Business News at 09:30 am on 28th March 2023

We begin the day with a big update on the Reliance Capital e-auction. The committee of creditors of debt-laden Reliance Capital has decided to conduct the second e-auction on April 4, even as participation from Torrent Group remains uncertain due to a lack of clarity on the outcome. However, IndusInd International Holdings, the firm through which the Hinduja Group had placed bids, intends to participate in the extended challenge mechanism. The firm, which had earlier informed the CoC of its plans to withdraw its revised bid, now intends to maintain the bid amount of Rs 9,000 crore in cash upfront, sources close to the development said. IIHL’s confirmation saves Reliance Capital from a possible liquidation process. In case of no interest from bidders, the former Anil Ambani group company would face liquidation that would deplete the value of its assets. This would also result in forcing the lenders to take bigger haircuts. The CoC was expecting to garner more than Rs 10,000 crore from the extended challenge mechanism.

Moving on. The Supreme Court has said that banks must hear borrowers before classifying an account as ‘fraud’. Declaring an account as fraud has serious consequences for the borrower such as the inability to borrow in future, a bench comprising Chief Justice DY Chandrachud and Justice Hima Kohli observed, upholding a Telangana High Court order. The Telangana HC had in a December 2020 verdict said that the principles of “audi alteram partem” or “hear the other side” must be applied before declaring a borrower as “fraudulent”. This is because the declaration of fraud entails civil and legal consequences, which results in blacklisting borrowers from accessing institutional finance, it had said. The ruling was challenged in the Supreme Court. While Monday’s apex court’s judgment is aimed at protecting the interests of borrowers, bankers are still assessing the fine print before deciding their next course of action. However, there is a consensus that the process of tracking defaulters and giving them time for hearing would delay the process of classifying them as wilful defaulters.

In other news, Aditya Birla Capital, the holding company of the financial services business of Aditya Birla Group, will exit its insurance broking business by selling Aditya Birla Insurance Brokers to Samara Capital for an upfront payment of Rs 455 crore. Further, under the share purchase agreement, the company and Infocyber, which is the other shareholder may receive an additional consideration after completion of five years from the closing which is conditional upon the fulfilment of certain conditions under the SPA. Financial Express had reported in December that Aditya Birla Capital has put ABIBL on the block and Samara Capital was in the race to acquire it. The company told the exchanges that ABIBL is being purchased by Edme Services, which is part of the Samara Capital Group and an affiliate of Samara.

Now some news from the tech world. Homegrown microblogging platform Koo has scaled up fast with a download of 60 million in the last three years. But the startup seems to be losing momentum on monthly active users. In its communication to investors, Koo has said its monthly active users reduced to 4.1 million in January from 9.4 million in July 2022. Monthly active users are the ones who log on to the app, at least once a month. The platform, which was started by Aprameya Radhakrishna and Mayank Bidawatka, and has investment by Tiger Global, had seen a sharp increase in monthly active users when the government was locked in a tiff with Twitter over intermediary guidelines. According to analysts, the decline in the active user base could be due to the platform lacking the vibrancy of Twitter. This is despite some of its inherent advantages, like offering the services in nine regional languages.

Over to latest from commodity sector. With mandi prices of mustard falling below the Minimum Support Price of Rs 5,450/quintal after staying far above the threshold for over two years, the government has decided to procure 2.7 million tonnes of the oilseed from farmers in key producing states namely Rajasthan, Madhya Pradesh, Uttar Pradesh, Haryana and Gujarat. The prices of soybean, another key oil seed, have also fallen in recent months, but there is no plan to hike the import duty on these edible oils right now, official sources said. The state cooperative marketing federations will be procuring mustard in collaboration with the farmers’ cooperative Nafed from April 1. The Rajasthan state co-operative marketing federation will purchase 1.5 MT of mustard at MSP from farmers.

And finally, here’s what the pre-market mood says about the opening trade. SGX Nifty is in green. The hints at a positive start for the Indian indices today. HDFC, Axis Bank, and Adani Enterprises are some of the key stocks that would be in focus today.