Author: Nisha Poddar

Reliance Industries sees big opportunity in global consensus against climate change

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

Listen to the Article (6 Minutes)

Reliance Industries Ltd has articulated its Environmental, Social and Governance (ESG) strategy to achieve net-zero carbon status by 2035 in its annual report, as the company that runs the world’s largest refining complex sees big opportunity in the sustainable business.

“This is part of a wider ambition to achieve best-in-class standards across environmental, social and governance parameters under the oversight of our Board,” Chairman and Managing Director Mukesh Ambani said in his note to the shareholders.

Ambani’s comments come at a time when a global consensus is emerging for action against climate change, helped by strong support from US President Joe Biden, while fossil fuel majors like Exxon are facing what its director Ursula Burns called a “tidal wave” of investor concerns on ESG issues.

Ambani sees opportunity in this. “The world is now closing ranks for a strong global action on climate change. This gives Reliance the right opportunity to accelerate our new ambitions New Energy and New Materials business wedded to the vision of clean and green development,” he said.

02C Business Future Sustainable Growth Strategy

Carbon emitting businesses worldwide are devising innovative ways to be sustainable. Reliance Industries’ flagship Oil To Chemicals (O2C) business has charted out the strategy to reduce its carbon footprint.

The conglomerate is in transition from fossil fuels to renewables for captive energy demand in the O2C business.

Other measures include transition from transportation fuels to produce chemical building blocks integrated with sustainable downstream derivatives. Scaling up recycling in materials & CO2 capture and conversion to useful chemicals and materials will give the added thrust. Conversion cost reduction through productivity and minor capex projects is also part of an investment to achieve the environmental goals.

Road To Sustainability

RIL’s annual report highlights various aspects of its moves to meet its ESG target, the note said. “The company considers the Net Carbon Zero target as its moral responsibility to protect the earth from the rising impact of climate change.”

Reliance, operating in different verticals, is putting in place a cross-business approach to reduce environmental footprint. It is also banking on its adoption of technology solutions to ensure sustainability of operations. Water management, waste management, energy efficiency, circular economy are all the tenets being adopted across various businesses, it said.

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Aditya Puri likely to chair the board of IPO-bound PharmEasy

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

Listen to the Article (6 Minutes)

Aditya Puri, the former CEO & MD of HDFC Bank, has joined the board of medicine delivery platform PharmEasy, and soon be chairing it, sources said.

The appointment comes ahead of a blockbuster IPO planned by PharmEasy’s parent company API Holdings.

“Aditya Puri’s vast experience will help scale up the company. Healthcare has huge potential and can grow as banks did in the country,” a source familiar with the development said.

PharmEasy declined to comment on the appointment. “As a policy, we don’t comment on market speculation,” it said in an emailed reply to Moneycontrol. Aditya Puri did not respond to an e-mail query

Aditya Puri’s Second Innings

Aditya Puri recently announced an investment in PNB Housing Finance along with Carlyle and other investors. Puri will be joining the board of PNB Housing as an investor nominee. He joined Carlyle as a senior advisor.

Earlier, Strides Group appointed Puri as the chairman of the board of Stelis Biopharma, biotech arm of Strides Pharma.

Induction of Aditya Puri, acquisition of Medlife is in the run-up to PharmEasy’s IPO. Sources suggest that the medicine delivery platform aims to list in Q4FY22 and expects over $5 billion valuation after the Medlife acquisition.

PharmEasy’s last round of fundraising in April this year valued at over $1.5 billion, giving it the coveted position in India’s coveted Unicorn club.

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Tata Sons board: Noel Tata, Pramit Jhaveri likely to be top contenders, say sources

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

Listen to the Article (6 Minutes)

In a top corporate development in the works, sources tell CNBC-TV18 that former CEO of Citi India Pramit Jhaveri and Tata Group’s Noel Tata are top contenders for the positions on Tata Sons board as certain positions get vacated. Tata Group is likely to make the final decisions in a few weeks, sources share.

Tata Sons’ board member Farida Khambata’s terms will end soon. Sources suggest that Farida Khambata could be considered on the boards of both Tata Steel and TCS after her tenure at Tata Sons board comes to an end.

Tata Sons in an e-mail response to CNBC-TV18’s query on board composition states, “We have no comments to offer.” Tata Steel and TCS did not comment on CNBC-TV18’s queries.

Pramit Jhaveri had joined Tata Trusts as a trustee in Feb 2020. Sources suggest that the Trust is considering him to be their nominee on the board of Tata Sons as a few positions get vacated by retiring members in the next few months. Pramit Jhaveri is recently appointed as a senior advisor to Wall Street boutique investment bank PJT Partners.

Jhaveri was unreachable for a comment on this story.

Noel Tata has been appointed a trustee of the Sir Ratan Tata Trust in 2019 and could be a likely contender to be inducted as a Director on the board of Tata Sons, sources share.

Within the Tata Group of companies, Noel Tata is Chairman of Trent (Westside) and Tata Investment Corporation; Managing Director of Tata International and Vice Chairman of Titan Company.

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Here is why Rakesh Jhunujhunwala is bullish on Tata Steel, JSPL, SBI

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

Listen to the Article (6 Minutes)

Renowned stockmarket trader-cum-value-investor Rakesh Jhunjhunwala is bullish on commodity stocks, particularly steel, and feels they still have steam left despite the run-up over the last few months.

The astute stock picker has named Tata Steel and JSPL among the stocks in the sector he is bullish on.

“I made a  very large investment in Tata Steel and JSPL,” he said in an interview to CNBC-TV18’s Nisha Poddar.

“There is a lot of money in commodities; I feel this commodity cycle is going to last for minimum of five years. The valuations were absurd, and when compared to cash flows, the valuations are still absurd,” he said.

Among banks, Jhunjhunwala is bullish on state-run State Bank of India and Canara Bank. He said both banks have fully provided for bad loans and have a strong in gathering retail deposits.

He said that credit growth, which was 7 percent in FY21, is likely to be in double digits by next year.

On SBI, he said: “The bank is very well run, it has YONO. If somebody wants to borrow Rs 5000 crore, whom will he go to? It is doing very well in the retail space, their subsidiaries are doing well. Nobody can match their distribution reach for insurance products and mutual funds.”

Also Read: Rakesh Jhunjhunwala and Multiples Asset buy Zydus Animal Health; Big Bull explains the rationale

Value unlocking in private equity 

Over the years, Jhunjhunwala has been actively re-deploying the profits from equity investments into the private equity space. There have been hits and misses, he agrees, but remains confident that some portfolio companies will give “multi-returns.”

Many of the private equity (PE) investments made by Rare Enterprises have now reached maturity and are ready to go public. An investment made two years ago in a consortium with WestBridge, Star Health is close to filing for an IPO, reports suggest.

Four companies from the PE portfolio should list in 12-18 months, Jhunjhunwala said, without naming the companies.

Jhunjhunwala’s Rare Enterprises has formed a consortium with Renuka Ramnath’s Multiples to buy Zydus Animal Health for close to Rs 3000 crores.

“Animal husbandry & poultry can be a big source of income for the farmers, with the govt promoting this space, the opportunity is too huge,” he says.

Rakesh Jhunjhunwala is looking at two more PE deals in education and healthcare over the next six months.

Note to reader: An earlier version of the copy said JSW Steel instead of JSPL. The error has been corrected and is regretted. 

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Tata Steel prudent on capital allocation: Not looking at global acquisitions, debt reduction to continue

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

Listen to the Article (6 Minutes)

Tata Steel’s fortunes have turned. After almost two decades of struggle with debt management post the Corus acquisition at the peak of the steel cycle in 2006, it is set to make operational profits of Rs 50,000 crore this year if this steel cycle uptrend persists. Tata Steel’s debt levels, which were way above Rs 1 lakh crore last year, will be reduced below Rs 50,000 crore by next year as steel prices support performance with global economies re-starting activity in the post pandemic phase.

Tata Steel’s biggest strength has been the captive iron ore mines, a key raw material for steel, which made it one of the only profitable steel companies in the world during many steel downturns over the years due to its low cost of production.

TV Narendran, Managing Director of Tata Steel told Moneycontrol, “If you really look at Tata Steel’s debt, lot of the debt has come because of what we had to do in Europe over the years.”

For the last three years, Tata Steel’s strategy has been to reduce debt by at least $1 billion every year and that will continue. “…focus on the balance sheet continues and we do believe that the India business in good times and bad times will generate enough cash flows to deleverage,” Tata Steel MD said.

Narendran highlighted, “Structurally we are moving to a better place, we are helped by the current steel prices.” Global steel prices have helped the UK business of Tata Steel to become Ebitda positive and the company is confident of this to continue while most experts do question the sustainability of current steel prices. The jury is still out on the movement steel prices, but Tata Steel is hopeful that the UK business will not saddle the growth of the rest of the profitable steel units of the company.

Not eyeing large global acquisitions

Despite comfortable cash position and steel outlook looking strong given China’s lowering dominance, the steel major is not looking at big bang acquisitions across the globe. TV Narendran added, “Certainly not outside India, we are looking at inorganic growth within India.”

Focus will be on enhancing the company’s presence in the long steel vertical, “The government has announced Neelachal disinvestment, we are part of the process, we have put in our EoI [expression of interest] through Tata Steel Long Products.”

There aren’t many acquisition targets available in the private sector, Tata Steel shared and pointed out that the government will open bids to sell RINL and they will participate in the sale process.

Narrative change on debt in capital intensive sectors

Burnt by past experiences of not being able to take the burden of ballooning debt on books, especially, due to the cyclical nature of the steel business, Tata Steel now takes a more prudent approach to its capital allocation strategy, Narendran added, “India business makes enough cash to support its own growth and we don’t need to have debt on our balance sheet to grow and as we grow we will generate even more cash to support any other incremental growth we need.”

During the Raghuram Rajan era at Reserve Bank of India, the asset quality review led to a long phase of debt management and recovery, which led to Essar Steel being sold to ArcelorMittal, add to that the uncertainties of COVID-19 pandemic, large business houses are moving towards a debt-free structure.

With big business houses going the debt free way, Tata Group’s focus on consolidating current businesses in all verticals after a series of leveraged buyouts over several years is a clear structural shift in the capital utilisation strategies of Corporate India.

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Tata vs Mistry case | SP Group review petition: Absence of terms of separation may lead to litigation

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

Listen to the Article (6 Minutes)

Shapoorji Pallonji group has challenged the Supreme Court’s verdict in favour of the Tata Group. In a review petition, Cyrus Mistry’s camp has raised many points of contention which bring back the same matters of corporate governance, rights of minority shareholders and duties of independent directors to the fore. Most importantly, the petition has claimed that absence of terms of separation in the judgement may lead to litigation. SP Group owns 18.37 percent stake in Tata Sons and the two warring camps do not see eye-to-eye on the valuation of the stake.

Challenging the apex court judgement pronounced by the bench led by now retired Chief Justice of India SA Bobde, the petition read, “[It] Denies relief that would have put an end to matters complained of.” SP Group had proposed a separation scheme seeking a pro-rata distribution of shareholding and assets of Tata Group companies. Pallonji Group valued its stake of 18.37 percent at Rs 1,75,000 crore. Tata Sons rejected the proposed terms of separation as an “attempt to break up Tata Group through sleight of hand”. Tata Sons counsel submitted before the SC that the value of Pallonji’s stake was no more than Rs 70,000 to 80,000 crore.

This being the biggest point of contention between the two camps, the petition read, “The Hon’ble Court ought to have put an end to further litigation by articulating the principles of valuation.” It goes on to say, “By leaving it to parties to take recourse of Article 75, or any other legally permissible route, the judgement has only relegated parties to further litigation…”

Points of contention:

• Personal remarks on Cyrus Mistry
• Findings of fact by NCLAT not held to be preserve
• Article 75: forceful exit of minority shareholder
• Section 241: Fiduciary duty of independent directors
• Absence of relief of separation may lead to litigation

Cherag Balsara, Advocate at Bombay High Court said, “Dehors what the Supreme Court does in the review petition, the next battle will be in respect of the valuation of shares of the Pallonji Group as the Supreme Court has not decided the same. At some point of time an exit of the Pallonji Group is inevitable.”

While there are multiple options the two sides could explore for the final separation, agreeing on the valuation is key and a mismatch could be hard to bridge.

The petition also emphatically challenged the disregard for findings of fact by NCLAT citing several examples in the judgement. While corporate governance aspects have been at the centre stage of the legal battle, the petition did point out the role of the independent directors and challenged the court on declaring ‘Trustee Nominee Directors are Sui-generis’ or unlike other directors.

SP Group also stated that acknowledging independent judgement confuses the duties of an independent director and added, “Just by exercising the duty of independent judgement, one does not become an Independent Director.”

Besides being the most high profile corporate legal battle, it looks clear that the spotlight will be on the fiduciary duty of independent directors and may trigger a public debate given the precedence of the judgement in the Tata vs Mistry case.

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Adani Ports’ removal from Sustainability Index: A wake up call for India Inc

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

Listen to the Article (6 Minutes)

S&P Dow Jones removing Adani Ports & SEZ from their Sustainability Indices due to the company’s commercial relationship with the Myanmar military makes it clear that sustainability is no more a choice.

The Index, a division of US-based S&P Global, said that the decision was taken as Myanmar’s military has been accused of having committed serious human rights abuses under international laws, following a coup on February 1.

Adani Ports is building a $290 million port in Yangon on land leased from the military-backed Myanmar Economic Corporation (MEC). However, the company has in its defense said stated, “The lump sum, one-time payments made in exchange for the port project were completed as of December 2019”. But, the catch is that the commercial interest and association continues as part of an annual fee for lease of the property. Adani said, “In light of the current situation, all transactions with and payments to MEC and its subsidiaries have been terminated.”

The action by S&P Global could be an outcome of US-imposed sanctions against entities including MEC, which is part of the infamous SDN list — Specially Designated Nationals and Blocked Persons.

This points to the fact that experts do not only assess a company’s sustainability standards based on their operations, but also their partner of choice. This could be a wake-up call for Indian companies with global dreams to conduct thorough due diligence on the business partners as well or be held responsible for their actions.

The answer is not that simple, India and the world is trying to internalise the right template for assessment of the sustainability criteria. An expert points out that Myanmar is strategically important in the region for India to counter China’s dominance and many business groups were rolled out a red carpet to explore business opportunities. It could be debated that there was little understanding that a business association can be perceived as an alleged support in the future actions of the transacting partner.

Lessons to learn from the incident could be that sustainability is assessed in every aspect, even external partners of choice and more importantly, the world is geared up to create an ecosystem of awareness and acceptance by putting pressure from all corners, which may cause collateral damage to those caught in the middle.

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Finance Bill fine print will impact tax efficiency of deals, restructuring

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

Listen to the Article (6 Minutes)

The fine print of the amendments in the Finance Bill are needle-moving especially for goodwill accounting, deals, restructurings and partnership funds.

The government has extended the tax net on slump sale and exchange and will now collect tax on the basis of fair market value and not book value. This could mean a higher tax incidence and may dent the tax efficiency of deals or even mega group restructuring exercises underway in some business conglomerates. This will be effective from April 1, 2021 and so will have a retrospective impact on recent deals.

On goodwill depreciation, the Finance Bill has excluded goodwill from definition of intangible assets and companies cannot claim amortisation on goodwill from FY20 onwards.

This will have a retrospective impact on all companies with goodwill on books and change future benefit projections. This will also hit the companies like HUL which baked in goodwill depreciation component in valuation while inking the deal with GSK Consumer.

The tax regime for partnership firms also stands to change in a big way as the Finance Bill seeks to tax any appreciation of asset of a partner at the time of distribution. This means that any amount above the capital contribution will attract capital gains tax.

Companies will now have to go back to the drawing board as the unanticipated amendments in the Finance Bill could lead to higher tax incidence and hurt tax efficiency of some deal structures. It’s not business as usual for India Inc for a while as companies digest these changes and recaliberate their strategies.

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

ESG should be a way of life for Indian companies: CDC Asia 

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

Listen to the Article (6 Minutes)

CDC Group, a development financial institution backed by the UK government, is looking for investments in companies with a focus on sustainability.

Climate change and gender diversity are key focus areas for this impact fund which has about 1.7 billion dollars of investments in India. CNBC-TV18’s Nisha Poddar caught up with the fund to get insights on their investment strategy in India.

Watch the video for more

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Blackstone signs deal to buy Piramal Glass for $1 billion

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

Listen to the Article (6 Minutes)

Private equity major Blackstone has signed a deal to acquire Piramal Group’s Piramal Glass for around $1 billion.

The deal contour includes an upfront payment of $850 million while Piramal Group will get approximately $150 million on achieving certain milestones, to be paid over 2 years.

CNBC-TV18 on December 3 had reported on the contours of the deal.

This will be the second billion-dollar deal by Piramal Group this year to capitalise the group which has a large NBFC arm. Earlier in the year, the group had sold US-based DRG for around a billion dollars. Piramal has taken many steps to raise funds via a rights issue, CDPQ investments, sale of a minority stake in Piramal Pharma to Carlyle.

Piramal Glass makes container glass packaging with a capacity of 1,475 tons per day. It has factories in the USA, India, and Sri Lanka.

The group has raised Rs 18,000 crore funds since July 2019.

Blackstone has a market value of $40 billion of assets in India, making it to the top 10 business groups in India. Blackstone has invested over $15 billion across Private Equity ($6.9 bn), Real Estate ($7.8 bn), and Tactical Opportunities ($400 mm).

In 2019-20, Blackstone in India invested $6 billion across Private Equity ($2.5 bn), Real Estate ($3.2 bn) and Tactical Opportunities ($300 mm). Blackstone’s recent transactions include a partial exit from Essel Propack.

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow