Business News at 09:30 am on 22nd May 2023

Let’s begin – Packaged food as a category has emerged as an outlier in the domestic fast-moving consumer goods (FMCG) market, contributing to the strong sales performance of the segment players in the March quarter of FY23. Firms like Nestle India, Britannia, Marico and ITC, for instance, have all reported double-digit growth in the food segment in Q4. These firms have also lined up big plans for the segment, ahead of their non-food peers. The food segment has maintained a positive growth trajectory even as the non-food category, which includes home and personal care, has had a bumpy ride in FY23, data from Nielsen showed. The June quarter growth in the food and non-food segments was the strongest owing to a low base effect in the previous year. Growth in September, December and March quarters in the food category was between 3% and 8%.

Meanwhile – Privatisation of Container Corporation, hanging fire since 2019, is unlikely to materialise even in the current financial year, as land-related issues are yet to be sorted out by the railways. “Internal approvals are not yet complete,” a senior government official told FE. After prolonged delays, the expression of interest (EoI) was expected to be rolled out by February-March, but the plan is understood to be put on hold. The process of strategic disinvestment (privatisation) usually takes 9-12 months to conclude after the EoI is floated. The ConCor sale is also politically-sensitive. Given the spate of state assembly elections by the end 2023 and general elections in April-May 2024, the whole process may be delayed indefinitely. The Cabinet had given its nod for the disinvestment of 30.8% government stake in ConCor to a strategic buyer as early as in November 2019. The government’s stake in the firm, a dominant player in the container terminal order (CTO) business with a 58% market share and around 60 terminals, is 54.8%. The company has paid LLF charges to the tune of Rs 392 crore in FY23 and has guided a 7% growth in FY24.

Moving on – As Tesla explores setting up a manufacturing plant in India, Reliance Jio is in talks with the Elon Musk-led company with an offer to build a captive private network for its factory. The network would manage all the critical operations at faster speeds and also look at connected car solutions, automation of production processes, among others, industry sources said. A query sent to Jio in this regard did not elicit any response till the time of going to the press.

In a separate development – The total overdues of power distribution companies to power generation companies (gencos) have fallen 73.5% to Rs 26,516.57 crore in less than a year of the introduction of Late Payment Surcharge (LPS) rule on June 3, 2022. The overdues (excluding disputed amounts and LPSC) were a little over Rs 1 trillion as on May 18, 2022, as per Praapti portal. The significant reductionin overdues is the direct result of the strict financial discipline brought in by the central government in the functioning of discoms to protect the entire value chain. The implementation of Electricity (LPS and Related Matters) Rules, 2022, with a provision to cut power supply to defaulting discoms, has improved the recovery of outstanding dues of suppliers – gencos, transmission companies and traders. The discoms are also paying their current dues in time. As per PRAAPTI portal, discoms’ total outstanding dues to gencos as on May 21, 2023, is Rs 92,760 crore, which includes current dues of Rs 66,243 crore.

In another development – Suspicious trading has been observed in Adani group shares by four foreign portfolio investors, one corporate and one individual, according to the Supreme Court-appointed panel’s report. The trading pattern is suspicious because of the buildup of short positions by these entities in the Adani group scrips prior to the publication of the Hindenburg report and substantial profits earned by them by squaring off their positions after the publication of the report. A detailed investigation is being carried out with respect to trading by these entities. A total of 849 alerts had been received by capital markets regulator Sebi in Adani group scrips for the period between April 1, 2018 and December 31, 2022. Of these, 603 alerts were related to price volume movements, while the remaining 246 were related to insider trading. The stock exchanges have submitted three examination reports to Sebi on which the work is in progress.

Lastly – Asian markets are giving slightly positive signals today. Indian stock markets are likely to open on a flat to positive note and will trade volatile as per global cues.