Namaste! Aaj ka news roundup, Newswala style!

MARKETS

Markets: The market remained weak throughout the session, ending near its lowest point. Nifty opened with a gap down and continued to decline, closing at the day's lows.

BUSINESS

Tata Steel's Net Profit Plunges 65% to ₹555 Crore

What happened

Tata Steel, a global steel giant, faced a substantial dip in its consolidated net profit for the quarter ending in March. The profit plummeted by two-thirds compared to the previous year, settling at ₹555 crore. 

The company's consolidated revenue during the same period witnessed a decline of around 7%, amounting to ₹58,678 crore. Additionally, its earnings before interest, tax, depreciation, and amortisation (EBITDA) saw a substantial drop of more than 8%, standing at ₹6,631 crore.

Why it matters

The sharp decline in Tata Steel's net profit underlines the challenges posed by lower steel prices in India, a market that contributes nearly 70% of the company's overall volumes. Operations in India experienced a marginal decrease in both sales and operating profit during the quarter. 
Tata Steel UK and Tata Steel Netherlands also continued to operate at a loss during Q4, but the losses were lower compared to the previous year.

Despite the tough market conditions, Tata Steel is strategically focused on strengthening its position. The company is investing in capacity expansion, with plans to add 5 million tonnes at its Kalinganagar plant and spent ₹18,207 crore on capital expenditure through FY24.

Zoom out

Tata Steel's proactive approach extends beyond operational improvements. The board's approval to inject up to $2.11 billion into its subsidiary, T Steel Holdings Pte, signifies a strategic investment move aimed at bolstering the company's financial structure. Additionally, the decision to convert $565 million of debt instruments into equity shares highlights Tata Steel's commitment to optimising its capital structure and enhancing shareholder value. 

BIG MONEY MOVES

India's carmakers face ₹44,000 crore inventory issue

Indian car manufacturers are bracing for a historic inventory challenge, with an estimated 400,000 vehicles worth ₹44,000 crore by the end of May. This surplus comes amidst a cooling demand following a three-year streak of robust sales. The decline, expected to be around 5% in May compared to last year, is attributed to factors like election-related uncertainties, the end of the marriage season, and heat waves affecting key markets like Delhi NCR

Inox Wind Energy raises ₹900 crore, aims to reduce debt

Inox Wind Energy has successfully raised ₹900 crore through an equity share sale of its subsidiary, Inox Wind Ltd, as per a regulatory filing. The funds acquired will be utilised to reduce the debt of Inox Wind and bolster the company's working capital, thereby fortifying its financial position. As of March 31, 2024, Inox Wind had a net external interest debt of ₹ 655 crore. 

BUSINESS

Bank Frauds Triple in Two Years as Digital Scams Soar 708%

What happened

Hold onto your wallets, folks! Bank frauds in India have skyrocketed, with a jaw-dropping 300% increase over the past two years. According to the Reserve Bank of India's (RBI) annual report, the number of reported fraud cases surged from 9,046 in FY22 to a staggering 36,075 in FY24. Interestingly, despite the spike in cases, the total amount involved in these frauds plummeted by 46.7%, dropping from ₹45,358 crore to ₹ 13,930 crore.

While most fraud cases stemmed from digital payments like card and internet transactions, the big-ticket frauds were primarily in loan portfolios, with public sector banks leading in terms of value.

Why it matters

Well, this surge in fraud cases, especially in the digital realm, underscores the growing vulnerabilities in our increasingly cashless society.

• Digital frauds alone shot up by an eye-watering 708%, jumping from 3,596 cases in FY22 to 29,082 in FY24. 
  
  

• The value of these digital frauds also saw a steep rise, increasing from ₹155 crore to ₹ 1,457 crore. 

Private sector banks reported the highest number of fraud cases, but public sector banks bore the brunt of the financial impact, particularly in their loan portfolios. The RBI also highlighted a significant time lag between the occurrence and detection of fraud, with a whopping 94% of the fraud value in FY23 involving incidents from previous years. This lag suggests that banks need to ramp up their fraud detection mechanisms to stay ahead of the crooks.

Zoom out

As bank frauds continue to rise, especially in the digital space, both banks and customers need to be more vigilant. While the reduction in the total amount involved in fraud is a silver lining, the sheer volume of cases is alarming. Public sector banks need to tighten their loan approval processes, and all banks must invest in robust fraud detection systems. For customers, it’s a wake-up call to stay alert and protect their financial information.

BIG PICTURE

Sony Music eyes $1 billion deal for Queen’s catalogue

Sony Music is reportedly in talks to acquire Queen’s iconic music catalogue, featuring hits like "Bohemian Rhapsody" and "Radio Gaga," for a whopping $1 billion. This deal, if finalised, would be the largest of its kind and include merchandising and other business ventures.

The potential sale highlights the intense competition among investors for lucrative music catalogues, with recent high-profile deals including Bruce Springsteen’s $500 million sale to Sony.

PhonePe expands into secured lending with six new loan schemes

PhonePe has launched secured lending products in six categories, including mutual fund loans, gold loans, bike loans, car loans, home loans/loans against property, and education loans. Partnering with banks, NBFCs, and fintech firms like Tata Capital, L&T Finance, Hero FinCorp, and others, PhonePe aims to expand its partner network from 15 to 25 by next quarter.

CEO Hemant Gala highlighted the rapid digital adaptation of secured loan processes, positioning PhonePe to enhance the lending experience.

BUSINESS

OYO Hits Profitability Milestone with ₹100 Crore Net Profit in FY24

What happened

OYO, the online hotel aggregator, has finally turned a profit in the financial year 2023-24, recording a net profit of nearly ₹ 100 crore. Founder Ritesh Agarwal shared the good news on X, highlighting eight straight quarters of positive EBITDA and a cash balance of around ₹ 1,000 crore. OYO is also looking to raise $80-90 million from family offices at a valuation of $3-4 billion, significantly lower than its 2019 peak of $10 billion.

Why it matters

OYO’s first profitable year is a significant milestone, showcasing a strong financial turnaround. With an adjusted EBITDA of ₹ 888 crore in FY24, up from ₹ 274 crore in FY23, the company's financial health is improving rapidly. 

• OYO added 5,000 hotels and 6,000 homes globally in FY24, and its gross booking value per storefront per month for hotels reached ₹ 3.32 lakh.
  
  

• The company's gross margins also improved, climbing to ₹ 2,508 crore, while operating costs fell to 14% of gross booking value from 19% the previous year. 

This turnaround is crucial as OYO seeks to refinance a $450 million loan and raise additional funds through a fresh issue of shares after withdrawing its IPO application twice.

Zoom out

OYO's financial journey from heavy losses to profitability marks a new chapter for the company. The company is poised for future growth with improved gross margins and reduced operating costs. Agarwal's optimism extends beyond India, with strong growth prospects in international markets like Scandinavia, Southeast Asia, the US, and the UK. The recent upgrade from Fitch Ratings reflects confidence in OYO's robust performance and strong cash flows. 

MIRCH MASALA

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