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#Linkfest – Edelweiss’s Newfangled ‘Power SIP’, Kapol Bank Depositor Woes, SME IPO Listing Scams, Adani Wilmar-Patanjali Tussle


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 the most interesting of such links shared by our members in recent days.

1. #bonds and funds – How Kotak AMC Turned ‘Fixed’ Maturity Plan Into ‘Floating’ Maturity Plan (Sarcasm)

Fixed Maturity Plans or FMPs are supposed to pay back their investors on time. That is what ‘fixed’ in FMP means. But Kotak AMC doesn’t think so. Some of Kotak AMC’s FMPs have exposure to Zee promoter group NCDs, which have gone under. Consequently, the AMC has informed the investors who’ve invested in these FMPs that it won’t be able to redeem the FMPs in full until the Zee promoter group companies pay up. Link

2. #bonds and funds – When the Fence Eats the Crops, Feat Deloitte and IL&FS

A whistle-blower, associated with the senior management team of renowned auditing firm Deloitte India, has written to Moneylife alleging that Deloitte helped IL&FS fudge its account books for years in return for steep fees and repeat business. Readers may be aware that IL&FS, once the crowning jewel of corporate India’s infrastructure companies, recently went under after an announcement that it was reeling under thousands of crores of debt. Link

3. #bonds and funds – Edelweiss Comes Up with New Scheme to Take Investors’ Money

The mutual fund industry is known for many shenanigans but this one takes the cake. Edelweiss has come out with a mutual fund systematic investment plan (SIP) that will invest in the market only when the market corrects by 0.5%, 1% or 2%. Edelweiss is calling the plan…wait for it…’Power SIP’. Link

4. #bonds and funds: ‘Take Our Money But Revive Kapol Bank’ Say Depositors

Drastic times call for drastic measures. Kapol Bank’s 2.5 lakh depositors have agreed to take a haircut on their deposits just so that the bank can survive and return their money over time. Kapol Bank ran aground in 2014, after the bank’s management was accused of mismanagement of funds and nepotism. Consequently, it was revealed that Kapol Bank had Rs. 415 crores in deposits against NPAs of Rs. 140 crores. Link

5. #geek stuff: Stratolaunch, the World’s Biggest Airplane, Makes a Tryst with History

Stratolaunch is the world’s biggest airplane and it just made its maiden flight. The aircraft has 6 engines on a wingspan of 117 meters and can touch a maximum speed of 189 mph. The company that built the airplane hopes to use it to launch satellites into space. Paul Allen, the recently deceased co-founder of Microsoft was one of the investors on the project. Link

6. #geek stuff: China Might Soon Pull the Plug on Bitcoin Mining Companies

Many countries have issued strict warnings to their citizens on mining and trading in cryptocurrencies, including India. Now, China has become the latest country to consider banning Bitcoin mining, as it attempts to weed out industries that either don’t add value to the economy, lead to pollution or cause wastage of resources. Currently, China is the world’s largest market for Bitcoin mining. Link

7. #general: U.S College Graduates Selling Part of Their Future for Their Present

Did the heading of this article confuse you? We bet it did. But that’s exactly what’s happening in the U.S. Some U.S students are selling a stake in their future earnings in return for student loans. Americans owe close to $1.5 trillion in educational loans, which has prevented many Americans from pursuing their dreams, as well as acting as a damper on the U.S economy. Link

8. #general: Zerodha Sees Threat in PayTM’s Stock Brokering Venture

Zerodha is currently India’s largest discount brokerage business. Until now, Zerodha has managed to fend off rivals and defend its numero uno position as the leading discount broker. But now there’s a new kid in town who might just change the rules of the game – PayTM. PayTM has recently acquired a brokering license, and quite understandably, it is making Zerodha nervous. Link

9. #general: There is Something Rotten in Denmark: The Murky World of SME IPO Listing

When the government gave permission to list SMEs on the bourse, it did so with the best of intentions – to help SMEs raise money at a cheap rate and quickly. But as Finception has unearthed, some unscrupulous elements have managed to game the system with the help of stock operators. These operators are paid by promoters to to lure in retail investors by jacking up the stock prices temporarily. Once they’ve achieved this target, they cash out. Link

10. #general: IL&FS Black Hole Swallows MNCs’ Employees’ PF and Pension Funds

We know that IL&FS has a debt of over Rs. 90,000 crores. Even as the interim board appointed by the government struggles to unravel the company’s financial situation, it is almost certain that at least some of the debt won’t be paid back. This is a problem, because many large corporations have invested their employees’ hard-earned PF and pension funds in IL&FS bonds, which have now defaulted. Link

11. #macroeconomics: RBI Capitulates to Banks Over Issue of External Benchmarking of Floating Loan Rates

The benchmarks that banks use to calculate interest rates on floating loans have long been criticized for being opaque and arbitrary. Recently, the RBI set out to correct this anomaly by issuing a circular to banks to benchmark floating loan rates to an external source, like the repo rate or GoI 91-day or 182-day treasury bill. Naturally, the banks revolved against this decision. It has now been revealed that the banks have won this round and the RBI has withdrawn the circular. Link

12. #macroeconomics: Scooter Sales in the Red for the First-time in 13 Years

For the first time in 13 years, scooter sales in India have come down, which many people say is a negative sign. This is significant because many analysts extrapolate scooter sales numbers to the condition of the economy. In fact, scooter sales have been on a downward trajectory since January 2019, which may also indicate that people are holding off high-end purchases for fear that it will eat into their savings. Link

13. #macroeconomics: U.S-based Blackstone Group Goes on Property Buying Spree in India

The common refrain is that the real estate in India is on the cusp of a crisis, thanks to low rental yields, unsold inventories and high working capital costs. However, one foreign player has been quietly buying premium office space in India since 2011, unmindful of the noise. That company is Blackstone which also recently launched an REIT in partnership with the Embassy Group. Link

14. #macroeconomics: KKR Inc. Scouts for India Opportunities with Rs. 5000 Crore War Chest

U.S based KKR Inc. has launched a Rs. 5000 crore India-focused credit opportunities fund. The funds come at a crucial time, as NBFCs shy away from wholesale financing, and banks struggle to raise capital. KKR Inc. will soon launch a nationwide marketing juggernaut to support the fund, which will have the twin effects of increasing awareness about the fund, while also finding opportunities to invest. Link

15. #stock fundamentals: IL&FS Fever Spreads to Gujarat Blue-Chip Companies

It doesn’t seem as if the IL&FS ghost is going to die down anytime soon. Every week, we hear of fresh trouble at the once marque company. The latest news is, a number of Gujarat blue-chip companies, including GCMMF (Amul) have been hit by IL&FS’s collapse, because they had invested their employees’ PF and pension funds in IL&FS bonds. This is bad news for the state’s ruling party, the BJP, coming so close to election time. Link

16. #stock fundamentals: Having Your Cake and Eating it: The Indian PSU Conundrum

By definition, any corporation where the government retains more than a 51% stake is a PSU. But with Delhi actively trying to divest its PSU holdings, the government may not be able to maintain this level of holding. However, the government seems to be in no mood to give up the family jewels. It is believed to be contemplating rules to ensure that PSU companies remain PSUs even after the government’s stake falls below 51%. Link

17. #stock fundamentals: Piramal Enterprises and TPG Bid Goodbye to Shriram Capital

Ajay Piramal’s Piramal Enterprises and TPG, the private investment firm, together own 29% in Shriram Capital, a stake currently worth over $1 billion. Recently, the two decided that they want to exit their stake and cash in the profits. TPG has retained the services of Morgan Stanley and JP Morgan to help it sell its stake, while Piramal Enterprises might sell its stake on the stock market, in a block deal. Link

18. #stock fundamentals: Patanjali Ayurved Trounces Adani Wilmar in Battle for Ruchi Soya

The Adani Wilmar-Patanjali Ayurved battle for Ruchi Soya was one of the most keenly watched battles in India’s corporate history. It has now emerged that Adani Wilmar has bowed out of the fight citing delays in the insolvency process. This leaves only Patanjali Ayurved, which has since renewed its Ruchi Soya bid, for Rs. 4350 crores. If Patanjali manages to acquire Ruchi Soya, it will get a solid foothold in an industry (edible oils), where it has only a negligible presence. Link

19. #stock fundamentals: Ashok Leyland’s Star Trek Moment, Wants New Plants in Africa and CIS

Ashok Leyland is planning a capex of Rs. 1500 in the current fiscal, some of which will be used to create new markets in Africa and the CI. As of now, the company exports 10% of its total production, but wants to raise it to 20% over the next five years. The expansion will be a new challenge for the company, which until now had restricted its operations to a handful of foreign countries, such as the UAE, Nigeria, Bangladesh, Sri Lanka and, U.K. Link


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