Sebi open to foreign inspection of market institutions, RBI yet to decide
The Securities and Exchange Board of India is open to allowing European regulators to inspect key financial market institutions in India as long as they take permission and carry out the inspection with Sebi officials. The Reserve Bank is yet to endorse such a proposal. The European Securities and Markets Authority has derecognised six key institutions including Clearing Corporation and NSE Clearing, which are central counterparties for settlement of trades in forex, gilts and currency and interest rate derivatives.
Why it’s important: A middle ground has to be found to resolve the matter. Since it involves overseas regulators and overlapping jurisdiction and supervision rights, any decision may have to be backed by an approval from the cabinet of ministers.
Reliance Industries to buy Metro AG’s wholesale business in India
Reliance Industries is set to buy Metro AG’s cash and carry business in India in a deal estimated at around Rs 4,060 crore, less than what the German wholesaler was expecting, but closer to Reliance’s non-binding bid submitted more than two months ago. The deal, likely to be signed later this month, includes 31 wholesale distribution centers, land banks and other assets owned by Metro Cash and Carry.
Why it’s important: The acquisition will help Reliance Retail, already India’s largest retailer, to expand its presence in the wholesale segment.
Government might foreclose 116 infra projects worth Rs 1.26 lakh crore
As many as 116 infrastructure projects worth Rs 1.26 lakh crore could be shut down due to unresolved issues ranging from land acquisition to Centre-state tussles. Although these have incurred a total capex of Rs 20,311 crore, the central government is considering the possibility of finally pulling the plug on them. In an internal report prepared by NITI Aayog, these projects feature in the list of those terminated, on hold, or bound for foreclosure. These may be removed from the Centre’s project-monitoring system, which has been created to speed up infrastructure execution.
Why it’s important: The government may decide to cut its losses on viability issues and move ahead. However, most of these delayed projects will need to be replaced by new ones despite sizeable infrastructure already in place.
Overhaul of bankruptcy regime to ensure faster rescue of distressed firms
The central government is planning an overhaul of India’s six-year-old bankruptcy regime. The corporate affairs ministry will soon seek cabinet approval for a bill to amend the Insolvency and Bankruptcy Code, which will be tabled in the winter session of Parliament. The amendments will address deficiencies in how insolvency professionals run the companies ending up in tribunals and achieve timely decisions.
Why it’s important: The modifications could lead to faster turnaround of sick firms and greater efficiency among resolution professionals.
Blackstone and Temasek lead race to purchase Care Hospitals
Blackstone and Temasek’s Singapore platform Sheares Healthcare have emerged as top contenders to acquire Care Hospitals. The deal could value Care, a large hospital chain, at Rs 8,000-8,200 crore. Torrent Group and buyout group CVC are also in the fray. Final rounds of due diligence are going on and binding bids are expected in the coming weeks.
Why it’s important: Once the deal takes place, it will be the second-largest hospital buyout in India after the IHH-Fortis transaction in 2018. There is strong investor interest in local healthcare firms as they have shown robust bounce back post the Covid pandemic.
Central ministries to work in tandem to avoid overlaps in proposed telecom law
The telecom ministry will work with the broadcasting ministry and department of space to implement the rules incorporated in the Indian Telecommunications Bill after it becomes a law to prevent conflicts in regulation. The draft version of the telecom bill will be released for stakeholder consultations in the coming months and will become an umbrella law under which several ministries are likely to be covered.
Why it’s important: There is potential for overlapping regulation due to the expanded definition of telecommunications in the draft law that includes over-the-top communication apps, broadcasting, satellite, and communication over the internet.
Corporate borrowing rises significantly as capital spending revives
There is a clear turnaround in fresh capital investment by companies, with demand for bank loans being led by infrastructure, roads, renewable energy, and oil sectors. In the past few quarters, loan demand was led by higher utilization of working capital due to increase in commodity prices. From the September quarter, corporate loan growth has trended towards fresh capacity building, bankers said. Credit to the industry rose by 12.6 percent in September compared with 1.7 percent growth a year earlier. Credit to large industry grew 7.9 percent against a contraction of 2.1 percent in September last year.
Why it’s important: The rise in corporate borrowing will ease the government’s concerns on restricted capex spending by the private sector. Bankers expect corporate loans to pick additional momentum in the remaining two quarters of the current financial year.
Maruti plans production capacity of 2.4 million vehicles by 2023-24
Maruti Suzuki is targeting an annual production capacity of 2.3-2.4 million in 2023-24 financial year by tweaking its factories in a bid to cater to any increase in demand for passenger vehicles, company chairman R C Bhargava has said. Elaborating on the capacity expansion, Bhargava said the Manesar unit and the Gujarat plant in Hansalpur Becharaji village will now have an equal capacity of producing 750,000 vehicles a year each on three assembly lines that are up and running. The Gurugram facility has a capacity of 500,000 units a year.
Why it’s important: India’s largest carmaker has lined up more SUVs, a growth market in the country where Maruti has been lagging rivals. It’s collaboration with Toyota has also started yielding results.
FMCG sector sees margin improvement and higher rural sales in coming quarters
India’s FMCG companies expect an improvement in its margins and a comeback in the rural market from the third quarter, though it saw pressure on volume in the September quarter on persistently high inflation. Makers of FMCG are now seeing green shoots of recovery with the festive season and an expected good harvest in the rural areas. In the September quarter, listed FMCG companies reported pressure on their margins on similar lines as the preceding quarter.
Why it’s important: The demand environment for FMCG remains challenging because persistently high inflation is squeezing consumption. Unless that changes, margins will remain under pressure.
Loss and damage funding makes it to agenda at UN climate summit for the first time
For the first time in the history of UN climate negotiations, loss and damage finance will be part of the official agenda of the conference of the parties at Sharm-El-Sheikh in Egypt. Countries participating in the negotiations have agreed to a 20-point provisional agenda. Matters relating to funding arrangements responding to loss and damage associated with the adverse effects of climate change, including a focus on addressing loss and damage, will be discussed at the summit.
Why it’s important: Developing countries like India, small island nations and several indigenous communities have been asking for a separate fund for loss and damage to tackle the extremes of climate caused by historic polluters in the rich nations. The discussions will now start officially.
Disclosure: Moneycontrol is a part of the Network18 group. Network18 is controlled by Independent Media Trust, of which Reliance Industries is the sole beneficiary.
