Menu

Author Archives: Vikas Solanki

Vibhor Steel Tubes IPO Overview

Vibhor Steel Tubes IPO Overview

Vibhor Steel Tubes IPO Overview

IPO Details:

Price Band: ₹141 – ₹151 per share
Lot Size: 99 shares
Cost per Lot: ₹14,949
Issue Size: Approx. ₹72 crore

The offer and objects

➡️The offer includes a fresh issue of up to 4,779,444 equity shares at the upper price band of Rs 151 and 5,118,411 equity shares at the lower price band of Rs 141, totaling Rs 72.17 crore.

➡️The company intends to use the net proceeds from the fresh issue to meet the company’s working capital needs, totaling Rs 62 crore, with the remaining funds allocated for general corporate purposes.

Company Overview

Vibhor Steel Tubes Ltd is engaged in the manufacturing and supply of steel pipes and tubes to various industries in India. The company’s product portfolio includes Mild Steel/Carbon Steel ERW Black and Galvanized Pipes, Hollow Steel Pipes, and Cold Rolled Steel (CR) Strips/Coils.

Manufacturing Units and Workforce

Currently, the company operates two manufacturing units and one warehouse located in Raigad, Maharashtra, and Mahabubnagar, Telangana. The Raigad unit serves as an ideal location for 100% export of the company’s products. As of September 2023, the company employs a total of 636 individuals, including laborers.

Association with Jindal Pipes for 6 Years

The company has entered into a strategic agreement with Jindal Pipes Ltd for a duration of six years to manufacture and supply finished goods under the brand name “Jindal Star.” The agreement stipulates two main terms: 1) a minimum order of 1,00,000 MT per annum and 2) a turnover discount of 2% of the net sales price to Jindal Pipes Limited. This collaboration provides the company with a stable business outlook for the next six years.

Terms and conditions of the Agreement with Jindal Pipes

➡️The selling price will be determined periodically through mutual agreement, taking into consideration the prevailing market prices for the end product. However, it shall never fall below the sum of raw material costs (steel plus consumables) and variable expenses (labor and power).
➡️JPL commits to placing orders with a minimum quantity of 1,00,000 MT per annum to maximize the utilization of Unit I & Unit II capacities of our Company.
➡️In case of any shortfall in off-take by Jindal Pipes Limited or in supply by Vibhor Steel Tubes Limited, the defaulting party will compensate at the rate of Rs. 2,000 per MT for the deficit. This compensation obligation ceases once the minimum order quantity is achieved.
➡️Vibhor Steel Tubes Limited agrees to grant a turnover discount of 2% on the net sales price to Jindal Pipes Limited.
➡️The duration of this agreement is six years from April 01, 2023, with the option for renewal if mutually agreed upon by both parties.

Revenue Concentration Risk – 93% Sales from Jindal Pipes

The company’s revenue heavily relies on its top customer, Jindal Pipes, contributing to 93% of the total revenue for FY23. While this concentration poses a risk, minimum offtake clauses help mitigate potential downsides. Other customers include De Wit Bouwmachines BV and Macro Metal Handelsgesellschaft MBH.

Capacity Utilization stood at 71.6%

Over the past three years, the company has increased its capacity utilization from 41.82% to 71.68%, indicating a growing demand for its products. Despite this improvement, the plants are not operating at full capacity, with a 30% reserve to meet future demand.

Negative Cash Flow Impact on Working Capital

The company reported negative cash flows from its operating activities in H1FY2024 and FY2021. The steel business’s working capital intensity poses a challenge, and insufficient cash flows may adversely affect working capital requirements.

Expansion Plans in Telangana and Odisha

Vibhor Steel Tubes plans to enhance manufacturing and galvanizing capacity at the Telangana plant and establish a new plant in Odisha. The company has added new products to its portfolio, such as crash barriers and square pipes. The total capex for these expansions is approximately Rs 60 crore, funded through a mix of debt and internal accruals.

Peers of Vibhor steel tubes

1.APL Apollo Tubes Limited
2.Hi-Tech Pipes Limited
3.Rama Steel Tubes Limited
4.Goodluck India Limited (listed)

These companies operate in the same industry, manufacturing similar products to Vibhor Steel Tubes. However, it’s important to note that while they are part of the peer group, they are not direct competitors. This is because these companies sell their products in the open market, whereas Vibhor Steel Tubes has a unique business model. Vibhor Steel Tubes exclusively serves one customer, Jindal Pipes Limited, and supplies all finished goods/products on behalf of Jindal Pipes Limited.

 

Particulars Total Income EPS PE ratio ROE
Vibhor steel Tubes 1,114 14.85 22.6
APL Apollo Tubes 16,213 23.15 70.39 21.36
Hi-Tech Pipes 2,388 3.06 27.66 9.01
Goodluck India 3,086 33.31 17.82 14.16
Rama Steel Tubes 1,336 1.22 28.93 10.97

 

Financials and Valuation

For FY2023, consolidated sales increased by 36% to Rs 1113.12 crore. The OPM rose by 50 bps to 4.1%, leading to a 54% increase in OP to Rs 45.59 crore. The FY2023 EPS on post-issue equity is Rs 11.1, and at the upper price band of Rs 151, the P/E works out to be 13.7. Compared to its listed peers, Vibhor Steel Tubes demonstrates competitive financials with an EBITDA margin of 4.2% and ROE of 25.5%.

 

Key Financial Performance FY23 FY22 FY21
Revenue 1,113 818 510
Total Income 1,114 818 511
EBITDA 47 30 20
EBITDA% 4.21% 3.69% 3.90%
PAT 21 11 0.6
PAT% 1.89% 1.39% 0.13%
CFO 7 -34 45
Net Worth 93 72 60
Net Debt 127 106 59
Debt Equity ratio 1.63 1.77 1.23
ROCE% 16.48% 12.09% 9.90%
ROE% 25.51% 17.11% 1.14%

 

Conclusion

Vibhor Steel Tubes Ltd operates in the steel pipes and tubes manufacturing sector, with a strategic collaboration with Jindal Pipes providing a stable revenue stream. While facing a concentration risk with 93% of sales from Jindal Pipes, the company shows positive signs of growth, increased capacity utilization, and expansion plans in Telangana and Odisha. However, negative cash flows and the highly competitive market warrant careful monitoring of its financial performance.

The image added is for representation purposes only

Strategic Partnerships Fuel One97’s Financial Turnaround

Infosys Announces Strategic Acquisition of InSemi a Premier Semiconductor Design and Embedded Services Provider

Infosys Announces Strategic Acquisition of InSemi, a Premier Semiconductor Design and Embedded Services Provider

Infosys Announces Strategic Acquisition of InSemi, a Premier Semiconductor Design and Embedded Services Provider

Infosys, a global leader in IT services, has revealed its plans to acquire InSemi, a prominent semiconductor design and embedded services provider. The acquisition, valued at Rs 280 crore, involves the purchase of a 100 percent stake in InSemi, marking a significant step in Infosys’ commitment to enhancing its engineering R&D capabilities.

Strengthening Digital Transformation Initiatives
In a press release, Infosys highlighted that this strategic investment is aligned with the company’s dedication to co-create with global clients, aiding them in navigating their digital transformation journey. The move underscores Infosys’ recognition of the pivotal role semiconductors play in the rapidly evolving landscape of electronic gadgets, especially in the context of the artificial intelligence (AI) boom.

Accelerating Chip-to-Cloud Strategy
Infosys articulated that the acquisition of InSemi will expedite its chip-to-cloud strategy, incorporating specialized design skills at scale. This integration will seamlessly complement Infosys’ existing investments in AI/automation platforms and industry partnerships, positioning the company at the forefront of technological innovation.

InSemi’s Expertise and Industry Presence
Founded in 2013, InSemi has emerged as a leading player in the semiconductor design services domain. The company offers end-to-end solutions, showcasing proficiency in electronic design, platform design, automation, and embedded and software technologies. Its clientele spans across semiconductor, consumer electronics, automotive, and hi-tech industries, serving as a testament to its global recognition.

Unique Differentiator in Next-Generation Services
Dinesh R, EVP & Co-Delivery Head at Infosys, emphasized the strategic importance of InSemi in the context of evolving technologies. He stated, “With the advent of AI, Smart devices, 5G and beyond, electric vehicles, the demand for next-generation semiconductor design services integrated with our embedded systems creates a unique differentiator. InSemi is a strategic investment as we usher in the next wave of growth and aim for a leadership position in Engineering R&D.”

Looking Forward to a New Wave of Growth
The acquisition of InSemi positions Infosys to capitalize on the growing demand for advanced semiconductor design services, especially in conjunction with emerging technologies. As the company sets its sights on a leadership role in Engineering R&D, this move signifies a significant milestone in Infosys’ pursuit of innovation and technological excellence.

About Infosys:
Infosys is a global leader in next-generation digital services and consulting. The company is dedicated to helping clients in over 50 countries navigate their digital transformation journey by providing innovative solutions and services.

About InSemi:
InSemi, founded in 2013, is a distinguished semiconductor design and embedded services provider. The company’s expertise spans electronic design, platform design, automation, embedded, and software technologies, catering to diverse industries worldwide.

The image added is for representation purposes only

Strategic Partnerships Fuel One97’s Financial Turnaround

India Affirms Long-Term Commitment to Coal Expansion Despite Global Pressures

India Affirms Long-Term Commitment to Coal Expansion Despite Global Pressures

India Affirms Long-Term Commitment to Coal Expansion Despite Global Pressures

In an exclusive interview with Moneycontrol, India’s Minister for Coal, Mines, and Parliamentary Affairs, Pralhad Joshi, emphasized the nation’s unwavering commitment to expanding coal production beyond the targeted doubling by 2030. The decision, he stated, is driven by the projected steep surge in India’s power demand in the coming decades, prioritizing domestic energy needs over mounting global pressure to reduce fossil fuel usage.

No Reduction in Coal Production Beyond 2030, Affirms Minister Joshi:
Minister Joshi categorically stated, “There is no question of any reduction in coal production after 2030. For the next 40 years at least, coal is going to stay (as a key energy source) in India.” Despite global efforts to shift towards cleaner energy alternatives, India remains resolute in its reliance on coal, which currently accounts for about three-quarters of the country’s power generation.

Recent Growth in Coal Production Amidst Renewed Demand:
After facing declines in 2019-20 and 2020-21 due to the COVID-19 pandemic, India’s coal production has rebounded significantly, registering a nearly 13 percent increase in 2021-22 and a subsequent 15 percent rise in 2022-23. Minister Joshi attributes this resurgence to the country’s escalating power demand, which continues to outpace the growth of renewable energy capacity.

Coal’s Vital Role in India’s Power Generation Landscape:
Coal remains a crucial component, contributing to approximately three-quarters of India’s power generation. Despite ambitious plans to achieve 500 gigawatts (GW) of non-fossil fuel capacity by 2030, the nation is grappling with the challenge of meeting its increasing power requirements. Minister Joshi pointed out, “Even if 50 percent of that is met by renewable energy sources, there is still going to be a huge need for thermal power.”

India’s Stance on Coal at International Platforms:
India, along with China, notably opposed the complete phasing out of coal at the United Nations Climate Change Conference (COP) in 2021. Despite initial resistance, the country has strengthened its position and decided to actively add coal capacity to meet its burgeoning power demands.

Record-Breaking Peak Power Demand and Future Projections:
India’s peak power demand reached a record 240 GW in 2023, surpassing the government’s projection of 230 GW. Projections indicate that this demand is expected to further escalate to 256.5 GW in 2024-25. Minister Joshi expressed confidence in meeting this rising demand, stating, “In FY23-24, we are going to hit the 1 billion ton, or 1,000 metric tonne (MT), mark of coal production for the first time.”

Flexibility in Production Targets to Meet Demand Surges:
Highlighting the coal ministry’s preparedness, Minister Joshi asserted that if demand surpasses the government’s projections, coal production will be further increased. The production target for FY24-25 stands at 1,111.6 MT, with a commitment to adjusting it based on the evolving energy landscape.

In summary, India remains steadfast in its commitment to coal as a dominant energy source, citing the necessity to meet the surging power demands in the foreseeable future. Despite global pressures, the nation’s strategic focus on prioritizing domestic energy requirements underscores its resilience in navigating the evolving energy landscape.

The image added is for representation purposes only

Strategic Partnerships Fuel One97’s Financial Turnaround

Starbucks Unveils Ambitious Expansion Plans in India, Aiming for 1,000 Stores by 2028

Starbucks Unveils Ambitious Expansion Plans in India, Aiming for 1,000 Stores by 2028

Starbucks Unveils Ambitious Expansion Plans in India, Aiming for 1,000 Stores by 2028

Seattle-based coffee giant, Starbucks, is set to significantly amplify its presence in India, strategically targeting a total of 1,000 stores across the country by 2028. The expansion drive is part of the company’s broader efforts to tap into one of its fastest-growing markets globally.

Current Landscape and Joint Venture with Tata Consumer Products:
Presently, Starbucks operates in India through a joint venture with Tata Consumer Products, with a current network of 390 outlets. The company’s recent statement indicates an ambitious store strategy, translating to a new store opening every three days.

Leadership and Aggressive Market Penetration Strategy:
Guiding this bold move is Starbucks’ CEO, Laxman Narasimhan, who assumed leadership in March 2023. Narasimhan outlined the strategy to broaden Starbucks’ footprint in tier two and tier three cities, along with an increased focus on drive-thru, airport, and 24-hour outlets to cater to the burgeoning demand for quick, on-the-go consumption.

Workforce Expansion and Market Dynamics:
In conjunction with its expansion plans, Starbucks announced intentions to double its workforce in India, reaching 8,600 employees. This move aligns with the company’s commitment to contribute to India’s growing coffee culture, leveraging the expanding middle class and a dynamic consumer market.

Market Dynamics and Global Economic Trends:
India’s youthful demographic, comprising Gen Z and millennials, combined with rising disposable incomes, presents a lucrative market for global corporations. Despite a global economic slowdown, India has showcased resilient growth, attracting a wave of foreign brands, including Starbucks. The company’s push also coincides with the emergence of local players, such as Blue Tokai Coffee Roasters and Third Wave Coffee.

CEO Perspective and Future Vision:
Laxman Narasimhan, during a recent visit to India, expressed Starbucks’ pride in being a catalyst for the evolving coffee culture while acknowledging India’s rich heritage. He emphasized the strategic partnership with Tata and the dedicated workforce as crucial elements in realizing Starbucks’ aspiration to become a truly global entity.

Focus on Sustainable Growth and Skill Development:
In addition to store openings, Starbucks emphasized its commitment to skilling local partners for jobs and promoting Indian-origin coffee to its global customer base. The company sees India’s economic trajectory, projected to become the world’s third-largest economy by 2030, as a compelling reason to intensify its focus on the Indian market.

Premium Offering – Starbucks Reserve Store:
As part of its expansion strategy, Starbucks announced the opening of its second Starbucks Reserve store in India this year. The Reserve Store is a premium concept designed to elevate the coffee experience. Starbucks plans to feature the Monsooned Malabar coffee blend from India, showcasing its commitment to high-quality Indian Arabica coffee.

In summary, Starbucks’ ambitious plans underscore its confidence in India’s growth potential and align with broader economic trends. The company’s commitment to skill development, local partnerships, and a premium coffee experience positions it to navigate the evolving landscape of the Indian market.

The image added is for representation purposes only

Strategic Partnerships Fuel One97’s Financial Turnaround

India's Finance Ministry Revises Strategic Crude Oil Reserve Plan Amid Market Volatility

India's Finance Ministry Revises Strategic Crude Oil Reserve Plan Amid Market Volatility

India’s Finance Ministry Revises Strategic Crude Oil Reserve Plan Amid Market Volatility

Introduction:
In a strategic move responding to market uncertainties and the potential for further declines in oil prices, India’s finance ministry has decided to abandon a 50 billion rupee ($602 million) plan to augment the nation’s strategic crude oil reserves. The ministry is now exploring the option of leasing out empty underground storage to refiners and global oil majors, as reported by individuals familiar with the matter who requested anonymity due to the private nature of the discussions.

Rationale Behind the Decision:
Market dynamics have played a pivotal role in reshaping India’s approach to bolstering its strategic crude reserves. With Brent crude already witnessing a significant 20% drop from its September peak and the specter of further declines if global oil supplies remain ample, the finance ministry is exercising prudence in its investment decisions.

While other major consumers are actively replenishing their oil reserves, India’s finance ministry is adopting a unique strategy, guided by considerations of fiscal responsibility. As part of a broader effort to reduce the fiscal deficit to 5.9% of the gross domestic product in the fiscal year ending March, down from 6.4% in the previous year, the ministry aims to optimize existing resources.

Leasing Out Underground Storage:
The ministry has directed the state-owned Indian Strategic Petroleum Reserves Ltd (ISPRL) to explore leasing out empty underground storage facilities. India currently has limited oil storage capacity, accommodating only 39 million barrels of crude oil—barely sufficient for eight days of the country’s consumption in case of emergencies. The decision not to refill reserves aligns with a cautious fiscal approach, even as it contrasts with the strategies of other large consumers.

However, leasing out storage space has presented challenges, as refiners have shown limited interest in the initiative so far. The outcome of these leasing discussions may determine whether the underground storage caverns remain vacant or are utilized based on future market conditions.

Current Storage Status:
India maintains strategic oil stockpiles at three key sites, with Visakhapatnam and Mangalore contributing a combined storage capacity of 13.5 million barrels. Presently, both locations have significant storage vacancies. At the Mangalore site, one of the two 5.5 million-barrel caverns has been leased to Abu Dhabi National Oil Co (Adnoc). The finance ministry has encouraged further discussions between ISPRL and local refiners, including Adnoc, regarding the potential lease of the second unit.

As India navigates the evolving landscape of global oil markets and fiscal imperatives, the decision to prioritize leasing over direct investment in reserves underscores the country’s commitment to maintaining economic stability while adapting to changing geopolitical and economic conditions. The outcome of these developments will be closely monitored by industry observers and financial analysts alike.

The image added is for representation purposes only

Strategic Partnerships Fuel One97’s Financial Turnaround

Renewables and Fossil Fuels: Balancing Act in India's Energy Mix

Renewables and Fossil Fuels: Balancing Act in India's Energy Mix

Renewables and Fossil Fuels: Balancing Act in India’s Energy Mix

Current Landscape:
Year after year, the fossil fuel market grapples with new challenges amid the ever-growing correlation between economic growth, urbanization, and industrialization, all fueled by increasing energy consumption. India, emerging as a major player, faces the intricate interplay of global conflicts, production cuts, and fluctuating demand.

Market Sentiment:
Many in the sector believe that India would find a crude oil price of up to $70 per barrel acceptable, with a preference for lower prices. Despite geopolitical conflicts and production adjustments, prices have not surged as anticipated, partially attributed to China’s lower-than-expected demand.

Insights from Energy Strategists:
2023-2024 Transition:
According to Umud Shokri, a Washington-based energy strategist, the fossil fuel industry is undergoing a dynamic period as 2023 ends and 2024 begins. The US Energy Information Administration predicts a rise in global liquid fuel consumption, but OPEC+ production cutbacks aim to balance supply and demand dynamics.

Renewables and Fossil Fuels:
While renewable energy sources gain interest, they are yet to replace fossil fuels. Renewables are meeting increased demand rather than phasing out traditional energy sources. OPEC’s oil production in 2024 will be influenced by production cuts, economic stability concerns, and geopolitical factors.

Russia’s Role:
Russia’s influence on oil prices remains significant, driven by economic needs and major buyers like China and India. Despite geopolitical complexities, Russia’s impact on global oil prices is expected to persist.

India’s Strategic Response in 2024:
Comprehensive Energy Security:
India faces the challenge of global oil market shifts, introducing uncertainty. To enhance energy security, a comprehensive approach in 2024 should include diversification of energy sources, investments in renewables, and energy efficiency improvements across sectors.

Domestic Production Initiatives:
India is actively boosting domestic production, with companies like ONGC marking success in deep-water exploration. Strategic investments in clean energy technologies and well-balanced policy measures are vital for long-term stability.

Adapting to Geopolitical Pressures:
India must navigate geopolitical tensions, maintaining a clear and comprehensive energy policy that adapts to evolving situations. The focus should be on fortifying energy security through sustainable and diverse energy sources.

Conclusion:
In the complex realm of the fossil fuel market, India’s proactive stance, including domestic production advancements and strategic diversification, positions it to address challenges and uncertainties on the global stage. A robust and adaptable energy policy will be instrumental in ensuring a reliable, affordable, and sustainable energy supply for India’s expanding economy and population.

The image added is for representation purposes only

Strategic Partnerships Fuel One97’s Financial Turnaround

Supreme Court's Landmark Ruling Strengthens Insolvency and Bankruptcy Code (IBC), 2016: Implications for Stakeholders

Supreme Court's Landmark Ruling Strengthens Insolvency and Bankruptcy Code (IBC), 2016: Implications for Stakeholders

Supreme Court’s Landmark Ruling Strengthens Insolvency and Bankruptcy Code (IBC), 2016: Implications for Stakeholders

Introduction:
The recent Supreme Court ruling validating Sections 95 to 100 of the Insolvency and Bankruptcy Code (IBC), 2016, has ushered in a new era in the management of distressed assets in India. This judicial validation holds profound implications for various stakeholders, reshaping the legal framework and dynamics surrounding insolvency proceedings.

1. Empowering Lenders and ARCs:
The ruling solidifies the position of lenders and Asset Reconstruction Companies (ARCs), enhancing their authority to take decisive actions against the previous management of struggling companies. This redefines the landscape of corporate governance, introducing a heightened level of accountability crucial for addressing the alarming volume of non-performing assets (NPAs) in the banking sector.

Statistics Reflecting the Need for Action:
As of September 30, 2023, ten public sector banks collectively reported gross NPAs amounting to INR 3.6 lakh crore. The Finance Ministry highlights a significant move as these banks transferred INR 11,617 crore of debt to the National Asset Reconstruction Company between January and November 2023. Despite a decline in gross NPAs from 11.2% in 2017-18 to approximately 3.9% in 2023, challenges persist, with new NPAs emerging and a recovery rate around 30%.

2. Streamlining Legal Action Against Guarantors:
The ruling simplifies and streamlines the process for banks and lenders pursuing legal action against guarantors of loan repayments. This accelerates the resolution of personal financial matters, eliminating delays that previously depended on the availability of specific individuals. The increased efficiency notably benefits lenders and reinforces the importance of accountability at a personal level.

Addressing Financial Irresponsibility:
The Supreme Court’s decision serves as a potent deterrent against financial irresponsibility, encouraging individuals to settle debts or devise repayment plans, mindful of the societal and personal impacts of financial distress. This measure aims to reduce instances of deliberate defaulting, a concern underscored by the alarming rise in debts accrued by willful defaulters, increasing by over INR 100 crore daily since March 2019.

3. Clarity and Structure in Debt Resolution:
The ruling introduces essential clarity and structure to the debt resolution process, marking a pivotal shift for professionals in the financial sector. Banks and financial institutions are now tasked with revamping their legal approaches, emphasizing more effective and resilient debt recovery methods amid the changing financial environment.

Challenges for Secured Loans:
However, challenges arise for those providing loans with some form of security, as participation in legal proceedings might necessitate relinquishing certain rights, such as property reclamation, in exchange for a say in the decision-making process.

4. Cautionary Measure for Business Leaders:
The decision serves as a cautionary measure for business leaders, dissuading them from making unfeasible commitments to banks. This aspect of the ruling provides an advantage for lenders looking to offload accounts, granting them increased leverage in price determination.

Conclusion:
In conclusion, the Supreme Court’s ruling on Sections 95 to 100 of the IBC, 2016, marks a significant step towards a more robust and accountable insolvency framework. While presenting challenges, it sets the stage for a more efficient, transparent, and responsible approach to distressed assets in the Indian financial landscape.

The image added is for representation purposes only

Strategic Partnerships Fuel One97’s Financial Turnaround

SEBI Announces Comprehensive Framework for Short Selling and Securities Lending

SEBI Announces Comprehensive Framework for Short Selling and Securities Lending

SEBI Announces Comprehensive Framework for Short Selling and Securities Lending

In a significant development, the Securities and Exchange Board of India (SEBI) has unveiled a comprehensive framework governing short selling and securities lending and borrowing scheme (SLBM). The regulatory body’s announcement, made on Friday, outlines key guidelines aimed at fostering transparency and integrity in the Indian securities market.

Inclusion of All Investors in Short Selling, With a Strict Prohibition on Naked Short Selling:
SEBI has granted approval for investors across all categories to participate in short selling activities. However, a notable restriction has been imposed to disallow naked short selling, a practice where a seller engages in short selling without possessing the securities at the time of the trade. This measure is designed to ensure the legitimacy and stability of the market.

Eligibility of All F&O Segment Stocks for Short Selling:
SEBI’s directive highlights that all stocks trading in the futures and options (F&O) segment are eligible for short selling. This move is anticipated to enhance market liquidity and provide investors with a broader range of options for executing short selling strategies.

Obligation Adherence for Delivering Securities:
The market regulator emphasizes the mandatory obligation for all investors to deliver securities at the time of settlement. This requirement underscores SEBI’s commitment to upholding the integrity of transactions and ensuring timely fulfillment of contractual obligations.

Prohibition on Day Trading and Intra-day Square Off for Institutional Investors:
SEBI’s framework explicitly prohibits institutional investors from engaging in day trading or squaring off transactions intra-day. This measure aims to promote a more stable and long-term approach to investing among institutional participants.

Supreme Court’s Directive Prompts Investigation:
The regulatory changes follow a directive from the Supreme Court, urging SEBI to investigate potential losses suffered by investors and assess any breaches of the law related to short positions. This directive was prompted by allegations from US short seller Hindenburg Research, which claimed that the Adani Group had violated stock market rules. SEBI is currently conducting an investigation into these allegations.

Introduction of Securities Lending & Borrowing Scheme (SLBM) Concurrent with Institutional Short Selling:
SEBI has announced that the introduction of a comprehensive Securities Lending & Borrowing Scheme (SLBM) will coincide with the implementation of short selling by institutional investors. This integrated approach aims to facilitate a more robust and efficient securities lending mechanism in the market.

Enhanced Disclosure Requirements for Brokers and Investors:
SEBI has mandated brokers to collect and upload scrip-wise short sell positions on exchanges before the commencement of trading on the following day. Retail investors have the flexibility to make necessary disclosures by the end of the trading hours. The regulatory body emphasizes the importance of transparent reporting to enhance market visibility and public awareness.

Balancing Market Stability and Efficiency:
Acknowledging the potential impact on market efficiency, market experts caution that limitations on short selling, particularly naked shorting, may impede liquidity, especially in smaller stocks. However, SEBI’s move is seen as a proactive measure to curb market manipulation and protect retail investors. A data-driven approach, with periodic reviews and adjustments, will be crucial to maintaining a healthy balance between market stability and dynamism. Monitoring the impact of these regulations will be essential to assess whether the benefits of curbing manipulation outweigh potential costs to market efficiency.

The image added is for representation purposes only

Strategic Partnerships Fuel One97’s Financial Turnaround

Anticipation Grows as Experts Suggest Bank Privatization Unlikely in Upcoming Union Budget Vote on Account

Anticipation Grows as Experts Suggest Bank Privatization Unlikely in Upcoming Union Budget Vote on Account

Anticipation Grows as Experts Suggest Bank Privatization Unlikely in Upcoming Union Budget Vote on Account

Introduction:
As the country awaits the Union Budget scheduled for February 1, 2024, financial experts express skepticism regarding the inclusion of bank privatization announcements. Given that this budget is categorized as a vote on account, analysts assert that major policy initiatives, particularly the contentious issue of bank privatization, may not find a place in the interim budget.

Economic Veterans Share Insights:
Renowned economist and former finance secretary, Montek Singh Ahluwalia, emphasized the nature of interim budgets, stating, “This is an interim Budget; so it’s like a non-Budget you are not supposed to announce any new thing.” He underscored the tradition of interim budgets primarily echoing election manifestos without introducing groundbreaking policies.

Finance Minister Nirmala Sitharaman further clarified the government’s stance on December 7, asserting that the upcoming budget would lack “spectacular announcements.” She highlighted that the regular budget with substantial policy declarations would be presented in July, post the general election.

Former Deputy Governor of the Reserve Bank of India, R Gandhi, echoed similar sentiments, emphasizing the limited scope of the upcoming vote on account. “It is only a vote on account, not a budget. So don’t expect any policy initiatives,” Gandhi remarked.

Recap of Previous Budget Announcements:
The backdrop of this anticipation stems from Sitharaman’s previous budget presentation in 2021-22, where she outlined the government’s intent to privatize public sector banks (PSBs) as part of a broader disinvestment strategy aimed at generating Rs 1.75 lakh crore. However, the proposed privatization, except for IDBI Bank, did not materialize, raising questions about the timing and implementation of such decisions.

Financial Stability of Public Sector Banks:
Notably, industry experts have assessed the current situation of public sector banks and suggest that, at present, they are in a robust financial position. Former finance secretary Subhash Chandra Garg affirmed, “There is no chance to touch issues like bank privatization in the interim Budget.” He pointed out that banks are enjoying favorable conditions, marked by improved earnings, successful fund raising, and strong capital positions.

A Moneycontrol analysis of the July-September FY24 quarter reveals double-digit profits and enhanced asset quality in India’s banking sector. Major banks, including the State Bank of India (SBI), Bank of Baroda (BoB), and Punjab National Bank, reported substantial profits, reflecting a positive trend in the industry.

Government’s Stance and Future Projections:
A finance ministry official indicated that critical decisions, including bank privatization, are likely to be deferred until after the general elections. The official stated, “Every government makes the decisions at the right time. So, I don’t think that anything is going to happen before the general elections.”

As the nation awaits the Union Budget on February 1, 2024, the financial landscape remains poised for potential shifts post the general elections, leaving experts and stakeholders keenly observant of the government’s future policy directions.

The image added is for representation purposes only

Strategic Partnerships Fuel One97’s Financial Turnaround