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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Inflation and its impact on an overall economy
Retail Inflation in April is 4.3% which is well within the range of RBI. Inflation is measured by the CPI and the wholesale price index (WPI). The CPI measures changes in prices of essential commodities at the consumer level, while the WPI notes changes at the producer level.
The commodities considered for measuring the WPI are manufactured products (63.75% weightage), primary articles such as food (20.02%), and fuel and power (14.23%).
For the CPI, the commodities are food and products (45.86%), housing (10.07%), clothing (6.53%), and fuel among others. Inflation is indicative of the decreasing purchasing power of the country’s currency and vice versa.
Inflation is indicative of decreasing purchase power of the country’s currency and vise versa.
It is basically the cost of production which is passed on to the consumers.
In the Monetary Policy Committee meeting of February 2021, Government specified that for the next 5 years they will not be focusing on maintaining the inflation rate. There is a possibility in the near future for the inflation rate to go higher.
In increasing inflationary conditions, the RBI adopts a contractionary monetary policy. In case of a slow-down, it adopts an expansionary monetary policy, which leads to the increased money supply, lower interest rates, lower borrowing costs, and increasing aggregate demand thereby giving a boost to the economy.
RBI has increased Gsec buying in the past 2 weeks
The central bank of India net purchased Rs. 34,175 crore of sovereign papers between April 22 and May 4 from the secondary market to ensure lower borrowing cost in the second wave that would derail the economic recovery.
The usual efforts through Open market Operation and Government Security Acquisition Program is a corrective measure that the government has been taking to control the rise in bond yields and lower the borrowing cost. The Government principal money manager is said to have bought T bills and long-term papers in 7 tranches in the past two weeks.
Due to the following action, the bond yields have reduced to 0.03 basis points to 6.02%.
Tata Motors Posts $1 billion loss as Jaguar Costs hot bottom line
Tata Motors announced a ₹ 7,600 crore ($1 billion) loss on Tuesday despite a strong performance in the first quarter of 2021 as restructuring costs related to its British luxury car brand Jaguar Land Rover (JLR) hit the automaker’s bottom line.
The company reported losses for three consecutive quarters last year, as the pandemic hammered demand in domestic and international markets.
The standalone business including joint operations reported profit at Rs 1,645.69 crore in Q4FY21 against a loss of Rs 4,871.05 crore in the year-ago quarter and clocked a massive 106 percent year-on-year growth in revenue at Rs 20,045.9 crore during the quarter, driven by strong passenger vehicle demand and recovery in commercial vehicle demand.
The commercial vehicle business consistently posted sequential quarter-on-quarter growth on the back of improved consumer sentiments, buoyancy in e-business, firming freight rates, and higher infrastructure demand including road construction and mining.
WFH promotes tier 2 cities as talent hub and Unemployment in Rural India
Due to work from home policy tier, 2 cities like Kochi, Guwahati, Jaipur, Indore, and Mysore are said to have emerged as talent hubs.
According to Talent500, there has been a 30-40% increase in demand for workforce in tier-2 cities within tech teams across sectors.
Covid has made us all work remotely. In a post-pandemic world, remote won’t just be the new normal, but instead, be a strategic advantage for companies as they build out their teams.
On the other hand, we see rural unemployment has nearly doubled in a week as lockdowns and surging covid infections in villages brought economic activity to a halt. Rural unemployment shot up to 14.34%. The MSMEs (micro, small and medium enterprises) are in bad shape, and the informal jobs market, as well as self-employment in rural India. The situation may get worsened over the next few weeks if we don’t manage to tackle the pandemic in rural India.
Competition Commission of India (CCI) agreed to the proposal of acquisition of an additional 25% stake of Adani Krishnapatnam Port Ltd By Adani Port SEZ
Adani Port SEZ holds 75% shareholding; the proposed combination will lead to acquiring 100% shareholding and complete control.
In April, Adani Ports and Special Economic Zone had said it had acquired a 25 percent stake of Vishwa Samudra Holdings in Krishnapatnam Port for Rs 2,800 crore. Krishnapatnam Port, located on the east coast of India in the Nellore district of Andhra Pradesh, is an all-weather, deep water port with a multi-cargo facility with a current capacity of 64 million tonnes per annum.
12 Drugmakers and Healthcare companies are planning IPO in 2021
Covid-19 has increased investor demand for promising companies in sectors like Pharmaceuticals, healthcare, and related businesses that are beneficiaries of the pandemic.
In the past five years, only seven companies involved in the sector have hit the IPO
Companies like Glenmark Lifesciences, Supriya Lifesciences, Krsnaa Diagnostics, Krishna Institute of Medical Sciences KIMS, Tatva Chintan Pharma, Sigachi Industries Windlass Biotech have already filed their draft paper switch SEBI.
The four companies i.e Emcure Pharma, Wellness Forever, Vijaya Diagnostic, and Star Health Insurance have initiated the process for filing IPO.
It looks like there will be a massive change in the Indian Healthcare system because of covid -19 and demand for drugs, vaccines, diagnostic medical equipment, hospital, and other related services will increase over the period.
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.
- Jet airways is all set to restart the services from summer 2021 If everything goes as per plan and the consortium receives the NCLT and regulatory approvals on time.
- The new promoters, Murari Lal Jalan and Kalrock Capital, intend to start domestic and international operations with all the slots that were available to the airline before it stopped operations.
- The new promoters contemplated starting a new airline but chose to stick to the Jet brand due to the existing brand value and glorious history of over 25 years.
- Six scheme which are suspended by the Franklin India after supreme court order Franklin Templeton India Mutual fund will conduct the online voting process to decide the closure or continue the six scheme which is suspended.
- Money stuck in them will depend on the outcome of the vote. If a majority of the unit-holders vote in favour of winding up the schemes, Franklin would be able to return the money.
- Walmart :Walmart had in May 2018 acquired a 77 percent stake in Flipkart for $16 billion. The Arkansas-based retailer in 2020 raised its stake to around 82 percent after a $1.2 billion financing round. But this US retail giant is looking to sell around 25 percent in Bengaluru-based Flipkart. Because they are preparing a USD 10 billion initial public offering (IPO) in the US and has hired Goldman Sachs to assist with the listing.
- Apple Co-founder Steve Wozniak start a new venture, more than four and a half decades. New venture is called Efforce and aims to use cryptocurrency and blockchain technology to make it cheaper and easier for companies to fund ‘green’ projects. The goal of Efforce is to “democratize” the USD 250 billion market for energy-efficiency projects.
- Walt Disney, Which owns 30% stake in Tata Sky, is considering multiple options to offload its holding.Firstly Disney offered tata to buy back its shareholding, which didn’t workout. Now they are working on an IPO option.If all goes well, filing for IPO is expected by mid to late next year. The two companies have also agreed on an option of Disney selling a partial stake to a strategic investor in the US.
- Tata Sons is seeking upto 1$ billion as oversea loans to set up a mobile phone and component contract manufacturing plant in Tamil Nadu that will start by making iPhone parts.It also benefits Apple who seek to diversify out of China. Tata partnership with Apple will be part of the Prime Minister Make in India push and will take advantage of the government production Linked incentive scheme.
- Kotak Mutual Launches India’s first international REIT fund of funds is an open-ended mutual fund scheme that will invest in units of SMAM Asia REIT Sun Trust fund.This mutual fund scheme will have diversified investment portfolio comprising of listed REITs which will invest in real estate , project like residential, office, data center, warehouse, retail and hospitality.
- Diversified conglomerate Vedanta Resources is set to raise up to $700 million by selling bonds to overseas investors to reduce debt of the company. Standalone debt on Vedanta is $7.3 billion as of the end of financial year 2020.