Tata Digital is set to acquire majority stake in e-pharmacy 1MG
This investment is in line with Tata group’s vision of creating a digital ecosystem that specifically addresses consumer needs across various categories. This is the second major investment of the company in an Indian startup. Recently they announced a $75 million investment in fitness startup Curefit and the current deal is a primary and secondary share sale worth $250-$270 million along with other investors. $160 million will be in the form of primary infusion into the company and Tata Digital is expected to own almost 60% in 1MG and will increase its shareholding in the e-pharmacy startup in the coming months. With this fundraising, 1MG’s valuation is expected to cross $450 million from $270 million before the deal.
SEBI is considering one more option/avenue for retail investor to buy shares in IPOs
SEBI – India’s capital market regulator may open one more avenue for retail investors to pay for shares that are offered in IPOs. The talk is going on with the central bank and payment banks so that these payment banks can accept money from IPO applicants though they are not allowed to accept IPO subscriptions. The main purpose of this is to ease out the efforts involved in subscribing to new share sales and allow investors in smaller cities and towns to buy stocks. Also, involving payment banks in this process can actually make the entire process quicker and faster as app-based payment reach is much higher in Tier 2 or Tier 3 cities.
Home and personal care segment – Galaxy Surfactants Limited
In an interview with Mr. Saurabh Mukherjea – Founder & Chief Investment Officer of Marcellus Investment Managers, he was asked to identify a champion from the mid and smallcap space. According to him, the cleaning and personal care segment is something that can be recommended and he has identified one company in this segment i.e. Galaxy Surfactants Limited. This is the largest manufacturer of surfactants in the country and supplies to companies like Unilever, P&G and so on. The company has a large business which goes into personal care products like lotions and skincare and so on. The company has a substantial export franchise. Profit after tax (PAT) has been at around 20-22 percent for the last 5 years with a strong balance sheet, clean management team, and strong R&D capability.
Sharp decline in auto registrations
Retail sales of automobiles were badly hit in the month of May as vehicle dealerships shut across most states because of localised lockdowns imposed by state governments. Vehicle registrations fell 55% to 535,855 units on a month-on-month basis this May. This decline is even more noticeable at 70.6% when compared with 1,822,566 units sold in May 2019. Retail sales of vehicles were negligible in May 2020 due to the nationwide lockdown. This time not only urban markets but rural areas are also badly hit.
Registrations in different auto segments:
- Vehicle segment – dipped 59% to 85,733 units
- Two-wheeler – fell by 52.5% to 410,757 units
- Commercial vehicles – fell by 65.9% to 17,534 units
- Tractor sales – fell by 56.6% to 16,616 units in May
India’s agriculture exports have shown a jump of 17.34% in FY21
India is seeing growth in the export of cereals, non-basmati rice, wheat, millets, maize and other coarse grains in spite of pandemic disruptions which is driven by the government’s policy-level interventions as well as the expansion of products into new markets.
The export of agriculture has been stagnant for the last three years. However, the same during 2020-21 grew 17.34% to $41.25 billion. In 2017-18 and 2018-19, it was around $38 billion and thereafter declining to $35.16 billion in 2019-20.
Major contributor towards this growth is “various programmes from agriculture policy December 2018.
Highest growth has been recorded in Indonesia, Bangladesh and Nepal.
IIFL Home Finance plans to raise Rs. 1,000 Cr via bond sale
IIFL Home Finance is planning to raise Rs. 1,000 Cr in bonds and targeting 18% growth in this fiscal year despite challenges faced by them. The company has solid co-lending arrangements with Standard Chartered Bank, ICICI Bank and Central Bank of India to grow its loan portfolio. As of March 2021, its loan portfolio stood at Rs. 14,439 Crore. The AUM by way of securitization and off-balance sheet exposure was at Rs. 20,700 Crore. The company is seeking approval from SEBI for the bond issue. Issuing non-convertible debentures are one of the options the company is looking for fundraising.
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S&P 500 Index down 1% on 22nd April. The Dow Jones Industrial Average and NASDAQ Composite both moved backwards –
- Joe Biden is seeking to raise taxes on millionaire investors to fund education and another spending on welfare to recover the U.S. economy.
- Biden is proposing to increase the capital gains tax to 39.6% for those Americans earning more than $1 million. The current capital gains tax rate and the top individual tax rate is 37%
Indian Cellular and Electronics Association (ICEA) seeks to include mobile phones, laptops and other information and communications technology (ICT) products in essential services list –
- Since the sale of these devices is happening via e-commerce platforms, the industry body has sought permission to include the above products in the list of essential services.
- ICEA has also asked for the service and maintenance of these products to be included in the government’s essential services list during the lockdown period.
- The government has included telecom, internet services, broadcasting, and cable services under essential services right now.
- The major reason behind seeking permission to include these products in essential services is only because the electronics industry in India has come to a standstill. Manufacturing has come to a halt because of shut down of factories.
Ola Electric to set up 100,000 strong network of EV chargers (Hypercharger Network)
- The company said it will install 5,000 chargers in the current financial year, including a few hundred chargers ahead of the launch of its first electric two-wheeler – due in July this year.
- The estimated cost of this is $2 billion will consist of two formats – Vertical tower-based chargers as well as standalone chargers installed at public spaces such as malls, IT parks, and cafes.
Glenmark Life Sciences – IPO
- The wholly-owned subsidiary of Glenmark Pharmaceuticals, Glenmark Life Sciences has filed a draft red herring prospectus with the SEBI for an initial public offer.
- The offer comprises a fresh issue of up to Rs 1,1160 crore and an offer for sale of up to 73.05 Lakhs shares of Rs. 2 each.
Indiabulls Housing Finance partners with HDFC Limited to offer home loans
- Indiabulls no longer wants to be a lender, instead, it will now be an originator of loans for the industry.
- The company has taken a decision to no longer expand its balance sheet but instead earn income by originating loans for HDFC.
- The reason behind taking this move is only because Indiabulls think that this business is a liability management business. The company made two attempts to get a deposit-taking license and got hit badly when both did not happen.
- The two firms will frame a common credit policy with Indiabulls Housing Finance originating retail housing loans. HDFC will retain 80% of any such credit on its book, the rest 20% will go to Indiabulls’s loan book.
Mirae Asset has launched two passive funds
- Investment Managers has launched two passive funds that will track the NYSE FANG+ ETF index, which consists of the most innovative technology and consumer companies.
- The Mirae Asset NYSE FANG+ ETF is an open-ended scheme tracking the FANG+ Total Return Index while the NYSE FANG + ETF Fund of Funds (FoF) will predominantly invest in Mirae Asset NYSE FANG+ ETF.
- The NYSE FANG+ Index is an equal-weighted index designed to represent the technology and consumer discretionary sectors consisting of highly traded growth stocks. Its constituents include Facebook, Amazon, Apple, Netflix, Alphabet (Google), Tesla, and Twitter, among others.
Discretionary consumers goods have taken a bad hit in terms of sales
- Weekly sales of discretionary consumer goods including ice cream, beverages, packaged snacks, refrigerators and ACs have dipped sequentially by up to 50% due to localized lockdowns, weekend and night curfews.
- The out-of-home consumption category has also taken a bad hit.
- Dairy products used by hotels and restaurants have declined by almost 30-40%.
- Sales of home appliances such as refrigerators, ACs, and washing machines have dipped up to 50% because of cuts in production due to a drop in demand.
RBI puts curbs on dividend payouts by banks
- The RBI had curbed banks’ dividend-paying ability in the FY 2020-21 because of the second wave of covid.
- Banks may pay dividends on equity shares from the profits for the FY 2021-21 provided the amount of dividend should not be more than 50% of the amount determined as per the dividend payout ratio.
- The dividend payout ratio shall not exceed 40%.
- This step has been taken in view of the continuing uncertainty caused by the ongoing second wave of COVID-19 as it is very crucial for banks to proactively raise and protect capital against unexpected losses.
- RBI did not permit any banks to pay dividends in 2019-20.
Will tax on PF interest also cover contribution to PPF account?
Budget 2021 has proposed to levy income tax on interest earned by an employee/person on his/her contribution in excess of Rs 2.5 lakh in a financial year to a provident fund. It appears that tax will apply to the interest earned on contributions made to Employees’ Provident Fund (EPF), Voluntary Provident Fund (VPF) as well as Public Provident Fund (PPF). However, tax experts have clarified that there are separate limits for EPF/VPF and PPF i.e. contributions to PPF and EPF/VPF will not be aggregated for the purpose of calculating the Rs 2.5 lakh limit.
RBI has announced monetary policy today
Repo Rate: 4%
Reverse Repo Rate: 3.35%
The Monetary Policy Committee (MPC) decided to continue with the accommodative stance as long as necessary – at least during the current financial year and into the next financial year
Reasons for no change in rates:
- To revive growth on a durable basis and mitigate the impact of COVID-19 on the economy, while ensuring that inflation remains within the target going forward.
- Concerns around core inflation coupled with widening fiscal deficit and normalization of economic activities.
- Also to normalize liquidity and drain out the surplus funds from the market.
Petrol, diesel price at fresh high; oil company says only tax cut by government can help
Petrol and diesel price was hiked by 35 paise per litre each after a gap of a week. The increase took petrol prices to a fresh high of Rs 86.65 a litre in Delhi and to Rs 93.20 in Mumbai. Diesel rates touched Rs 76.83 in Mumbai and an all-time high of Rs 83.67.
Reasons behind increase in petrol and diesel prices:
- There has been a sudden spike in international oil prices to USD 59 per barrel in the last 2-3 days because of a perception of mismatch in demand and supply as well as cut in production by Saudi.
- Addition of central and state taxes and dealer commission to the benchmark cost of production.
Tata Power Q3 results: Net profit up 22% to Rs 318 cr on debt reduction
Tata Power on Thursday reported a 22 percent year-on-year increase in consolidated net profit for the October-December quarter at Rs 318 crore on debt reduction, better performance of the Mundra plant, and steady operational performance across all businesses.
The company’s revenue rose 7.5 percent to Rs 7,598 crore during the December quarter. Earnings before interest, tax, depreciation, and amortization (EBITDA) rose 1 percent to Rs 1,997 crore from Rs 1,970 crore in the year-ago quarter.
The company has marked a new milestone for its distribution business by acquiring the distribution and retail supply of electricity in Odisha’s five circles of WESCO and six circles of SOUTHCO.
The company is bullish on its renewables business and said its solar engineering, procurement, and construction (EPC) business continues to grow.
FM Nirmala Sitharaman sets Rs 15 lakh income cap to tax NRIs
The Finance Minister has put in place a threshold of Rs 15 lakh for the levy of tax on incomes emerging from India while leaving out global incomes from the tax ambit.
- Bharti Airtel is planning to raise a billion dollars with an offer of perpetual bonds (Securities with no maturity). This would be Bharti’s second perpetual bond float. Reliance Industries and Bharti Airtel are among the few companies that have tapped the international money market with such bonds. The company may use the fund for business expansion and refinance more expensive debt raised a few years ago.
- Creditors of DHFL have voted in favor of a 372.5 billion rupees ($ 5.09 billion) takeover bid submitted by the Piramal Group for the Troubled Shadow lender. Once one of India’s top shadow lenders, DHFL accumulated total debts of almost 1 trillion rupees before defaulting on payments to its creditors. There are three entities – Adani Group, Piramal Group, and the US-based AMC Oaktree Capital Management were invited to bid for DHFL’s entire loan book.
- RBI is likely to propose stricter rules on ‘shadow banks’ to strengthen the solvency and sustainability of a sector that has been showing signs of stress in recent years. RBI has been trying to tighten regulatory norms on the sector since IL&FS went bankrupt in 2018 and DHFL and Altico Capital defaulted on payments in 2019. RBI is going to set out proposals recommending that bigger shadow banks maintain a statutory liquidity ratio which is right now at 18%. Also, large non-banks are required to maintain a CRR to 3% reduced from 4% but the same to be reversed after March 31.
- Power Finance Corporation has announced the launch of its maiden taxable bond issue of Rs. 5000 crore for individual buyers that have already opened on January 15. PFC is planning to raise Rs. 10,000 crore through NCDs in two tranches. First tranche of Rs. 5000 crore – already open on January 15 and closes on January 29. The company is bringing the issue on diversification and that is the reason they have launched this bond – said by PFC Chairman and MD R.S. Dhillon. The second tranche would be entirely based on the response to the issue of the first tranche.
- SEBI on January 15 levied a total fine of Rs. 76 Lakhs on Garware Polyester Ltd. and its five officials for disclosure lapses with regards to change in the shareholding of the firm. They have been fined for violating the Prohibition of Insider Trading norms. The investigation was conducted between Dec 2011 and Dec 2014 in this regard. Here the value of the shares exceeded Rs. 5 lakh but they failed to do so within the prescribed time limit. The promoter-directors – Sonia Garware, Sheela Garware, and Monika Rajiv Garware Modi are facing penalties in the range of Rs. 1 Lakh to Rs. 11 Lakh, while the firm is required to pay a fine of Rs. 38 Lakh.
- US automaker Tesla has chosen the tax-friendly jurisdiction of the Netherlands to route its India Investment. The corporate structure in India would offer Tesla tax benefits related to capital gains and dividend payments. Tesla is registered in California, and Tesla Motors, the Netherlands, is its subsidiary. The Netherlands has been one of the top choices for US-based companies since it offers favorable tax rates and has a strong intellectual property protection framework.
- SpiceJet expects to resume Boeing 737 Max aircraft operations by March 2021 two years after the worldwide grounding following two crashes that killed 346 people. Boeing will pay more than $2.5 billion in fines and compensation after reaching a settlement with the US Department of Justice over two plane crashes.
- NBFCs are better placed in terms of asset quality when compared to banks with their aggregate bad loan ratio being projected to rise to 8.4% in a year even under extreme stress. Their capital adequacy is expected to remain well above the regulatory minimum of 15%. Bad loans for banks may rise to 14.8% as of Sep 2021. The asset quality is expected to deteriorate further due to the disruption of business operations caused by the pandemic.