It is official now; the merger of HDFC into HDFC Bank will be effective July 1, 2023. Announcing the dates, HDFC Ltd chairman Deepak Parekh said that the boards of HDFC Bank and HDFC Ltd will meet on June 30, 2023 post-market hours to clear and approve the merger deal. The shares of HDFC will be delisted from the stock exchanges effective from July 13, 2023. Once the merger is completed, HDFC Bank will become the tenth-largest bank in the world. The swap ratio is 42 shares of HDFC Bank for 25 shares of HDFC Ltd.
Government extended deadline for completion of ethanol facilities and ethanol subvention soft loans by 6 months, as per Ministry of Consumer Affairs. Under Ethanol Blended with Petrol (EBP) programme, the government extends financial assistance to sugar mills to expand ethanol output. This improves liquidity of sugar mills during surplus season, and help clear cane price arrears. Ethanol production grew from 421 crore litres in 2014 to 1,244 crore litres in 2023. India crossed 10% ethanol blending in November 2022.
For the fourth quarter ended March 2023, India’s current account deficit (CAD) narrowed to $1.3 billion or 0.2% of GDP. The moderation in the CAD was an outcome of the sharp fall in the merchandise trade deficit and an expansion of the services trade surplus in the quarter. The overall CAD for the full fiscal year FY23 stood at $67 billion or 2% of GDP. While this is higher on a yoy basis, it is much more palatable as compared to the 3.5%-4% CAD that economists were projecting after the Q2 CAD data was announced.
Securities Appellate Tribunal (SAT) reserved its order in an appeal by Subhash Chandra and Punit Goenka. This was on the SEBI interim order barring both Essel group promoters from holding any key management position (KMP) in listed entities. SEBI has been emphatic that the sequence of events and bank audit trail clearly pointed to siphoning of funds by the promoters out of a listed entity, ZEEL, into unlisted entities owned by the promoters. Zee counsel wanted to know why Yes Bank was not made party to this order.
The joint venture, Vedanta Foxconn Semiconductor Ltd, re-submitted its application for an electronic chip manufacturing plant in India. The plant was supposed to entail an investment of Rs150,000 crore and would start generating revenue from 2027. The JV submitted the application as per revised guidelines issued by the government of India offering 50% higher fiscal incentives to chip makers. The JV will set up a world class chip fab to emerge as an alternative to China and also to capitalize on growing chip demand.
With an official index rejig coming up in Nifty, it is time for passive flows again. HDFC Bank, ONGC, AEL, ICICI Bank, Adani Ports, HDFC Life and NTPC will see passive inflows of $187 million due to the Nifty rejig. However, BHEL, IndusInd Bank, Axis Bank, Reliance, BOB and JSW Steel will see outflows of $119 million. The adjustment will happen on June 28, 2023 and will be effective from June 30, 2023. The adjustment for capping factor happens quarterly on the last trading day of March, June, September, and December.
If one looks at the surge in SME IPOs on the NSE and BSE, it does look like a lot of action is happening in the MSMEs, and rightly so. SMEs have compelling engines of growth and innovation. Investors are looking for exposure to businesses with substantial growth potential and diversification via SME listings. In the Indian markets, even when the mainboard IPOs were ambivalent even after SEBI approvals, it was the SME IPOs that made up for the gap. Also, the average size of the SME IPO has grown sharply in last 1 year.
White-label ATMs (WLAs) operated by non-banking entities have been around since FY14 but have been losing their sheen of late. Back then, RBI had licensed 8 such WLAs to operate in semi-urban and rural areas. Now, nearly half the players have backed out due to higher costs and lower fees. According to data, the WLAs contribute 23% of all ATMs in semi-urban and rural areas. However, the low debit card usage in these areas, low interchange fee and high interest rates act as a dampener. Inter-operability could help.
