Tata Group: Understanding Supreme Court ruling

Tata Group: Understanding Supreme Court ruling

The Supreme Court today ruled in favour of Tata Sons and Ratan Tata, by upholding the ouster of Cyrus Mistry as the Executive Chairman of the salt-to-software Tata Conglomerate. The apex court dismissed pleas filed by Cyrus Mistry and set aside the NCLAT (National Company Law Appellate Tribunal) order. The bench headed by Chief Justice of India S A Bobde, and comprising Justice A S Bopanna and Justice V Ramasubramanian had reserved the judgement earlier in December on various pleas by Tata Sons as well as Cyrus Mistry’s Cyrus Investments Pvt Ltd.
While allowing all the appeals by Tata Group, a three-judge bench has set aside the entire December 2019 order of the NCLAT that reinstated Mistry to his post. The three-judge SC bench also held that it would not go into the details of the compensation to be awarded or adjudicate on whether Tata Group could or could not use Article 75 of its Articles of Association. The court also held that there was no oppression of minority shareholders of the Tata Group or any mismanagement at Tata Sons.

The Apex Court, however, stopped short of adjudicating on the matter of separation between the two groups. The order leaves Tata Sons and Cyrus Mistry on their own to decide the issue of shares held by the Shapoorji Pallonji Group.
The judgement comes after a long legal battle between the two groups that began in 2017 after Cyrus Mistry was removed as the Executive Chairman of Tata Sons Ltd after a little over four years into his reign. Mistry had approached the Mumbai-bench of NCLT (National Company Law Tribunal) earlier in 2017 which ruled that his removal was legal. However, in 2019 the NCLAT (National Company Law Appellate Tribunal) overturned the NCLT order. It ruled that Cyrus Mistry be reinstated as the Executive Chairman of the $100-billion Tata conglomerate.
Both sides had approached the Supreme Court earlier last year.

Tata Sons have challenged the NCLAT ruling altogether, saying that the NCLAT has granted reliefs that were not asked for by the opposing party. Meanwhile, Cyrus Mistry’s Shapoorji Pallonji Group has sought representation on the Tata Sons board. Shapoorji Pallonji Group holds an 18.3% stake in Tata Sons through various subsidiaries.

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Wabco India: Promoter begins to offload stake via OFS

Wabco India: Promoter begins to offload stake via OFS

Shares of Wabco India slumped 10% to Rs 5,510 on the BSE in the intra-day trade on Thursday after the promoter’s two days stake sale through offer-for-sale (OFS) route began today.
The floor price has been fixed at Rs 5,450 a share, an 11% discount to Wednesday’s closing price of Rs 6,102 apiece on the BSE. The issue opened on Thursday for non-retail investors and will open on Friday for retail investors.
As per the stake sale plan, the promoter ZF International UK will offload 18.10% stake (Base Issue: 9.05% + Oversubscription Issue: 9.05%) through OFS. The sale is being undertaken by the seller for achieving the minimum public shareholding requirement in the company.

As on December 2020, the promoters, Wabco Asia Private (75%) and ZF International UK (18.11%), collectively held 93.11% stake in the auto parts and equipment company.
Meanwhile, according to Wabco India, a well thought out vehicle scrappage policy with incentives is likely to spur demand for commercial vehicles in the short to medium term. Adoption of digital connectivity solutions will make fleets more efficient and cost-effective.

Meanwhile, the government’s FAME-II scheme has led to an increase in the adoption of electric buses in the country and it can make significant budget allocation to the Ministry of Urban Development to support State Transport Undertakings in procuring Buses with other fuels like CNG, Diesel, Biofuel etc. This would also lead to reviving demand for commercial vehicle.

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Maruti Suzuki to increase vehicle prices from April

Maruti Suzuki to increase vehicle prices from April

Shares of Maruti Suzuki rallied Tuesday as India’s largest passenger car manufacturer has revealed its plan of raising vehicle prices with effect from April 2021.
Over the past year, the cost of company’s vehicles has been impacted adversely due to increase in various input costs. Hence, it has become imperative for the company to pass on some impact of the above additional cost to customers through a price increase in April, 2021.

Before this, the firm on January 18 had also announced an increase in its vehicle prices by up to Rs 34,000 (ex-showroom in Delhi). It had raised the price of Alto by up to Rs 9,000, while Espresso’s price was increased by Rs 7,000 more. For Baleno, the price were hiked by up to Rs 19,400.
The country’s largest carmaker reported an 11.8% increase in wholesales to 1,64,469 units in February 2021 against 1,47,110 units in February last year.
Its domestic sales increased by 11.8% to 1,52,983 units last month, as against 1,36,849 units in February 2020.

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Allana Group picks up minority stake in LT Foods

Allana Group picks up minority stake in LT Foods

India-based exporter of meat, frozen fruits and vegetable products, coffee, spices and cereals, Allana Group, on Tuesday announced an investment of Rs 20 crore for a 1% stake in LT Foods that sells Daawat and Royal branded rice.
The two companies plan to work together to expand the packaged rice company’s consumer products business to focus on value-added as well as impulse food products.
Both companies have underlying strengths in distribution, production and marketing of food products. This will give the alliance a superior edge in the market.

Allana Group has a large export business that ships its products to over 85 countries. It also distributes brands such as London Dairy Ice Cream, Sunny Oil, and Pristine Bakery.
LT Foods sells its packaged rice brands such as Daawat, Heritage, Royal, across the US, India, the UK, Europe, Middle East and Far East. It also has a range of organic food products, apart from rice-based sauces and snacks. For FY20, it reported revenue of Rs 2,350.07 crore.
In January, LT Foods had announced the acquisition of a 30% stake in Leev.nu, a Netherlands-based packaged foods company through its subsidiary Nature Bio Foods BV.

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Aurum Ventures acquires Majesco’s promoter stake; makes open offer

Aurum Ventures acquires Majesco’s promoter stake; makes open offer

Shares of Majesco were locked in a 5% upper circuit after Aurum Platz IT Pvt Ltd made an open offer for acquiring up to 74,43,720 fully paid-up equity shares, representing 26% stake, of Majesco from the public shareholders. The offer price is Rs 77 a share. Assuming full acceptance of the open offer, the total consideration payable by Aurum Platz will be Rs 57.31 crore.
The deal, including the open offer, is worth around Rs 90 crore.
The deal is significant since a realty firm is acquiring a listed technology company and will provide Aurum Ventures control of a corporate entity that is listed on both the major stock exchanges as well as the flexibility to explore new strategic business streams.

The entire transaction is expected to conclude over the next few months.
Majesco has a cash balance of over Rs 100 crore, along with a constructed and under-construction area of 160,000 square feet. Aurum Ventures is planning to use a portion of the available cash to upgrade the real estate infrastructure and the rest for the company’s growth.
DAM Capital Advisors, formerly known as IDFC Securities, acted as the sole advisor to the acquirer and manager to the open offer.

In May 2018, Aurum Ventures had sold two buildings with a combined built-up area of 1.4 million sq ft for Rs 930 crore to Singapore’s sovereign wealth fund.
The company is developing a township – Q Parc – in Navi Mumbai including a Special Economic Zone, office spaces, walk-to-work residences and lifestyle retail.

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Nerves of Steel: Tata Steel, JSW Steel realisation set to improve

Nerves of Steel: Tata Steel, JSW Steel realisation set to improve

Shares of steel companies rallied on Tuesday with the Nifty Metal index gaining over 3% as a further rise in steel prices going ahead are likely to boost their earnings.
Steel makers, after the significant outperformance over the past year, are set to witness a further upside in their valuations as risk-reward remains favourable.

The upward revisions in valuations are supported by the estimated Rs 10,000-12,000/tonne correction in steel prices versus spot. With domestic prices trading at a 10% discount to import parity, it is expected that the sharp correction is unlikely unless demand drops sharply.
Further, China’s focus on lowering emissions is likely to reduce production, and while its demand outlook is uncertain, supply cuts should support prices.
Indian steel companies earning estimates raised
mainly on better realisations.

Tata Steel, JSW Steel are expected to benefit from the changing global scenario.
Meanwhile, steel price hikes are expected to take effect in April.

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Manappuram Aims to give off microfinance arm

Manappuram Aims to give off microfinance arm

Manappuram Finance, the second largest gold loan company in the country, is considering hiving off and taking its microfinance arm Asirvad Microfinance public within a year.
With a loan portfolio of over Rs 5,360 crore and close to 25 lakh customers across 23 states, the Chennai-headquartered Asirvad is the fourth largest microfinance lender in the country in terms of the loan book. Founded in 2008 by SV Raja Vaidyanathan, Asirvad was taken over by Manappuram in February 2015 for Rs 48.63 crore. The VP Nandakumar-led company first bought 71% stake which was later increased to 95% and the rest is with the founder Vaidyanathan.

Asirvad’s loan book of just Rs 300 crore and a few lakh customers across 115 branches in Tamil Nadu, Kerala and Karnataka when it was bought over, Asirvad has over 1,030 branches across 314 districts in 23 states (excluding Andhra Pradesh and Telangana) and a loan book of over Rs 5,358 crore as of 2020-end, of which over Rs 1,000 crore is in Tamil Nadu alone.
As of the December 2020 quarter, Asirvad had a loan book of Rs 5,357.71 crore, a growth of 6.68% from Rs 5,022.14 crore in the year-ago quarter. This makes the microlending arm the biggest vertical after the gold loan business for the group.

This is the most profitable business when it comes to return on investment at 20%. While cost of fund is 10%, net interest margin is 10%.
Microlending business has a long future in the country as the poor still face difficulties in getting credit from banks.
Asirvad will close the year to March 2021 with a profit of Rs 50 crore. Asirvad’s net profit had dipped to Rs 17.78 crore in the December quarter from Rs 71.21 crore a year ago, and it posted a net loss of Rs 2.42 crore in the June quarter due to the pandemic but it is expected to make a comeback and clock Rs 200 crore net income in the 2022 fiscal.

For the mainstay gold loan business under the Manappuram brand, it is expected to post 20% growth in net income this fiscal over the last financial year. In the December quarter, its net income rose 17% to Rs 483 crore on an income of Rs 1,644 crore, up 14.5% year-on.
Consolidated assets under management grew 14.7% to Rs 27,642.5 crore. Of this, the gold loan stood at Rs 20,211.6 crore, up 24.43% from a year ago, while the aggregate gold loan disbursement was at Rs 57,445.14 crore. Manappuram Home Finance has a loan book of Rs 633.44 crore, while the vehicles and equipment finance arm had an AUM of Rs 988.04 crore.

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This document is meant for the recipient only for use as intended and not for circulation. This document should not be reproduced or copied or made available to others. The information contained herein is from the public domain or sources believed to be reliable. While reasonable care has been taken to ensure that information given is at the time believed to be fair and correct and opinions based thereupon are reasonable, due to the very nature of research it cannot be warranted or represented that it is accurate or complete and it should not be relied upon as such. Also above note is not a recommendation to Buy or SELL and is only a view based on facts and figures and we will be in no way responsible for any losses incurred by anyone who uses this information to either trade or invests securities mentioned herein.

HCC Group to receive Rs 1,259 crore from NHAI BOT conciliations

HCC Group to receive Rs 1,259 crore from NHAI BOT conciliations

Shares of Ajit Gulabchand-led Hindustan Construction Company (HCC) were locked in a five per cent upper circuit at Rs 8.07 after the company informed exchanged that it has settled disputes with National Highways Authority of India (NHAI).
HCC Concessions (HCON) concluded its conciliation with NHAI for all disputes concerning Baharampore-Farakka Highways (BFHL) and Farakka-Raiganj Highways Ltd (FRHL).

The SPVs entered into settlement agreements with NHAI for a comprehensive closure of all outstanding disputes and claims between the parties. BFHL will receive Rs 405 crore while FRHL will receive Rs 854 crore from the NHAI.
Thus, HCC settled disputes pertaining to its largest (build, operate and transfer) BOT projects.
The proceeds of conciliation shall be used to expedite completion of key projects and to strengthen HCC’s participation in future works of nation-building.

BFHL and FRHL are among the largest Public Private Partnership (PPP) projects in the country. They encompass 200 kilometres of Bengal’s main artery, NH-34, and pass through major towns such as Baharampore, Farakka, Kaliachawk, Malda, and Gajol, besides being the only link over the river Ganges in the region. NH-34 provides north-south connectivity between the capital region and the ports of Kolkata & Haldia to the north-eastern states of India.
FRHL was sold to Cube Highways & lnfrastructure II Pte (Cube) on September 22, 2020, at an enterprise value of Rs 1,508 crore.

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This document is meant for the recipient only for use as intended and not for circulation. This document should not be reproduced or copied or made available to others. The information contained herein is from the public domain or sources believed to be reliable. While reasonable care has been taken to ensure that information given is at the time believed to be fair and correct and opinions based thereupon are reasonable, due to the very nature of research it cannot be warranted or represented that it is accurate or complete and it should not be relied upon as such. Also above note is not a recommendation to Buy or SELL and is only a view based on facts and figures and we will be in no way responsible for any losses incurred by anyone who uses this information to either trade or invests securities mentioned herein.

Va Tech Wabag achieves financial closure of Clean Ganga project

Va Tech Wabag achieves financial closure of Clean Ganga project

Shares of VA Tech Wabag advanced 4% to Rs 251.90 on BSE, Wednesday after the company signed financing agreements for the development of a 100 million-litres-per-day sewage treatment plant at Digha and a 50-million-litres-per-day plant in the Kankarbagh area of Bihar’s Patna under the hybrid annuity-based PPP model (HAM).
Va Tech Wabag had won a contract worth Rs 1,187 crore under the National Mission for Clean Ganga (NMCG) scheme to develop sewage treatment plants (STP) of 150-million litres per day capacity along with the sewage network of over 453 kms in the Digha and Kankarbagh zones of Patna.

The company will execute the engineering, procurement and construction (EPC) portion of the STP under HAM over 24 months, followed by operation and maintenance of 15 years.
The sewage treatment plant will produce renewable energy from biogas to run the plants leading to lower operational expenses. The project comprises a design, build and operate (DBO) part worth Rs 940 crore and the HAM scope worth about Rs 247 crore.
The EPC portion of the hybrid annuity scope is to be funded through a mix of NMCG grant (40%) and 60% by equity and debt.
To meet the project’s debt funding requirement of about Rs 86 crore, Va Tech Wabag has partnered with PTC India Financial Services.

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Ashok Leyland to buy out Nissan’s stake in Hinduja Tech

Ashok Leyland to buy out Nissan’s stake in Hinduja Tech

Hinduja group flagship Ashok Leyland (ALL) on Thursday announced it has entered into a share purchase agreement with Nissan International Holding to acquire the latter’s 38% stake in Hinduja Tech (HTL) for a consideration of Rs 70.20 crore.
Following the acquisition, HTL will become a wholly-owned subsidiary of the Chennai-based commercial vehicle manufacturer.

The company owns 62% in the paid-up share capital of HTL and the remaining was held by Nissan International Holding.
HTL works in the IT & ITeS space.
In 2019-20, the company reported a profit of Rs 15.95 crore as against Rs 14.30 crore in the year ago period. The company’s revenue stood at Rs 226.16 crore in 2019-210 as compared to Rs 210.19 crore in the corresponding period of the last year.
Nissan International Holdings, a Dutch investment arm of Japanese automaker Nissan, came as the strategic investor on Hinduja Tech in 2014.

Founded in 2009, Hinduja Tech provides engineering, manufacturing and enterprise (EME) services and solutions for automotive, aerospace, defence, industrial and general manufacturing industries.
ALL and Nissan had decided to part away in 2016 out of their light commercial vehicle (LCV) JV, which was formed in 2007 and other related joint ventures. ALL decided to buy its partners stake in the JVs, which were floated by the two partners.

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This document is meant for the recipient only for use as intended and not for circulation. This document should not be reproduced or copied or made available to others. The information contained herein is from the public domain or sources believed to be reliable. While reasonable care has been taken to ensure that information given is at the time believed to be fair and correct and opinions based thereupon are reasonable, due to the very nature of research it cannot be warranted or represented that it is accurate or complete and it should not be relied upon as such. Also above note is not a recommendation to Buy or SELL and is only a view based on facts and figures and we will be in no way responsible for any losses incurred by anyone who uses this information to either trade or invests securities mentioned herein.