20% salary of mutual fund managers to come by way of scheme units: SEBI
- A minimum of 20% of a fund manager’s salary shall be paid in the form of units of mutual fund schemes that they manage. Aside from fund managers, all other “key employees” of the fund house will also be covered, such as the chief executive officer, chief investment officer, and other employees that the fund house identifies as key employees.
- In the case of a fund manager managing only one scheme, he has the option to receive half of the compensation in the units of the scheme he manages. The other half would come by way of other schemes whose risk profile (as defined by SEBI’s risk-meter guidelines) are the same or higher.
- Index funds, exchange-traded funds, overnight funds and existing close-ended schemes will be excluded from unit allocation.
- View- Though this is expected to increase the transparency and may boost the confidence of the investors as the key employees will have ‘skin in the game’ – aligned interest, the norm is expected to hit the fund house employees hard.
Mutual Fund – Low-interest rates. Where should you invest?
IRDA sets a time limit to approve cashless claims in COVID-19 cases
- All insurance companies have to convey a decision on approving all cashless claims against COVID19 hospitalisation within an hour.
- View- This move has been implemented to keep a check on delays in discharging patients. It will help to make hospital beds available to new patients at a time when the second wave of coronavirus has crippled the healthcare system across the country.
- Bad bank to get Rs 2 lakh crore of defaulting companies’ loans
- The Indian Banks’ Association has asked members to identify large loans where they are lead bankers and get approval from co-lenders so that these loans can be sold to a bad bank (NARC). Approval from 75% of the lenders by value is required to transfer the loans to an ARC.
- The association has identified 102 corporate bad loans of Rs 2 lakh crore, where the amount outstanding in each is over Rs 500 crore.
- Once the lenders decide on selling the loan, the NARC will make them an offer based on the scope of recovery. With the NARC’s offer on hand, the lenders will hold a ‘Swiss Challenge’, where rivals are allowed to better the offer made by a chosen bidder.
Zomato files for Rs 8250 crore IPO
- Food aggregator business Zomato filed its much-awaited draft red herring prospectus (DRHP) with SEBI for INR 8,250 Cr IPO this year. The offer consists of fresh issue amounting to INR 7,500 Cr and a secondary component of INR 750 Cr, which will come from the company’s largest stakeholder Info Edge.
- Zomato has reported a revenue of INR 1,367 Cr in the first three quarters of the financial year 2021. The company’s expenses were at INR 1,724 Cr in the same period, leading to a loss of INR 684 Cr. The company’s overall revenue for FY21 is bound to increase as the company witnessed more stability in the last quarter due to a decrease in covid cases.
- View- Zomato is obviously one of the two main food delivery service companies in India. It is a duopoly structure as of now and that goes in its favour. Clearly, they are meeting a need that exists currently and there is a lot of excitement in this sector. This kind of business has a potential high operating lever. So, as the business scales up, costs do not go up in line and as a result, one cannot look at the profitability in the coming years.
Related Article: Upcoming IPO in India 2021
Tata gets nod by CCI for the proposed acquisition of BigBasket
- The CCI approves acquisition by Tata Digital Ltd of up to 64.3% of the total share capital of Supermarket Grocery Supplies Private Ltd and SGS’ sole control over Innovative Retail Concepts Pvt Ltd. The proposed combination will result in the acquisition by Tata Digital of the majority stake of and control over SGS.
- While SGS is engaged in online business-to-business sales through business.bigbasket.com, IRC is engaged in online business-to-consumer sales and operates the BigBasket website.
- Tata Group is into diversified businesses; including steel, software, retail, tea and FMCG. It plans to launch a super app to bring all the Tata consumer-facing brands and products on one platform. The acquisition of Bigbasket is a part of these plans.
- View- The Tata Super app might take on Reliance Industries’ JioMart and the e-commerce giants like Amazon and Walmart-owned Flipkart with robust business strategy.
Steel Industry & Its Impact on Indian Economy
Overview of the sector:
- India was the world’s second-largest steel producer in 2019. India surpassed Japan to become the world’s second-largest steel producer in 2019 with crude steel production of 111.2 million tonnes (MT).
- The country is ending FY21 with a total steel consumption of around 95-97 million tonnes of steel which is nearly 5 percent lower than the previous year.
- Apart from construction and infra sectors (68 percent share), engineering goods and fabrication comprises around 20 percent share of steel use, while automobile and packaging have shares of 9 and 3 percent respectively of total steel demand.
- In FY20, crude steel production and finished steel production in India were 108.5 MT and 101.03 MT, respectively.
- Between April–September 2020, India’s cumulative production of crude steel was 52.37 MT, and finished steel was 47 MT. In the month of October 2020, India produced 9.06 MT of crude steel.
- Export and import of finished steel stood at 8.42 MT and 6.69 MT, respectively, in FY20.
- India’s per capita consumption of steel grew at a CAGR of 4.43% from 46 kgs in FY08 to 74.10 kg in FY19.
Government Initiative towards the sector:
- The government has taken various steps to boost the sector including the introduction of National Steel Policy 2017 and allowing 100% Foreign Direct Investment (FDI) in the steel sector under the automatic route.
- The Government’s National Steel Policy 2017 aims to increase the per capita steel consumption to 160 kg by 2030-31.
- The Government has also promoted a policy that provides a minimum value addition of 15% in notified steel products covered under preferential procurement.
- In 2019, the Government introduced Steel Scrap Recycling Policy with an aim to reduce imports.
Steel Industry under the pandemic scenario:
- Steelmakers have supplied about 1.43 metric tonne (MT) liquid medical oxygen to various parts of the country for the treatment of coronavirus patients.
- From September 2020 to April 22, 2021, the total LMO supplied by the steel industry — including public and private sectors — was 1,43,876.283 MT, of which the contribution of steel CPSEs stood at 39, 805.73 MT, as per data provided by the Steel Ministry.
- Private steel companies supplying oxygen are Tata Steel, ArcelorMittal Nippon Steel India (AMNS India), JSW Steel, Jindal Steel and Power Ltd (JSPL), and Vedanta ESL, while state-owned firms are Steel Authority of India NSE 8.00 % Ltd (SAIL) and Rashtriya Ispat Nigam Ltd (RINL).
- Steel prices rose to historical highs in the week ended 16 April 2021, in response to the global rise in steel prices. Prices have gone up by ~59% y-o-y in the month (until April 16).
- An increase in prices of steel to record levels will impact automobile manufacturers in the coming months as most of them will have to increase the prices of their products, twice in the last four months, to protect their operating margins.
Growth Prospect & Future Outlook:
- India is ending FY21 with a total steel consumption of around 95-97 million tonnes of steel which is nearly 5 percent lower than the previous year.
- In FY22 the budget has announced a capital investment target of Rs 5.4 lakh crores that is more than a 34 percent increase compared to BE FY21.
- After a slight dip in February, 2021 domestic steel prices recovered in March 2021 and are expected to remain elevated over the coming months on the back of higher international steel and iron ore prices.
IRDAI annual report: LIC’s claim settlement ratio deteriorated in FY20 to 96.6%
LIC saw its claim settlement ratio deteriorate marginally in FY20 to 96.6% from 97.7% in FY19 even as private insurers increased their settlement ratio to 97.18% from 96.6% in this period. Private sector life insurer Max Life had the highest claim settlement ratio for the industry at 99.2% followed by HDFC Life and TATA AIA – with a settlement ratio above 99%. Edelweiss Tokio Life and Sahara Life had among the worst settlement ratios at 83.4% and 89.4% respectively. Private insurer, ICICI Prudential was in the tenth spot with a settlement ratio of 97.8%.
Government plans to sell 20% of its stake in National Fertilizers Ltd through ‘offer for sale’
The GoI intends to disinvest 20 percent paid-up equity capital of NFL out of its shareholding of 74.71%, through the ‘Offer for Sale’ (OFS) method of shares by promoters through the stock exchanges. The Centre is also considering allotting shares to eligible and willing employees of NFL at a discount on the issue or discovered price. Incorporated on August 23, 1974, National Fertilizers is a Mini Ratna company with an authorized capital of ₹1,000 crores and a paid-up capital of ₹490.58 crores out of which the Government of India (GoI) holds 74.71 percent shares and 25.29 percent shares are held by financial institutions and others.
Geotagging of warehouses in works for location tracking
The government is working on geotagging all warehouses, cold storages and refrigerated vans in the country for real-time tracking of the location and status of space availability. The data will be captured in a mobile app, which can be used by the government as well as farmers to locate the nearest warehouses and store their produce, reducing the risk of wastage. As per an estimate, we lose Rs 44,000 crore every year due to harvest rot. Even if there are storage facilities available in the vicinity, farmers don’t know about them. With the mobile app, they will have access to information.
Spat between builders, cement makers ramp up over price hike
The tussle between manufacturers of construction inputs such as cement and steel and builders is intensifying, with both sides trading charges of faulty trade practices. The South India Cement Manufacturers Association (SICMA) alleged that builders were spreading “misinformation” on cement prices to take advantage of the economic recovery and increase real estate prices, which are already at unaffordable levels.
CCI actions on Cement & Steel Industry
The Competition Commission of India had come down heavily on cement companies, many of whom saw their offices being raided in December 2020. In 2016, the CCI had slapped a fine of Rs 6,700 crore on 11 cement makers, including UltraTech, Ramco, ACC and Lafarge. Offices of some of these companies were raised in December 2020, as part of a fresh probe against price cartelization. Steel companies have maintained that domestic prices, despite the hikes, remained lower than international rates. Prices in China, Europe, and the US – the three biggest markets – were higher than those in India.
Five-fold spike in BoI’s Q3 net at Rs 541 cr as NPA provisions dip
Public sector lender Bank of India’s (BOI) net profit rose by 412 percent to Rs 541 crore in the third quarter ended December 2020 (Q3FY21) on a sharp dip in provisions for bad loans. It had posted a net profit of Rs 106 crore in the third quarter ended December 2019 (Q3FY20). The bank’s deposits grew by 0.72 percent to Rs 6,11,879 crore in December 2020 from Rs 5,22,138 crore a year ago. The lender’s Capital Adequacy Ratio stood at 12.51 percent with tier-I of 9.44 percent in December 2020. The bank raised Rs 750 crore Basel-III-compliant AT-1 bonds in January 2021.
Mastercard to allow cardholders to transact in cryptocurrencies
Mastercard has partnered with some of the biggest cryptocurrency firms including Wirex and Bitpay. The company will begin allowing cardholders to transact in certain cryptocurrencies on its network, becoming the latest to embrace digital assets. Mastercard isn’t recommending to start using cryptocurrencies. It is enabling customers, merchants and businesses to move digital value.
Delhivery plans to raise $800 million through IPO
In 2019, Delhivery raised $415 million in a Series F financing round led by SoftBank, which valued the Gurugram-based company at $1.5 billion. It is looking to raise up to $800 million through an initial public offering (IPO) that might value the company at $3.2-4 billion.
India planning tighter FDI rules for E-commerce segment
The Department for Promotion of Industry and Internal Trade may issue a clarification through a Press Note, prohibiting e-commerce platforms from holding a stake in a seller, directly or indirectly.
BharatPe, Centrum team up for PMC Bank bid
Fintech platform BharatPe has put in a joint bid with financial services firm Centrum to acquire Punjab and Maharashtra Cooperative Bank. Acquiring PMC Bank will save them time and effort in building a bank from scratch. If successful, the less than three-year-old startup will be one of the first fintech to get a small finance bank license from the Reserve Bank of India.
Tata closes in on BigBasket and 1mg
The Tata Group has finalized a $200-250 million primary cash infusion in BigBasket as part of its larger deal ($1.2 Billion) to acquire its majority stake. The deal is likely to provide a full exit to two of BigBasket’s biggest investors, Chinese e-commerce giant Alibaba and scandal-hit private equity firm Abraaj Group. Tata Group is also close to finalizing a $200-250 million investment in e-pharmacy 1mg.
BPCL may buy Oman oil company OQ’s stake in Bina refinery for Rs 2,000 crore
BPCL has given a loan of Rs 1,254.10 crore to BORL (Bina Refinery) and subscribed to share warrants of Rs 935.68 crore. BPCL has also subscribed to zero percent compulsorily-convertible debentures of Rs 1,000 crore. The decision to buy OQ’s remaining stake in the Bina Refinery was taken by BPCL’s board of directors in December’20.
Total SE set to acquire a 20% stake in Adani Green Energy
Total SE is planning to buy a 20% stake in Adani Green Energy Ltd as well as a 50% stake in a 2.35 gigawatts (GW) portfolio of its operating solar assets for $2.5 billion. Total will also get a seat on the board of Adani Green Energy. In October 2019, Total SE had invested ₹5,700 crores to acquire a 37.4% stake in city gas distributor Adani Gas Ltd.
Domestic mutual funds report higher redemption in December
The profit booking in several funds due to double-digit returns and outflow from several small to medium funds due to rebalancing aggravated the redemption pressure. The balance funds, which are supposed to be all-weather funds, have seen outflow in every month of 2020.
Government to conduct a nationwide survey to identify willful EPFO & ESIC defaulters
The government is set to begin a nationwide exercise to identify companies that did not deposit social security dues under EPFO & ESIC as a part of a crackdown against wilful defaulters.
NABARD gives clean chit to Reliance Commercial Finance
Government owned National Bank for Agriculture and Rural Development (NABARD), the second-largest lender to Reliance Commercial Finance Limited with over Rs 1,100 crore of secured loan exposure, has given it a clean chit and has removed its red flag.
NABARD had classified the account of RCF as a red flag on February 25, 2020. Thereafter lenders conducted a detailed forensic audit by Grant Thornton (GT). At a meeting of the consortium of lenders led by Bank of Baroda held on September 25, NABARD informed the consortium of lenders that having examined the GT forensic report, it found no element of fraud and has therefore removed the red flag.
Ahead of Gland Pharma IPO, ED wants Raju family’s 3.87% stake transferred to it
Ahead of India’s largest initial public offering by Chinese pharmaceutical giant Shanghai Fosun Pharma-controlled Gland Pharma to raise INR 6000 crore, premier investigating agency Enforcement Directorate has directed the company to transfer to it 3.87% equity held by tainted entrepreneur Ramalinga Raju’s family. The development comes nearly a decade after ED ordered Gland Pharma management to attach 6 lacs shares held by 10 companies belonging to Raju’s family, in connection with the country’s largest accounting fraud at software firm Satyam Computers, now merged into Tech Mahindra.
Abu Dhabi’s SWF becomes first notified Fund to get 100% IT exemption
The Central Board of Direct Taxes (CBDT) has exempted dividend, interest and long term capital gains made by sovereign wealth fund MIC Redwood 1 RSC Limited, Abu Dhabi, the United Arab Emirates in India from income tax under the clause 23 FE of section 10 of the Income Tax Act which allows sovereign wealth funds to invest in infrastructure projects in India subject to conditions including prohibition from undertaking any commercial activity within or outside India.
The exemption will be allowed on investments made by the fund till March 31, 2024, the CBDT said in a notification dated November 2.
HDFC Bank provides Rs 500 crore funding to Jewar Airport project
HDFC Bank has entered into a settlement to present Rs 500 crore funding to the upcoming Jewar airport in Greater Noida. The funds will likely be utilized for infrastructure improvement and land acquisition for the proposed airport that will likely be Asia’s largest. The funding will likely be supplied at curiosity value of Marginal value of funds based mostly lending fee (MCLR) plus 1%.
The tenure of HDFC’s mortgage is 5 years, and the funding quantity will be elevated later. The project is estimated to value over Rs 29,500 crore and the authority is trying to elevate further funds by way of issuance of infrastructure bonds quickly.
Kotak Mahindra Bank slashes interest rate on housing loan to 6.75%
In line with the RBI’s efforts to revive consumption demand, banks have cut home loan interest rates to record lows to attract home buyers during the ongoing festive season. Kotak Mahindra Bank announced that it has reduced its home loan interest rates by a further 15 basis points and is now offering home loan interest rate of as low as 6.75 percent per annum.
Ant Group’s $37 billion IPO suspended in both Shanghai and Hong Kong
China suspended Ant Group’s $37 billion stock market listing on Tuesday, thwarting the world’s largest IPO with just days to go in a dramatic blow to the financial technology company founded by billionaire Jack Ma. The Shanghai stock exchange announced that it had suspended the company’s initial public offering (IPO) on its STAR Market, prompting Ant to also freeze the Hong Kong leg of the dual listing, which was due on Thursday.
Analysts interpret the move as a slap-down for Ma, who had wanted Ant to be treated as a technology company rather than a highly regulated financial institution.
Adani Ports & SEZ Q2 consolidated profit up 32% to Rs 1,394 cr
Adani Ports and Special Economic Zone Limited reported a 31.57 percent increase in its consolidated profit to Rs 1,393.69 crore for the second quarter ended on September 30, 2020. The country’s largest integrated logistics player had clocked a consolidated net profit of Rs 1,059.20 crore in the corresponding period a year earlier. Its total consolidated income increased to Rs 3,423.16 crore for the second quarter as against Rs 3,326.90 crore in the year-ago period.
The company’s total expenses during the quarter under review declined to Rs 1,622.78 crore compared to Rs 2,440.56 crore in the year-ago period.
Sun Pharma: Debt comes down, R&D spend increases in Q2
Emerging markets and the rest of the world markets were the main drivers behind the company’s growth during the quarter. Analysts believe the performance will give a boost to shares of the company that have seen undeserving selling.
Sale of branded formulations in India for Q2 was Rs 2,531 crore, up by 1 per cent over Q2 last year and up by 6 per cent over Q1FY21, accounting for 30 per cent of total sales. During the September quarter, the company launched 22 new products in the Indian market. Also, external sales of API were at Rs 510 crore, a growth of 9 per cent over Q2 last year and lower by 8 per cent compared to Q1FY21.
The company has said it has repaid the debt of over $300 million in H1FY21 compared to the debt as of March 31, 2020. Consequently, the debt to equity ratio came down to 0.13 per cent from 0.18 at the end of March.
IndusInd Bank says report on merger with Kotak Mahindra Bank is untrue and malicious
IndusInd Bank said that the management is not aware of any deal talks with Kotak Mahindra Bank and the promoters have already denied the merger report. IIHL is promoted by the Hindujas and broad base of other successful NRIs from the overseas Indian diaspora. Kotak Mahindra Bank has denied commenting over the matter. Although, if reports are to be believed, IndusInd Bank had been looking out for a strategic investor, especially in the era after Mr. Sobti for a strong leadership. The promoters have also upped their stake and the RBI has yet not cleared their application for a 26% stake in the company. Promoter’s family dispute could also act as a trigger which could lead to a final transaction. On the flip side, Kotak has also been eyeing on big acquisition for growth for past many years.
Interim stay on Future Group-RIL deal as Amazon gets relief from emergency arbitration
Amazon had been granted relief by an emergency arbitrator in Singapore to get an interim stay on Future Group’s deal with Reliance Retail, in which Reliance has sought to purchase Future’s retail assets. Future Group-Amazon contract gave later the first right of refusal and it had a non-compete clause which prevented Future Group from approaching Reliance. Amazon had taken a 49 percent stake in Future Coupons last year, which gave it a small stake in Future Retail as well.Reliance Retail was informed of an interim order passed by the Emergency Arbitrator in the arbitration proceedings invoked by Amazon under a shareholders’ agreement with the promoters of Future Group.
Piramal Group planning for acquisitions in both pharma and financial services
Piramal Group Chairman Ajay Piramal believes that more consolidation in pharma and financial sector will take place in the post pandemic era. Piramal Group is sought to be positioning itself with the plans of having two independently listed companies in these opportunistic sectors. The company is growing Y-O-Y at about 15-16% for past nine years with its debt significantly reduced from INR 55122 Crore in March’19 to INR 38153 Crore in June’20. Its current net debt to equity ratio is 1.2 times. However, Piramal did not reveal the expected size of the business as he said the discussions are still at the nascent stage.
Lenders to debt-ridden DHFL to take call on bids
In the early October, DHFL had received four bids for either picking up stake in the company or buying out assets. The four bidders are Adani Group, Piramal Enterprises, US-based Oaktree and Hong Kong-based SC Lowy. The committee of creditors (CoC) of debt-ridden DHFL is scheduled to meet on Monday to take a call on four bids received as part of resolution process for the beleaguered firm. According to the sources, since investors have submitted poor bids, lenders are set to lose whopping Rs 68,000 crore against the total liabilities of Rs 95,000 crore. As a result, lenders are likely to reject the bids as they are far lower than the Fair Value and Liquidation Value arrived at by the independent valuers on behalf of the debtors.
Franklin Templeton likely to move SC over HC order
While Franklin Templeton is in the process of studying the order, basis initial review, it believes it may be necessary to appeal aspects of the order in the Hon’ble Supreme Court. The High Court has stayed the operation of its judgment for six weeks, which means the six debt schemes remain subject to winding up at this time. No redemption would be allowed and the trustees & the AMC cannot make any borrowings or clear any liabilities during this period. While the court has upheld the decision taken by the trustees to wind up the schemes, consent of the unit holders will be required under regulation 18(15)(c) to operationalize the decision.
LIC IPO may spill over to next fiscal
The mega IPO of LIC may spill over to the next fiscal as the government will first look at the independent actuarial valuation of the country’s largest insurer. The pre-IPO work of LIC is going on at four stages — appointment of advisors for ensuring compliance, legislative amendment, LIC”s internal software changes to come out with its ”embedded value” and appointing an actuary for vetting LIC’s actuarial valuation. Only after the four stages converge, then a decision would be taken on the quantum of government stake to be diluted in LIC. Deloitte and SBI Caps have been appointee pre-IPO advisors who have been working with LIC to list out the items of compliance.
Oil falls more than 1% as surging COVID-19 cases stoke demand fears
Brent crude was down by 53 cents, or 1.3 percent, at $41.24 on Monday, extending last week’s losses, as a jump in COVID-19 infections in the United States and Europe raised alarms over crude demand, while the prospect of increased supply also hurt sentiment. Brent fell 2.7 percent last week and WTI dropped 2.5 percent. On the supply side, Libya’s National Oil Corp on Friday ended its force majeure on exports from two key ports and said production would reach 1 million barrels per day (bpd) in four weeks. If market conditions worsen, OPEC+ will have no choice but to delay the increase of quotas by a month or two at its December meet.
PM to meet CEOs of Oil & Gas Companies today
Prime Minister Narendra Modi will interact with chief executive officers of global oil and gas companies today at an annual event organised by the NITI Aayog and the Ministry of Petroleum and Natural Gas. The objective behind the meeting is to deliver a global platform to understand best-practices, discuss reforms, and inform strategies for accelerating investments into the Indian oil and gas value chain.