SEBI has explicitly prohibited stock brokers and clearing members from creating new bank guarantees on client funds. This will be effective from May 2023 and all open guarantees must be unwound by Sep-23. This will help curb any misuse of funds by brokers. SEBI is of the view that the current practice exposes the brokers and the clients to risk of price disruption. However, this rule will not apply to proprietary funds of the broker. Even the stock exchanges and clearing corporations have been instructed to monitor this.
The good news is that personal income tax as a share of GDP has gone up from 2.11% FY15 to 2.94% in FY22. This can be broadly interpreted as widening of tax base in India. This was disclosed by the finance minister at an internal review meeting. This includes STT collections, which has surged from Rs2.65 trillion in FY15 to Rs6.96 trillion in FY22. Apart from higher income levels and better living standards of people, the finance minister disclosed that more tax payers had come into the net via digital-driven monitoring.
The government has cautioned that there could be downside risks to the 6.5% GDP growth target for FY24. This is on account of headwinds like hardening oil prices, global banking turmoil and tepid rain forecasts. However, the government also expressed confidence that the Indian banking sector would be less vulnerable to a global banking crisis. Ironically, these warnings are in contrast to the optimistic tone of the RBI in its state of the economy report and the GDP upgrades made in the latest monetary policy.
Coal stocks at thermal power stations stood at about 35 million tonnes (MT), which is 64% higher than last year. This largely allays fears that Indian thermal power companies may run out of coal stock during the peak summer demand season. Even pithead coal stocks were 13.7% higher. This is a stark contrast to the previous year when coal stocks at many thermal stations fell to below critical levels. That was when the Coal Ministry had instructed state-run power companies to scale up coal imports on a war footing.
Foodtech platform, Thrive, is charging restaurants a commission of just 3%, compared with 25% levied by existing aggregators. In the process, THRIVE plans to shake up the food delivery market in a big way. This is likely to give Swiggy and Zomato a real run for their money as their core franchise is likely to be hit. The outfit will spend less on marketing spends and more on word of mouth and organic reach. THRIVE helps in online promotion and also offers third-party logistics integration through tie-ups with delivery outfits.
Adani Ports and Special Economic Zone (APSEZ) expects to reduce refinancing risks after a bond buyback worth $130 million. In fact, S&P Global Ratings has a good word in the light of easier cash flows and lower refinancing risk for the company. Its secured notes of $650 million are due to mature in July 2024 and it is likely to easily manage the refinancing. It may be recollected that the seven listed stocks of the Adani group had lost close to $114 billion in market value in the aftermath of the Hindenburg Research report.
Currently, the RBI is examining the proposal to re-appoint Uday Kotak as non-executive director of Kotak Mahindra Bank after his term ends in December 2023. Incidentally, 99% of the shareholders of Kotak Mahindra Bank had decisively voted for Uday Kotak as the non-executive non-independent director post December 2023. RBI normally intervenes in the appointment of non-executive directors only if they do not meet the fit and proper criteria. While the move is OK in letter of law, RBI may want to look at spirit.
Serum Life Sciences will pick up an additional stake in Biocon Biologics by converting the $150 million loan to Biocon Pharma Private Limited into equity. The deal was struck at enterprise valuation of $6 billion. It is over and above Serum’s previous investment in November 2022 of a similar amount. With the new deal in place, Biocon Biologics will have access to 100 million doses of vaccines annually coupled with the distribution rights to Serum’s vaccine portfolio. In January 2020, True North had invested Rs536 crore for a 2.44% stake in Biocon Biologics at a $3 billion valuation. Later Goldman invested at $3.94 billion value.