One97 Communications, better known by its digital brand name Paytm, had a not-so impressive debut on the bourses. After opening 9% lower on 18-November, the stock eventually closed with losses of 27%; closing at Rs.1,564 against the IPO price of Rs.2,150. Most investors were sceptical about the lofty valuations and sustained losses, although the same can be said about all digital companies. It is estimated that the value erosion over the IPO price was Rs.38,000 crore. Paytm had been subscribed just 1.89 times.
ONGC and GAIL initiated preliminary talks with lenders of JBF Petrochemicals to explore acquiring the distressed company. JBF Petrochemicals is backed by KKR. There are already ready offers in place for JBF Petro. ACRE ARC has made a cash bid of Rs.1,188 crore while Citax offered Rs.1,411 crore. Now ONGC and GAIL want to independently join the fray. As of now, neither ACRE ARC nor Citax have made a binding bid. JBF had actually planned to set up a 1.25 MTPA plant to manufacture PTA, but caught in cost overruns.
It looks like all is well on the retrospective tax front with Cairn and other players approaching the government to settle their cases under the scheme offered. Only Vodafone is yet to apply formally. Cairn has already given an undertaking to revoke all legal cases and claims and the Indian government has accepted the same. Government will refund Rs.7,880 crore withheld from Cairn. The dues to the others are much smaller. Under the new scheme, these companies can settle cases within 30-60 days period.
In a swift move, the European Commission imposed tariffs on imports of cold-rolled flat stainless steel products from India and Indonesia. EC argued that India was selling these products at artificially low prices. The EC imposed duties of 13.9% on Jindal Stainless group and 35.3% for other producers. The EC’s view is that the anti-dumping dues would take effect immediately and would remedy some of the damage caused to metal companies in the EU. These duties will make Indian stainless steel more expensive in EU.
The Supreme Court of India has allowed the central government to proceed with the proposed sale of its residual 29.54% stake in Hindustan Zinc Limited in open market transactions. The value of the government stake in HZL is valued at nearly Rs.40,000 crore. A majority stake in Hindustan Zinc is held by Anil Agarwal’s Vedanta group. This is expected to give a boost to the disinvestment target of the government for the current fiscal year. Supreme Court also directed CBI to probe the 2002 divestment of 26% stake in HZL.
Air traffic volumes in India has picked up sharply post COVID. For Oct-21, air traffic was up 70.46% yoy at 89.85 lakh passengers. The DGCA had recently allowed Indian aviation companies to fly at 100% of pre-COVID capacity. For October, Indigo Airlines had a dominant market share of 53.5% while Air India had a 11.8% market share. Among others, Spice Jet had a market share of 9.8% while Go Air had a market share of 9% in Oct-21. Tata group airlines. Vistara and Air Asia had market shares of 11.8% and 6.4% respectively.
Delhi based Escorts scaled fresh all-time highest after Japan based Kubota enhanced its stake in the company. Escorts announced it had raised Rs.1,873 crore by placing 96.64 lakh shares of Escorts with Kubota at Rs.2,000 per share. As the next step, Kubota will also make an open offer to the public shareholders of Escorts to acquire up to 26% as per SBI regulations. Incidentally, Rakesh Jhunjhunwala also holds a 4.5% stake in Escorts and has been a long-time investor. Escorts plans price hikes in Nov-21.
With digital lending proliferating at an informal level, RBI has made its bid to bring these digital lenders into the financial mainstream in a more organized way. The idea is that people only borrow from digital lenders that are verified and authentic. RBI has also called for a public register of verified apps. RBI has also suggested that all loan servicing and loan repayments be executed only through bank accounts. There have been constant complaints about unfair practices by loan sharks, which needs to be eliminated.