Monday, 16 July 2018

43% surge in Mutual Fund investments for Q1 2018-19 says AMFI.

Bombay Stock Exchange

There has been a historic rise in investments in Mutual Funds according to the data released by Association of Mutual Funds of India. According to the financial market expert, the surge in MF investments can be attributed to the strong performance of Indian market, low paying Fixed Deposit interest rates and the rising awareness among small investors through campaigns like 'Mutual Fund Sahi Hain'.

Investors have pumped Rs 1.4 lakh crore into mutual fund (MF) schemes in April-June quarter this fiscal, a surge of 43 per cent from the year-ago period, driven by strong participation from retail investors. 

According to Association of Mutual Funds of India (Amfi) data, the inflow has also helped in pushing the assets base of the 42-player MF industry to Rs 23.40 lakh crore at the end of June this year, an increase of 20 per cent from Rs 20.40 lakh crore in June-end 2017.

According to the data, investors poured in a net of Rs 1,33,903 crore in MF schemes in the first quarter of the ongoing fiscal, as compared to Rs 93,400 crore in the April-June period of 2017-18. The latest inflow has been mainly driven by contributions from liquid funds and equity schemes. Individually, liquid funds or money market category -- investments in cash assets such as treasury bills, certificates of deposit and commercial paper for shorter horizon -- witnessed an inflow of Rs 1.22 lakh crore. Besides, equity schemes attracted close to Rs 33,000 crore.

The rise in the Mutual Fund market despite the volatility and weaker Rupee suggests that investors are looking for long-term horizon view. The trend is expected to rise further as investors are starting to acknowledge the long-term wealth-creation potential of equities.

Source - IBEF.

Numaligarh Refinery sets up bio-ethanol plant with Finnish, Dutch firms


State-run PSU Numaligarh Refinery Limited has taken a giant step forward by establishing a joint venture, Assam Bio-Refinery Pvt. Limited (ABRPL) with equity participation of M/s Chempolis Oy of Finland and M/s Fortum 3 B.V. of Netherland to build and operate the first of its kind Bio-Refinery in India which would generate renewable green fuel-bioethanol, other valuable chemicals and green power from bamboo biomass.
The joint venture company incorporated on 04th June 2018 has 3 partners with major equity holding of 50% by NRL, 28% by Fortum 3.B.V. Netherland and 22% by Chempolis Oy, Finland.
“NRL’s new venture shall produce 62 million litres of bio-ethanol by using around 0.5 million MT bamboo per annum which is going to be a game changer in terms of additional revenue generation for the bamboo farmers through sustainable cultivation, extraction and transportation of bamboo. It is indeed a historic moment for India’s North East to garner first major foreign direct investment for setting up its first bamboo based Biorefinery” said Mr S.K. Barua, Managing Director, NRL
Bioethanol shall be produced from bamboo as feedstock by using pioneering 3G Formicobio technology by a Finnish technology provider M/s Chempolis Oy with other valuable chemicals and bio-coal. Bio-coal will be used for the production of steam and green power to the bio-refinery.
According to a statement from NRL, the company is implementing India’s first bio-refinery in Assam at an estimated cost of Rs 950 crore which would produce bio-ethanol with co-production of furfural and acetic acid from the locally available non-food biomass feedstock. Bamboo is one of the major non-food biomass resources available abundantly in North East India and is among the fastest growing plants. 49,000 tonnes of BioEthanol produced annually would primarily be used to blend NRL petrol as mandated by the National Policy on Biofuel, with the surplus to be sold to other oil marketing companies. The company added that NRL has already inked MoUs with Nagaland Bamboo Development Agency (NBDA) and Arunachal Pradesh Bamboo Resources Development Agency (APBRDA) last year for sourcing of bamboo for the Bio-Refinery.
The government of India recently stepped up its support for the production of bio-ethanol, most prominently by means of the new bio-ethanol policy for mandatory blending of Ethanol with gasoline up to 10%. The new bio-ethanol policy aims to spur investments for setting up projects with a total production capacity of 1 billion litres of fuel ethanol every year. The policy is also aimed at cutting down the country’s significant energy import dependence as well as meet Nationally Determined Contributions (NDCs) committed to the Paris Agreement on Climate Change.
This project has a clear role in the fight against climate change. It can also have a big positive impact on local communities. It will provide employment opportunities for thousands of people and in the long run, it will help local communities from Assam and Arunachal Pradesh to become self-sustainable and enhance their living standards.
– Chaitanya Kulkarni
Also published on CSRBulletin.com

Thursday, 12 July 2018

State Bank of India plans to raise $750 million via maiden green bonds


India's largest lender, the State Bank of India has announced plans to issue an inaugural USD benchmark green bond in the Reg S market. Green Banking and Sustainability have long been areas of priority for the lender and in an early delineation of this approach, SBI had enunciated its Green Banking Policy a decade back.

Through its inaugural green bonds launch from its London branch, SBI is seeking to raise between USD 500 million (EUR 426m) and USD 750 million.

The transaction will likely consist of two tranches and could open for subscription in the next few days, people aware of the development told the newspaper. The raised funds will be used to support investment in sustainable and climate-friendly projects.

The bank has appointed Bank of America Merrill Lynch, BNP Paribas, Citigroup, Credit Agricole CIB, HSBC, SBICAP and Standard Chartered Bank to manage the issuance. According to Business Standard, bankers will meet with investors this week. As per the Green Bond Framework, the proceeds from the bonds will be invested in research and development of ecological solutions to make this world a better place for our future generations.

The Green Bonds market as per July 2018 stands at $80 billion against $170 billion against the full year of 2017. The estimated investments in Green Bonds stand at $250 billion.

- Chaitanya Kulkarni

Thursday, 5 July 2018

Bank of China to open office in Mumbai

Bank of China office in New York.

Reserve Bank of India has issued scheduled commercial bank license to the Bank of China. Bank of China is one of China's largest banks which is set to open its first branch in Mumbai.

Prime Minister Narendra Modi had made a commitment to Chinese President Xi Jinping to allow Bank of China to set up branches in India when they met on the sidelines of the SCO summit in Chinese city of Qingdao last month. Bank of China will be the second Chinese bank to enter India after Industrial and Commercial Bank of China.

As China’s most internationalised and diversified bank, Bank of China provides a comprehensive range of financial services to customers across the Chinese mainland as well as 51 countries and regions. The Bank’s core business is commercial banking, including corporate banking, personal banking and financial markets services.

"By the end of 2017, Chinese investments into India added up to more than $8 billion, as India has become an important market for infrastructure cooperation among Chinese companies and a major investment destination," Gao Feng, Ministry of Commerce, People's Republic of China.

China had permitted Indian banks to open seven branches in China since 2006. The State Bank of India was the first to start operations in China where it has two branches. The Bank of India, the Bank of Baroda, Canara Bank, ICICI Bank and Axis Bank have one branch each.

- Chaitanya Kulkarni

Wednesday, 4 July 2018

Turnaround Strategy? LIC likely to acquire 51% stake in IDBI Bank.


In a bid to achieve targets in Operation Clean-up, the Ministry of Finance is keen to finalise the acquisition of state-owned IDBI Bank by Life Insurance Corporation of India in three-four months to ensure the lender’s balance-sheet shows an improvement by next fiscal.

The Insurance Regulatory and Development Authority of India (IRDAI) had, on June 29, given a one-time exemption to LIC to acquire a 40 per cent stake in debt-ridden IDBI Bank, taking its total holding in the lender to over 51 per cent. The acquisition will help infuse ₹10,000-13,000 crore in the bank, which had non-performing loans totalling ₹55,588 crore as of March 2018 and is under the RBI’s Prompt Corrective Action.

“IRDAI has already cleared the transaction and other approvals are also in the pipeline. The idea is that before the end of 2018, the transaction should be finalised and it should start showing results by the end of the financial year,” as reported in a corporate announcement page of BSE. The Finance Ministry is already in discussions with IDBI Bank and LIC on the timelines and proposed valuation for the acquisition.

As IDBI Bank is a listed entity, the deal is likely to take place at market value. The boards of IDBI Bank and LIC are, however, expected to come up with a final proposal on the valuation and timeline by the end of this month.

The next step is LIC has to go to its board and inform the board about the conditions under which the approval is given. What we have asked for is: what is going to be their plan for reducing the stake to 15% over a period. The government, which is the promoter of the bank, holds almost 81%. The deal, which will trigger takeover regulations, will also require an approval from the Securities and Exchange Board of India.

Interestingly, as per capital market regulations, any company that acquires 25% stake in a listed entity has to make an open offer to acquire 26% additional stake from public shareholders. SEBI is likely to waive off this requirement as it has previously done before in case for government companies.

The IRDA rules don't permit a single entity to run two separate insurance companies. With this acquisition, IDBI Bank will be a subsidy of LIC. LIC's ambition of getting into banking business may come true as LIC Housing Finance had applied for the banking license in 2014 but failed to receive RBI nod. No clear information regarding the business of IDBI Federal Life Insurance has been decided yet.

Several financial experts have opposed this deal as it needs to bypass Insurance law. The infusion of capital by LIC is a bet on NPA struck IDBI Bank as it is very unlikely to turn around the bank's books in near term.

- Chaitanya Kulkarni

Tuesday, 26 June 2018

#MarketWatch: What next for Manpasand Beverages?

Manpasand Beverages auditor resignation

Over the last few weeks, the Indian stock market has been hit with several shocks. The large caps were affected by rising crude and currency prices. The tumble in the small cap and mid-cap were led by the investor confusion in few selective stocks like Vakrangee, Inox Wind and Manpasand Beverages. Manpasand Beverages through its corporate disclosure declared the announcement of resignation of its statutory auditors M/S Deloitte Haskin & Sells, Vadodara. On the subsequent day, the Board of Directors of Manpasand Beverages appointed M/s Mehra Goel and Co., as their statutory auditor for the year. The newly appointed accounting firm has 13 partners on-board with an operational experience of sixty five years.

Although, there have been many cases of resigning auditors in the recent past. Several misinformed presumptions were disseminated through mainstream and social media which affected investor sentiments at large. Most of them are unsubstantiated rumours that are not based on any factual evidence and a lot of shareholders and investors have been negatively impacted. In fact, according to Prime Database, between January and May 2018, 32 auditors have resigned midterm, while for 2017-18 the number of exits stood at 36. 

Investors should be aware that Deloitte was auditing the financial results of Manpasand Beverages for the last 8 years and had never expressed their concerns on the financial performance of the company. Further, there has been no instance till date where the company has denied disclosure of any financial information. This rumour ride has affected the stocks of the company. Although the investors should prefer official sources of information than media agencies for further investment opportunities.

Manpasand Beverages has been one of the fastest growing listed FMCG companies. The company reported staggering 43.8% rise in net profit of Rs 72.6 crores for the financial year end of 2017. The total income for the same year stood at Rs. 735 crores. For Q3 2017-18, India’s leading fruit drink player, Manpasand Beverages, reported a growth of 64% rise in net profit at Rs 11.9 crores against net profit of Rs 7.2 on Year on Year. 
A 2016 report by Mintel on the global juice market indicates that in India too, packaged juice is likely to grow by taking a share from fresh-squeezed juice and moving into small cities and more rural areas, similar to what is observed globally.

“In India, for example, local fruit juice manufacturer Manpasand Beverages found success focusing on semi-urban and rural markets, where growth is fuelled by rising disposable incomes and a void left by bigger brands that have largely stuck to urban centers,” the Mintel report states. 

Manpasand's healthy market position in the fruit drink segment is underpinned by presence of brand Mango Sip and Fruits Up. The company has made several innovations in the past couple of years, which have enabled it to enter in top 5 players in the mango-based drinks market. In fiscal 2014, it launched the Fruits up brand in the carbonated drink market. The brand grew 71.30% over the past three fiscals and contributed 25% to the company's revenue in fiscal 2017. With network of 4000 distributors across the country and strong presence in Western and northern parts of India, revenue increased significantly over five fiscal through 2017.

The company already has 5 manufacturing units spread in Vadodara, Varanasi and Ambala. Manpasand Beverages plans capex of Rs 600 crores to increase manufacturing capacity with plants at Sri City, Vadodara, Varanasi, and in Khurda, Odisha. The ground-breaking ceremony of upcoming Khurda plant was commenced in the august presence of CM of Odisha, Shri Naveen Patnaik. These four new plants are sure to double the company’s production capacity in the coming months. This shall also help the brand to reach newer markets as the production facilities increase. Manpasand Beverages also plans to enter into new beverage verticals in near future.

What market investors want? Stable outlook, prospective growth and a laborious past for a glorious future. Manpasand Beverages Limited was set up as a proprietorship firm named Manpasand Agro Foods in 1996 in Vadodara, and was reconstituted as a private limited company in fiscal year 2012 and public limited company in fiscal year 2014. Since then it has been expanding its market portfolio. 

Manpasand’s flagship brand, Mango Sip is growing by leaps and bounds and is expected to grow at a CAGR of 33.1% to Rs 1,408 crore by FY20. The recent backlash against carbonated cola drinks especially in the south and the upcoming Sricity facility will help Manpasand acquire southern markets. The Indian Juice market is expected to register compounded annual growth rates (CAGR) of 8% by 2022 to cross Rs. 17,500 crore compared to around Rs. 12,040 crore at present, according to Euromonitor International. The report states that the regional players and start-ups are currently challenging present market leaders by introducing new healthy lines of juices. Over the forecast period, these companies are expected to increase their production capacity and distribution networks to ensure year-round availability, which is likely to affect the current competitive landscape of juice in India.

The Euromonitor International report states that Coca Cola, Parle Agro, PepsiCo and Dabur together account for the vast bulk of juice sales primarily due to their successful portfolios of mango-based drinks. However, companies like Manpasand Beverages and Hector Beverages are quickly gaining market share since the last couple of years. Also, a Motilal Oswal report published in May 2018 suggested that Manpasand Beverages Limited shall see continuous growth in the coming years and would positively impact in its stock value.

Much of the ambiguity around Manpasand Beverages was to do with the fact that the company had not shared a schedule for its Meeting of the Board of Directors of the Company. However, now that the company has informed the bourses that it would convene a board meeting on June 27 to consider and approve audited financial results for Q4 FY2017-18. Soon, after this corporate announcement, the shares of Manpasand Beverages saw an upward trend since the third week of June; further validating the growing positivity about this company in the investor community.

Disclaimer – We have provided all information based on our research and we do not have any holding. Please consult your financial advisor before making any investment decision.

- Chaitanya Kulkarni.

Monday, 25 June 2018

India becomes 69th member of Europe's EBRD Bank

India EBRD bank

India’s membership will pave the way for more joint investment in EBRD regions.

Shareholders of the European Bank for Reconstruction and Development (EBRD) have agreed to India becoming the Bank’s 69th member, setting the stage for an increase in joint investment with Indian companies in the EBRD’s regions.

The Indian government applied for EBRD membership on 18 December 2017, saying the step would benefit both the Bank and India. India will take a shareholding in the EBRD but it will not be a recipient of EBRD financing. The EBRD’s Board of Governors, which represents all of the existing shareholders, voted in favour of India’s application.

With India’s impressive economic growth over the years and enhanced international political profile, it was considered appropriate that India should expand its presence on the global developmental landscape beyond its association with the Multi-lateral Development Banks (MDBs) such as the World Bank, Asian Development Bank and African Development Bank. The decision to join the Asian Infrastructure Investment Bank (AIIB) and the New Development Bank (NDB) was taken earlier in this backdrop.

“This is an important step in the relationship between the EBRD and India, allowing us to build further on already very close ties.” – Suma Chakrabarti, President, EBRD.

The EBRD has long worked with top-class Indian companies on investments in the EBRD’s regions, which comprise 38 economies across three continents. The Bank has cooperated with Indian enterprises on joint projects worth nearly €1 billion, including investments with Tata, SREI and Jindal.

Impact:

  • Membership of EBRD would enhance India’s international profile and promote its economic interests. Access to EBRD’s Countries of Operation and sector knowledge.
  • India’s investment opportunities would get a boost.
  • It would increase the scope of cooperation between India and EBRD through co-financing opportunities in manufacturing, services, Information Technology, and Energy.
  • EBRD’s core operations pertain to private sector development in their countries of operation. The membership would help India leverage the technical assistance and sectoral knowledge of the bank for the benefit of the development of private sector.
  • This would contribute to an improved investment climate in the country.
  • The membership of EBRD would enhance the competitive strength of the Indian firms, and provide an enhanced access to international markets in terms of business opportunities, procurement activities, consultancy assignments etc.
  • This would open up new vistas for Indian professionals on the one hand, and give a fillip to Indian exports on the other.
  • Increased economic activities would have the employment generating potential.
  • It would also enable Indian nationals to get the employment opportunity in the Bank.

The total value of joint India-EBRD investments in EBRD economies currently stands at €982 million, with the majority of the transactions in the private sector.

The EBRD also works closely with leading Indian chambers such as the Confederation of Indian Industry, and the Associated Chambers of Commerce and Industry of India. It recently signed a Memorandum of Understanding with the Federation of Indian Chambers of Commerce and Industry.

In 2017, the EBRD signed an accord to strengthen ties with the International Solar Alliance, which was launched during the 2015 UN Climate Change Conference in Paris at the initiative of Indian Prime Minister Narendra Modi and former French President Fran├žois Hollande as a platform for cooperation among solar resource-rich economies.

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Also published on InfraStory.com