LIC IPO: Government invites bids from merchant bankers, legal advisors

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

Listen to the Article (6 Minutes)

Kickstarting the process for LIC disinvestment, the government has invited bids from merchant bankers and legal advisors for advising it on the proposed mega initial public offer.

The Department of Investment and Public Asset Management (DIPAM) would appoint up to ten merchant bankers and one legal firm for assisting and advising on the stake sale.

The last date for putting in bids is August 6, as per a notice issued by DIPAM. Last week, the Union Cabinet approved an Initial Public Offer (IPO) of LIC and the modalities such as issue size, pricing and timing would be decided by a panel headed by Finance Minister Nirmala Sitharaman.

The listing of LIC will be crucial for the government to meet its disinvestment target.

Also Read: LIC plans to invest in Zomato’s IPO, final decision soon, says report

The government aims to mop up Rs 1.75 lakh crore in the current fiscal from minority stake sales and privatisation. Of the Rs 1.75 lakh crore, Rs 1 lakh crore is to come from selling the government’s stakes in public sector banks and financial institutions. The remaining Rs 75,000 crore would come as CPSE disinvestment receipts.

So far, in the current fiscal, the government has mopped up over Rs 7,500 crore from sale of SUUTI stake in Axis Bank and OFS of NMDC.

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

View: Remember, free power is no power

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

Listen to the Article (6 Minutes)

The free power jumla is back and that is terrible news for India. Even though it appeared that thanks to sensible policies over the past few years, almost all political leaders had moved away from this game (except perhaps of hiding free agricultural power inside T&D losses), it appears to be sadly back on the political centerstage, as assembly elections approach.

More than a decade ago I had the privilege of being part of a World Bank Group Study which did one of the 1st ever in-depth reports on the link between groundwater depletion and free power, leading to a messing up of the power sector as a whole. It focused on Punjab (and Karnataka) and the evidence was damning. The recent promise of free power by the Aam Aadmi Party and the Congress Party (and any other party which does so), will hurl Punjab, Goa, Uttarakhand (and any other state which does so) back to the Jurassic age, economically speaking. It is the mother of all “Amma Economy” failed models – which have always failed for there is no free lunch. It is negative competitive politics at its worst.

With a total installed generation capacity of 14.2 GW in 2019, the State of Punjab accounts for about four percent the total installed capacity of India, making it the tenth largest state in terms of generation capacity as per the Central Electricity Authority. The peak demand has been growing rapidly reaching 13.7 GW in 2019, higher by 8.4 percent than in 2018. Its power sector provides 47,374 GWh of electricity to consumers in the state. The electricity consumed has been also increasing quickly and met by increasing power trade with the central system and other states. There is a strong seasonality of the peak demand. During the paddy season from June to August, the peak demand is almost double the peak demand in the low season. In addition, during the day, there is a high variability of the electricity demand between day and night.

Punjab’s power sector is comprised of several stakeholders with different responsibilities and incentives facing them. The power sector has been financially distressed and relied heavily on subsidy from the state government. The provision of free electricity to agricultural customers and subsidy to almost every segment of electricity customers has incurred high expenditure from the state government to the state utility company for generation and distribution, Punjab State Power Corporation Limited (PSPCL). The utility has also accumulated debt rapidly due to insufficient financial sustainability, high interest, and financial charges.

After signing the UDAY MOU, Government of Punjab (GOP) has taken over Rs 15,628.26 Crore, 75% of debt of PSPCL as on September 30, 2015 (50% in FY 2015-16 and 25% in FY 2016-17). GOP has issued non-SLR (Statutory Liquidity Ratio) state development bonds (SDL) in market or directly to banks and financial institutions holding DISCOM debt. This amount is currently recorded as GOP loan in PSPCL’s book and will be converted to Rs 11,728.26 Crore of grant and Rs 3,900.00 Crore of equity in FY2019-20. In addition, GOP has agreed to partially take over losses of PSPCL over the four years from FY2016-17 to FY2020-21, by providing grant equivalent to a certain percentage of net losses in the following year. Further, as per Budget provision made by Government of Punjab, it has been decided that the amount of Rs. 15,628.26 Crore will be converted into equity as whole as on March 31, 2020.

Despite UDAY scheme and aggressive debt takeover from the state government, the power sector is still in trouble. PSPCL recorded net losses over the recent four years in row from FY2015-16 to FY2018-19. The revenue of each year includes the government subsidy for the several consumer categories as explained above, so even with the subsidy income PSPCL does not make profit out of its business. PSTCL’s net profit or loss is marginal compared to its revenue over the last four years, as its annual required revenue filed to PSERC is approved by PSERC without much variation and paid by PSPCL.

Revenue from the approved electricity tariff is not sufficient to recover the cost of PSPCL approved by PSERC. Even though the tariff determination mechanism allows PSERC to set the tariff to cover the aggregate revenue requirement (ARR) filed by PSPCL, the revenue billed is lower than the cost approved by PSERC in True-up exercise, per unit basis.

The subsidy to be paid by the GoP has reached INR 9,674 crore (equivalent to USD 1.35 billion) in FY2019-20, with the annual average growth of 12 percent over the last five years. In the True-up exercise, PSERC adjusts the ARR by reviewing the actual expense, but some disallowed expense still exists, making the ARR insufficient to cover the actual cost. Except FY2018-19, over the last five years there has been disallowed expense in True-up. The aggregate disallowed expense is about Rs. 6,840 crores over the last five years, which is over 60 percent of its current equity position. As a result, the current tariff determination mechanism does not allow full cost recovery from electricity sales. Government subsidy, accounting for about 30 percent of PSPCL’s tariff revenue, has been underpaid, mounting arrears to PSPCL. The cumulative arrears up to FY2018-19 is about Rs. 5,300 crores, on top of the projected subsidy of Rs. 9,670 crores for FY2019-20. The total subsidy payable by the GoP is therefore Rs. 14,970 crores for FY2019-20, reaching about 10 percent of GoP’s total expenditure for the year.

In sum, as the above evidence suggests, no party in its right mind should compete on the promise of free power, anywhere in the country. They should move on to compete on more substantive, mature issues and leave behind the freebie “Amma Economy” model, which is well past its political expiry date, even despite the short-term illusory gains that it offers. Hope better sense prevails and realization dawns that free power is no power.

Note: The author Dr Srivatsa Krishna is an IAS officer. Views are personal.

Twitter: @srivatsakrishna

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

Larsen & Toubro Infotech Q1 results: Profit rises 19.3% YoY to Rs 496.8 crore, misses estimates; declares dividend of Rs 10/share

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

Listen to the Article (6 Minutes)

IT services company Larsen & Toubro Infotech on Thursday reported a 19.3 percent jump in its net profit to Rs 496.8 crore for the quarter ended June 30, 2021.

In the corresponding quarter last year, the Mumbai-headquartered company posted a net profit of Rs 416 crore. CNBC-TV18 Poll had predicted a profit of Rs 499 crore for the quarter under review.

Also Read: HDFC Bank Q4 Results: NII rises up 2.3% QoQ; net profit dips 2.8% sequentially

The Board of Directors at its meeting held on July 15, 2021, has recommended a special dividend of Rs 10 per equity share (Face value Rs 1) for the financial year 2021-22.

Sanjay Jalona, chief executive officer and managing director, said, “We are pleased to report our best ever Q1 sequential growth of 5.1% driven by holistic growth across our verticals, service lines, client pyramid and geographies. Our healthy pipeline and continued strong demand make us confident of our future growth.”

Also Read: ACC Q1 results: Net profit declines 29.6% to Rs 396.3 crore

“Over these past 5 years, we have delivered USD revenue CAGR of 13.5% and more than doubled our net profit. I am proud of how we continue to innovate and deliver year-on-year industry-leading growth. I am also excited as we strengthen our digital engineering capabilities welcoming Cuelogic Technologies to the LTI family,” he said.

The results came after the close of the market hours. Shares of Larsen & Toubro Infotech ended at Rs 4,417.30, up by Rs 196.65, or 4.66 percent on the BSE.

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

Rakesh Jhunjhunwala picks up 1.39% stake in this PSU between April-June

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

Listen to the Article (6 Minutes)

Billionaire investor Rakesh Jhunjhunwala has picked up 1.39 percent stake in Steel Authority of India (SAIL), data available on the exchange shows. Jhujhunwala picked up 5.75 crore shares in SAIL during the April-June period and did not hold any stake in the company in the previous quarter.

Both Jhunjhunwala and his wife Rekha have invested in SAIL.

The ‘Big Bull’ has also increased his stake in Edelweiss Financial Services in Q1 by 0.4 percent. Jhunjhunwala holds 1.5 crore shares aggregating 1.61 percent stake in Edelweiss Financial Services in Q1 as against 1.1 crore shares or 1.1 percent stake in the March quarter.

Meanwhile, Jhunjhunwala decreased his stake in Titan Company by 0.25 percent in the June quarter. This is for the third consecutive quarter that Jhunjhunwala has cut stake in the jewellery-watch-to-eyewear maker.

As per shareholding patterns posted on BSE, Jhunjhunwala reduced his stake in Titan to 3.72 percent in June 2021, from 3.97 percent in March 2021. His wife, Rekha’s stake remained unchanged at 1.09 percent.

On July 17, Jhunjhunwala, his wife and eight other individuals settled a case related to insider trading in the shares of Aptech Ltd after paying over Rs 37 crore. The amount included settlement charges, disgorgement of ill-gotten gains along with interest charges.

The other eight individuals who settled the case are — Rajeshkumar Jhunjhunwala, Shushila Devi Gupta, Sudha Gupta, Ushma Seth Sule, Utpal Sheth, Madhu Vadera Jayakumar, Chugh Yoginder Pal and Ramesh S Damani, according to two separate orders passed by Sebi. The orders come after the settlement applications by these perons with Sebi proposing to settle, “without admitting or denying the findings of fact and conclusions of law, through a settlement order”.

In separate settlement orders, Sebi said, “pending enforcement proceedings for the alleged defaults …are settled qua the applicants”. It was alleged that Utpal Seth and Rakesh Jhunjhunwala were in possession of the unpublished price sensitive information (UPSI) related to Aptech foraying into preschool segment and communicated the same to other applicants. “On the basis of the UPSI, Rakesh Jhunjhunwala, Rekha Jhunjhunwala, Rajeshkumar Jhunjhunwala, Shushila Devi Gupta, Sudha Gupta and Ushma Seth Sule are alleged to have traded in the scrip of Aptech during the UPSI period,” the order noted.

— With inputs from PTI

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

Carbon sink to source: Amazon rainforest emitting more CO2 than it absorbs, says study

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

Listen to the Article (6 Minutes)

The Amazon rainforest in South America was one of Earth’s principal absorbers of carbon dioxide  or carbon sink. However, a new study says that part of the rainforest is now emitting more carbon dioxide than it is soaking up, thus becoming a carbon source.

A team of researchers from different countries have said this area is on the eastern side of the Amazon, which covers around 20 percent of the rainforest basin, as per a study published in Nature Communications journal on July 14.

This land carbon sink in the largest tropical forests, called Amazonia, has been absorbing roughly a quarter of all fossil fuel emissions since 1960, researchers said.

The study revealed that western Amazonia is still a relatively weak carbon sink. But the eastern forest region has seen a huge degradation and even reversal in carbon intake towards becoming a carbon source.

The eastern Amazon region has seen a lot of deforestation and forest burning to make it safe for cattle grazing by keeping away wild animals and insects.

The maximum increase in carbon emissions came from the regions where fires were recorded.

The researchers found evidence of enhanced vegetation that generally happens due to rising levels of carbon dioxide and other chemicals. They also found carbon flux generally related to forest decay.

The researchers checked carbon (monoxide and dioxide) levels in atmosphere levels via satellite readings and solar-powered light energy or radiation from the vegetation. They had been collecting data for the last 10 years.

Researchers found little variance in the growth and decay in north-western Amazonia, which is always very wet. They also found that the relatively drier forests in the north-eastern and south-eastern regions were close to carbon balance during the wet season.

But carbon release from decomposition and fire was more than carbon intake via photosynthesis during the dry season (August to October).

Greater carbon releases occurred during hotter and drier years due to decomposition and fire, researchers said.

They added that tropical forests such as the Amazonia are the world’s most productive ecosystems. But they are not recovering fast enough from the damage to their carbon balance (as their Arctic and boreal peers) due to human activities.

Some 123 billion tonnes of carbon is believed to be stored in the Amazon rainforest, according to the National Oceanic and Atmospheric Administration (NOAA).

Up to 40 percent of the Amazon was at risk of becoming savannah, as per 2020 study published in Nature.

For many years, the ratio of fossil fuels emitted by land ecosystems had been almost constant despite the continuous rise in emissions. This puzzled scientists and ecologists for years.

Forests at high latitudes continue to collect carbon, because out there climate change has increased the length of sowing seasons. Mid-latitude forests, which are recovering from past clearances, have benefited from more soil nutrients provided by humans adapting efficient farming techniques.

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

Andhra government allots land for OP Jindal’s Rs 7,500-crore steel plant

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

Listen to the Article (6 Minutes)

The Andhra Pradesh government on Thursday issued orders allotting 860 acres of land to Jindal Steel & Power Limited for setting up a 2.25- million tonne per annum integrated steel plant at an investment of Rs 7,500 crore.

According to the GO, the proposed plant at Thamminapatnam in SPSR Nellore district, is expected to create employment to 2,500 people directly and 15,000 indirectly.

The government, after careful examination of the matter, hereby accord permission to APIIC for allotment of land to an extent of 860 acres at Thamminapatnam and Momidi Village of Chilakur Mandal of SPSR Nellore District to Jindal Steel Andhra Limited, as per the rates fixed by APIIC for establishing an integrated steel plant with a condition that R&R charges, if any, shall be borne by Jindal Steel Andhra Limited as agreed by them, the GO said.

The OP Jindal Group has a dominant presence in steel, power, mining and infrastructure sectors with a total steel production of 11.6 MTPA and has expertise in running integrated steel plants in Odisha, Chhattisgarh, and Jharkhand.

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

Small loans with lower ticket size in high demand since COVID-19 started, say experts

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

Listen to the Article (6 Minutes)

The credit demand and easy availability of credit have led to a huge surge of small-ticket credit loans since the COVID-19 outbreak, experts say.

Due to the outbreak of the second wave of the coronavirus, many people faced job loss or salary cuts by their employers. To meet short-term demands such as medical or emergency expenses, purchasing health insurance policies, rental deposits, etc, Pranjal Kamra, CEO of Finology said people became adamant to take a small ticket size loan.

“People were comfortable spending on lower transactional value and further technology amalgamated with digital access helped lenders locate, reach and engage with new customers,” Kamra added.

Adding to this, Kunal Gangal, Analyst – Tavaga Advisory said that first-time borrowers, particularly millennials and Gen-Z with no credit history, fuelled demand, as they found it difficult to obtain larger ticket-sized loans from traditional credit sources such as banks and NBFCs.

Also read: Looking for a personal loan? Here are key things to consider

“Traditional lenders’ reliance on formal credit history information drove more people to digital lending platforms. Unlike traditional credit channels, the fintech lenders rely less on bank statements, tax returns, credit history details, and physical engagement with customers, and instead create an ecosystem where loan disbursement was quick and seamless,” Gangal said.

Further, Anil Pinapala, founder & CEO of Vivifi India Finance said he has even observed millennials turning towards fintech for financial related worries and small-size loans.

“This is because fintech companies have been at the forefront of making financial services more accessible with instant approvals and immediate disbursements in a completely digital onboarding process. Most fintech companies that are technology-backed have gamified the entire borrowing experience where the lenders are rewarding the borrowers for positive repayment behavior. They have solved the basic problem of meaningful access to institutional credit. As fintech is expected to exponentially grow over the next 5 years, millennials and gen-z will be the foundation on which this growth will happen,” Pinapala stated.

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