For the quarter ended December 2023, the sugar production was 7.7% lower yoy at 112 lakh tonnes. The sugar companies typically follow the sugar cycle year extending from October to September. For the SCY 2023-24 season, the sugar production is likely to be 7.85% lower at 305 lakh tonnes. Among the 3 top sugar producing states in India, Maharashtra and Karnataka saw fall in output. That is why the government has restricted the sugarcane quota for ethanol. Uttar Pradesh produced more sugar in the Dec-23 quarter.
On January 03, 2023, the Supreme Court will pronounce judgement on petitions seeking court-monitored investigation into the allegations made by Hindenburg Research. These were allegations pertaining to opacity and round tripping of funds by the Adani group; apart from other stock market violations. After the publication of the Hindenburg report, the Adani group shares lost more than $120 billion in market cap, although most of that has been recovered. Adani group dismissed all charges as being fully baseless.
Payment problems have forced Russia to cut down on its India oil exports as the share of Russia in the Indian oil import basket fell to a 11-month low in December. IOCL, which was to get 5 shipments from Russia, is already getting alternate supplies from the Middle East. India had shown a huge appetite for the Sakhalin grade (Sokol); a kind of crude unique to Russia. Russia cannot sell oil above $60/bbl as it would also invite sanctions on the shipping company. Currently, Russia is not able to export crude oil to Europe.
Vedanta Resources, the holding company of the Vedanta group, as it has $3.2 billion of bond payments coming up shortly. Vedanta is trying to push back the due dates, but for that it needs the approval of two-third directors. In response, S&P Global Ratings had already cut the company’s rating deeper into junk in December itself. Vedanta has been borrowing at close to 18% to refinance debt, which is a serious concern about its finances. It has been gaining big time from strong commodity price and India business dividends.
Goldman Sachs stated in a recent note that looking at India’s strong external balances and strong foreign inflows, current account deficit (CAD) for FY24 could end up around 1%. That is likely to result in a balance of payment surplus of $39 billion. In addition, there are expectations that the US would cut rates by 125 bps in 2024. The Indian goldilocks edge of high growth and low inflation is also going to be of some help. For FY24, the CAD has been revised lower by 30 bps to 1% while FY25 CAD has been cut 60 bps to 1.3%.
RBI proposed to allow banks with NPA ratio of less than 6% to pay dividends. This stands at 7% currently.
The guidelines have been reviewed in the light of implementation of Basel III standards, the revision of the prompt corrective action (PCA) framework, and introduction of differentiated banks. The new rules will come into effect from FY25 onwards. The bank must also have minimum capital adequacy of 11.5% to be able to pay dividends. RBI will not entertain requests by banks for ad-hoc declaration of dividends.
Shares of BHEL surged 5% on Tuesday after reports that it had received an order of Rs19,422 crore from the Talabira Power Project, of NLC India. BHEL will build 3 ultra supercritical units of 800 MW each. NLC India already has 3.6 GW of thermal power capacity and 1.4 GW of renewable energy capacity. However, analysts at Kotak expressed apprehensions that valuations of BHEL can only be justified on the assumption that BHEL growth in top line and bottom lien would be frenetic. BHEL is a good play on capital cycle revival.
Adani Ports expects to handle 400 million metric tonne (MMT) of cargo in FY24. This is higher than their earlier guidance of 370-390 MMT for the year. For December 2023, dry bulk cargo handling rose 63% while containers rose 28%. For the December quarter, Adani Ports handled 109 MMT of overall cargo. For the 9 months to December 2023, Mundra Port handled 5.5 million Twenty-Foot Equivalent Units (TEUs) and is on track to surpass 7 million TEUs in FY24. Even Karaikal and Ennore handled record cargo this year.