Investors who had lapped up Indian bonds on the hope that they would be included in JP Morgan Bond indices may be in for a disappointment. India has ruled out changes to tax policies to enable Indian bonds to be included in global indices. That essentially refers to waiver of capital gain tax. Both FTSE Russell and JP Morgan will unveil the results of their index reviews in the coming weeks as Indian debt was expected to replace Russian debt in global indices. The $30 billion of passive bond flows may not really materialize.
Birla Corporation (part of the MP Birla group) is not planning to lag behind in the cement race. It plans to spend $1 billion over next 8 years to expand its cement capacity to 30 MTPA. Its current capacity stands at 20 MTPA after its recent plant commissioned in Mukutban, Maharashtra. The expansion will be through a mix of greenfield and brownfield expansion. Due to the incentive, the Mukutban plant is likely to be the lowest cost cement producer in India. Birla Corp also faced profit margin pressure in midst of rising costs.
The news on the forex reserves is not good as per the latest Reuters Poll, which expects India’s forex reserves to fall to as low as $523 billion. The Indian forex chest has already fallen from $647 billion to $545 billion as the RBI has aggressively intervened to defend the rupee by selling dollars. Despite the best efforts of the RBI, the rupee has tanked to nearly 82/$. In 2008, during the global financial crisis, the forex reserves fell by 20% but this time around, experts are apprehensive that the fall could be much sharper.
The board of Nykaa, the cosmetics and fashion retailer founded by Falguni Nayyar, plans to meet on 03rd October to consider and approve the issue of bonus shares to its existing shareholders. The company had issued shares at a steep premium, so most likely, the premium account would be used to issue bonus to the shareholders. Of course, bonuses are value neutral, although they do the stock price into a popular range attractive to retail investors. Nykaa had reported a 42% growth in net profits in Q1FY23 at Rs5 crore.
The government will tighten registration norms for new companies to weed out possible shell companies with Chinese links. The entire process flow of incorporation and statutory filings of the company would be monitored via tech enabled modules. There will be a 2-factor authentication by directors and also by Cas and CS in submitting statutory documents. It is likely to link the corporate filings more closely with the filings done by the individual directors. The present system is built upon single-factor authentication.
Government is likely to adopt a 2-stage approach to privatize IDBI Bank. The first stage will examine the eligibility of potential bidders, while the second stage is when the transaction advisers take charge of the sale. IDBI Bank is co-promoted by the government of India and LIC and both will take partial exit in this sale. The government is also playing it cautious following the legal troubles in the strategic disinvestments of Pawan Hans, Central Electronics Ltd and HLL Lifecare. The Expressions of Interest will be sought soon.
Ambuja Cements has signed a non-dealing undertaking (NDU) on 50.5% stake in ACC Ltd as collateral for loans taken by the company. It may be recollected that Adani had bought control of ACC and Ambuja by buying out the stake of Holcim. Adani plans to double the combined cement capacity of Ambuja and ACC from the current 70 MTPA to 140 MTPA over 5 years. Adani has already encumbered its entire 63.5% in Ambuja Cements and its 56.7% in ACC as pledge to the Hong Kong branch of Deutsche Bank against loans.
The IPO of Electronics Mart will open on 04th October and close on 07th October, both day inclusive. The entire IPO is a fresh offer of shares worth Rs500 crore, which will be utilized for capex and for debt repayment. The price band has been fixed at Rs56 to Rs59 with minimum equity lot of 254 shares. The retailer of electronics has 112 stores across 36 cities. For FY22, Electronics Mart reported total revenues of Rs4,349 crore with net profits at Rs104 crore. Anand Rathi, IIFL Securities and JM Financial are BRLMs.