Market regulator asks PE, VC firms for details on start-up valuation process
The Securities & Exchange Board of India is taking a look at how private equity and venture capital funds value startups and unicorns. On September 6, the regulator asked many funds to disclose their valuation practices and share details like the qualification of the valuer, whether the valuer was an associate or its manager or sponsor, and if there was any change in the valuation methodology in the past three years.
Why it’s important: A boosted valuation provides a rosy but misleading picture of the portfolio to a fund’s investors. This has led to complaints and more transparency would be a good thing.
Russia offers to sell crude oil to India at even cheaper rates
In order to counter the growing demand among G7 nations to enforce a price cap on Russian crude oil, Moscow is willing to sell to India at even lower rates than before. In return, it is asking Indian not to support the G7 proposal.
Why it’s important: Since late June, India’s biggest oil supplier Iraq has undercut Russian prices by a substantial margin. The government may agree to Russia’s offer in order to keep its oil bill down in a highly price-sensitive market.
Insurance regulator considers setting up agency to investigate fraud
The Insurance Regulatory and Development Authority of India is mulling a suggesting to set up an independent investigation agency to probe cases of insurance fraud. This agency could be similar to the Serious Fraud Investigation Office, which probes corporate fraud. The proposed agency has been recommended by a working group constituted by the regulator and had representation from the industry.
Why it’s important: Insurance fraud is on the rise in India. Having a specialized institution to investigate and prevent frauds and adjudicate and punish offenders could be a good idea.
Reserve Bank sold $ 13 billion in August to prop up rupee at 80 to a dollar
The Reserve Bank of India is estimated to have sold about $ 13 billion in the spot market in August to defend the rupee from falling further against the dollar, according to top dealers. This is the highest monthly currency market intervention so far in 2022-23 as the central bank is said to be defending the psychological mark of 80 to stabilize the local currency.
Why it’s important: The selling of dollars is not expected to be sustainable due to the raid depletion in forex reserves. The rate vis-à-vis the dollar could remain volatile and may drop further.
Government working on plan to revive gas-fired power plants
The central government is working on a plan to revive stalled gas-fired plants and will provide them with a separate market to sell electricity, energy minister RK Singh has said in an interview. Coal blending through imports will be used if domestic supplies fall short, he said.
Why it’s important: These measures could only be short-term fixes. In the long run, India will have to add more capacity based on hydro, wind, and solar power sources in order to maintain its energy security.
Digitization and right targeting have helped India, says IMF chief
India has effectively used its financial resources in the aftermath of the Covid pandemic as faster digitization and digital public infrastructure have helped improve tax collections and target aid to the needy, International Monetary Fund managing director Kristalina Georgieva said in an interview
Why it’s important: The IMF thinks India’s Covid response was prudent and not oversized, and the government has kept a buffer for further support during an evolving crisis.
Adani to overhaul company boards of cement makers Ambuja and ACC
In a major overhaul of the top management and board of ACC and Ambuja Cements, Gautam Adani, his son Karan, and nephew Pranav will join the boards of two of India’s oldest cement companies. Some long-serving board members of the two firms will step down following the takeover of Holcim India’s ownership in the two companies by the Adani group in a $ 10.5 billion acquisition.
Why it’s important: Adani has made a major play in the country’s cement sector by acquiring the two top companies. Its open offer elicited a lukewarm response. The change on the board was expected.
Yes Bank may receive Reserve Bank nod for stake sale by November
Yes Bank is hoping to receive approval from the Reserve Bank of India in the next two months for its proposed stake sale to infuse Rs 8,898 crore, chief executive Prashant Kumar said in an interview. The banking regulator’s approval is the only one pending as the private lender’s board and shareholders have voted in favor of the stake sale.
Why it’s important: Yes Bank has been stressed for the past few years. The fund infusion will help it to put its troubles in the past and grow at a faster pace that the overall banking sector.
Better safety features in cars drive capex among component makers
Makers of airbags, advanced driver assist systems, and electronic stability control are investing in capacities and localization of technologies to capitalize on the upcoming stricter laws related to passenger safety and a strong demand for feature-rich premium cars.
Why it’s important: The makers of safety systems in vehicles are expected business to rise at least three times. But higher prices of cars could provide a headwind to retail demand.
Tata group proposed to purchase stake in Bisleri International
The Tata Group has made an offer for a stake in Ramesh Chauhan-owned Bisleri International, India’s largest packaged water company. It might also scale up its stake at a later date. The Tata Group’s consumer business is exploring strategic acquisitions, chief executive Sunil D’Souza had said in recent post-earnings investor call.
Why it’s important: A significant stake in Bisleri will give the Tata group a good foothold in the packaged drinking water industry since Bisleri mineral water is a market leader in India.
