was Rs 1,910.17 crore, 24.21 per cent higher than Rs 1,537.71 crore in the previous fiscal.
     
    Disclaimer: Information, facts or opinions expressed in this news article are presented as sourced from IANS and do not reflect views of Moneylife and hence Moneylife is not responsible or liable for the same. As a source and news provider, IANS is responsible for accuracy, completeness, suitability and validity of any information in this article.
  • User

    IT Sector Suffering from Bulging Staff Cost, Shrinking Margin: CRISIL
    Indian information technology (IT) services companies need to write a new code to debug rising staff costs, says rating agency CRISIL whose research suggests that operating margins will decline 30-80 basis points (bps) in FY19-20 evey as dollar revenues rise 7%-8%. 
     
    According to CRISIL, visa restrictions by the US will begin to bite as the cost of local hires will be 25%-30% more than their H1-B counter parts, cutting into labour arbitrage margins. 
     
    Employee expenses, which account for nearly 60%-65% of total operating costs and cost per employee for tier-1 players, rose faster at about 17% and around 9% in FY18-19, respectively, compared with about 6% and 3% a year before. For mid-tier players, the increase in employee expenses was around 13% year-on-year (y-o-y) for nine months of FY18-19 as many are yet to declare fourth quarter results.
     
    Such an increase in employee costs can be attributed to tightening of visa norms for Indian players, resulting in higher onsite costs for them. Ever since the US government tightened its H-1B visa policy in 2017, challenges have mounted for the sector. That year, Indian-origin employees were the largest consumers of H-1B visas at 63% of initial employment, so the sudden change meant fulfilling onsite client requirements became tough. 
     
    “To be sure, Indian IT players have had an offsite-onsite employee ratio of 80:20. Employees with H-1B visas have been at the core of their strategy, given that they cost about 20% cheaper than US-based employees. Further, the unemployment rate in the US technology sector was only 1.8%-2.0% in calendar 2018, compared with an overall unemployment rate of 3.8%-4.0%. So, the limited staff availability is expected to lead to higher employee costs associated with hiring US locals,” the ratings agency says.
     
    A deep dive into this issue shows the onsite costs of Indian IT companies would continue to rise and put their profit margins at risk. 
     
    According to CRISIL, margins have been declining structurally for the past five fiscals, as billing rates and utilisation stabilise, so rising employee costs will only add to the pressure. Employee utilisation was high at about 85% in FY18-19, with only a marginal room for improvement in the future. Billing rates are expected to remain under pressure, as traditional services become commoditised. 
     
    CRISIL Research expects revenues of IT sector to grow by 7%-8% in dollar terms during FY19-20, helped by double-digit growth in digital services. Operating margin is forecast to decline 30-80bps for the sector in fiscal 2020 as local hires increase for onsite job, who cost 25%-30% more than their H1-B counterparts, it added. 
     
    “Players can try to optimise onsite costs by resorting to the pyramid model, wherein college graduates are hired at $50,000-$60,000 in a higher proportion and the rest filled with a few domain experts at a higher cost, fewer onsite bench resources, and keeping variable salaries depending on the outcome of projects.
     
    “Focus on moving up the value chain in digital services could also play a role to offset rising employee cost,” the rating agency concludes. 
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