Daily Financial News Analysis – 5th May’20

Aarogya Setu

The onus to ensure that all private sector employees install the central’s government’s health app Aarogya Setu on their mobile phones cannot lie with the head of a company.
Dereliction by an individual employee should not be a sword hanging over management.
MAIT: It will write to the government seeking a withdrawal of this punitive measure announced in the guidelines released by the MHA.
Heads of all organisations are equally keen to run their operations without the pandemic situation flaring up.
“While this may seem like it is being made mandatory, it should be seen from the light of an enabling feature which can allow businesses to start operations,” the official said.
“Anyone who is in the red rating should not come to work, and only those who are green should step out. Privacy matters to that extent only and the larger economy of the country has to be also taken care of,” said the official on condition of anonymity.
Pointing out that while an organisation can ask its employees to install the app, but if some of the employees delete it later, “how will anybody enforce it?

Manufacturing PMI

India’s manufacturing activity contracted at its sharpest pace in more than 15 years in April as factories remained locked down through the month because of Covid-19.
The seasonally adjusted IHS Markit India Manufacturing Purchasing Managers’ Index (PMI) fell to 27.4 in April from 51.8 in March, its lowest reading since data collection began over 15 years ago.

Labour Pain

Entrepreneurs and exporters are struggling to start operations because labourers are back home.
Problems of logistics and transportation.
Financial hardships
Labourers are anxious to return home after over a month of rough, jobless existence.
Industry leaders said April-June quarter would be a washout even for the high and mighty, but would be catastrophic for SMEs.
Hopefully, supply of raw material will smoothen out soon

Industrial Output

India will take more than a month to get back to at least a third of its earlier industrial output.
The official said the government would try to swiftly address supply chain hurdle.
Retailers are without stock as wholesalers in many parts of the country are unable to resume activity.
Everybody will have to put their heads together, including central government, labour ministry, state governments and the industry.
The labour ministry is currently working on ways to encourage people to come back to work.

AePS

The average daily transactions through the Aadhaar Enabled Payment System (AePS) doubled to 11.3 million
Aimed at promoting financial inclusion and providing digital payment services in rural and remote areas, such transactions totalled 430 million, amounting to Rs 16,101 crore, during the lockdown.
Rs 32,300 crore has been transferred to 340 million beneficiary accounts under the Pradhan Mantri Garib Kalyan Package announced by finance minister on March 26.

Coal India

Coal India is incurring daily net cash losses of ₹190-200 crore as sales are down and customers are delaying payment.
Before the lockdown, it managed daily cash profits of ₹50-60 crore.
Executives said the company will struggle to pay for regular expenditure, half of which goes to pay salaries.
In April, sales and production dropped 26% and 11%, respectively, compared to April 2019.
Dues from state power companies rose to a record ₹16,500 crore towards the end of April from about ₹14,000 crore at the end of March.
Coal India’s daily cash earnings hovered between ₹260 crore and ₹270 crore, including government levies like taxes, cess and royalty.
It is now hovering between ₹30 crore and ₹40 crore a day.
Before the lockdown, daily cash expenses were ₹210-220 crore including salaries, operational input costs and payment of levies to the government.
Although, fall in production reduced outgo including levies marginally, the reduction has been undone by additional outgo on account of security deposit refunds within a fixed timeframe.
Expenses are currently hovering at ₹220-230 crore daily.
Coal India has been reporting net profits over the last several years. During the quarter ended December 2019, it reported a total comprehensive income of ₹3,670 crore.
ET had on April 27 reported that subsidiary Bharat Coking Coal didn’t have funds to pay April salaries to its 42,000 employees since it received almost no payment from customers during the month.
Its dues crossed ₹3,200 crore, one of the highest among subsidiaries.

Fuel Consumption

India’s fuel consumption slumped by close to 70 per cent in April as all petroleum products except LPG saw massive demand erosion.
But demand has shown signs of pick up in the last 10 days of April after the government allowed resumption of economic activity beyond the urban municipal limit, industry data showed.
The demand is expected to further pick up as more areas were opened up on Monday.
According to provisional industry data, petrol sales by public sector firms were down 64 per cent in the first half of April but ended the month with a 61 per cent fall after some up trend in the second half.
Similarly, diesel sales slumped 61 per cent in the first half but ended with 56.5 per cent lower sales for the month.
Overall, petrol sales came in at around 8,70,000 tonnes in April, down from 2.23 million tonnes in the same month a year back.
Diesel consumption was down to 2.84 million tonnes from 6.56 million tonnes in April 2019.
Aviation turbine fuel (ATF) consumption collapsed by 91.5 per cent as most airlines have stopped flying.