Business News at 09:30 am on 23rd October 2023

Let’s begin. In the event of a bank winning the bid to acquire IDBI Bank, the promoters will be given reasonable time to merge both entities to comply with the Reserve Bank of India’s norms for bank licensing, sources said. Reports had suggested that Kotak Mahindra Bank and Fairfax India Holdings, which are in the fray for IDBI Bank, want a two-to- three year window from the RBI for the merger with IDBI Bank in case they get to acquire the private bank. An official told FE that time has to be given for the merger of two banks in case a bank wins the bid. Operational details have to be worked out with RBI on this, as only one bank licence will be available.

Meanwhile, Backed by strong residential sales and collections from customers, property developers are not utilising credit lines sanctioned by their lenders including banks, housing finance companies and nonbanking finance companies for construction finance. Construction finance is a Rs 1.25 lakh crore a year market in the country. Developers get construction finance at 8 to 11 % depending on their credit profile. According to industry experts, top developers are not utilising 70 to 80 % of credit lines sanctioned by banks and other finance companies as they are posting record residential sales. Housing sales across the top cities have hit record high in the third quarter, despite the usually slow monsoon quarter, and expected to touch decadal high this year.

Moving on. After raising a Rs 1500 crore for its real estate fund earlier this year, Blackstone-backed ASK group has launched a new property fund of similar quantum. Sunil Rohokale, managing director and chief executive at ASK group, said, quote, “We plan to raise Rs 1000 crore by March and would like to do a final close within 12 months,” unquote. He said they would do 8 to 10 investments and focus on top 5 cities like they did in previous funds. Each investment would have a ticket size of Rs 150 to Rs 200 crore, he said. ASK Property Investment Advisors, the real estate focused fund manager of the group, has raised over Rs 6,100 crore so far.

Some more industry news. Rural growth has remained weak for the second straight quarter of FY24 for most fast-moving consumer goods companies, pointing to a lag in recovery in the hinterlands. A recovery in rural areas is critical for FMCG companies, as it contributes to over a third of their total sales. A thriving rural economy is also good for FMCG companies as the possibility of improving overall FMCG penetration grows, experts tracking the market said. While the June quarter of FY24 was plagued by unseasonal rains, the September quarter has seen uneven rainfall and food inflationary pressures. These factors have hurt consumption in rural areas, firms such as HUL, Marico, Dabur and GCPL said. In contrast, urban demand has remained resilient.

On to economy. India has settled international trade worth over $2.5 billion in rupee after the Reserve Bank of India (RBI) facilitated this in July last year, according to a senior official. Much of the trade settlement in rupee has been with Russia, Sri Lanka and three-four other countries, he said. Though this shows a pick-up in rupee trade, the pace is much below expectations. After the RBI introduced the mechanism for the rupee-denominated settlement of foreign trade on July 11 last year, trade experts had pegged rupee-denominated exports to rise to $8-10 billion. Strong demand for Indian goods from Russia after the western sanctions on that country was expected to drive rupee-rouble trade arrangement in big way.

IN some more economy news. The country’s first silos for storing rice built under a private-public-partnership (PPP) model with the Food Corporation of India will be commissioned next month. Two rice silos with combined capacity of 25,000 tonne have been built by the National Commodity Management Services Ltd at Buxar and Kaimur in Bihar under the design-build-finance-operate-transfer model, according to a food ministry official. This is part of the government’s pilot project to set up steel silos for rice to prevent cereal wastage during storage. Officials said that technology for silos to store rice is still being developed, as at these facilities, the grain has to be stored at 15 degrees Celsius.

Lastly, let’s have a look at the stocks in focus. These include L&T Finance, ICICI Bank, Samvardhana Motherson International, and RBL Bank among others. L&T Finance posted a 46% on-year growth in net income at Rs 595 crore for the second quarter of FY24. It achieved the highest-ever quarterly retail disbursements of Rs 13,499 crore, a growth of 32% on-year, the lender said in a release. ON the other hand, ICICI bank net profit soared 35.8% in the second quarter of F24, due to robust loan growth and strong core lending income.