Business News at 10:00 am on 1st May, 2024

Let’s begin with the major update, Online pharmacy retailer PharmEasy has raised Rs 1,804 crore, or $216 million, in a round led by Ranjan Pai’s Manipal Education and Medical Group and existing investors. The company has allotted 186.4 million convertible preference shares in total at an issue price of Rs 96.8 each. But the funding round has dragged down its valuation by 90% to $710 million, from the peak valuation of $5.6 billion it had in 2021. Last year, several media reports had indicated that the company is looking to raise funds to pay its lender Goldman Sachs, who had lent about $285 million to the company to pay off an earlier debt taken during its Rs 4,546-crore Thyrocare acquisition.

Moving on, The government is rethinking a plan to usher in the cross-border insolvency regime, as some sections feel that enforcement may be challenging in the current circumstances, multiple official sources told FE. Quote, It’s likely that the government may not introduce the cross-border insolvency norms anytime soon, unquote, a senior official told FE. One reason for the rethink is learnt to be the realisation that since many important countries with which India has strong investment relations haven’t adopted the relevant convention. So, reciprocity, which is crucial for implementing the regime, may be found wanting. The government has drawn up a plan to introduce cross-border and group insolvency as part of the series of amendments to IBC to be pushed after the elections.

In other news, After a sluggish start following delayed harvest, the government agencies’s purchase of wheat in the current rabi marketing season – 2024-25 (April-June) have crossed 19.61 million tonne (MT), which is more than the annual grain requirement for all the welfare schemes including Pradhan Mantri Garib Kalyana Anna Yojana. Ashok Meena, chairman and managing director, FCI said, quote, We need around 18.4 MT of grain for social welfare schemes and any additional procurement in the current season would help us in carrying out open market sales to curb possible spike in prices, unquote. The government to curb prices had sold a record 10 MT of wheat in the open market to weekly e-auction to bulk purchasers and flour millers in FY24.

Meanwhile, The growth of “core sectors” eased to 5.2% in March from 7.1% in February on account of the statistical effect of a high base, data released by the commerce ministry showed on Tuesday. Sequentially, however, the output of eight core industries rose 9.9% in March, at the highest rate in 12 months. Typically, core sector’s output rises in March from February, but the sequential growth recorded between the two months in FY24, is lesser than the 11.4% growth recorded on average in the past 12 years. On a year-on-year basis, the growth of five sectors – coal, crude oil, natural gas, refinery products, and steel – slowed in March from the levels in February; while the growth of fertilisers, cement and electricity increased.

Up next, Continuing premiumisation, favourable affordability, along with rising per capita incomes, should facilitate 10-12% volume growth for large, listed residential developers this financial year, following an estimated growth of ~14% on a high base in FY24, Crisil Ratings said. These developers have a relatively good record of timely and quality delivery, which explains the greater consumer preference for them, the rating firm said. Crisil projected that the market share of top listed developers is expected to double to 30-32% in FY25 compared to fiscal 2019, predating the Covid-19 pandemic. Higher collections and sharper focus on asset-light models have enabled deleveraging of balance sheets, which, in turn, supported the credit profiles of developers.

Moving ahead, The FirstCry IPO will see Ratan Tata selling all his 77,900 shares in the company. Tata had bought 0.02% in preference shares at a price of Rs 84.72 a share, amounting to an investment of around Rs 66 lakh. Besides Tata, SoftBank will sell 20.3 million shares — the highest among all existing investors — while Mahindra & Mahindra (M&M) plans to sell 2.8 million. TPG will sell 3.9 million shares and the investment arm of the Premji Foundation will sell 8.6 million. SoftBank is FirstCry’s biggest shareholder and holds a 25.6% stake or 124 million shares followed by M&M, which has a 10.98% stake. Among individual selling shareholders, FirstCry’s chief executive officer Supam Maheshwari owns 5.95% of the company.

Lastly, India’s gold demand in the March quarter rose 8% from a year ago, but a continuation of recent price rallies could cut its total consumption in 2024, the World Gold Council (WGC) said on Tuesday. Demand for gold from India could stand around 700-800 tonne in 2024, with the figure falling near the lower end of the range if prices continue to rally. The WGC had earlier expected demand in India to rise to between 800 tonne and 900 tonne in 2024. India’s gold consumption fell 1.7% in 2023 from a year earlier to 761 tonne. Sachin Jain, the new India regional CEO of the World Gold Council, said the general election may keep demand subdued.