Year 2022 saw record levels of mergers and acquisitions in India. Companies tried to consolidate positions and enter new segments, leading to some mega transactions in banking, cement and aviation. Total value of M&A deals in India stood at $152 billion in 2022, smartly higher than $107 billion in 2021. Even in terms of number of deals, this was the best year since 2018. Domestic deals made up 72% of value and 52% of volumes. The big dominating deal was the $40 billion HDFC merger and $11.5 billion Adani cement deal.
Indian aviation companies may end the December quarter on a high note. Daily air traffic in December more than doubled to 420,000 as people took to the skies with a vengeance. This is also higher than the pre-COVID levels, showing that recovery was real. Not surprisingly, IndiGo carried 12.97 million in October and November while Vistara carried 2.14 million passengers in the same period. For both airlines, it marked a sharp growth over 2019. However, revenue growth may still disappoint on profit due to costs.
SEBI has proposed an elaborate regulatory framework for index providers for greater transparency in the administration of indices; apart from greater accountability. Regulations are likely to provide for eligibility criterion, compliance, disclosures, periodic audits and penal action when such rules are not complied with. It will apply to domestic index providers and also to global index providers like MSCI, Bloomberg and FT. Index providers must also have minimum net worth of Rs25 crore, and a minimum track record of 5 years.
Bharti Airtel plans to invest up to Rs28,000 crore in enhancing and upgrading its telecom network with a focus on 5G rollout. While the capex will be up by 10-15%, Airtel has no plans to charge premium rates for 5G. This would be in line with the capex of last 3 years. Much of the capital outlays would be on radios, fibre, broadband and enterprise technology data centres. Bharti Airtel has already rolled out 3,293 base stations for 5G. In Q2, the Average Revenue Per User (ARPU) stood at Rs190; up from just Rs153 last year.
Even as manufacturing struggles to show real gains from the Make in India program, a related beneficiary has been the services sector. This was disclosed in a note by India Ratings and Research. It also disclosed that bulk of the FDI in manufacturing was not greenfield or fresh investments. FDI has tilted in favour of the services sector possibility due to ease of business in services. Between 2014 and 2022, services sector FDI increased from $80 billion to $153 billion, while manufacturing grew from $77 billion to $94 billion.
JSW Energy completed the acquisition of 700 MW Ind-Bharath Energy (Utkal) for Rs1,048 crore. This deal was done through the insolvency proceedings route. After the NCLT (National Company Law Tribunal) had approved the resolution plan, JSW Energy emerged the best bidder for Ind-Bharath Energy (Utkal) Ltd and now holds 95% stake in the latter while secured creditors hold the balance 5%. Ind-Bharath Energy, is now implementing a 700 MW (2×350 MW) thermal power plant located at the Jharsuguda district of Odisha.
India may end year 2022 with record outflows. After 3 consecutive years of infusing huge funds, foreign portfolio investors are about to end 2022 with net outflows in excess of Rs121,000 crore. This is much bigger than the Rs53,000 crore of outflows seen in 2008, at the peak of the global financial crisis. In 2022, the outflows were triggered by global monetary tightening, volatile crude prices, rising input costs as well as the worsening geopolitical situation in Russia. In 2023, Fed policy is likely to drive FPI flows into India.
Competition Commission of India (CCI) has apparently issued demand notices to Google for failure to pay penalties within the stipulated time. Google had been accused of anti-competitive practices by CCI and it had filed appeals before the NCLT against the CCI. The appeals are yet to be heard by the tribunal. It may be recollected that CCI had imposed penalties worth Rs2,274 crore in two separate cases pertaining to the Android mobile system and Play Store policies of Google. It had been given 60 days to pay the penalty.