Large Indian corporates may soon have an out-of-court insolvency resolution process. This can happen by informal discussions among stakeholders, without inviting any bids. This scheme will involve minimal level of involvement by the NCLT. It will essentially be a creditor led resolution process and will largely be an out-of-court settlement. The scheme only requires the final approval of the NCLT and is similar to the current pre-pack scheme offered to small companies. Unlike pre-pack, no base resolution plan is needed.
The ARC route appears to have picked up steam with the total ARC value to touch Rs10 trillion by March this year. Most banks prefer the ARC route as banks get anywhere between 15% and 70% upfront in this route, when they sell the bad loans. Most of the financial institutions are focusing on cleaning up their legacy loans by selling it at a discount to the ARCs. Currently, there are a total of 27 ARCs operating in the Indian markets. The ARC book has been adding around Rs1.50 trillion annually over the last 3 fiscal years.
Coal India has slashed its FY25 coal output target by 12 million tonnes (MT) from 850 MT to 838 MT. Even for the current fiscal of FY24, Coal India is likely to miss its target of 780 MT. One reason for the cut in the output could be that the premium on e-auctions have fallen from 117% to 45% in the current quarter, The e-auctions constitute about 15% of the total revenues of Coal India Ltd. In a big decision taken recently, Coal India has decided to foray into the mining of critical minerals and has identified global lithium blocks.
There has been some block selling in Sula Vineyards with Verlinvest Asia and Mousserana LP selling 11.8% stake in the stock between them. The stock crashed by 8% post the deal. While Verlinvest Asia sold total of 8.34%, Mousserana LP sold 3.44%, with the total block sale valued at Rs573 crore. The shares were sold in the range of Rs575 to Rs576. The stock had rallied by more than 30% in the last quarter. A large block of 8.65 lakh shares were absorbed today by Morgan Stanley Asia, Singapore, which was worth Rs50 crore.
Institutions in the bond market have been preferring longer tenure debt over shorter tenure debt in the last few days. Due to the liquidity crunch, most borrowers are preferring to borrow at the long end rather than at the short end. Apart from the liquidity crunch, the weak demand at the short end is also due to a likely delay by RBI in cutting rates. For now, investors like insurance companies and pension funds have showed a preference for long-dated bonds with maturities of 30 years and more, to lock in at higher rates.
JSW Steel, part of the Sajjan Jinal group and the largest by installed steel capacity in India, now plans to buy 20% stake in an Australian coal mine for a consideration of more than $1 billion. Australia based Whitehaven is planning to sell 20% stake in the Blackwater mine to the JSW group. For JSW Steel, the logic is quite clear. It plans to up its manufacturing capacity to 50 million tonnes per annum (TPA) by year 2030 and for that to happen, the company needs to secure its supplies of key inputs like coal and coking coal.
Promoters of Whirlpool India are likely to sell nearly 24% stake in the company through block deals. The sale of 30.4 million shares will be done by Whirlpool Mauritius, representing about 24% stake in Whirlpool. Currently, Whirlpool Mauritius holds about 75% stake in Whirlpool India, so they would still remain as a majority shareholder in the India outfit. The floor price for the deal has been pegged at Rs1,230 per share, which is 7.6% below current market price. The base issue size is 19 million shares with greenshoe option.
Deepak Fertilizers has tied up with Equinor for LNG supply. The company signed a 15-year LNG contract to strengthen its value chain from gas to ammonia to various downstream fertilizers and industrial mining chemicals. Equinor is based out of Norway. The deal will ensure annual supplies of 0.65 million tonnes of LNG starting from 2026. The long term deal will help absorb the volatility of global prices. LNG is also a less pollutant as a source of energy and hence it also reduces the carbon footprint for Deepak Fertilizers.