As part of the rescue plan for Silicon Valley Bank (SVB), the Federal Deposit Insurance Corporation (FDIC) plans to break up the bank and hold 2 separate auctions for traditional deposits unit and private banking business. The FDIC could not find interested buyers for the bank, so now it will split the private banking business and seek bids from buyers. The SVB collapse has been followed by the fall of Signature Bank, and the First Republic is almost on the brink. A fire sale would mean booking huge losses on bond portfolio.
Jayanti Chauhan, scion of the Chauhan family of Bisleri International, will come back at the helm of the company after the Tatas walked out of the deal. The Tatas and Bisleri International could not agree on a price for the acquisition. Ramesh Chauhan confirmed that Jayanti will run the business and that they had abandoned plans of selling out now. Bisleri had signed a conditional deal in November 2022 to sell a majority stake in Bisleri International to Tata Consumer for Rs7,000 crore. Negotiations have stopped.
In a statement to Parliament, MOS Finance, Bhagwat Karad, confirmed that gross NPAs of PSBs had fallen sharply from 14.6% in March 2018 to 5.53% in December 2022. He confirmed to the house that all PSBs were profitable in FY22 with aggregate profits of Rs66,543 crore. The profits of PSBs in the first 9 months of FY23 were already 5.5% higher than full year profits of FY22. Karad added that the provision coverage ratio (PCR) had improved sharply from 46% to 89.9%, with 300 bps higher capital adequacy ratio at 14.5%.
Shipping Corporation of India (SCI) saw a 4% price spike after the company announced 31st March 2023 as the record date for the proposed demerger. As part of the demerger, the land and other assets of SCI will be hived off as a separate company; SCI Land and Assets Ltd. Shareholders of SCI will get one share of SCILAL for every 1 share of SCI held. The scheme of demerger has been approved by the company board, MCA, DIPAM, and the stock exchanges. This will pave the way for strategic disinvestment of PSU holdings.
Foreign brokerages like Jefferies and CLSA are betting big on Indian cement companies amid lower energy costs and a surge in volumes. Prices of petcoke and coal are down 35% to 60% in line with falling energy prices globally. Price hikes for cement companies had lagged costs and that had led to tardy progress on the profits front. Jefferies also sees cement players focusing on volumes instead of prices in the near term. However, it remains to be seen if this cement demand really sustains pan-India, once elections are over.
India plans to spend Rs98,000 crore or about $12 billion in the next 2 years for boost airport capacity and readiness. With airline companies order a slew of planes, it is likely to exert pressure on the existing infrastructure. India plans to boost number of airports from 148 to 220 by the year 2025. To meet the back-end infrastructure needs, private players will invest $9 billion while the AAI will bring in the rest. It entails greenfield projects, new terminals and the renovation of existing airport and technical facilities.
Gold prices in India touched a fresh lifetime high on the MCX after the worsening banking crisis in the US and Europe led to a flight to safe havens. Gold prices for 10 grams on the MCX crossed Rs60,200 mark for the first time ever. In India, the rupee gold prices re not only impacted by the global spot gold price, but also the taxes payable and the currency depreciation. Weak rupee has helped India gold prices to touch a peak when the global gold prices are still 10% short of the peak. Brokers are pegging Rs70,000 for gold.
Shapoorji Pallonji Group is doing a major restructuring of its business. It will create 2 holding companies for its diverse businesses. Shapoorji Pallonji Company Private Ltd will cease to operate as the holding entity. Under the new scheme, SP Finance and SC Finance will hold 47.69% each in the holding company. With the tragic death of Cyrus Mistry in a car accident, the entire mantle will fall upon his children to run their share of the business. Both the verticals will drive their own strategy with no cross holdings at all.