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Commentary

Links: The LEEL-Porinju Saga, TVS and NIITTECH’s Potential Deals, IL&FS Wants To Clawback Principal Repayments

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At Capitalmind Premium, we have a very active Slack channel where we discuss a lot of interesting topics. In there,  a number of interesting links come our way. Here’s a list:

  1. Two subsidiaries of IL&FS Transportation Networks Ltd, Jharkhand Road Projects Implementation Company Ltd and West Gujrat Expressway Ltd, have decided to stop repaying debt and have asked for the refund of debt repaid after 15th October. This is downright bizarre. India Ratings have threatened to downgrade ratings as a consequence of this. Some mutual funds will suffer as a result of this.
    https://www.livemint.com/Companies/63s1qqkZKu6o0aRnoRDhPI/Two-ILFS-subsidiaries-seek-refund-of-debt-repaid-after-15-O.html
  2. Discoms owed power producing companies Rs. 31,676 crore in October 2017. In October 2018 this number stood at Rs. 39,498 crore. Most discoms take about one and a half year to pay their dues. The private sector companies to these discoms owe money are Adani Power, Babaj Group’s Lalitpur Power Generation Company Ltd, GMR and Sembcorp Energy.
    https://www.business-standard.com/article/economy-policy/discoms-outstanding-dues-to-power-generators-rise-24-to-rs-39-498-cr-119011300154_1.html
  3. Porinju’s gamble with LEEL Electricals Ltd backfired when, due to its allegedly unscrupulous promoters, it’s share price fell 80%. 
    http://rakesh-jhunjhunwala.in/chor-promoter-did-fraud-caused-massive-loss-porinju-veliyath-fumes-vows-to-bring-them-to-book/
  4. Bajaj is slipping in market share, thanks to Eicher and TVS’s stellar performance. To make matters worse, Jawa has made a stunning relaunch. International players such as  Harley and Triumph are also getting their products to India. This will be a tough battleground for Bajaj.
    https://blog.ventura1.com/2019/01/12/will-the-shift-in-strategy-help-bajaj-auto-recoup-its-former-glory/
  5. The recent FDI policy changes in the e-commerce sector have started showing its effects. Amazon would likely stop the food-only retail business (a $500 million investment) if the latest guidelines remain unchanged. Also, it may lead to a delay or cancellation of acquiring a stake in the Future Group.
    https://economictimes.indiatimes.com/industry/services/retail/amazon-food-biz-to-log-off-if-new-rules-remain-on-menu/articleshow/67534312.cms
  6. Patanjali Ayurveda is willing to match the bid amount of Adani Wilmar Ltd in the race to acquire Ruchi Soya Industries Ltd after Adani decided to withdraw from the race.
    https://www.livemint.com/Companies/2VI7458HnUaByydSJULTeK/Patanjali-only-suitor-for-Ruchi-Soya-as-Adani-opts-out.html
  7. It looks like lenders are going through a dark phase. NCLT has ordered the liquidation of Bharati Defence and Infrastructure Ltd and it may leave lenders to lose around 11,373 crore. Additionally, more than 850 employees would lose their jobs and two dozen defence vessels would be left stranded. They’re not accepting a low bid to buy it out – and liquidation can potential take years. 
    https://www.thehindubusinessline.com/companies/nclt-orders-liquidation-of-bharati-defence/article26000863.ece
  8. While DCB bank’s Q3 profits are in line with estimates and the core income increased by 17%, there has been slippage primarily in the agriculture and the mortgage sector.
    https://www.livemint.com/Money/Yk6rhQMQetLuaCSr7zXZCL/DCB-Bank-Q3-results-Small-loans-give-big-pain-as-farm-mort.html
  9. TVS is in talks with JM Financials and EY for a possible restructuring of ownership of the company. The family-owned company has been run by 4 generations family members since 1911.
    https://brandequity.economictimes.indiatimes.com/amp/news/business-of-brands/tvs-looks-at-recast-as-new-generation-hops-on-board/67566405
  10. A joint venture of Rs. 16,000 crore will be entered upon by BASF SE and Adani Group. The JV will be towards the development, construction and production of various petrochemical plants.
    https://www.livemint.com/Companies/ky00gUsn2lt1agKpn6eRHP/Adani-set-to-foray-into-petrochemicals-with-Rs-16000-crore.html
  11. NIIT Technologies may be valued at Rs.8,000-10,000 crore, in a deal to acquire it by Baring Private Equity Asia Ltd. The initial acquisition could be of the 30.58% stake held by the former’s promoters. This is likely to trigger an open offer too. 
    https://www.livemint.com/Companies/GF9y7Zty6Kf9M23KXFxFsI/Baring-PE-Asia-may-buy-NIIT-at-up-to-10000-crore-valuation.html