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Business News/ Mint-lounge / Mint-on-sunday/  Star Wars at the box office, winter washout and a new juvenile law
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Star Wars at the box office, winter washout and a new juvenile law

Star Wars targets Avatar record; another Parliament session wasted; and the law gets tough for juvenile criminals

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1. The Force arrives

Star Wars: The Force Awakens collected a record $248 million in North American ticket sales in its opening weekend, and $529 million globally. The seventh Star Wars film, which premiered in India on Friday, $890.3 million worldwide through Christmas day. On Friday, Star Wars set a Christmas day record in US and Canadian cinemas, with ticket sales of $49.3 million. The new movie is the first instalment in a decade of the series, which was created by George Lucas in 1977. Disney had acquired Star Wars owner Lucasfilm for $4 billion in 2012. The movie is poised to become the highest grossing movie of all time, ahead of the current record holder, Avatar.

2. Sunny days are over

Sun Pharmaceutical Industries Ltd, one of India’s two biggest pharmaceuticals firms, is in further trouble after the US Food and Drug Administration (FDA) issued a warning letter regarding its Halol plant in Gujarat. In its warning, the FDA detailed possible deviations from good manufacturing practices at Halol. This brings the company’s earning prospects into question as the firm depends on the US market for most of its revenue. The Halol plant contributes about 7-8% of the company’s overall sales and 15% of the company’s sales in the US.

3. An unproductive session

With the ruling Bharatiya Janata Party (BJP) and opposition Congress party continuing to spar in Parliament, the winter session became the second in a row that failed to pass the constitutional amendment bill to roll out the goods and services tax (GST). None of the bills that could have set off the government’s ambitious economic reforms agenda managed to get approved. The BJP is particularly hampered by its lack of majority in the upper house of Parliament. The Lok Sabha passed 13 bills, while the Rajya Sabha passed nine in the session.

4. State lenders in a tight spot

The Reserve Bank of India (RBI)’s Financial Stability Report showed that nearly a fifth of all listed companies have levels of debt in excess of what is considered prudent. The report argued that the banking sector faces greater risks as many borrowers are struggling to service their debt. It noted that the gross non-performing assets (NPAs) ratio for advances to large borrowers has jumped significantly. However, the rise has been most acute in the case of state-run lenders whose gross NPAs from the segment jumped to 8.1% as of 30 September, from 6.1% in March.

5. New juvenile law

The Rajya Sabha approved the Juvenile Justice (Care and Protection of Children) Bill, 2015, which lowers the age at which juveniles can be treated as adults for heinous crimes from 18 to 16 years. The bill has been passed in the aftermath of the uproar over the release of the juvenile accused in the 16 December 2012 gang rape and murder of a student in a moving bus in the national capital. The new law has raised the minimum punishment for heinous crimes from three to seven years. The bill defines heinous offences as those that are punishable under the Indian Penal Code with a minimum of seven years in prison.

6. Merger ahead?

Anil Ambani-led Reliance Communications Ltd (R-Com) has announced that it is considering the possibility of a merger with Aircel Ltd. R-Com had earlier announced that it would buy the local unit of Russia’s Sistema JSFC. If executed, both deals will ensure 150 million subscribers for R-Com. It will then also hold the most spectrum in the country—around 19.3% of the total airwaves available with telecom operators. Experts have expected this kind of consolidation for some time, and expect further announcements of mergers. (Reliance Group companies have sued HT Media Ltd, Mint’s publisher, and nine others in the Bombay high court over a 2 October 2014 front-page story that they have disputed. HT Media is contesting the case.)

7. Glimmer of hope

In what could be the first sign of green shoots in the economy, the data on bank credit expansion showed that credit growth rose by 11% year-on-year, well above the average rate of growth this fiscal year. These are still early signs. However, State Bank of India’s economic newsletter for December noted that following RBI’s cut in the repo rate, there has been a rapid pickup in credit growth in October and November. Credit expansion will have greater significance if subsequent data shows there has been a pickup in lending to firms as opposed to lending for personal finance.

8. Spare cash

In a sign of bad governance, a recent Comptroller and Auditor General report has revealed that more than 1.4 trillion in funds raised through various cesses is lying unutilized with the government. A cess is an additional levy on top of regular taxes, and ironically, the government recently enforced a 0.5% Swachh Bharat cess. It is also proposing a 2% regional connectivity cess in the aviation sector and increasing the cess on sugar production. The bad news is that such utilized funds from cesses could end up being diverted to ends different from their original intended purpose.

9. Growing a behemoth

Wipro, India’s third largest IT services company, announced its second acquisition this month. This time, the target was the New Jersey-based Viteos group, which specializes in shadow-accounting services. Viteos works on customized processing and post-trade operations across asset classes, currencies, borders or structures for the alternative investing management industry in the US, Europe and Asia. The acquisition will help Wipro strengthen its position in the digital segment of the outsourcing industry. Wipro’s shares rose slightly after the acquisition.

10. Soft steel

The rout in global commodity prices has meant a steady decline in global steel output. Capacity utilization at global steel mills has shrunk during the course of 2015, from 69.5% in January to 66.9% in November. Falling ore prices have worsened the situation and hurt steel prices further. The rout had begun with China’s shift to a consumption-led growth model from its former investment-led growth model. China’s steel output in 2015 till November was down 2.2%. The Indian government has started taking steps to check the dumping of cheap steel imports.

Graphics by Ajay Negi/Mint.

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Published: 26 Dec 2015, 11:33 PM IST
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