OFS in an IPO - a double-edged sword

An OFS in an IPO is seen as a double-edged sword, where on one
hand, it provides an opportunity for existing shareholders to cash in on the
early investments. On the other hand, it doesn't bring any new funds to the
company for strategic growth initiatives, unlike a fresh equity sale that could
be used to fund growth opportunities.

A Decade of Make in India

 

An uptick in manufacturing activity a decade since the launch of the Make in India initiative notwithstanding, India's integration with global value chains faces some challenges.

Global value chain (GVO-related rade, a measure of a country's participation in the multi-stage trade process, accounts for more than half of the gross trade in India's manufacturing sector. And despite an uptick in the ratio in other sectors as well, India's total GVC-related trade lags behind Vietnam and Russia (Charts 1, 2).

One of the stated objectives of the Make in india initiative was to boost manufacturing activity and improve investments in the sector. Manufacturing contributes less than a fifth of india's gross domestic product, a ratio that has remained unchanged since 2013-14. In the decade ending in 2022, India's manufacturing output per capita grew at a compound annual growth rate of 5 per cent.

However, Bangladesh, Vietnam, and China grew at a faster pace (Chort 3). But manufacturing activity, which has picked up after the pandemic, remains robust compared to many peers from the Brics (Brazil, Russia, China, and South Africa) grouping (Chort 4). The initiative also aimed to strengthen self-reliance and boost exports.

However, India's share in the world's merchandise exports has remained stagnant despite exceeding $400 billion in the decade since the initiative was launched (Chart 5). India has taken its share of high-technology exports in total manufactured goods exported up by over 3 percentage points between 2014 and 2022, while in the same period, China has seen a drop of over 6 percentage points.

The share of India's overall high-technology exports, though, remains small compared to China,Vietnam, and the global average (Chart 6).

Source Sameer Want/Statsguru

Automobile Sales in September 2024 - FADA

 

The overall automobile sales in September,2024 witnessed a significant decline of -9.26% YoY, says Federation of Automobile Dealers Association.

Two wheeler segment witnessed YoY decline of 8.51%, driven by weak consumer sentiment, low inquiries, and delayed purchases due to heavy rains and seasonal factors like Shraddh

Passenger Vehicles like cars, SUVs witnessed Steep YoY decline of 18.81%. 
Commercial vehicle witnessed YoY decline of 10.45%, with only marginal Month on month growth of 1.46%, reflecting subdued market conditions and weak government spending

Three wheelers and tractor segments reported Marginal growth of 0.66% YoY and 14.69% YoY respectively, attributed to positive customer engagement and increasing demand for e-rickshaw options

Passenger Vehicles (PV) Dealers are facing all time high inventory levels of 80-85 days, equivalent to 7.9 lakh vehicles worth ₹79,000 crore due to aggressive OEM dispatches. Dealers are under financial pressure, with increased cash flow challenges
FADA urges the RBI to issue stricter guidelines on channel funding policies to mitigate the financial risk faced by dealers. 


FADA said it is “Cautiously Optimistic” on the overall outlook. “While the festive season presents an opportunity for recovery, the high stakes in October make it crucial for dealers and OEMs to clear existing inventory. Strategic inventory management and targeted festive promotions are key to capitalizing on the expected surge in demand and stabilizing market conditions,” it said.

Source: The Hindu

Lavasa Story by Bloomberg's Andy Mukherjee

 

Nearly a quarter century after investors formed a private corporation to build and manage a hillside resort four hours from Mumbai, just 5,000 people linger in the derelict shadow of what was meant to be the first of several picturesque enclaves, housing 300,000 in total. 

For the hapless residents — and the homebuyers waiting to move in — more bad news came last week. The bankruptcy court sent packing the only rescuer of Lavasa Corp. to have kindled some hope in six years of insolvency. Creditors will start their hunt for a white knight all over again.

Situated in the Sahyadri mountain range along the country’s western coast, Lavasa was supposed to be India’s answer to Portofino, the popular tourist destination on the Italian Riviera. Other such capitalist oases were to follow suit, for the well-heeled to circumvent the poor state planning and administrative apathy that plague urban living in India.

Yet for all its promise, the project bombed after completing a fifth of its first phase. It is mired in about $1 billion in liabilities, most of which are to financial institutions. The homeowners who never got the keys lost $63 million in lease advances. Those who did make Lavasa their home live in a crumbling ghost town: In landslides during this year’s rains, three villas vanished. Two electricians were trapped inside one of them.

Lavasa is a cautionary tale. The Indian state has little money and even less executive capacity and political will to give the people of its polluted, overpopulated megalopolises the breathing spaces and retirement communities they yearn for. Mumbai has 22 million inhabitants; Delhi is home to 34 million. The tech hub of Bengaluru has a population of 14 million and is growing a lot faster than Silicon Valley. 

But the private sector has no magic wand, either. An entire city built and managed by investment capital was ambitious when it was conceived. It remains an impossible dream even now. India’s bankruptcy law, brought in with much fanfare in 2016 to salvage the precious capital trapped in grandiose, debt-fueled undertakings like Lavasa, is failing to make headway even with state-run creditors accepting 80% haircuts.

Mumbai builder Ajit Gulabchand’s HCC Real Estate Ltd., or HREL, was the original 69% owner. HREL, as well as other large shareholders, had raised debt for the venture by offering guarantees and share pledges. By May 2018, however, Lavasa had defaulted. A Bloomberg News article from the time paints a picture of decay and defeat: crumbling sidewalks; garbage rotting in the lake; a shell of a hotel in construction for seven years; and a resigned Gulabchand estimating the cost of revival at $1.5 billion.

That he wasn’t going to be a part of the solution became clear soon. In August 2018, the project slipped into bankruptcy. Gulabchand lost control of the township to an administrator. The banks played along, preferring to recover 60 billion rupees ($700 million) of claims via the sale of Lavasa. They didn’t enforce the guarantees. In July 2023, the insolvency tribunal cleared the sale to a new owner while releasing all securities and pledges, allowing more than $900 million of HREL’s assurances to just disappear. In March this year, Guabchand’s Hindustan Construction Co. divested its shareholding in HREL for $12,000. The guarantee had already gone, and now the guarantor, too, had left the building.

Hindustan Construction shares have jumped nearly 12-fold since March 2020. Other stakeholders weren’t as lucky. Few had ever heard of Darwin Platform Infrastructure Ltd., the savior chosen by the lenders. The new-owner-in-waiting lost no time in getting into trouble with India’s anti-money-laundering sleuths. It never completed the insolvency resolution from which the creditors were hoping for $137 million over nine years — a fraction of what they were owed.

Eventually, the lenders soured on Darwin, which, in turn, accused them of illegally pocketing the surety it had put up against concluding the purchase. Last week, the tribunal came down on the creditors’ side. The sale process will begin afresh. More years will be added to the decade-long wait for the hundreds of fully constructed new houses the suitor had promised.

The owners of mansions and apartments, some of whom are former ministers, movie stars, judges, businessmen and top bureaucrats, no longer dream of living alongside golf courses, amusement parks, a NASA research center, and a campus of Oxford University’s Said Business School. It’s only because of a desolate old-age home, and a college — Christ University of Bengaluru, not Oxford — that the town has a population. In a cruel twist on Danny Boyle’s Oscar-winning Slumdog Millionaire, Lavasa has taken rich people’s retirement savings and given them a shantytown to slum it out. A resident told me his wife had to carry an umbrella to the bathroom during this year’s monsoon. 

The arc of the bankruptcy law in India bends toward power, not justice. And here, there is a power vacuum. The deadline for putting farmland to commercial use has come and gone. The environmental clearance has expired. Politicians have lost interest. Capturing power in crucial state polls later this year is their priority, not a project that has no more contracts to award. 

So creditors could consider liquidating Lavasa Corp., and handing over management to the municipal authority of Pune, the nearest large city. Or, with a little imagination, they could turn their dying investment in 10,000 acres of land acquired from farmers — plus the manmade lake leased from a government agency— into a community of rain-swept idylls. Let individuals construct their cottages, with the infrastructure supplied by a people’s collective, rather than by a company or the government.

Lavasa won’t be among the 100 “smart cities” promised by Prime Minister Narendra Modi. Does it even need to be? A smart village is a better destiny, and a superior alternative to a bankrupt, half-finished city where only a forlorn street is named after Portofino.

GIFT Nifty, Earlier SGX Nifty, started trading from July 2023

What is GIFT NIFTY, which started trading from July 3

GIFT NIFTY is the first cross-border initiative in connecting India and Singapore’s capital markets.

Rechristened GIFT NIFTY, the popular Singapore Exchange (SGX) NIFTY started trading from GIFT City in Gujarat Monday, executing over 30,000 trades in a single session.

Gift Nifty Futures Live is a priceless resource for traders and investors who enjoy following the Nifty Futures market in real-time. 

After moving from the Singapore Exchange (SGX) to the GIFT IFSC in (GIFT City) Gandhinagar district in Gujarat, India. On July 3, 2023, the current SGX Nifty Futures & Options contracts will be replaced by the new name of GIFT (Gujarat International Finance Tec-City) Nifty, which was revealed by the NSE IFSC-SGX. It is the first international effort to establish a connection between the capital markets of Singapore and India.

A significant turning point for GIFT IFSC’s outreach to international investors and the improvement of GIFT City’s capital market environment is GIFT Nifty. The NSE International Exchange trades the Gift Nifty, Gift Nifty Futures, which is the IFSC-SGX Connect Nifty Index, at IFSC, Gift City, Gujarat, India.

(Gujarat International Finance Tec-City) Gift Nifty is something that is used by institutional investors and hedge funds to manage their exposure to the Indian stock market. It is also used by traders to make predictions about the future course of the Nifty 50 index.

What is the GIFT NIFTY opening time?

GIFT Nifty will be accessible for around 19 hours, coinciding with trading hours in Asia, Europe, and the US. In the Asia time zone, the GIFT NIFTY begins at 6:30 am and lasts until 3:40 p.m. The next session, which runs from 4:35 p.m. to 2:45 a.m. the next day, is aimed at the United States and European investors.

When Gift Nifty Opens:-

• In Asia, the GIFT NIFTY started at 6:30 am and lasted for 9 hours.
• The second session opens at 4:35 pm and lasts for 10 hours.

Time of Gift Nifty Closing:-

• In the Asia time zone, the first GIFT NIFTY session lasts till 3:40 p.m.
• The second session, which is targeted at investors from the US and Europe, continues until 2:45 am on the next day.

What are other names used for GIFT NIFTY?

Some of the common names / alias used for GIFT Nifty are Gujarat International Finance Tec-City, Gift Nifty Live, Gift Nifty Futures, Gift Nifty Futures Live, Gift Nifty Index, Gift Nifty Chart, Gift Nifty Future, Gift Nifty Live Price, Gift Nifty Live Chart.

How Gift NIFTY, Gift Nifty Futures Live, Impact on Share Market ?

• As per experts, the shift will boost GIFT City to become a true international. The change will swiftly speed up GIFT City’s transition into a truly global city. Currently, each sale transaction is liable for a tax deduction at source, and the attestation of documentation issued by embassies is required in order to open an NRI account.
• This shift will help GIFT City establish itself as a leading global financial services hub by significantly increasing trading volumes and liquidity. This would attract more market intermediaries, traders, and investors.
• India’s integration with the global financial sector and its increasing international recognition would both be improved by the SGX Nifty’s relocation to GIFT City, India.
• Investors will profit from the SGX Nifty shift because the NSE IX operates out of a Special Economic Zone (SEZ), which allows them to allowances from capital gains waiver, dividend payment tax, commodity transaction tax, and securities transaction tax.

Difference between GIFT Nifty & SGX NIFTY

Factor	GIFT Nifty	SGX Nifty
Based On:	Gujarat International Finance Tec-City	Singapore Exchange SGX.
Trading Hours:	It follows the trading hours of the Indian stock market, with trading sessions in line with the NSE’s timings.	SGX Nifty trading occurs during the trading hours of the SGX, which are different from the Indian market hours. It provides opportunities for trading on the Nifty 50 index even when the Indian markets are closed.
Location and Exchange:	GIFT Nifty is traded on the Gujarat International Finance Tec-City (GIFT City) International Financial Services Centre (IFSC) exchange in India. It is an onshore derivative product.	SGX Nifty is traded on the Singapore Exchange (SGX) in Singapore. It is an offshore derivative product.
Regulatory Oversight:	It falls under the regulatory jurisdiction of Indian financial authorities and is subject to Indian financial regulations and taxation.	As an offshore derivative, SGX Nifty is subject to the regulatory framework of Singapore and is not directly regulated by Indian authorities. Tax implications may also differ.
Liquidity and Participation:	GIFT Nifty typically sees higher participation from domestic investors and traders.	SGX Nifty attracts a mix of international and Indian investors, making it a more globally accessible product.

Urban Company erstwhile Urban Clap

Urban Company, the Hyperlocal services unicorn has a presence in top 10 metros and 40 Tier 2 cities, by-and-large it has "been in a metro phenomenon so far".

On the international front, the UAE market is doing quite well for the company.

"On the back of the success of UAE, we are at the cusp of announcing a JV in Saudi Arabia...which should happen hopefully in the next three months...and Singapore, which is also a very important and strategic market for us...we have been there for the last three years, and that market also is doing well," Abhiraj Bhal, co-founder of Urban Company

Bhal said Urban Company, the marketplace for home services, would like to go for an IPO "at the right time", and while internal preparations have started, there are no firm timelines for hitting the public markets.

"We would definitely like to go public at the right time. Internal preparations have started, but I can't put a firm timeline...I think we are still some distance away, but we would like to be ready," Bhal said.

The company in October launched its range of fully 'Made in India' smart RO water purifiers - marking its foray into the branded water purifiers space.

Core Sector in India - Core Sectors and their weightage in Index of Industrial Production(IIP)

What are the core sectors of India?

The Core Sector of India includes Coal, Crude Oil, Natural Gas, Refinery Products, Fertilizers, Steel, Cement, and Electricity. It comprises 40.27 percent of the weight of items included in the Index of Industrial Production (IIP). The Core sectors of an economy are the primary or important industries.

The Office of the Economic Adviser (OEA), Department of Industrial Policy and Promotion (DIPP), and Ministry of Commerce and Industry compile and publish the index.

The Index of Key Industries evaluates the performance of the eight core industries of coal, crude oil, natural gas, refinery products, fertilisers, steel, cement, and power in aggregate and individual production terms. These industries serve as the foundation for all other industries. The current year’s production of these industries is computed using the 2011-2012 base year.

• Core industries include eight sectors of the Indian economy that are mentioned below:

Sector	Description	Weightage
Coal	Coal production, excluding Coking coal.	10.33 %
Electricity	generation of thermal, nuclear, hydro	19.85 %
Crude Oil	Total crude oil production.	8.98 %
Cement	Production in large plants and mini plants.	5.37 %
Natural Gas	Total production of natural gas.	6.88 %
Steel	Production of alloy and non-alloy steel only.	17.92 %
Refinery Products	Total refinery production.	28.04 %
Fertilizer	Urea, ammonium sulfate, calcium ammonium nitrate, complex grade fertilizer, and single superphosphate, among others.	2.63 %